Minnesota Newspaper Ass'n v. Postmaster General, Civ. No. 3-86-806.

• Court: United States District Courts. 8th Circuit. United States District Court of Minnesota
• Writing for the Court: C. Gail Walker, Dept. of Justice, Civ. Div., Washington, D.C., for defendants
• Citation: 677 F. Supp. 1400
• Parties: MINNESOTA NEWSPAPER ASSOCIATION, INC., Plaintiff, v. POSTMASTER GENERAL OF the UNITED STATES, United States Postal Service, and United States of America, Defendants.
• Decision Date: 31 December 1987
• Docket Number: Civ. No. 3-86-806.

677 F. Supp. 1400

MINNESOTA NEWSPAPER ASSOCIATION, INC., Plaintiff,
v.
POSTMASTER GENERAL OF the UNITED STATES, United States Postal Service, and United States of America, Defendants.

Civ. No. 3-86-806.

United States District Court, D. Minnesota, Third Division.

December 31, 1987.

677 F. Supp. 1401

Mark R. Anfinson, Minneapolis, Minn., for plaintiff.

C. Gail Walker, Dept. of Justice, Civ. Div., Washington, D.C., for defendants.

MEMORANDUM AND ORDER

MAGNUSON, District Judge.

This matter comes before the court on the parties' cross-motions for summary judgment. At issue is the constitutionality of certain federal statutes and postal regulations which criminalize the mailing of advertisements or prize lists for lotteries or similar enterprises. Plaintiff Minnesota Newspaper Association ("MNA") contends that the statutes, primarily 18 U.S.C. § 1302 (1982), violate the constitutional standards of free speech and press, and equal protection. Defendant Postmaster General contends that the statutes and related regulations satisfy the standards set out in Central Hudson Gas & Elec. Corp. v. Public Service Comm'n, 447 U.S. 557, 100 S.Ct. 2343, 65 L.Ed.2d 341 (1980). For the reasons stated below, the court grants partial summary judgment for MNA and partial summary judgment for the Post-master. The challenged statutes are constitutional with respect to advertisements. However, the Postmaster has failed to establish a compelling governmental interest justifying the content-based restrictions on the mailing of prize lists.

677 F. Supp. 1402

FACTS

Minnesota law allows, subject to extensive regulation, nonprofit charitable organizations to operate gaming activities for fund raising purposes. Minn.Stat. §§ 349.11-.60 (1986 & Supp.1987). The primary games are bingo, pull tabs, raffles, paddle wheels, and tip boards. These organizations are free to use any form of advertising which does not involve mailing or broadcast.¹

Plaintiff MNA is the chief representative of the organized newspaper press in Minnesota. MNA's member newspapers distribute a significant portion of their circulation through the United States mails. This dependence on the mails has forced newspapers to reject advertisements from charitable and nonprofit organizations wishing to publicize gaming activities. Such advertisements would run afoul of the restrictions contained in 18 U.S.C. § 1302² and 39 U.S.C. §§ 3001³ and 3005.⁴

Newspapers have also withheld news reports on bingo games and similar lottery operations legally conducted in Minnesota by private organizations because of the confusion that surrounds the interpretation and application of these statutes. Some of MNA's member newspapers have published such advertisements or news reports, and have been threatened with sanctions by representatives of the Postal Service. The Postal Service has also asked MNA to notify its members that further publication would cause the Postal Service to take action against the offending newspapers.

ANALYSIS

MNA seeks declaratory and injunctive relief. Its member newspapers face the very real threat of prosecution and/or the loss of mailing privileges. MNA itself was asked to warn its members of the serious potential for sanctions.

The Postmaster does not dispute MNA's standing to challenge the constitutionality of 18 U.S.C. § 1302 and 39 U.S.C. § 3001. However, the Postmaster does contend that MNA lacks standing to challenge the constitutionality of 39 U.S.C. § 3005. This section authorizes the issuance of "stop mail" orders against parties who use the mails to conduct a lottery or similar enterprise.

677 F. Supp. 1403

The Postmaster argues that § 3005 applies only to those who actually conduct lotteries. Therefore, since MNA and its members do not conduct lotteries, MNA lacks standing to challenge this statute

The court rejects the Postmaster's argument. Subsection (d) of section 3005 specifically excepts newspapers which carry advertisements or information concerning state-conducted lotteries from the prohibitions of this section. The exception proves the rule. By implication, newspapers which carry advertisements or information concerning private gaming operations may be subject to the sanctions of § 3005. Such advertising is precisely the conduct at issue in MNA's suit. Therefore, MNA has standing to challenge 39 U.S.C. § 3005.

A. Statutory Background

The criminal statute at issue, 18 U.S.C. § 1302, provides that whoever knowingly deposits in the mails, among other things, a newspaper containing any advertisement of a lottery⁵ or similar enterprise, or containing a prize list for such lottery or enterprise, is subject to a fine of up to $1,000 and/or imprisonment up to two years for the first offense and up to five years for any subsequent offense.

This prohibition originated in 1890 as an amendment to certain statutes relating to lotteries. 26 Stat. 465. See also Act of Mar. 4, 1909, Ch. 321, § 213, 35 Stat. 1129. The constitutionality of this section was upheld in In re Rapier, 143 U.S. 110, 12 S.Ct. 374, 36 L.Ed. 93 (1892). The Court based its decision on the authority of Congress to establish a postal system. U.S. Const. Art. 1, § 8, cl. 7. That authority includes the power to designate what may and may not be carried in the mails. Id. at 133, 12 S.Ct. at 374.

Though the exercise of Congress' postal power through this legislation restricted lotteries, the Court did not "regard the right to operate a lottery as a fundamental right...." Id. at 134, 12 S.Ct. at 374. The Court also held that the legislation did not abridge the freedom of the press. "The circulation of newspapers is not prohibited, but the government declines itself to become an agent in the circulation of printed matter which it regards as injurious to the people." Id.

The Supreme Court has recently reiterated the broad scope of the Article I postal power. United States Postal Service v. Council of Greenburgh Civic Associations, 453 U.S. 114, 126, 101 S.Ct. 2676, 2683-84, 69 L.Ed.2d 517 (1981). "The power possessed by Congress embraces the regulation of the entire Postal System of the country. The right to designate what shall be carried necessarily involves the right to determine what shall be excluded." Id. (quoting Ex parte Jackson, 96 U.S. (6 Otto) 727, 732, 24 L.Ed. 877 (1877)). However, the Court in Greenburgh noted that this power "may not ... be exercised by Congress in a manner that abridges the freedom of speech or of the press protected by the First Amendment to the Constitution." Id.

This court must determine whether, in light of the developments in constitutional, particularly First Amendment, jurisprudence over the past century, the statutes at issue impermissibly infringe on the rights of freedom of speech and of the press, or equal protection.

B. Freedom of Speech and Press

The definition of commercial speech is central to this analysis. 18 U.S.C. § 1302 prohibits the mailing of publications containing, first, advertisements of a lottery or similar enterprise, and, second, lists of prizes for a lottery or similar enterprise. The categorization, commercial or noncommercial speech, of advertisements or prize lists will determine the defendant's burden in justifying these restrictions.

Commercial speech is entitled to First Amendment protections, though less extensive than those afforded to noncommercial

677 F. Supp. 1404

speech. Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626, 637, 105 S.Ct. 2265, 2274-75, 85 L.Ed.2d 652 (1985). If commercial, the Postmaster must satisfy the standards of Central Hudson, 447 U.S. 557, 100 S.Ct. 2343. If noncommercial, the Postmaster faces the almost impossible task of justifying the restriction. Arkansas Writers' Project, Inc. v. Ragland, ___ U.S. ___, 107 S.Ct. 1722, 95 L.Ed.2d 209 (1987)

The Eighth Circuit, in Garner v. White, 726 F.2d 1274 (8th Cir.1984), defined commercial speech as "speech which does `no more than propose a commercial transaction,' or that `relates solely to the economic interests of the speaker and its audience.'" Id. at 1277 (citations omitted). The Seventh Circuit noted, in Woods v. Evansville Press Co., 791 F.2d 480, 484 (7th Cir.1986), that "the term `commercial speech' has predominantly been used in the first amendment context to describe commercial advertising."

1. Advertisements

Most advertisements fall squarely within the definition of commercial speech. A vendor purchases publication space in order to propose a business transaction. The charitable organization which sponsors a lottery has a similar motive. It wants its audience to know that for a sufficient consideration and with a sufficient amount of luck, they may realize a more than sufficient return. The advertisement touches the economic interests of both speaker and audience.

The Supreme Court, in Central Hudson, established a four-step analysis for commercial speech. In order to receive First Amendment protection, the speech:

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 necessary to serve that interest.

Central Hudson, 447 U.S. at 566, 100 S.Ct. at 2351.

Under the Central Hudson test, then, the dissemination of truthful commercial information about a lawful activity can be restricted if it is misleading, or if the government has a substantial interest, directly advanced, and the restriction is no more extensive than necessary.

a. Lawful activity, not misleading

The advertising which MNA's members desire to publish would concern lawful gaming enterprises. The Postmaster contends, though, that such advertising is deceptive and misleading if it does not reveal the odds against winning. As such, it is not entitled to the protections of the commercial speech...