Nat'l Fed'n Of The Blind Of Tex. Inc v. Greg Abbott As He Is Attorney Gen. Of The State Of Tex.

• Decision Date: 01 February 2010
• Docket Number: No. 3:09-CV-1567-F.,3:09-CV-1567-F.
• Citation: 682 F.Supp.2d 700
• Parties: NATIONAL FEDERATION OF THE BLIND OF TEXAS, INC., a Texas Nonprofit Corporation, Institute For Disability Access, Inc., a/k/a Adapt of Texas, Inc., a Texas Nonprofit Corporation, Plaintiffs; v. Greg ABBOTT as he is Attorney General of the State of Texas, Defendant.
• Court: U.S. District Court — Northern District of Texas

682 F.Supp.2d 700

NATIONAL FEDERATION OF THE BLIND OF TEXAS, INC., a Texas Nonprofit Corporation, Institute For Disability Access, Inc., a/k/a Adapt of Texas, Inc., a Texas Nonprofit Corporation, Plaintiffs;

v.Greg ABBOTT as he is Attorney General of the State of Texas, Defendant.

No. 3:09-CV-1567-F.

United States District Court,

N.D. Texas,

Dallas Division.

Decided: Feb. 1, 2010.

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Chris J. Akin, Lynn Tillotson Pinker & Cox LLP, Dallas, TX, Errol Copilevitz, William E. Raney, Copilevitz & Canter LLC, Kansas City, MO, for Plaintiffs.

James Carlton Todd, Office of the Texas Attorney General, Jeffrey S. Boyd, Thompson & Knight LLP, Austin, TX, for Defendant.

ORDER GRANTING IN PART AND DENYING IN PART DISPOSITIVE MOTIONS FOR SUMMARY JUDGMENT

ROYAL FURGESON, Senior District Judge.

BEFORE THE COURT are dispositive motions for summary judgment filed by Defendant Greg Abbott ("Texas") and by Plaintiffs, National Federation of the Blind of Texas, Inc. and Institute for Disability Access, Inc. (Docket Nos. 11 and 14). Also before the Court are Plaintiffs' Motion for Emergency Injunctive Relief and Thereafter a Preliminary Injunction (Docket No. 5); Texas Association of Goodwills' ("TAG") Amicus Brief; TAG's Supplemental Amicus Brief;¹ and Texas's Response and Objection to TAG's Supplemental Amicus Brief. The Court held a hearing on this matter on November 3, 2009. After careful consideration of the law, the parties' submissions, and the oral arguments, the Court GRANTS IN PART AND DENIES IN PART Texas's Motion for Summary Judgment and GRANTS IN PART AND DENIES IN PART Plaintiffs' Motion for Summary Judgment.² The Court's resolution of the cross-motions for summary judgment resolves all issues in the case. Accordingly, Plaintiffs' Motion for Emergency Injunctive Relief and Thereafter a Preliminary Injunction is DENIED AS MOOT.³

I. FACTUAL BACKGROUND

This action concerns a recently enacted Texas Statute codified at Tex. Bus. & Comm.Code §§ 17.921-17.926 (the "Act"), entitled "An Act relating to regulating the collection or solicitation of donated goods subsequently sold by for-profit entities or individuals." Acts 2009, 81st Leg., ch. 1368, § 1. The Act requires for-profit entities that solicit and resell donations on behalf of charitable organizations, "professional resellers," to make certain disclosures when they collect clothing or other household goods through public receptacles, or through telephonic, mail, or in-person solicitations. See generally Tex. Bus. & Comm.Code §§ 17.922-17.924. These disclosures apply in three situations. The "no-charitable-organization disclosure sections," §§ 17.922(b), 17.923(b), 17.924(b), require professional resellers to disclose if no money will go to a charitable organization. The "percentage disclosure sections," §§ 17.922(c), 17.923(c), 17.924(c), require professional resellers who pay a percentage of the proceeds from the sale of donated items to disclose the percentage that will be paid to the charitable organization. Finally, the "flat fee disclosure sections," §§ 17.922(d), 17.923(d), 17.924(d), require professional resellers who pay a charitable organization a flat fee for use of the charitable organization's name to disclose the flat fee that will be paid to the charitable organization.

The parties filed a Joint Stipulation of Facts (Docket No. 10). Plaintiffs are charitable organizations that engage in activities regulated by the Act. Joint Stipulation of Facts ¶1. Specifically, Plaintiffs are charitable organizations who retain professional resellers to assist their mission. The professional resellers are retained to solicit donations of clothing or other household goods through donation bins referred to as "receptacles," as well as through telephone appeals. Id. ¶¶2-3. Plaintiffs are paid a flat fee based on volume. Id. ¶4. At the November 3, 2009 hearing, Plaintiffs explained that the flat fee by volume is a payment based on the size of donations, not the number of items donated—donations are placed in a bin, and when the bin is full, the flat fee payment for that bin is due. Plaintiffs' Complaint alleges that the Act violates the First and Fourteenth Amendments of the United States Constitution because it; (1) is a content-based restriction of protected speech; (2) violates equal protection; (3) is underinclusive; (4) is overly broad; and (5) is a prior restraint of protected speech. The Complaint also alleges that the Act violates Article I, Section 8 of the Texas Constitution. Plaintiffs argue that the three Supreme Court cases dealing with the regulation of charitable solicitations, Village of Schaumburg v. Citizens for a Better Env't, ⁴ Secretary of State of Md. v. Joseph H. Munson Co., ⁵ and Riley v. National Federation of the Blind of North Carolina, Inc., ⁶ require that this Court declare the Act unconstitutional.

In response to Plaintiffs' constitutional claims, Texas argues that the Act is not an unconstitutional restriction on protected free speech. Texas urges the Court to find that the speech regulated by the Act is commercial speech entitled only to intermediate scrutiny. Texas also argues that to the extent strict scrutiny applies, the statute is narrowly tailored. Finally, Texas explains that Plaintiffs' Equal Protection claims are based on their First Amendment claims and do not require the Court to strike any portion of the Act that survives the Court's First Amendment analysis. Both parties now move for summary judgment. In addition to moving for summary judgment, Texas challenges this Court's jurisdiction to hear Plaintiffs' state constitutional claim and argues that Plaintiffs do not have standing to challenge certain portions of the statute.

II. LEGAL STANDARD

Summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c), Celotex v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). To support its motion for summary judgment, the moving party bears the "burden of showing the absence of a genuine issue of material fact, and for these purposes the material it lodge[s] must be viewed in the light most favorable to the opposing party." Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). To grant a motion for summary judgment, the Court must determine that, viewing the record in the light most favorable to the nonmovant, the moving party is nevertheless entitled to judgment as a matter of law. Here, the parties have stipulated to all relevant facts.

III. JURISDICTION OVER STATE

CONSTITUTIONAL CLAIM

Texas asserts Eleventh Amendment immunity with regard to Plaintiffs' state constitutional claim. See Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 100, 104 S.Ct. 900, 79 L.Ed.2d 67 (1984) ("[I]n absence of consent[,] a [federal] suit in which the State or one of its agencies or departments is named as a defendant is proscribed by the Eleventh Amendment."). Plaintiffs identify a case where the Fifth Circuit heard state constitutional arguments. See Woodall v. City of El Paso, 49 F.3d 1120 (5th Cir.1995). But Woodall is inapplicable here. Woodall involved a city government that was not entitled to the same Eleventh Amendment protections as a state government. Cf Bd. of Trustees of University of Alabama v. Garrett, 531 U.S. 356, 369, 121 S.Ct. 955, 148 L.Ed.2d 866 (2001) (discussing federal abrogation of Eleventh Amendment immunity and observing that "the Eleventh Amendment does not extend its immunity to units of local government"). Additionally, in Woodall, El Paso consented to federal jurisdiction over the state constitutional claim—the case was filed in state court and El Paso removed it to federal court. 49 F.3d at 1122. Texas is not a "local government" and has not consented to federal jurisdiction, so Woodall is unpersua-sive. The Court does not have jurisdiction over the state constitutional claim because Texas is entitled to Eleventh Amendment Immunity.

IV. STANDING

Texas disputes Plaintiffs' standing to challenge the Act with respect to the "no-charitable-organization disclosure sections" and the "percentage disclosure sections." Plaintiffs are paid a flat fee by professional resellers based on volume. Joint Stipulation of Facts ¶ 4. The "flat fee disclosure sections" require professional resellers who solicit donations while paying charitable organizations a flat fee to disclose the fee paid to the charitable organization if the solicitation is done through a receptacle, by phone, by mail, or in-person. Tex. Bus. & Comm.Code §§ 17.922(d), 17.923(d), 17.924(d). Texas does not challenge Plaintiffs' standing to this portion of the statute.⁷ But the Act also requires similar disclosures for the same solicitation where the charitable organization receives a percentage of goods sold or where the charitable organization receives nothing at all. Id. §§ 17.922(b)-(c), 17.923(b)-(c), 17.924(b)-(c). Plaintiffs have not offered any evidence to show that they intend to hire professional resellers to engage in activity covered by these sections of the Act. Texas argues that the sections are severable, so that Plaintiffs do not have standing to challenge these sections. Plaintiffs argue that the sections are not severable, and that even if Plaintiffs do not have standing to challenge the sections that do not pertain to a flat fee, the relaxed standing requirements in First Amendment cases permit the case to go forward.

Standing is an absolute constitutional minimum that the Court must examine when necessary, even if not raised by the parties. See, e.g., Juidice v. Vail, 430 U.S. 327, 331, 97 S.Ct. 1211, 51 L.Ed.2d 376 (1977) (examining standing sua sponte). The Article III standing...