Terminal-Hudson Electronics, Inc. of California v. Dept. of Con. Aff.

• Citation: 407 F. Supp. 1075
• Decision Date: 06 January 1976
• Docket Number: No. CV 74-2321 (AAH) FW,CV 74-2079 ALS.,CV 74-2321 (AAH) FW
• Court: U.S. District Court — Central District of California
• Parties: TERMINAL-HUDSON ELECTRONICS, INC. OF CALIFORNIA, dba Opti-Cal, Plaintiff, v. DEPARTMENT OF CONSUMER AFFAIRS et al., Defendants. CALIFORNIA CITIZEN ACTION GROUP et al., Plaintiffs, v. DEPARTMENT OF CONSUMER AFFAIRS et al., Defendants.

407 F. Supp. 1075

TERMINAL-HUDSON ELECTRONICS, INC. OF CALIFORNIA, dba Opti-Cal, Plaintiff, v. DEPARTMENT OF CONSUMER AFFAIRS et al., Defendants.

CALIFORNIA CITIZEN ACTION GROUP et al., Plaintiffs, v. DEPARTMENT OF CONSUMER AFFAIRS et al., Defendants.

Nos. CV 74-2321 (AAH) FW, CV 74-2079 ALS.

United States District Court, C. D. California.

January 6, 1976.

Charles W. Anshen, Beverly Hills, for plaintiffs; Lee Zorne, Beverly Hills, Cal. (of counsel).

Evelle J. Younger, Atty. Gen., Alvin J. Korobkin, Deputy Atty. Gen., San Diego, Cal., for defendants.

Athearn, Chandler & Hoffman, Walter Hoffman, Donald H. Maffly, San Francisco, Cal., for amicus curiae California Assn. of Dispensing Opticians.

James S. Reed, Consumer Federation of California, Sacramento, Cal., for amicus curiae Consumer Federation of California.

Wilke, Fleury, Sapunor & Hoffelt, William A. Gould, Jr., Sacramento, Cal., for amicus curiae California Optometric Assn.

Before ELY, Circuit Judge, EAST, Senior District Judge, and WHELAN, District Judge.^*

DECISION

EAST, Senior District Judge:

The above two cases were consolidated as a matter of judicial expediency for hearing upon the several motions of the respective parties as hereinafter delineated.

CASE NO. CV 74-2079 ALS

Plaintiffs' Cause:

It appears from the verified complaint:

The plaintiff California Citizen Action Group (hereinafter referred to as CCAG) is a non-profit, non-partisan, volunteer organization incorporated in California, with a membership of approximately 800, many of whom are wearers of prescription eyeglasses;

The plaintiffs Dick Davis, Pedro Gonzales, Nathan Seiderman and Ernest A. Jacobi (hereinafter referred to as the Named Plaintiffs) are residents of the State of California and suffer certain optical infirmities which require that they wear prescriptive eyeglasses; and

The defendants are the Department of Consumer Affairs, State Board of Optometry, and State Board of Medical Examiners, each statutory agencies of the State of California, and the respective individuals constituting the membership of the agencies (hereinafter collectively and severally referred to as Defendants).

The Business and Professions Code of the State of California provides in relevant part:

Section 651.3: "No person, whether or not licensed under this division, shall advertise or cause or permit to be advertised, any representations in any form which in any manner, whether directly or indirectly, refer to the cost, price, charge, or fee to be paid for any commodity or commodities furnished or any service or services performed by any person licensed as a . . . optometrist . . . registered dispensing optician, when those commodities or services are furnished in connection with the . . . business for which he is licensed . . .." Section 2556: "It is unlawful to do any of the following: To advertise at a stipulated price or any variation of such a price or as being free, the furnishing of a lens, lenses, glasses or the frames and fittings thereof . .." Section 3129: "It is unlawful to advertise at a stipulated price . . . any of the following: . . . the furnishing of a lens, lenses, glasses, or the frames or fittings thereof. . . ."

Title 16 of the Professional and Vocational Regulations of the State of California provides in relevant part:

Section 1515(b): "No advertising of any optometrical service may state any stipulated amount of money or no money as a `down payment' or any `no charge for credit' or any stipulated amount of money as a periodical payment or at the termination of any period of time."

Provision is also made for possible criminal penalty for the violation of each of the sections.

It further appears from the verified complaint and the records herein that as a result of the proscriptions in the sections, there is in California no publication, advertising or promotion of the prices of prescription eyeglasses, and CCAG and the Named Plaintiffs are thereby deprived of true factual information concerning comparative pricing and where prescription eyeglasses might be purchased at such pricing.

CCAG and the Named Plaintiffs seek ultimate permanent relief by way of this court's declaration that the provisions of Sections 651.3, 2556 and 3129 of the Business and Professions Code of the State of California and Title 16, Section 1515(b), of the Professional and Vocational Regulations of the State of California, and each of them, to the extent that such provisions deprive them of news media public offerings of true factual information as to comparative costs and prices and where to purchase eyeglasses and kindred services at such costs and prices, are violative of their United States Constitution, First Amendment, immunities and privileges, and, if necessary, permanent injunctive enforcement of the declaration.

Presently CCAG and the Named Plaintiffs seek temporary injunctive relief from the Defendants' enforcement of those provisions of the Sections asserted to the extent that such enforcement would deprive them of news media public offerings of true factual information concerning eyeglasses and kindred services as above delineated.

Motions:

We deny the Defendants' motion to dismiss the complaint and cause.

We reject the suggestion to abstain and defer to the State of California courts a state law interpretation of the sections involved. See Procunier v. Martinez, 416 U.S. 396, 404, 94 S.Ct. 1800, 40 L.Ed.2d 224 (1974); Wisconsin v. Constantineau, 400 U.S. 433, 91 S.Ct. 507, 27 L.Ed.2d 515 (1971); Dombrowski v. Pfister, 380 U.S. 479, 85 S.Ct. 1116, 14 L.Ed.2d 22 (1965); and Zwickler v. Koota, 389 U.S. 241, 252-55, 88 S.Ct. 391, 19 L.Ed.2d 444 (1967).

The standing of CCAG as a proper party plaintiff is not established by undisputed evidence, and we reserve for a future determination, if required, the lawful standing of CCAG as a proper party plaintiff in these proceedings. Cf. Construction Industry Association of Sonoma County v. Petaluma, 522 F.2d 897, at 902-904 (9th Cir. 1975).

We grant the motion of the Named Plaintiffs for preliminary injunctive relief as sought.

Discussion:

The Defendants contend that news media paid informational advertisements of price structures for commodities and services at public offerings are "commercial" or "business" speech which enjoy no First Amendment protection under the rationale and rule of Valentine v. Chrestensen, 316 U.S. 52, 62 S.Ct. 920, 86 L.Ed. 1262 (1942) hereinafter cited as Chrestensen. The rationale of Chrestensen has been criticized for nearly 20 years. Concurring in Cammarano v. United States, 358 U.S. 498, 79 S.Ct. 524, 3 L.Ed.2d 462 (1958), Mr. Justice Douglas wrote:

"Chrestensen . . . held that business advertisements and commercial matters did not enjoy the protection of the First Amendment . . . was casual, almost offhand. And it has not survived reflection. . . . Individual or group protests against action which results in monetary injuries are certainly not beyond the reach of the First Amendment . . .." 358 U.S. at 513-14, 79 S.Ct. at 533-534.

Informative is Mr. Justice Brennan's dissent in Lehman v. City of Shaker Heights, 418 U.S. 298, 314, n. 6, 94 S.Ct. 2714, 41 L.Ed.2d 770 (1974).

Lately, the Chrestensen rationale was sent to oblivion in Bigelow v. Virginia, 421 U.S. 809, 95 S.Ct. 2222, 44 L.Ed.2d 600 (U.S. June 16, 1975).¹ Therein the majority at 818, 95 S.Ct. at 2231 say of the Chrestensen rationale of non-First Amendment protection "to paid commercial advertisements" that:

"Our cases, however, clearly establish that speech is not stripped of First Amendment protection merely because it appears in that form. Pittsburgh Press Co. v. Pittsburgh Comm'n on Human Relation, 413 U.S. 376, 384 93 S.Ct. 2553, 2558, 37 L.Ed.2d 669 (1973); New York Times Co. v. Sullivan, 376 U.S. 254, 266 84 S.Ct. 710, 718, 11 L.Ed.2d 686 (1964).

"The fact that the particular advertisement in appellant's newspaper had commercial aspects or reflected the advertiser's commercial interests did not negate all First Amendment guarantees. The State was not free of constitutional restraint merely because the advertisement involved sales or `solicitations,' Murdock v. Pennsylvania, 319 U.S. 105, 110-111 63 S. Ct. 870, 873-874, 87 L.Ed. 1292 (1943) . . . or because appellant's motive or the motive of the advertiser may have involved financial gain, Thomas v. Collins, 323 U.S. 516, 531 65 S.Ct. 315, 323, 89 L.Ed. 430 (1945). The existence of `commercial activity, in itself, is not justification for narrowing the protection of expression secured by the First Amendment.' Ginzburg v. United States, 383 U.S. 463, 474 86 S.Ct. 942, 949, 16 L.Ed.2d 31 (1966).

. . . . .

"The fact that Chrestensen had the effect of banning a particular handbill does not mean that Chrestensen is authority for the proposition that all statutes regulating commercial advertising are immune from constitutional challenge. The case obviously does not support any sweeping proposition that advertising is unprotected per se."

Finally, the majority completely sweeps away and eradicates the Chrestensen rationale via the statement at 826, 95 S.Ct. at 2235:

"The relationship of speech to the marketplace of products or of services does not make it valueless in the marketplace of ideas.

"The Court has stated that `a State cannot foreclose the exercise of constitutional rights by mere labels.' NAACP v. Button, 371 U.S. 415 at 429 83 S.Ct. 328 at 336, 9 L.Ed.2d 405. Regardless of the particular label asserted by the State — whether it calls speech `commercial' or `commercial advertising' or `solicitation' — a court may not escape the task of assessing the First Amendment interest at stake and weighing it against the public interest allegedly served by the regulation."

See Anderson, Clayton & Co. v. Washington State Department of Agriculture, 402 F.Supp. 1253 (W.D.Wash.1975). See also Population Services International v. Wilson, 398 F.Supp. 321 (S.D.N.Y.1975), appeal docketed...