Nordyke v. Santa Clara County

• Decision Date: 04 April 1997
• Docket Number: No. 96-16377,96-16377
• Parties: , 97 Cal. Daily Op. Serv. 2538, 97 Daily Journal D.A.R. 4562 Russell Allen NORDYKE; Sallie Nordyke, dba TS Trade Shows, Plaintiffs-Appellees, v. SANTA CLARA COUNTY; Santa Clara County Fairgrounds Management Corporation, Inc., a California nonprofit corporation; Michael Honda; Bianca Alvarado; Ron Gonzales; James T. Beall, Jr.; Dianne Mckenna; Carl Cookson; Barbara Perzigian; Robert Quinlan; Jaime Rosso; Jack Rouleau; Steve Tedesco; John Vidovich, in their official capacities, Defendants-Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 707

110 F.3d 707

65 USLW 2668, 97 Cal. Daily Op. Serv. 2538,

97 Daily Journal D.A.R. 4562

Russell Allen NORDYKE; Sallie Nordyke, dba TS Trade Shows, Plaintiffs-Appellees, v. SANTA CLARA COUNTY; Santa Clara County Fairgrounds

Management Corporation, Inc., a California nonprofit

corporation; Michael Honda; Bianca Alvarado; Ron

Gonzales; James T. Beall, Jr.; Dianne Mckenna; Carl

Cookson; Barbara Perzigian; Robert Quinlan; Jaime Rosso;

Jack Rouleau; Steve Tedesco; John Vidovich, in their

official capacities, Defendants-Appellants.

No. 96-16377.

United States Court of Appeals,Ninth Circuit.

Argued and Submitted Feb. 13, 1997.

Submission Deferred Feb. 13, 1997.

Resubmitted March 14, 1997.

Decided April 4, 1997.

Paul A. Bruno, Thelen, Marrin, Johnson & Bridges, San Jose, CA, for defendants-appellants.

Joseph D. Wargo and Russell S. Bogue, Holland & Knight, Atlanta, GA, and Edward P. Davis, Jr., Genesis Law Group, LLP, San Jose, CA, for plaintiffs-appellees.

John A. Crose, Jr., O'Melveny & Myers, Los Angeles, CA, Robert Fabela, Deputy City Attorney, San Jose, CA, for amici curiae.

Appeal from the United States District Court for the Northern District of California, James Ware, District Judge, Presiding. D.C. No. CV-96-20367-KW.

Before SNEED, LEAVY, and THOMAS, Circuit Judges.

SNEED, Circuit Judge:

This is an appeal from a preliminary injunction preventing the enforcement of an addendum to the lease between the Santa Clara County Fairgrounds Management Corporation (SCCFMC) and the owner of the Fairgrounds, Santa Clara County. The addendum, approved by the County Board of Supervisors on January 23, 1996, reads as follows: "[e]xcept for uses that are required under Existing Contracts, Tenant [SCCFMC] shall not permit any gun shows on the Premises." In April, 1996, the County Counsel sent a letter to the SCCFMC to "clarify the intention of the Board of Supervisors with respect to" the addendum. That letter states:

It is the intention of the Board only to prohibit any person from selling, offering It is not the intention of the Board to prohibit the exchange of information or ideas about guns, gun safety, or the display of guns for historical or educational purposes.

for sale, supplying, delivering, or giving possession or control of firearms or ammunition to any other person at a gun show at the fairgrounds. This prohibition applies to any act initiating any of the foregoing transactions with the intent of completing them at a later date.

We interpret the addendum in accordance with the County's clarification thereof and hereafter shall refer to both as the "addendum." ¹ This prohibition was both vigorously defended and attacked within Santa Clara County. The purposes of the ban were stated by the Board of Supervisors to be to "avoid sending the wrong message to the community relative to support of gun usage," "to improve the Fairgrounds' image," and to reduce "the fiscal impact of criminal justice activities in response to gun-related violence."

On May 14, 1996, the Nordyke appellees, who previously had conducted gun shows at the Santa Clara Fairgrounds, filed this suit in the District Court of the Northern District of California, in which they sought a preliminary injunction to prevent the enforcement of the addendum on the ground that it infringed the protection afforded by the First Amendment to their commercial speech that accompanied their gun shows. On July 8, 1996, the district court found that the addendum violated the appellees' constitutional rights under the First Amendment and enjoined its enforcement. Santa Clara County timely filed an appeal. We affirm.

I. PREEMPTION

Prior to oral argument, we requested that both parties brief the issue whether federal or state law preempted Santa Clara County's addendum to its lease with the Fairgrounds Management Corporation. While these briefs have been helpful, we conclude we should not address this issue. The district court did not rest its decision on preemption and, were we inclined to do so, a remand to the district court for full briefing and argument would perhaps be appropriate. A further difficulty is that preemption normally contemplates the subordination of a statute, ordinance, or rule of law, not a term of a lease. While a lease term beyond the powers of Santa Clara County would be unenforceable, to decide this case on such grounds would require that we interpret state and federal law of some detail and complexity. ² Such a task had best be left to others, providing its avoidance is fairly available, a condition which, we believe, exists in this case. That is, we are convinced that the district court was correct in striking from the lease its addendum on First Amendment grounds.

Before passing to our analysis of the fairly recent First Amendment jurisprudence pertaining to "commercial speech," we observe that the district court correctly stated the burden that a party moving to obtain a preliminary injunction must discharge. Judge Ware put it this way: "In the Ninth Circuit, in order to obtain a preliminary injunction, the moving party must show a combination of probable success on the merits and the possibility of irreparable injury or that serious questions are raised and the balance of hardship tips sharply in its favor." Nordyke v. County of Santa Clara, 933 F.Supp. 903, 905 (N.D.Cal.1996) (citing Vision Sports, Inc. v. Melville Corp., 888 F.2d 609, 612 (9th Cir.1989)).

II. IS THE FIRST AMENDMENT APPLICABLE?

The Fourteenth Amendment, by incorporating the First Amendment and applying it to the States, precludes state and local governments from "abridging the freedom of speech." Appellants contend that the addendum at issue in this case is not properly subject to First Amendment analysis, because it does not abridge anyone's freedom of speech. Rather, they claim, the addendum merely prohibits the sale of guns, and the sale of guns is not "speech" within the meaning of the First Amendment.

We agree that the act of exchanging money for a gun is not "speech" within the meaning of the First Amendment. However, the addendum covers more than the simple exchange of money for a gun. The addendum purports to prohibit any person from "offering for sale ... firearms or ammunition to any other person at a gun show at the fairgrounds." The Supreme Court has defined commercial speech as speech that "does no more than propose a commercial transaction." Virginia State Bd. of Pharmacy v. Virginia Citizens Consumer Council, 425 U.S. 748, 762, 96 S.Ct. 1817, 1825, 48 L.Ed.2d 346 (1976); Board of Trustees of the State Univ. of N.Y. v. Fox, 492 U.S. 469, 482, 109 S.Ct. 3028, 3036, 106 L.Ed.2d 388 (1989). An offer to sell firearms or ammunition is speech that "does no more than propose a commercial transaction." Such an offer is, therefore, commercial speech within the meaning of the First Amendment.

Of course, the First Amendment does not protect all proposals to engage in commercial transactions. An offer to pay a "hit man" one million dollars to murder my neighbor proposes a commercial transaction. Similarly, an offer to pay a government official to provide unauthorized copies of classified documents also proposes a commercial transaction. But these proposals to engage in commercial transactions are not accorded First Amendment protection because the underlying transaction is illegal. See Central Hudson Gas & Elec. Corp. v. Public Serv. Comm'n of N.Y., 447 U.S. 557, 566, 100 S.Ct. 2343, 2351, 65 L.Ed.2d 341 (1980) ("For commercial speech to come within [the First Amendment], it at least must concern lawful activity").

Thus, a threshold question in the present case is whether the commercial speech at issue-i.e., an offer to sell firearms at a gun show at the Fairgrounds-concerns lawful activity. We conclude that the sale of firearms at a gun show at the Fairgrounds, which is not proscribed by federal or state law, is "lawful activity," because the County has not enacted an ordinance to prohibit such sales. ³ The distinction between an ordinance and a contract provision is critical. SCCFMC has agreed in its contract with the County not to permit, inter alia, the sale of guns at gun shows at the Fairgrounds. ⁴ Hence, if SCCFMC rents all or a portion of the Fairgrounds to a lessee for the purpose of conducting a gun show, the lessee proceeds to sell guns at that gun show, and SCCFMC does nothing to prevent that sale, then SCCFMC has arguably breached its contract with the County. But neither the lessee nor SCCFMC has done anything illegal. Since the sale of guns at a gun show at the Fairgrounds is "lawful activity," Central Hudson, 447 U.S. at 566, 100 S.Ct. at 2351, a proposal to engage in such a transaction is protected as commercial speech under the First Amendment.

III. FIRST AMENDMENT PROTECTION OF COMMERCIAL SPEECH

The conclusion that speech is "commercial," and that it concerns lawful activity, does not mean that it enjoys unqualified First Amendment protection. Indeed, only in 1976 did it become clear that "commercial speech," not otherwise serving some perceived public interest, was to a limited extent protected by the First Amendment. See Virginia State Bd. of Pharmacy, 425 U.S. 748, 96 S.Ct. 1817. There the Court held that a state statute that branded as unprofessional conduct advertising by a pharmacist of his prices for drugs dispensed only by prescription violated the First Amendment. In so holding, the Court observed:

Our pharmacist does not wish to editorialize on any subject, cultural, philosophical, or political. He does not wish to report any particular newsworthy fact, or to make generalized observations even about commercial matters. The "idea" he wishes to communicate is simply this: "I will sell you the X prescription drug at the Y price." Our question, then, is whether this communication is wholly outside the protection of the First Amendment.

Id. at 761, 96 S.Ct. at 1825. In response to its question, the Court held it...