Michel v. Bare

• Decision Date: 05 November 2002
• Docket Number: No. CVS02-1139PMPRJJ.,CVS02-1139PMPRJJ.
• Citation: 230 F.Supp.2d 1147
• Parties: Herbert L. MICHEL, Jr., a licensed attorney in the State of Nevada; and Herbert L. Michel, Jr., A Professional Law Corporation, Plaintiffs, v. Rob W. BARE in his capacity as Bar Counsel to the State Bar of Nevada, Defendant.
• Court: U.S. District Court — District of Nevada

230 F.Supp.2d 1147

Herbert L. MICHEL, Jr., a licensed attorney in the State of Nevada; and Herbert L. Michel, Jr., A Professional Law Corporation, Plaintiffs, v. Rob W. BARE in his capacity as Bar Counsel to the State Bar of Nevada, Defendant.

No. CVS02-1139PMPRJJ.

United States District Court, D. Nevada.

November 5, 2002.

Hector J. Carbajal, Dennis L. Kennedy, Daniel R. McNutt, Lionel, Sawyer & Collins, Las Vegas, NV, for Plaintiff.

Felicia Galati, State Bar of Nevada, Las Vegas, NV, for Defendant.

FINDINGS OF FACT, CONCLUSIONS OF LAW, DECLARATORY JUDGMENT AND INJUNCTION

PRO, Chief Judge.

I. BACKGROUND

Plaintiff Herbert L. Michel, Jr., is a resident of and an attorney licensed to practice law in Nevada. In 1995, Michel formed the Professional Law Corporation of Herbert Michel, Jr., doing business under the registered service marks "Your Legal Power" and "Su Poder Legal" (collectively "Trade Names"). Michel alleges that since 1995, he has expended over $1.2 million promoting the Trade Names.

On July 16, 2001, the Nevada Supreme Court established the Nevada Supreme Court Commission on Multijurisdictional Practice ("Commission") to research a number of issues related to the multijurisdictional practice of law. The Commission conducted three public hearings and collected written comments as part of its study of the issues related to multijurisdictional practice. The study culminated in a Report of the Supreme Court of Nevada Commission on Multijurisdictional Practice ("MJP Report") in which the Commission recommended several changes to the Nevada Supreme Court Rules. Among the recommendations of the Commission adopted by the Nevada Supreme Court on July 26, 2002, was new Supreme Court Rule 199(1). In relevant part, the Rule provides:

Rule 199. Firm names and letterhead.

1. A lawyer shall not use a firm name, letterhead, or other professional designation that violates Rule 195. The firm name shall contain the names of one or more living, retired, or deceased members of the law firm. No trade names shall be used other than those utilized by non-profit legal services organizations; however, phrases such as "the law offices of" or "and associates" shall be permissible.

....

On September 3, 2002, Michel filed a Motion for Temporary Restraining Order and Preliminary Injunction; Request for Emergency Consideration and Expedited Briefing and Hearing Schedule. (Docs. # 2 & 3.) Michel claims that prohibiting his use of the Trade Names violates his First Amendment right to freedom of speech and Fourth Amendment right to equal protection of the laws. As a result, Michel brings this action for declaratory and injunctive relief against Defendant Robert W. Bare ("Bare"), in his capacity as Bar Counsel for the State Bar of Nevada, to enjoin enforcement of Rule 199(1).

On September 18, 2002, Bare filed an Opposition to Plaintiffs' Motion for Temporary Restraining Order and Preliminary Injunction. (Doc. # 9.) Bare also filed Defendant's Exhibits to Defendant's Opposition to Plaintiffs' Motion for Temporary Restraining Order and Preliminary Injunction (Doc. # 10) on September 18, 2002. Michel filed Plaintiffs' Reply in Support of Motion for Preliminary Injunction (Doc. # 12) on October 7, 2002.

Rule 199(1) became effective on September 24, 2002. However, at the September 6, 2002, hearing on Michel's Motion for Temporary Restraining Order, the parties stipulated that the State Bar would take no further enforcement action against Michel pending the resolution of the present litigation.

II. LEGAL STANDARD

The Ninth Circuit uses two alternative tests to determine whether a preliminary injunction should issue. According to the "traditional test":

The traditional equitable criteria for granting preliminary injunctive relief are: (1) a strong likelihood of success on the merits; (2) the possibility of irreparable injury to the plaintiffs if injunctive relief is not granted; (3) a balance of hardships favoring the plaintiffs; and (4) advancement of the public interest.

Textile Unlimited, Inc. v. A..BMH & Co., Inc., 240 F.3d 781, 786 (9th Cir.2001) (citing Los Angeles Mem'l Coliseum Comm'n v. Nat'l Football League, 634 F.2d 1197, 1200 (9th Cir.1980)). A preliminary injunction is "a device for preserving the status quo and preventing the irreparable loss of rights before judgment." Id. (citing Sierra On-Line, Inc. v. Phoenix Software, Inc., 739 F.2d 1415, 1422 (9th Cir. 1984).

In the alternative, the Ninth Circuit uses a "sliding scale" or balancing test:

Preliminary injunctive relief is available to a party who demonstrates either: (1) a combination of probable success on the merits and the possibility of irreparable harm; or (2) that serious questions are raised and the balance of hardships tips in its favor.

A & M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1013 (9th Cir.2001) (citing Prudential Real Estate Affiliates, Inc. v. PPR Realty, Inc., 204 F.3d 867, 874 (9th Cir. 2000)).

Additionally, pursuant to Federal Rule of Civil Procedure 65(a)(2), a United States District Court may consolidate "the hearing of an application for a preliminary injunction" with "the trial of the action on the merits." Fed.R.Civ.P. 65. At the hearing conducted on Plaintiffs' Motion for Preliminary Injunction on October 15, 2002, the parties agreed that all facts and applicable law were before the Court, and this action was ripe for full adjudication on its merits without the need for further trial.

III. FINDINGS OF FACT AND CONCLUSIONS OF LAW

Michel asserts that Rule 199(1) violates the First Amendment commercial speech doctrine as outlined in Central Hudson Gas & Electric Corp. v. Public Service Commission of New York. 447 U.S. 557, 566, 100 S.Ct. 2343, 65 L.Ed.2d 341 (1980). Michel further contends that Rule 199(1) violates his Fourteenth Amendment right to equal protection.

Bare offers a variety of arguments in response. First, Bare asserts that several state supreme courts have upheld the regulation of trade names, and Nevada's regulations on the use of trade names should similarly be upheld. Second, relying principally on the United States Supreme Court's holding in Friedman v. Rogers, 440 U.S. 1, 99 S.Ct. 887, 59 L.Ed.2d 100 (1979), Bare contends that Nevada's regulation on the use of trade names by attorneys constitutes a permissible restriction on commercial speech. Third, Bare asserts that SCR 199(1) does not violate equal protection rights. Next, Bare contends that injunctive relief is not warranted because Michel can continue to use his current trade names—"Su Poder Legal" and "Your Legal Power"—as slogans. Finally, Bare claims that Michel will not suffer irreparable harm as a result of the enforcement of SCR 199(1).

A. COMMERCIAL SPEECH

In Central Hudson, the United States Supreme Court articulated the following test for evaluating regulations of 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, [1] it at least must concern lawful activity and not be misleading. Next, [2] we ask whether the asserted governmental interest is substantial. If both inquiries yield positive answers, we must determine [3] whether the regulation directly advances the governmental interest asserted, and [4] whether it is not more extensive than is necessary to serve that interest.

Central Hudson, 447 U.S. at 566, 100 S.Ct. 2343 (bracketed numbers and emphasis added). "[T]he Government bears the burden of identifying a substantial interest and justifying the challenged restriction." Greater New Orleans Broad. Ass'n, Inc. v. United States, 527 U.S. 173, 183, 119 S.Ct. 1923, 144 L.Ed.2d 161 (1999) (citing sources). See also Valley Broad. v. United States, 107 F.3d 1328 (9th Cir.1997).

In addition to laying out a general rule for testing the constitutionality of a commercial speech restriction, the United States Supreme Court has specifically addressed restriction of trade names as a form of commercial speech. See generally Friedman, 440 U.S. 1, 99 S.Ct. 887, 59 L.Ed.2d 100. The Friedman decision was rendered by the United States Supreme Court before Central Hudson and appears to allow greater regulation of trade names than does Central Hudson. However, the Court finds that Rule 199(1) does not survive either the Friedman or Central Hudson test.

1. Friedman v. Rogers

In Friedman, the United States Supreme Court held that a Texas law prohibiting the practice of optometry under a trade name was constitutional. Friedman, 440 U.S. at 8, 99 S.Ct. 887. The law in question in Friedman prohibited "the practice of optometry under an assumed name, trade name, or corporate name." Id. at 3, 99 S.Ct. 887 (emphasis added). In holding that the Texas law was constitutional, the Supreme Court reasoned that "restrictions on false, deceptive, and misleading commercial speech" are permissible, and "there is a significant possibility that trade names [in particular] will be used to mislead the public." Id. at 9, 99 S.Ct. 887. The Court noted that the concerns about the deceptive and misleading use of optometrical trade names in Texas "were not speculative or hypothetical ...." Id. at 13, 99 S.Ct. 887.

The present case deals with trade names, and Friedman does state that "there is a significant possibility that trade names will be used to mislead the public." Friedman, 440 U.S. at 12, 99 S.Ct. 887. However, the Court's conclusion in Friedman must be understood in the specific factual context presented:

The concerns of the Texas Legislature about the deceptive and misleading uses of optometrical trade names were not speculative or hypothetical, but were based on experience in Texas with which the legislature was familiar when in 1969 it enacted § 5.13(d). The forerunner of § 5.13(d) was adopted as part of a "Professional Responsibility Rule" by the Texas State Board of...