Syndicated Publications, Inc. v. Montgomery County, Md.

• Decision Date: 09 April 1996
• Docket Number: Civil A. No. AW 95-3769.
• Parties: SYNDICATED PUBLICATIONS, INC., Plaintiff, v. MONTGOMERY COUNTY, MARYLAND, Defendant.
• Court: U.S. District Court — District of Maryland

921 F. Supp. 1442

SYNDICATED PUBLICATIONS, INC., Plaintiff, v. MONTGOMERY COUNTY, MARYLAND, Defendant.

Civil A. No. AW 95-3769.

United States District Court, D. Maryland, Southern Division.

April 9, 1996.

COPYRIGHT MATERIAL OMITTED

C. Christopher Brown, Baltimore, MD, for plaintiff.

Clifford L. Royalty, Linda Berk Thall, Rockville, MD, for defendant.

MEMORANDUM OPINION

WILLIAMS, District Judge.

Plaintiff, Syndicated Publications, Inc. ("SPI"), filed this action seeking a declaratory judgment that Montgomery County Code § 11-4 is (1) unconstitutional as applied and construed by the Defendant and (2) preempted by federal law. Plaintiff is also asking the Court to enjoin Montgomery County, Maryland ("County") from initiating any civil or criminal proceeding against the Plaintiff in connection with its use of the subject solicitation. Pending before the Court are the Defendant's motion to dismiss or in the alternative for summary judgment and the Plaintiff's cross motion for summary judgment. Also pending is the Plaintiff's unopposed motion for leave to amend the complaint. The Court has considered the parties' respective memoranda and has conducted a hearing. For the reasons that follow, the Court will grant the Plaintiff's motion for leave to amend. The Court will grant the Defendant's summary judgment motion and deny the Plaintiff's summary judgment motion.

I. Background

SPI is a California corporation that publishes a weekly periodical entitled Professional Employer. This newspaper is comprised of business and employment news and a compilation of job opportunities for technical, academic and professional positions nationwide. Each issue contains approximately 25,000 advertisements and is circulated throughout the United States to major city public libraries, universities and national employment search firms.

SPI uses the United States mail to solicit advertisements for its publication. The solicitation contains the following statement: "THIS IS NOT A BILL. THIS IS A SOLICITATION. YOU ARE UNDER NO OBLIGATION TO PAY THE AMOUNT STATED ABOVE UNLESS YOU ACCEPT THIS OFFER." SPI includes this statement in the solicitation in an effort to comply with Postal Service Regulation CO31 §§ 1.1-1.2. That regulation states, in relevant part, that "any otherwise mailable matter that reasonably could be considered a bill, invoice, or statement of account due, but is in fact a solicitation for an order ... must bear on its face ..." the notice: "THIS IS NOT A BILL. THIS IS A SOLICITATION. YOU ARE UNDER NO OBLIGATION TO PAY THE AMOUNT STATED ABOVE UNLESS YOU ACCEPT THIS OFFER." The Plaintiff's solicitation also includes, on the back of the document, the disclaimer: "We have placed your classified advertisement in our publication. This is a solicitation for that advertisement."

Between September 1994 and November 1995, Montgomery County's Office of Consumer Affairs ("OCA") received written complaints from businesses that had received the Plaintiff's solicitation, including one nonprofit organization. Under § 11-2 of the Montgomery County Code, OCA has the authority to receive and investigate complaints and initiate its own investigation of deceptive or unfair trade practices against consumers, to issue cease and desist orders, and to enforce Montgomery County's Deceptive Trade Practices Act. Pl.'s Ex. D, at 2.

After receiving the complaints, OCA investigator Eric S. Friedman conducted an investigation and concluded that SPI's solicitation is "patently deceptive, if not fraudulent." Affidavit of Eric S. Friedman. The solicitations were found to be violative of § 11-4¹ of the County Code because they are inherently deceptive and misleading in that they appear to be legitimate invoices. Pl.'s Ex. E, at 1. Mr. Friedman asked SPI to enter into a "Cease and Desist Agreement" which would require the Plaintiff to discontinue mailing the solicitations. Pl.'s Ex. F, at 1. The Plaintiff has declined to sign the agreement.

The Plaintiff's complaint raises three arguments. First, the Plaintiff claims that the County Code is preempted by 39 U.S.C. § 3001(d) and Postal Regulation CO31. Secondly, the Plaintiff claims that its solicitation is constitutionally protected speech under the First Amendment. Finally, the Plaintiff claims that application of the County Code imposes an unconstitutional burden on interstate commerce.²

The County argues at the outset, however, that SPI's complaint is not ripe for adjudication because there is no case or controversy within the confines of Article III of the Constitution. Paper No. 3, at 7. The Court disagrees and finds that this matter is ripe for adjudication. Before we get to the merits of the parties' arguments, the Court will address the ripeness issue.

II. Ripeness

The Declaratory Judgment Act provides that "in a case of actual controversy ... any court of the United States ... may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201(a). In order for a district court to have jurisdiction to issue a declaratory judgment, (1) there must be a case or controversy within the confines of Article III of the U.S. Constitution and (2) the court, in its discretion must be satisfied that declaratory relief is appropriate. White v. National Union Fire Ins. Co., 913 F.2d 165 (4th Cir.1990).

The test for a case or controversy is whether the dispute is definite and concrete, touching the legal relations of parties having adverse legal interests. Id., citing Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240-41, 57 S.Ct. 461, 463-64, 81 L.Ed. 617 (1937). The question is whether the facts alleged show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment. White, 913 F.2d 165, citing Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 512, 85 L.Ed. 826 (1941).

The test for determining whether declaratory relief is appropriate is (1) whether the judgment will serve a useful purpose in clarifying the legal relations in issue, or (2) whether the judgment will terminate and afford relief from the uncertainty, insecurity and controversy giving rise to the proceeding. White, 913 F.2d at 168, citing National R.R. Passenger Corp. v. Consolidated Rail Corp., 670 F.Supp. 424, 431 (D.D.C.1987).

The County argues that no formal action has been taken against the Plaintiff and no formal action will be taken until, pursuant to the County Code, it becomes apparent that a County consumer has received one of the Plaintiff's solicitations or it becomes likely that a consumer will thereby be misled. Paper No. 3, at 11. Therefore, the County argues, this dispute is hypothetical and the existence of a justiciable controversy is contingent upon the Plaintiff's future actions. Id.

This argument fails for two reasons. First, the Court finds that the County has the authority to institute a code enforcement action against the Plaintiff under the Code. The OCA has already received several complaints from businesses that have received the Plaintiff's solicitation. Def.'s Exs. 1-3. Furthermore, the County Code defines consumer as a purchaser, lessee, recipient or prospective purchaser, lessee or recipient of ... consumer goods or services. Montgomery County Code § 11-1 (1994). In this case, a business would be considered a consumer because the business would be purchasing an advertisement through the Plaintiff's solicitation. Therefore, the Court is not persuaded that the County cannot at this time institute a code enforcement action against the Plaintiff under the statute.

Secondly, the Court finds that the OCA has made a final agency decision which renders this case ripe for adjudication. In the context of administrative agency actions, the doctrine of ripeness requires that there be an administrative decision that has been formalized and its effects felt in a concrete way by the Plaintiff. Charter Federal Savings Bank v. Office of Thrift Supervision, 976 F.2d 203, 208 (4th Cir.1992), quoting Pacific Gas & Electric v. Energy Resources Commission, 461 U.S. 190, 200, 103 S.Ct. 1713, 1720, 75 L.Ed.2d 752 (1983). The County argues that it has made no final or definite decision that impinges on the Plaintiff's ability to conduct its business. Paper No. 3, at 11. The Court disagrees because the evidence shows that upon receiving complaints from area businesses, the OCA conducted its own investigation into SPI's practices and concluded that its solicitations are "inherently misleading" in violation of chapter 11 of the Montgomery County Code. Def.'s Ex. 1, at 1; Pl.'s Ex. F, at 1. Consequently, the OCA has asked SPI to enter into a Cease and Desist agreement whereby SPI would agree to discontinue its activities in Montgomery County. Pl.'s Ex. F.

SPI argues, and the Court agrees, that this matter became a case or controversy within the confines of Article III when SPI was presented with the choice of either discontinuing its practices or facing penalties and prosecution under the County Code. Paper No. 6, at 7. The Court will not delay the inevitable. The Court finds, therefore, that this matter presents a definite and concrete dispute between parties with adverse legal interests. White v. National Union Fire Ins. Co., 913 F.2d 165, 167 (4th Cir. 1990). The Court also finds that a declaratory judgment is appropriate in this case because it would serve the useful purpose of clarifying the legal relations between the parties and it would terminate the uncertainty about the legality of SPI's solicitations. White, 913 F.2d at 168, citing National R.R. Passenger Corp. v. Consolidated Rail Corp., 670 F.Supp. 424, 431 (D.D.C.1987).

Next, the Court will address the merits of the parties' cross motions for summary judgment.

III. Discussion

Summary judgment will be granted...