Greater New Orleans Broadcasting Ass'n v. US

• Decision Date: 31 October 1994
• Docket Number: Civ. A. No. 94-656.
• Citation: 866 F. Supp. 975
• Parties: GREATER NEW ORLEANS BROADCASTING ASSOCIATION, INCORPORATED, et al. v. UNITED STATES of America, et al.
• Court: U.S. District Court — Eastern District of Louisiana

866 F. Supp. 975

GREATER NEW ORLEANS BROADCASTING ASSOCIATION, INCORPORATED, et al. v. UNITED STATES of America, et al.

Civ. A. No. 94-656.

United States District Court, E.D. Louisiana.

October 31, 1994.

Ashton Richard Hardy, Hardy & Carey, Metairie, LA, Marjorie Ruth Esman, Atty. at Law, New Orleans, LA, for plaintiffs Greater New Orleans Broadcasting Ass'n, Phase II Broadcasting, Inc., Radio Vanderbilt Inc., Keymarket of New Orleans, Inc., Professional Broadcasting, WGNO, Inc., Burnham Broadcasting Co.

Nancy Ann Nungesser, U.S. Atty's Office, New Orleans, LA, Lisa A. Olson, U.S. Dept. of Justice, Civ. Div., Theodore Hirt, Lois Bonsal Osler, U.S. Dept. of Justice, Washington, DC, for defendants U.S., F.C.C.

Charles L. Spencer, Hebert & Spencer, Baton Rouge, LA, for movant Louisiana Ass'n of Broadcasters.

ORDER AND REASONS

EDWARD J. BOYLE, Sr., District Judge.

This declaratory action comes before the Court on motion for summary judgment filed by the plaintiffs, Greater New Orleans Broadcasting Association, Inc. ("broadcasters") and cross motion for summary judgment filed by the defendants, the United States of America and the Federal Communications Commission (collectively "FCC"), both parties having agreed that this matter can be determined summarily. Having considered the record, the memoranda of counsel and the law, the Court has determined that the motion of the plaintiffs should be denied and the motion of the defendant granted as submitted.¹

Three issues concerning broadcast restrictions on casino advertising are presented to this Court on cross motion: (1) whether a stay of enforcement by the FCC in Nevada violates the equal protection clause; (2) whether prohibitions against the broadcast of certain "lottery" information apply to casino gaming; and (3) whether those restrictions violate the plaintiffs' freedom of speech, due process rights, freedom to contract and equal protection of the law under the First Amendment. These issues largely reflect those presented in Valley Broadcasting v. United States, 820 F.Supp. 519 (D.Nev.1993), wherein the district court granted summary judgment in favor of broadcasters and struck down the broadcast advertising restrictions imposed by statute and FCC regulations.² That decision focused on the First Amendment challenge and found that the FCC prohibitions did not directly advance substantial government interests and were unconstitutionally broad for purposes of the commercial speech analysis set forth in Central Hudson Gas & Electric Corp. v. Public Service Commission, 447 U.S. 557, 100 S.Ct. 2343, 65 L.Ed.2d 341 (1980).

EQUAL PROTECTION

The plaintiffs' equal protection claim is directed to the decision by the FCC to stay enforcement of the challenged broadcast regulations in Nevada pending appellate review of Valley Broadcasting. The plaintiffs do not dispute the fact that the stay was provoked by the district court decision, that the stay reduces uncertainty for those broadcasters within the state of Nevada or that the stay preserves FCC resources pending appeal. The plaintiffs do argue that because this stay effectively classifies Nevada broadcasters differently than other broadcasters, the plaintiffs have been denied equal protection of the law. The proposed result: a nationwide stay of enforcement pending the appeal of the Valley Broadcasting decision.

The broadcasters ask for application of a strict scrutiny standard to the FCC's decision because it allegedly intrudes on the fundamental right of free speech. This standard would require a compelling interest be served by the FCC restrictions which cannot be served by an alternative and less burdensome means. However, in Dunagin v. City of Oxford, Mississippi, 718 F.2d 738 (5th Cir.1983), the Fifth Circuit specifically rejected the argument that strict scrutiny applies where commercial speech was involved.

Furthermore, in all cases commercial speech is entitled to only a limited measure of protection under a different standard of review. Under the Central Hudson Gas test, the state must demonstrate a substantial interest which is directly advanced by the regulation. If the right to advertise for profits were fundamental, then parties to any particular commercial speech regulation could rely on a stricter standard of review — requiring a compelling state interest and necessary means chosen to attain in — by locating an unregulated class of advertisers and insisting on an equal protection analysis by the court.

Id., 718 F.2d at 752. The Fifth Circuit continued: "Hence, unlike other areas of First Amendment protection, the commercial speech doctrine is concerned primarily with the level and quality of information reaching the listener." Id. The minimal scrutiny recognized by the Fifth Circuit in commercial speech equal protection cases requires that "the classification challenged need only be rationally related to a legitimate governmental interest." Id., 718 F.2d at 753. Without acknowledging Dunagin or this rule, the plaintiffs do alternatively argue that the FCC's stay in Nevada fails even the lesser "rational basis" test.

This Court recognizes the lesser rational basis standard as applicable to the equal protection challenge made in this matter, and finds that the FCC stay easily meets constitutional muster thereunder. For purposes of the lesser standard, the Court finds that the geographically limited FCC stay was rationally designed to accomplish a legitimate government goal.³

In addition, however, the Court finds that the FCC stay survives challenge under the stricter challenge applicable to speech entitled to full First Amendment protection. The allegedly offensive stay and resulting classification were based on the order of the district court. Obedience to the orders of the court is surely a compelling interest to all concerned. That obedience is secured by the contempt recognized upon violation. The stay accommodates the broadcasters in the state by providing a measure of certainty of the consequences of any actions. All concerned are spared from the anticipated deluge of individual declaratory actions seeking clarification of the scope of the order which has yet to be declared final.

It is important to note that the stay is temporary in nature and limited in scope. The Nevada district court does not enjoy nationwide jurisdiction; its order is without effect elsewhere. Its order is not final within its jurisdiction until affirmed upon appeal. Yet by virtue of the stay, those within the state of Nevada were served while those persons in all other states, including those states which do outlaw casino gambling, did not have to undergo an unnecessary and perhaps only temporary change of policy. In this regard, it should be noted that the right to unregulated casino advertising was recognized for the first time in Valley Broadcasting. Under the circumstances, the clarity and conservation sought by the government is a compelling interest which could have been accomplished in no other manner that this Court can imagine, and certainly in no other manner suggested by the plaintiffs.

STATUTORY APPLICATION

Next, the plaintiffs argue that casino gaming does not fall within the scope of the statute that empowers the FCC to regulate broadcasted advertising of casino gambling. That statute, 18 U.S.C. § 1304, provides in pertinent part:

Whoever broadcasts by means of any radio or television station for which a license is required by any law of the United States, or whoever, operating any such station, knowingly permits the broadcasting of, any advertisement of or information concerning any lottery, gift enterprise or similar scheme, offering prizes dependent in whole or in part upon lot or chance, or any list of the prizes drawn or awarded by means of any such lottery, gift enterprise, or scheme, whether said list contains any part or all of such prizes, shall be guilty of an offense against the United States.

(Emphasis added).⁴ Specifically, the plaintiffs argue that this statute does not prohibit advertisement concerning casino gambling because casino games cannot be considered a "lottery, gift enterprise or similar scheme."

This argument has yet to receive judicial recognition, failed before the district court in Valley Broadcasting and fails again here. Those things that fall within the coverage of the statute share three characteristics: (1) the distribution of prizes; (2) according to chance; (3) for consideration. F.C.C. v. American Broadcasting Co., 347 U.S. 284, 74 S.Ct. 593, 98 L.Ed. 699 (1954). It is clear that all of those characteristics are enjoyed by casino gambling, regardless of the treatment given by any state enactment.

FIRST AMENDMENT

The parties have grounded their First Amendment arguments on the Central Hudson analysis traditionally applied to restrictions on commercial speech.

In commercial speech cases, then, a four-part analysis has developed. At the outset, we must determine whether the expression is protected by the First Amendment. For commercial speech to come within that provision, it at least must concern lawful activity and not be misleading. Next, we ask whether the asserted governmental interest is substantial. If both inquiries yield positive answers, we must determine whether the regulation directly advances the governmental interest asserted, and whether it is not more extensive than is necessary to serve that interest.

Central Hudson, 447 U.S. at 566, 100 S.Ct. at 2351. For purposes of the first factor, there is no dispute here that the proposed speech would concern lawful activity and not be misleading.

Disagreement sharpens on the second prong of the analysis. The FCC contends that the government has a substantial interest (1) in protecting the interest of nonlottery states and (2) in reducing participation in gambling and thereby minimizing the social costs associated therewith. The United States Supreme Court summarily recognized these interests in ...