Telco Communications, Inc. v. Carbaugh

Decision Date16 November 1988
Docket NumberCiv. A. No. 88-0471-R.
Citation700 F. Supp. 294
PartiesTELCO COMMUNICATIONS, INC., Plaintiff, v. S. Mason CARBAUGH, as he is Commissioner of the Department of Agriculture and Consumer Services of the Commonwealth of Virginia, Defendant.
CourtU.S. District Court — Eastern District of Virginia

Francis E. Telegadas, John G. Douglass, Wright, Robinson, McCammon, Osthimer & Tatum, Richmond, Va., Peter S. Brooks, Louis J. Scerra, Jr., Goldstein & Manello, Boston, Mass., for plaintiff.

Mary Sue Terry, Atty. Gen., Gail S. Marshall, Deputy Atty. Gen., Guy W. Horsley, Jr., Sr. Asst. Atty. Gen., Edward P. Nolde, Jas. P. Wheeler, Asst. Attys. Gen., Antitrust & Consumer Litigation Section, Richmond, Va., for defendant.


MERHIGE, District Judge.

This matter is before the Court on cross motions for partial summary judgment pursuant to Fed.R.Civ.P. 56. Plaintiff, Telco Communications, Inc. ("Telco"), has challenged five provisions of the Virginia charitable solicitation law as facially violative of the First and Fourteenth Amendments. Telco has also asserted that its activities in Virginia do not fall within the definition of charitable solicitation established in the statute and thus argue that they are not subject to its requirements. This latter argument is not raised in the instant motion — jury trial is scheduled for November 23, 1988. Both parties have agreed that the constitutional challenge may appropriately be decided on summary judgment as there are no factual issues in dispute.

The motions have been fully briefed and argued and are ripe for disposition. Jurisdiction is based on 28 U.S.C. §§ 1331 and 1343. For the reasons which follow, the Court will grant plaintiff's motion for partial summary judgment and will deny defendant's cross motion for partial summary judgment.

Plaintiff is a Rhode Island corporation engaged in the business of providing fund raising services to charitable organizations and labor unions for a fee. Telco also publishes handbooks on topics relating to public health and safety. Telco has contracted with local police fraternal organizations in the Commonwealth of Virginia to publish and distribute a pamphlet on their behalf and to solicit advertisements to appear in the publication.

In March, 1988, Telco was notified by Virginia officials that it was being investigated for alleged violations of the charitable solicitation law which warranted suspension or revocation of Telco's registration to solicit charitable contributions in Virginia. Telco met with representatives of the State Office of Consumer Affairs on July 6, 1988, but no resolution of the charges was reached at that time. The state has taken no further administrative action pending resolution of Telco's suit in this Court.

Telco challenges five specific provisions of the Virginia Code. Each provision will be set out in pertinent part below with the Court's discussion.


The Supreme Court has made it clear that charitable solicitation is noncommercial speech fully protected by the First Amendment. See Riley v. National Federation of the Blind of N.C., ___ U.S. ___, 108 S.Ct. 2667, 101 L.Ed.2d 669 (1988) ("the solicitation of charitable contributions is protected speech"); Village of Schaumburg v. Citizens for a Better Environment, 444 U.S. 620, 100 S.Ct. 826, 63 L.Ed. 2d 73 (1980) ("charitable solicitations are so intertwined with speech that they are entitled to the protections of the First Amendment"). Nor does the fact that a paid solicitor is used as part of a fund raising campaign deprive a charitable organization of its First Amendment protections. See Secretary of State of Maryland v. Joseph H. Munson Company, 467 U.S. 947, 967 n. 16, 104 S.Ct. 2839, 2852 n. 16, 81 L.Ed.2d 786 (1984). Further, those protections extend as well to the paid professional solicitor: 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." Riley, 108 S.Ct. at 2680.

Because the professional solicitation of charitable contributions is protected by the First Amendment, any "direct and substantial limitation" on that speech must necessarily be subjected to rigorous scrutiny. That is, the state bears the burden of showing that the statutory provisions at issue protect a strong subordinating interest that it is entitled to protect, and are narrowly tailored to serve only that interest. Munson, 467 U.S. at 960-61, 104 S.Ct. at 2848-49.

Disclosure of Minimum Percentage
§ 57-55.1 — It shall be a violation of this chapter for a professional solicitor to solicit contributions from a potential donor in this Commonwealth without clearly and conspicuously disclosing to the potential donor prior to orally requesting a contribution, or contemporaneously with a written request for a contribution, at the point of solicitation, the minimum percentage of any amount contributed which will be received by the charitable or civic organization for its own use.

Telco's challenge to this provision is directly governed by Riley v. National Federation of the Blind of N.C., ___ U.S. ___, 108 S.Ct. 2667, 101 L.Ed.2d 669 (1988). In Riley, the Supreme Court struck down a North Carolina statute that required a professional solicitor to disclose to potential donors the percentage of charitable contributions collected during the previous 12 months that were actually turned over to charity. Justice Brennan, writing for the majority, stated that "mandating speech that a speaker would not otherwise make necessarily alters the content of the speech. We therefore consider the Act as a content-based regulation of speech." Id. 108 S.Ct. at 2677. As such, the regulation was subjected to, but could not survive exacting First Amendment scrutiny. The Court found that the state's interest in informing donors how the money they contribute to charity is actually spent was not as weighty as asserted, and that the means chosen to protect that interest were "unduly burdensome and not narrowly tailored." Id. 108 S.Ct. at 2678.

The Virginia statutory section at issue here is facially invalid under the holding in Riley. Indeed, the state has not argued that the statute is in fact constitutional. Instead, the state asserts that there is no case or controversy with respect to this claim because the state has not threatened Telco with any sanction for violation of § 57-55.1 since the decision in Riley was issued.

The weakness of this argument, as Telco points out, is that it was not until the state was forced to respond to the instant motion that it announced its intent not to enforce the provision. Additionally, Virginia cited Telco for violating the provision in March 1988, after the Court of Appeals for the Fourth Circuit had affirmed the district court's invalidation of the North Carolina statute. See Riley v. National Federal Federation of the Blind of N.C., 817 F.2d 102 (4th Cir.1987) (per curiam). Further, in their answer to Telco's complaint, the defendant has denied that § 57-55.1 was unconstitutional. Thus, although the state did not pursue the issue after March, 1988, their position up until oral argument has consistently been that the provision is not unconstitutional.

A case or controversy exists if a party has suffered an actual or threatened injury, the injury is traceable to the defendant's conduct, and there is substantial likelihood that the relief requested will redress the injury. See Valley Forge Christian College v. Americans United for Separation of Church and State, 454 U.S. 464, 472, 102 S.Ct. 752, 758, 70 L.Ed.2d 700 (1982). As heretofore noted, there is ample record in this case for the Court to conclude, as it does, that there is a live case or controversy.

Disclosure of Availability of Financial Statement
§ 57-55.2 — Every professional solicitor who solicits contributions from a prospective contributor in this Commonwealth: ... (iii) shall further disclose, in writing, the fact that a financial statement for the last fiscal year is available from the State Office of Consumer Affairs.

Telco relies heavily on Riley to support its contention that the requirement of a writing disclosing that a financial statement for the last fiscal year is available from the state Office of Consumer Affairs is an unconstitutional content-based regulation of speech. Telco urges that the statute is unduly burdensome and that the state itself could just as easily publish information which would serve its interests.

For its part, the state argues that the disclosure in § 57-55.2(iii) is "a de minimus requirement" that does not hamper fund raising efforts. Telco, so the state argues, includes the statement on its receipt and therefore it cannot be seen to discourage donations. Further, the state contends that the requirement is such that the disclosure is made to a very specifically targeted audience: those who are interested in making charitable contributions through a particular solicitor.

The Court is satisfied that under Riley, the requirement of § 57-55.2(iii) is a content-based regulation of speech — it compels the speaker to include speech that it would not otherwise include. See Riley, 108 S.Ct. at 2677. The provision is therefore subject to exacting scrutiny.

The state's asserted interests protected by the disclosure requirement are education of the public and prevention of fraud and harassment. Additionally, the state asserts an interest in "preventing the coercion inherent in solicitations for the police, and in protecting the reputation of the police from public misapprehension of the integrity of a police force which requests donations." This latter interest is a nonstarter because the statute applies to all solicitations, not just those made on behalf of the police.

The issue, as the Court has suggested, thus comes down to whether the requirement is unduly burdensome and narrowly tailored. Admittedly, the provision is less burdensome than the...

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4 cases
  • Telco Communications, Inc. v. Carbaugh
    • United States
    • U.S. Court of Appeals — Fourth Circuit
    • September 20, 1989
    ...court held that each of the four challenged provisions impermissibly infringed on First Amendment freedoms. Telco Communications, Inc. v. Carbaugh, 700 F.Supp. 294 (E.D.Va.1988). We find Telco's challenge to the percentage disclosure requirement to be moot. We likewise find the challenge to......
  • Telco Communications, Inc. v. Barry
    • United States
    • U.S. District Court — District of New Jersey
    • March 5, 1990
    ...or spoken word, and the procedural safeguards which the Court later required are totally absent here. See Telco Communications, Inc. v. Carbaugh, 700 F.Supp. 294, 299 (E.D.Va.1988), aff'd in part, rev'd in part, 885 F.2d 1225 (4th Cir.1989). Also, Shapero is inapposite because the statute t......
  • Com. by Preate v. Watson & Hughey Co.
    • United States
    • Pennsylvania Commonwealth Court
    • August 21, 1989 our deliberations by the decision of the U.S. District Court for the Eastern District of Virginia in Telco Communications, Inc. v. Carbaugh, 700 F.Supp. 294 (E.D.Va.1988). The Court in that matter was asked to determine the constitutionality of provisions which permitted the state to sus......
  • D.E.L.T.A. Rescue v. Bureau of Char. Org.
    • United States
    • Pennsylvania Commonwealth Court
    • July 8, 2009
    ...than requiring legitimate organizations to provide the information. Finally, DELTA argues that, in Telco Communications, Inc. v. Carbaugh (Telco I), 700 F.Supp. 294 (E.D.Va.1988) aff'd in part, rev'd in part, remanded by Telco Communications, Inc. v. Carbaugh (Telco II), 885 F.2d 1225 (4th ......

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