Special Programs, Inc. v. Courter

• Decision Date: 15 April 1996
• Docket Number: Civil Action No. 3:95CV609.
• Citation: 923 F. Supp. 851
• Parties: SPECIAL PROGRAMS, INC., Plaintiff, v. J. Carlton COURTER, III, in his capacity as the Commissioner of the Department of Agriculture and Consumer Services of the Commonwealth of Virginia, Defendant.
• Court: U.S. District Court — Eastern District of Virginia

923 F. Supp. 851

SPECIAL PROGRAMS, INC., Plaintiff, v. J. Carlton COURTER, III, in his capacity as the Commissioner of the Department of Agriculture and Consumer Services of the Commonwealth of Virginia, Defendant.

Civil Action No. 3:95CV609.

United States District Court, E.D. Virginia, Richmond Division.

April 15, 1996.

COPYRIGHT MATERIAL OMITTED

Warren David Harless, J. Tracy Walker, IV, John Willard Montgomery, Jr., Craig Thomas Merritt, Christian & Barton, Richmond, VA, for Plaintiff.

Joshua Noah Lief, David Benjamin Irvin, Anne Marie Cushmac, Edward Paul Nolde, Office of Attorney General, Richmond, VA, for Defendant.

AMENDED MEMORANDUM OPINION

RICHARD L. WILLIAMS, Senior District Judge.

This case is before the Court on cross-motions for summary judgment on the constitutionality of various provisions of the Virginia Solicitation of Contributions statute. For the reasons stated below, the Court declares that the exception from the definition of charitable organization provided for labor unions and trade associations by VA.CODE ANN. § 57-48 (Michie 1995) is unconstitutional under the Equal Protection Clause of the Fourteenth Amendment, and permanently enjoins the Commissioner from enforcing it.

I.

This case finds its genesis in the activities of Smokey Mountain Secrets, Inc. ("Smokey Mountain"), which operated as a professional solicitor on behalf of charitable organizations in Virginia from 1985 to 1994, and exclusively on behalf of the Virginia State Police Association ("VSPA") from 1988 onwards. Over that six-year period, Smokey Mountain sold food products packaged under its name, retaining 87.5% of the proceeds and remitting the remaining 12.5% to VSPA.

Smokey Mountain met with the Division of Consumer Affairs ("DCA") on June 2, 1994 to discuss plans for door-to-door marketing, which would be conducted under the name Special Programs, Inc. ("Special Programs"). DCA informed Smokey Mountain at that time that it was investigating its business. On July 1, 1994, Smokey Mountain and VSPA entered into a new royalty agreement; the same day, Smokey Mountain subcontracted its obligations to Special Programs. Special Programs has continued to sell, through telemarketing, products packaged under the Smokey Mountain name, as a subcontractor of Smokey Mountain.

On February 14, 1995, the Commonwealth of Virginia sued Smokey Mountain, alleging violations of the Solicitation of Contributions statute and the Virginia Consumer Protection Act. Special Programs then sued the Commissioner of the Department of Agriculture and Consumer Services ("Commissioner") on July 28, 1995. In Count 1 of the complaint, Special Programs sought to have the exception from the statute provided for the American Red Cross declared unconstitutional under the Equal Protection Clause of the Fourteenth Amendment. In Count 2, it sought to have the exception from the definition of charitable organization provided to labor unions and trade associations declared unconstitutional, again under the Equal Protection Clause. In Count 3, Special Programs sought to have the distinction drawn in the statute between professional solicitors and the employees and officers of charitable organizations declared unconstitutional, also under the Equal Protection Clause. Subsequently, on September 29, 1995, immediately before the hearing on the Commissioner's motion to dismiss, the Commonwealth sued Special Programs under the statute as well. On October 5, 1995, the Court entered an order dismissing Count 1 under the doctrine of Younger abstention, see Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971) (except in special circumstances, federal courts forbidden to enjoin pending state court criminal proceedings); Hicks v. Miranda, 422 U.S. 332, 95 S.Ct. 2281, 45 L.Ed.2d 223 (1975) (pending criminal proceeding need not be brought before commencement of the suit, but only before proceedings of substance on the merits); Trainor v. Hernandez, 431 U.S. 434, 97 S.Ct. 1911, 52 L.Ed.2d 486 (1977) (Younger abstention applies to pending state civil enforcement proceedings), but retaining Counts 2 and 3. The parties and the Court agreed that summary judgment was appropriate on the remaining counts, see FED. R.CIV.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986), and the Court issued a Memorandum Opinion and Order on March 7, 1996. The Commissioner filed a motion to alter or amend the judgment pursuant to FED.R.CIV.P. 59(e), and the Court stayed enforcement of its previous Order pending resolution of the Commissioner's motion. The Court now grants the Commissioner's motion to alter or amend the judgment, and issues this Amended Memorandum Opinion.

II.

A.

The parties disagree as to the applicable standard of review. The Commissioner, in his briefs, argues that both of Special Programs's equal protection claims should be analyzed using the rational basis test. Under this test, if the Commissioner can articulate a rational basis for the distinctions drawn in the statute, it is constitutional. Special Programs, on the other hand, argues for what in common parlance is referred to as strict scrutiny. In order to pass strict scrutiny, the statute must be narrowly tailored to address a compelling government interest. As one might expect, few statutes can withstand this test.

Analysis of the applicable standard of review begins with the proposition that charitable solicitations are fully protected speech under the First Amendment. See Riley v. National Federation of the Blind, 487 U.S. 781, 787-89, 108 S.Ct. 2667, 2672-73, 101 L.Ed.2d 669 (1988); Telco Communications, Inc. v. Carbaugh, 885 F.2d 1225, 1230 (4th Cir.1989) ("Charitable solicitations are so intertwined with speech that they are entitled to the protections of the First Amendment." (quoting Secretary of State of Maryland v. Joseph H. Munson Co., 467 U.S. 947, 959, 104 S.Ct. 2839, 2848, 81 L.Ed.2d 786 (1984))), cert. denied, 495 U.S. 904, 110 S.Ct. 1923, 109 L.Ed.2d 286 (1990). This proposition holds true even if the solicitor is compensated for his or her speech. See Riley, 487 U.S. at 801, 108 S.Ct. at 2680 ("It is well settled that a speaker's rights are not lost merely because compensation is received; a speaker is no less a speaker because he or she is paid to speak."). Nonetheless, the government may regulate charitable solicitations if such regulation is narrowly tailored to serve a compelling state interest; that is, the regulation meets strict scrutiny. See Village of Schaumburg v. Citizens for a Better Env't, 444 U.S. 620, 637, 100 S.Ct. 826, 836, 63 L.Ed.2d 73 (1980) ("The Village may serve its legitimate interests, but it must do so by narrowly drawn regulations designed to serve those interests without necessarily interfering with First Amendment freedoms."); Riley, 487 U.S. at 799 n. 11, 108 S.Ct. at 2679 (requirement that fundraiser disclose professional status constitutional).

The challenges to the solicitation statute in the instant case, however, are not to its requirements per se; rather, they are to the exclusion of labor unions and trade associations from its definition of charitable organization and to its differing treatment of professional solicitors and the officers and employees of charitable organizations. Special Programs does not claim that the challenged portions of the statute ipso facto violate its rights under the First Amendment by placing impermissible regulations upon protected speech, but rather that they violate the Equal Protection Clause of the Fourteenth Amendment. That clause "is essentially a direction that all persons similarly situated should be treated alike." City of Cleburne v. Cleburne Living Center, Inc., 473 U.S. 432, 439, 105 S.Ct. 3249, 3254, 87 L.Ed.2d 313 (1985); accord F.S. Royster Guano Co. v. Virginia, 253 U.S. 412, 415, 40 S.Ct. 560, 562, 64 L.Ed. 989 (1920) (Equal Protection Clause mandates that "all persons similarly circumstanced shall be treated alike.").

In Plyler v. Doe, 457 U.S. 202, 216-17, 102 S.Ct. 2382, 2394-95, 72 L.Ed.2d 786 (1982), the Supreme Court endorsed strict scrutiny analysis of such claims, stating

The Equal Protection Clause was intended as a restriction on state legislative action inconsistent with elemental constitutional premises. Thus we have treated as presumptively invidious those classifications that ... impinge upon the exercise of a "fundamental right." With respect to such classifications, it is appropriate to enforce the mandate of equal protection by requiring the State to demonstrate that its classification has been precisely tailored to serve a compelling governmental interest.

See also Austin v. Michigan Chamber of Commerce, 494 U.S. 652, 666, 110 S.Ct. 1391, 1401, 108 L.Ed.2d 652 (1990) ("Statutory classifications impinging upon a fundamental right must be narrowly tailored to serve a compelling governmental interest."); Police Dep't of the City of Chicago v. Mosley, 408 U.S. 92, 101, 92 S.Ct. 2286, 2293, 33 L.Ed.2d 212 (1972) ("The Equal Protection Clause requires that statutes affecting First Amendment interests be narrowly tailored to their legitimate objectives."). As stated previously, charitable solicitation is a fundamental right guaranteed under the First Amendment. Consequently, any statute which, by virtue of classifications contained within it, impinges upon the ability of some persons or organizations to so solicit, is subject to strict scrutiny with regard to those classifications. It makes no difference that the restriction placed upon some classes under the statute does not, in and of itself, violate the First Amendment. The Equal Protection Clause is an additional guarantee that otherwise permissible government restrictions will be applied in an even-handed manner, not unduly favoring some over others.

B.

At oral argument, the...