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Attorneys for Amici Curiae, Free Speech Defense and =
Education Fund,=20
Inc., et al.
[Filed November 10, =
1998]
TABLE OF=20
CONTENTS
CONCLUSION
APPENDICES
APPENDIX A: Selected Charitable Solicitation Laws in the United =
States
APPENDIX B: Annual Survey of State Laws Regarding Charitable=20
Solicitation
APPENDIX C: State Laws Governing Fund-Raising Counsel
APPENDIX D: Consent Letters from Parties
TABLE OF AUTHORITIES
Cases: Page
American Oil Co. v. Neill, 380 U.S. 451 (1965) 6,7
Asahi Metal Industry Co. v. Superior Court, 480 U.S. =
102=20
(1987) 6,8
Bibb v. Navajo Freight Lines, Inc., 359 U.S. 520 (1959) =
13
Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985) =
5,6,7,8
Brown-Forman Distillers Corp. v. New York State Liquor=20
Authority, 476 U.S. 573 (1986) 13
Central Hudson Gas v. Public Service Comm., 447 U.S. =
557 (1980)=20
17
Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 =
(1977) 11
Hague v. CIO, 307 U.S. 496 (1939) 17
Kassel v. Consolidated Freightways Corp., 450 U.S. 662 =
(1981)=20
9
Lewis v. BT Investment Managers, Inc., 447 U.S. 27 =
(1980) 11
Lovell v. City of Griffin, 303 U.S. 444 (1938) 18
Martin v. City of Struthers, 319 U.S. 141 (1943) 17
OMI Holdings v. Royal Insurance, 149 F.3d 1086 =
(10th=20
Cir. 1998) 8
Pike v. Bruce Church, Inc., 397 U.S. 137 (1970) 9
Police Dept. Of Chicago v. Mosley, =
408 U.S.=20
92 (1972) 15
Quill Corp. v. North Dakota, 504 U.S. 298 (1992)=20
5,6,7,9,10,11
Raymond Motor Transport, Inc. v. Rice, 434 U.S. 429 =
(1978)=20
13
Riley v. National Federation of the Blind, 487 U.S. 781 =
(1988)=20
14,18,19
Rosenberger v. University of Virginia, 515 U.S. 819 =
(1995)=20
14
Rowan v. Post Office Dept., 397 U.S. 728 (1970) 17
Cases (cont'd):
Schneider v. State, 308 U.S. 147 (1939) 19
Secretary of State v. Joseph H. Munson Co., 467 U.S. =
947 (1984)=20
18
Simon & Schuster v. N.Y. Crime =
Victims=20
Bd., 502 U.S. 105 (1991) 14,16
Stanley v. Georgia, 394 U.S. 557 (1969) 16
Trierweiler v. Croxton and Trench Holding Corp., 90 =
F.3d 1523=20
(10th Cir. 1996) 8,9
Village of Schaumburg v. Citizens for a Better =
Environment, 444=20
U.S. 620 (1980) 14,18,19
Virginia Pharmacy Board v. Virginia Citizens Consumer =
Council,=20
Inc., 425 U.S. 748 (1976) 16
Statutes and Regulations:
U.S. Code, Title 18, sec. 1341-1346 19
U.S. Code, Title 39, sec. 3005 19
Utah Code Ann., sec. 13-22-1 3
Utah Code Ann., sec. 13-22-2(2) 17
Utah Code Ann., sec. 13-22-2(3) 17
Utah Code Ann., sec. 76-10-1801 19
Utah Code Ann., sec. 78-27-24 19
STATEMENT OF INTEREST OF THE FREE SPEECH=20 DEFENSE
AND EDUCATION FUND, INC. AND ITS CO-AMICI=20 CURIAE
This Amicus Curiae Brief is submitted on behalf of the Free = Speech=20 Defense and Education Fund, Inc. ("FSDEF"), a nonprofit educational = organization=20 dedicated to the defense of First Amendment rights. FSDEF, incorporated = in 1995=20 in Maryland, is a nonpartisan educational organization exempt under = section=20 501(c)(3) of the Internal Revenue Code ("IRC").
Joining as co-amicus is the Free Speech Coalition, Inc. = (McLean,=20 Virginia), a nonpartisan section 501(c)(4) organization dedicated to the = protection of constitutional rights, including freedom of speech. Its = members=20 include nonprofit organizations which communicate and solicit = contributions=20 throughout the country, as well as for-profit firms that assist such=20 nonprofits.
Joining as co-amici are the following IRC section 501(c)(3)=20
charitable/educational
organizations that use direct mail nationally as part of their =
educational=20
and fundraising efforts:
Also joining as co-amici are the following IRC section =
501(c)(4)=20
social welfare organizations (also considered "charities" under the Utah =
Act)=20
that use direct mail nationally as part of their educational and =
fundraising=20
efforts:
Finally, joining as co-amici are the following for-profit=20
organizations, direct mail
agencies assisting nonprofit organizations with their educational and =
fundraising program:
Like countless organizations throughout the nation, FSDEF and its=20
co-amici have a strong interest in the matters raised in this=20
litigation.
As other states have similar statutes, FSDEF and its co-amici face = cumulative=20 regulatory and tax barriers, which have substantial and adverse impact = on their=20 First Amendment rights. Since this Nation was founded, Americans have = been free=20 to communicate on public policy issues with fellow citizens in every = state. Any=20 state regulation that chills such communication -- including mass = mailings=20 generated by using modern technology, and periodicals, including
newsletters -- strikes at the fundamental right of Americans to speak = and to=20 assemble and consult with others to exercise more effectively their = rights of=20 association and petition.
ISSUES PRESENTED
1. Did the District Court err in holding that the Utah Act, as = applied, does=20 not violate appellant's right to Due Process of Law?
2. Did the District Court err in holding that the Utah Act, as = applied, does=20 not violate appellant's rights under the Commerce Clause?
3. Did the District Court err in holding that the Utah Act does not = violate=20 appellant's First Amendment rights to freedom of speech, press, = association and=20 petition?
STATEMENT OF THE CASE
The Utah Charitable Solicitations Act ("the Utah Act") regulates and = requires=20 the licensure of out-of-state professional fundraising counsel ("PFCs") = who=20 advise nonresident organizations soliciting charitable contributions in = Utah.=20 Under the Act, PFCs must (i) apply for a state license, file various = documents,=20 and make certain disclosures to the Utah Division of Consumer = Protection, (ii)=20 pay a $250 annual registration fee (license tax), and (iii) secure a = $25,000=20 bond or letter of credit. If they do not obtain a Utah state license, = their=20 clients are not permitted to use the U.S. Mail to communicate with to = residents=20 of Utah while, even incidentally, soliciting contributions. See = Utah=20 Code Ann., sec. 13-22-1, et seq. (1953, Supp. 1997).
Appellant American Target Advertising, Inc. ("ATA"), a Virginia =
for-profit=20
corporation, provides consulting services to nonprofit organizations =
that use=20
direct mail to communicate with and solicit funds from the general =
public. ATA=20
was retained by Judicial Watch, a nonprofit organization incorporated =
and=20
operating in the District of Columbia, to plan, manage, counsel and =
prepare=20
materials relating to Judicial Watch's program to disseminate public =
policy=20
information and ideas to, and solicit funds from, the American public. =
When=20
Judicial Watch applied to register under the Utah Act, the application =
was=20
denied because ATA had not registered with the Utah Division of Consumer =
Protection.
ATA filed suit against the Director of Utah's Division of Consumer=20 Protection, seeking, inter alia, injunctive relief against = enforcement=20 of the Act. Following limited discovery, the parties filed cross-motions = for=20 summary judgment. On August 18, 1998, the District Court sustained the = Utah Act=20 in its entirety and ordered that ATA's suit be dismissed.
SUMMARY OF ARGUMENT
Utah's Charitable Solicitations Act, as applied to ATA, violates = ATA's Due=20 Process rights. There is simply no nexus between ATA and Utah justifying = any=20 licensing jurisdiction over ATA whatsoever. There is no evidence that = ATA=20 "purposefully directed" any activities to take place in Utah, nor that = ATA=20 established any presence in Utah at all.
Utah's Act, as applied to ATA, also violates ATA's rights under the = Commerce=20 Clause. There is no "substantial nexus" between ATA and Utah justifying = any tax=20 or regulation of ATA whatsoever. Furthermore, the Utah Act imposes an = excessive=20 burden upon ATA's interstate operations without redounding to any = legitimate=20 benefit to the State.
Utah's Act also violates ATA's First and Fourteenth Amendment rights. = It=20 imposes a discriminatory prior restraint upon nonprofit solicitors and = the=20 residents of Utah. It also grants unconstitutional discretion to Utah = government=20 authorities.
ARGUMENT
THE UTAH ACT, AS APPLIED TO ATA, VIOLATES THE DUE PROCESS = CLAUSE OF=20 THE FOURTEENTH AMENDMENT
The court below found "that American Target has 'purposely directed' = its=20 fundraising efforts toward residents of [Utah]." Based solely upon that = finding,=20 and relying exclusively upon Burger King Corp. v. = Rudcewicz, 471=20 U.S. 462 (1985), the district judge ruled that "American Target [having] = established minimum contacts with the State of Utah so as to subject = itself to=20 the jurisdiction of Utah courts..., Utah may therefore require American = Target=20 to submit to the requirements of the Utah Charitable Solicitations Act = without=20 violating the Due Process Clause of the Fourteenth Amendment." Slip op. = p. 18.=20 This ruling is clearly erroneous.
As the U.S. Supreme Court observed in Quill Corp. v. North=20 Dakota, 504 U.S. 298 (1992), a state regulation or tax is not = justified=20 where an out-of-state business has merely "purposefully directed its = activities"=20 towards that state's residents. Rather, there must also = be=20 evidence that the out-of-state business (as opposed to a client of the=20 out-of-state business) has engaged "in continuous and widespread = solicitation of=20 business within a State" (or in other activities comparable in = magnitude), and=20 that the tax (or regulation) imposed be "related to the benefits" that = the=20 out-of-state business "receives from access to the State." Only after=20 finding all three factors -- not just the = one=20 erroneously found by the court below -- did the Court rule in = Quill that=20 the Due Process Clause "does not bar enforcement of that State's use = tax."=20 Id., 504 U.S. at 308.
As concurring Justice Antonin Scalia explained, the Quill = ruling did=20 not "mean that the due process standards for adjudicative jurisdiction = and those=20 for legislative (or prescriptive) jurisdiction are necessarily = identical...."=20 Id., 504 U.S. at 319-20. To illustrate this point, Justice = Scalia cited=20 two previous Court decisions: Asahi Metal Industry Co. v. = Superior=20 Court, 480 U.S. 102 (1987), and American Oil Company v. = Neill,=20 380 U.S. 451 (1965).
In Asahi, an "adjudicative jurisdiction" case, the Court = applied the=20 "purposely directed" test, ruling that a foreign company's "mere = awareness" that=20 its product might be sold in the forum state did not meet the Burger = King=20 requirement of Due Process. 480 U.S. at 105, 108-12. By contrast, in = American=20 Oil, a "legislative jurisdiction" case, the Court applied a more = rigorous=20 formula. In addition to its review of the "foreseeability" that a = company's=20 goods would enter the taxing state, the court also examined whether the = company=20 had contributed to that entry by other acts within the state. Finding = that it=20 had not, the Court ruled that the state's excise tax on a transaction = that took=20 place wholly outside the state violated the company's due process = rights. 380=20 U.S. at 457-59. Since this case involves legislative jurisdiction, the = Due=20 Process standard in Quill and American Oil applies in this = case,=20 not the standard in Burger King.
ATA Did Not Have a Taxable or Regulatory Presence in Utah=20
The district court erred in ignoring the fact that ATA had no = contacts with=20 Utah. While it was "reasonably foreseeable" that ATA's assistance to = Judicial=20 Watch would result in Judicial Watch's communications to Utah residents, = foreseeability does not meet the "purposeful direction" requirement of = the first=20 prong of the three-part Quill test. See Asahi,=20 supra, 480 U.S. at 108-112. Nor have ATA's actions met either = of the=20 other two prongs of that test.
In Quill, the Court ruled that a state may tax an out-of-state = business that has engaged in "continuous and widespread business within = a State"=20 (e.g., by sending its "catalogues" or its "drummers" into that = state).=20 ATA has not engaged in any such activity. Judicial Watch, not ATA, makes = the=20 decision to send solicitation mailings, some of which go to Utah. = Judicial Watch=20 sends those mailings on its own behalf, certainly not as a "drummer" for = ATA.=20 Thus, no evidence exists that ATA has made any contact whatsoever with = the state=20 of Utah, much less engaged in the "magnitude" of contacts required by = the=20 Quill Due Process test.
Likewise, even though required by Quill, Utah has introduced=20 absolutely no evidence that it offers "benefits" to ATA that are related = in any=20 way to the burdens that would be imposed on ATA should it be required to = register under the Utah law. Utah seeks to force ATA to register, = thereby=20 imposing an impermissible extraterritorial regulatory burden on ATA. In=20 American Oil, the U.S. Supreme Court struck down Idaho's = imposition of an=20 excise tax upon an out-of-state sale of motor fuel that was later to be = shipped=20 into Idaho. The Court found the imposition of the tax unconstitutional = because=20 "it was applied to a sale made outside Idaho" and because there were no = in-state=20 activities that "contributed in any way to the procurement or = performance" of=20 the out-of-state sale. American Oil, supra, 380 U.S. at = 455,=20 459.
American Oil applies with equal force in this case. The = contract=20 between Judicial Watch and ATA was made and performed in Virginia. = Neither=20 entity engaged in activity in Utah that contributed to either the = "procurement"=20 or the "performance" of that contract. Anticipation that this contract = could=20 result in Judicial Watch determining to mail some of its solicitations = to Utah=20 is not sufficient to establish the required Due Process nexus. = Id., 380=20 U.S. at 455.
B. ATA Did Not "Purposefully Direct" Solicitations Into=20
Utah
Even if the Burger King Due Process standard were applied, = Utah still=20 lacks jurisdiction to regulate ATA. The dispute in Burger King = grew=20 directly out of a contract which had a substantial connection with = Florida, the=20 forum state. Burger King, supra, 471 U.S. at 479. = Defendant=20 "entered into a carefully structured 20-year relationship that = envisioned=20 continuing and wide-reaching contracts with Burger King in Florida" = involving=20 "long-term and exacting regulation of his business from Burger King's = Miami=20 headquarters" and providing that disputes would be governed by = Florida=20 law. Id. at 480. Defendant thereby "purposefully availed = himself of the=20 benefits and protections of Florida's laws." Id. at 481-82.
By contrast, this case involves a business relationship between a = District of=20 Columbia corporation (Judicial Watch) and a Virginia corporation (ATA) = which did=20 not involve "continuing and wide-reaching contacts with" Utah. The = relationship=20 between Judicial Watch and ATA had nothing to do with the State of Utah = or with=20 Utah law. Serving Judicial Watch only in an advisory capacity, ATA did = not=20 control Judicial Watch's mailing of First Amendment-protected = communications to=20 Utah residents. Thus, the fundraising efforts were those of Judicial = Watch, not=20 ATA. At most, ATA was "merely aware" that some of Judicial Watch's = mailings=20 would end up in Utah mailboxes. Awareness, standing alone, is not = sufficient to=20 meet Burger King's Due Process standard. Asahi, = supra,=20 480 U.S. at 105, 108-112.
Such is the law of this Circuit. "Mere foreseeability...is not a = sufficient=20 benchmark for exercising personal jurisdiction.... There must be some = act by=20 which the defendant purposely avails itself of the privilege of = conducting=20 activities within the forum State, thus invoking the benefits and = protections of=20 its laws." Trierweiler v. Croxton and Trench Holding = Corp., 90=20 F.3d 1523, 1534 (10th Cir. 1996). Purposeful availment = "requires=20 actions by the Defendant which 'create a substantial = connection=20 with the forum state.'" OMI Holdings v. Royal Insurance, = 149 F.3d=20 1086, 1998 U.S. App. LEXIS 14717 at *11 (10th Cir. 1998) = (emphasis=20 added). Under this test, courts must examine "the quantity and quality" = of=20 contacts with the forum state, a task not undertaken by the court below. = As the=20 Trierweiler court ruled, "'[p]urposeful availment analysis turns = upon=20 whether the defendant's contacts are attributable to his own actions = [and=20 generally] requires...affirmative conduct by the defendant which allows = or=20 promotes the transaction of business within the forum state.'" 90 F.3d = at=20 1535.
II. AS APPLIED TO ATA, THE UTAH ACT VIOLATES THE COMMERCE=20 CLAUSE
The court below misapplied the U.S. Supreme Court's tests determining = whether=20 the Utah Act violates the Commerce Clause. It found that the Act does = not=20 directly regulate interstate commerce because it subjects ATA "to Utah=20 regulations only to the extent that it provides consulting services in=20 connection with charitable solicitations in Utah" and because that = regulation=20 "does not have the "'practical effect' of... controll[ing] [professional = fund-raisers] in other states." Slip op. p. 16. It also found that there = was no=20 "indirect" regulation of interstate commerce because the "challenged = provisions"=20 of the Utah Act "are reasonable necessary to prevent and remedy the = effects of=20 fraud" and "[a]ny resulting burdens on interstate commerce are minimal = by=20 comparison." Slip op. p. 17. Both rulings are erroneous.
Provision of "consulting services in connection with charitable = solicitations=20 in Utah" does not give Utah regulatory power over ATA; and just because = the Utah=20 Act does not "control" the acts of ATA in other states, does not make = the Act=20 constitutional. The questions are whether there is a "substantial nexus" = between=20 Utah and ATA and whether Utah confers benefits upon ATA equivalent to = the=20 burdens imposed upon it. Quill, supra, 504 U.S. at 312, = 313.
Even where there are such a nexus and mutual benefits, the Commerce = Clause=20 prohibits application of the Utah Act to ATA if the burdens placed upon = ATA are=20 excessive in relation to the benefits accruing to Utah from regulating = ATA.=20 Pike v. Bruce Church, Inc., 397 U.S. 137, 142 (1970). To = apply=20 this test, courts must weigh the burdens and benefits with careful = attention to=20 the facts. See, e.g., Kassel v. Consolidated = Freightways=20 Corp., 450 U.S. 662 (1981). The court below failed to conduct such = an=20 analysis, offering only conclusions based upon
generalities.
A. The Utah Act is a Direct Tax or Direct Regulation of = Interstate=20 Commerce
Because of the Commerce Clause's "structural concerns about the = effects of=20 state regulations on the national economy" Quill, supra, = 504=20 U.S. at 312, the U.S. Supreme Court has always insisted upon both: (1) a = "substantial nexus" between the state and the taxed or regulated entity = and (2)=20 "a relationship between the tax and State-provided service [or a = relationship=20 between the regulation and the State's local interest] so as to ensure = the State=20 taxation [or regulation] does not unduly burden interstate commerce." = While=20 these concerns may appear similar to those discussed in the Due Process = section=20 above, the U.S. Supreme Court has ruled that "a corporation may have the = 'minimum contacts' with a taxing [or regulating] State required by the = Due=20 Process Clause, and yet lack the 'substantial nexus' with that State as = required=20 by the Commerce Clause." Id. at 313.
First, the substantial nexus test requires proof that the taxed or = regulated=20 entity has some kind of physical presence in the taxing or regulating = state. If=20 that presence is no more than mailing letters into a state, then there = is no=20 "substantial nexus" with that state. See Quill, = supra,=20 504 U.S. at 311. ATA has not even done that, for it is Judicial = Watch,=20 not ATA, that mails letters containing solicitations into Utah. = By only=20 contributing to another's communications by mail, ATA is engaged in "a = discrete=20 realm of commercial activity that is free from interstate taxation" or=20 regulation, because it has not established a "substantial nexus" with = any state,=20 except Virginia, where it physically conducts its consulting business.=20 See Quill, supra, 504 U.S. at 315.
Second, the "burden/benefit" test is designed to protect interstate = business=20 from state regulations and taxes that, in effect, project a state's = taxing or=20 regulatory power outside its boundaries into other states and, thereby,=20 unconstitutionally burden interstate commerce. As for the imposition of = a tax,=20 there must be some corresponding benefit conferred by the state upon the = taxed=20 entity; otherwise, the state is simply taking advantage of that entity = to=20 increase its revenues. See discussion of Complete Auto = Transit=20 v. Brady, 430 U.S. 274 (1977) in Quill, supra, = 504 U.S.=20 at 313. In this case, the Utah Act seeks to impose a = registration/licensing fee=20 -- in practical effect a tax -- upon ATA, which derives no benefit = whatsoever=20 from the State of Utah because it has no presence and does no business=20 whatsoever in that state.
B. The Utah Act is an Indirect Regulation of Interstate=20 Commerce
Even when a state has a substantial nexus permitting a tax or = regulation, the=20 tax or regulation cannot impose an excessive burden on interstate = commerce=20 without a countervailing legitimate local benefit. There can be no = question that=20 the Utah Act unnecessarily burdens ATA's interstate commercial = activities.=20 Indeed, under the Act, ATA (and every professional fundraising = consultant in the=20 country) must either register in Utah, pay a $250 license fee, and = obtain a=20 $25,000 bond from a Utah surety (or a $25,000 line of credit) for Utah's = benefit. The alternative is to forego completely advising clients on = national=20 fundraising drives that might potentially include even a minimal number = of Utah=20 residents as potential donors. Since it is unlikely that any charitable=20 organization would want to purge all Utah residents from owned or rented = lists,=20 or to develop a different solicitation (designed by a Utah-licensed = fundraising=20 consultant) to Utah than is sent to residents of the other 49 states, = the Utah=20 Act serves to regulate and impose a single state's standards on an = entire=20 national industry. There can be no question that the requirements of the = Utah=20 Act unnecessarily burden interstate commerce. See, e.g., = Lewis=20 v. BT Investment Managers, Inc., 447 U.S. 27, 42-44 (1980).
Utah, however, is not alone. At least 41 states, plus the District of =
Columbia and an unknown number of counties and municipalities, require =
annual=20
licensing and registration of nonprofit organizations soliciting funds =
from the=20
public. Licensure, registration, or other regulation of professional =
fundraising=20
counsel is presently required by at least 28 states, and additional =
counties and=20
cities, where such advisors are obligated to pay registration fees =
(license=20
taxes) and meet further bonding requirements.
The cumulative effect of these laws on nonprofit/charitable = organizations is=20 clearly substantial. Before even a single letter is mailed, start-up=20 organizations, like Judicial Watch -- seeking to educate or mobilize = Americans=20 on national policy issues -- require significant initial capital just to = comply=20 with the state law requirements. The net effect of such parochial laws = is to=20 "Balkanize" America, imposing burdensome licensure and regulatory = requirements=20 that isolate American citizens in a particular state from their fellow=20 citizens.
Surely, the free flow of mailings on public policy matters on the = nation's=20 "information highways" is as vital to the nation as the free flow of = truck=20 traffic on its asphalt highways. With respect to the latter, the U.S. = Supreme=20 Court has consistently offered constitutional relief to truck traffic = when=20 disrupted by state "safety" regulations, upon finding that such = disruption is=20 not justified by the claimed safety benefits. See, e.g., = Raymond=20 Motor Transport, Inc. v. Rice, 434 U.S. 429 (1978); = Bibb v.=20 Navajo Freight Lines, Inc., 359 U.S. 520 (1959). Likewise, the = Utah Act=20 should be struck down since the claimed benefits from preventing fraud = do not=20 justify the disruption that it creates in the interstate traffic of = ideas.
Utah has made no effort to show why it must require ATA to register = and post=20 a bond in order to protect its residents from fraud. Any such alleged = purpose is=20 already served by its requirement that Judicial Watch register. Nor has = Utah=20 shown why its residents need access to information about ATA when Utah=20 authorities have access to information about Judicial Watch. Nor has = Utah shown=20 that the information which it requires from ATA could not easily be = found on the=20 Internet or secured from Virginia, where ATA is registered.
In short, Utah need not -- indeed, it cannot -- project its = regulatory power=20 across the country, and well beyond Judicial Watch which sent the = letters,=20 especially in an effort to force ATA and Judicial Watch to alter a = contractual=20 relationship consummated and completed wholly outside the state of Utah. = See Brown-Forman Distillers Corp. v. New York State = Liquor=20 Authority, 476 U.S. 573, 583-84 (1986).
III. THE UTAH ACT VIOLATES THE FIRST AND FOURTEENTH AMENDMENT =
GUARANTEES OF FREEDOM OF SPEECH, ASSOCIATION, AND PETITION
The court below apparently assumed that the only constitutional = measure=20 applicable to a First Amendment challenge to a charitable solicitation = statute=20 is the rule established by the U.S. Supreme Court in Village of=20 Schaumburg v. Citizens for a Better Environment, 444 U.S. 620 = (1980).=20 Slip op. pp. 5-13. This is not true. The Court in Schaumburg also = reviewed and commented favorably on decisions involving charitable = solicitations=20 which had applied traditional First Amendment standards, including = "prior=20 restraint." Id., 444 U.S. at 628-32. The Court's decision in=20 Schaumburg did not discard those rules, but merely added to them. = Hence,=20 contrary to the assumption of the court below, the Schaumburg = formula is=20 not the only relevant First Amendment standard protecting charitable=20 solicitations.
Further, the court below failed to apply correctly the = Schaumburg test=20 itself. The Utah Act requires the Director of the Division of Consumer=20 Protection to deny or revoke a license only when the Director finds that = such=20 action is in the "public interest." By granting the Director such power = to act=20 in the "public interest" and without defining that term, the Utah Act = has=20 conferred upon the Director the very kind of impermissible discretion = that=20 Schaumburg and its progeny sought to prevent. See, e.g., = Riley v. National Federation of the Blind, 487 U.S. 781, = 801=20 (1988).
A. The Utah Act is an Unconstitutional Prior = Restraint
Utah law imposes requirements on direct mail to the public that = contains=20 charitable solicitations, but not on direct mail to the = public=20 that contains commercial solicitations. This is pure=20 content-based regulation of protected speech, favoring one kind of = speech over=20 another. This Utah cannot do. As the U.S. Supreme Court ruled in=20 Rosenberger v. University of Virginia, 515 U.S. 819, 132 = L.Ed 2d=20 700, 714-15 (1995), citing Simon & Schuster, Inc. v. N.Y. = Crime=20 Victims Bd., 502 U.S. 105, 115, (1991): "In the realm of private = speech or=20 expression, government regulation may not favor one speaker over = another....=20 Discrimination against speech because of its message is presumed to be=20 unconstitutional...."
In this case, Utah has prohibited Judicial Watch (or any other =
nonprofit)=20
from mailing public policy information into the state with fundraising=20
solicitations developed with advice and counsel from ATA (or any other=20
professional fundraising counsel) -- unless the professional fundraising =
counsel=20
agrees to register, to pay Utah's registration fee, to put up a bond, =
and to=20
subject itself to Utah's jurisdiction. No comparable requirements apply =
to any=20
type of commercial enterprise that ATA (or any other professional =
fundraising=20
counsel) may have advised. To the extent that a commercial enterprise =
may have=20
sought counsel from ATA on the use of direct mail to engage in grass =
roots=20
lobbying to affect the outcome of a public policy debate, or to =
advertise=20
merchandise for sale, the Utah Act would not apply. Thus, a nonprofit=20
organization soliciting money to oppose a state initiative establishing=20
off-track betting would be governed by the Act, but a commercial gaming=20
interest's communications soliciting support for the very same state =
initiative=20
would not.
Nor is there any Constitutional basis for Utah's requirement that = charities=20 register and pay a license fee before making mailings disseminating = ideas which=20 contain incidental solicitations for donations when there is no such = requirement=20 for commercial enterprises making similar mailings. Thus, if Judicial = Watch=20 should offer a particular book as a premium for a contribution to = support its=20 free speech activities, the Utah Act requires it to be licensed and to = pay the=20 registration fee. On the other hand, if a commercial seller should offer = to sell=20 the same book, it need not be licensed or pay a registration fee. As was = the=20 case with the New York law in Simon & Schuster, = supra, the=20 Utah law "singles out income derived from expressive activity for a = burden the=20 State places on no other income, and it is directed only at works with a = specified content," thereby "establish[ing] a financial disincentive to = create=20 or publish works with a particular content." Id., 502 U.S. at = 116, 118.=20 The requirements and burdens imposed by the Utah Act are therefore = purely=20 content-based, are discriminatory, and are unlawful.
Not only does the Utah Act place a prior discriminatory restraint = upon=20 Judicial Watch as a disseminator of ideas, it places a prior restraint = on the=20 receipt of ideas by Utah residents. The U.S. Supreme Court has clearly=20 "established that the Constitution protects the right to receive = information and=20 ideas." Stanley v. Georgia, 394 U.S. 557, 564 (1969). In = the area=20 of free speech, "the protection afforded is to the = communication, to=20 its source and to its recipients both." Virginia Pharmacy Board = v.=20 Virginia Citizens Consumer Council, Inc., 425 U.S. 748, 756 = (1976).=20 Significantly, the Court in Stanley accorded First Amendment = protection=20 to the possession of obscene matter, 394 U.S. at 559, and in Virginia = Pharmacy Board protected speech that "does 'no more than propose a=20 commercial transaction,'" 425 U.S. at 762. The core political
speech at issue in the instant case should receive even greater=20
Constitutional protection than the speech at issue in either of those =
cases.
The Utah Act violates the First Amendment rights of Utah residents. = It has=20 chilled Judicial Watch's communication with them. But for the Utah Act, = Judicial=20 Watch would have included Utah residents in its nationwide mailings on = matters=20 of public policy. The First Amendment does not permit governments to = interject=20 themselves as intermediaries between door-to-door solicitors of = financial=20 support for the promulgation of ideas and the occupier of a home. = Martin=20 v. City of Struthers, 319 U.S. 141, 146-47 (1943). Nor can Utah = place=20 itself between the U.S. mails and its residents, for the "householder = [must be]=20 the exclusive and final judge of what will cross his threshold...." = Rowan=20 v. Post Office Dept., 397 U.S. 728 (1970). By preventing First=20 Amendment-protected correspondence from entering Utah households, the = Utah Act=20 unconstitutionally interposes itself upon the flow of = Constitutionally-protected=20 speech, and deprives not just the senders, but also the receivers, of = their=20 First Amendment freedom of speech and press. And because the subject = matter of=20 Judicial Watch's mailings concern matters of national importance, Utah's = interference with those mailings deprives Utah's residents of their = freedom of=20 assembly, a privilege and immunity of United States citizenship. = See=20 Hague v. CIO, 307 U.S. 496, 512-14 (1939).
The Utah Act is Not Narrowly Tailored to Meet a Compelling = State=20 Interest
Because the Utah Act also substantially encumbers protected speech, = it must=20 be narrowly tailored to meet a compelling state interest. = Schaumburg,=20 supra, 444 U.S. at 633-38; Secretary of State v. = Munson,=20 467 U.S. 947, 959-68 (1984); and Riley, supra, 487 U.S. = at=20 784-803. To meet this standard, the language of the Act must be = carefully=20 examined to determine whether its provisions have been narrowly drawn to = further=20 the purpose of protecting the people from fraud.
The district court found that the Act authorized the Director of = Consumer=20 Affairs to deny or revoke a license to solicit charitable donations upon = finding=20 one or more of eight statutorily defined acts of wrongdoing if such = denial or=20 revocation is found to be in the "public interest." Slip. op. pp. 11-13. = The Act=20 does not even attempt a definition of the "public interest," thereby = opening the=20 door to discriminate among applicants based upon factors totally = unrelated to=20 the purpose of the statute. Courts have consistently struck down = statutes that=20 grant licensors such broad discretion without clearly and specifically = defined=20 legal standards. See, e.g., Lovell v. City of = Griffin,=20 303 U.S. 444 (1938), and cases cited in Schaumburg, = supra, 444=20 U.S. at 628-32.
As for the specified eight acts of wrongdoing, only four are tailored = to=20 limit discretion. The other four fail to place adequate rein on that = discretion.=20 For example, the Director may reject an application for registration if = it is=20 "incomplete or misleading in any material respect"; or if "an injunction = or=20 administrative order" has been entered against the applicant "based on a = finding=20 of a lack of integrity, dishonesty, or mental incompetence of the = applicant"; or=20 if the applicant "has materially misrepresented or caused to be = misrepresented=20 the purpose and manner in which contributed funds and property will be = used in=20 connection with any solicitation"; or that the applying "consultant has = failed=20 reasonably to supervise its agents or employees."
These provisions appear to grant the Director authority as broad as = that=20 granted to regulators in the North Carolina statute, which was struck = down in=20 Riley, supra. In Riley, the Court found that the = state of=20 North Carolina could not, even for the purpose of deterring fraud, = impose a=20 standard of "reasonableness" upon a professional fund raiser, ruling = that "the=20 State's generalized interest in unilaterally imposing its notions of = fairness on=20 the fundraising contract is constitutionally invalid." Riley,=20 supra, 487 U.S. at 792.
The Utah Act allows the Director to impose her "notion of fairness" =
upon a=20
license applicant. She may deny the application because she finds it =
"incomplete=20
or misleading"; because she finds the applicant lacks "integrity" or =
honesty;=20
because she finds a "misrepresentation [of] the purpose and manner in =
which=20
contributed funds and property will be used"; and even if she believes =
the=20
applicant "has failed reasonably to supervise its agents or employees." =
Such=20
grants of authority smack of unconstitutional paternalism and =
censorship, easily=20
susceptible of abuse. They are not genuine efforts to protect the public =
from=20
fraud.
The Act makes government officials unsupervised gatekeepers of First=20 Amendment-protected speech. Such standardless power violates the rule of = Schneider v. State, 308 U.S. 147, 163-64 (1939), that = door-to-door=20 canvassing cannot be subjected to government assessment of "good = character" or=20 "absence of fraud." The government cannot "in the name of preventing = fraudulent=20 appeals, subject door-to-door advocacy and communication of views to = [such a]=20 discretionary permit requirement." Schaumberg, supra, = 444 U.S.=20 at 629, quoting Schneider.
CONCLUSION
For the foregoing reasons, these amici curiae support the = Appellant=20 in seeking the reversal of the opinion of the District Court below, and = a ruling=20 that the Utah Act, both facially and as applied to ATA and Judicial = Watch,=20 should be stricken as unconstitutional.,
Respectfully submitted,
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Attorneys for Amici Curiae, Free Speech Defense and = Education Fund,=20 Inc., et al.
1. Counsel for these amici sought and = obtained the=20 written consent of the parties to the filing of this amicus = curiae=20 brief. Copies of the letters evidencing the parties' consent appear as = Appendix=20 D. See Fed.R.App.P. 29.
2. Later, the Division of Consumer Protection = granted=20 Judicial Watch a license contingent on its agreement not to correspond = with Utah=20 residents using materials developed with any assistance from ATA.
3. See collection of statutory, = regulatory and=20 administrative burdens, collected in Philanthropy Monthly Survey of = State Laws=20 Regulating Charitable Solicitation and in CCH Exempt Organizations = Reporter,=20 "State Law Registration Reporting," =B6=B6 750-995.
4. Appendix B indicates that fees on nonprofits = and on PFCs=20 in six states alone (Florida, Maryland, Massachusetts, New Jersey, = Tennessee,=20 and Utah) could total $2,950.
5. Additional unacceptable consequences can be = envisioned if=20 Utah were permitted to engage in content-based discrimination against=20 fund-soliciting nonprofit organizations, including:
6. The Utah Act applies to requests for = "anything of value=20 ... on the representation that it will be used for a charitable = purpose." Utah=20 Code Ann., sec. 13-22-2(3). "Charitable purposes," in turn refer to = charitable=20 or civic ends, including benevolent, educational and social welfare or = advocacy, along with others. Utah Code Ann., sec. 12-22-2(2). This=20 discriminatory focus on non-commercial speech is also ironic, given = that=20 commercial speech historically has enjoyed less = Constitutional=20 protection than non-commercial speech. See, e.g., Central = Hudson=20 Gas v. Public Service Comm., 447 U.S. 557, 561-63 = (1980).
7. That the constitutionally-intrusive Utah Act = serves no=20 legitimate purpose is evident from the established state and federal = laws=20 actually combatting fraud. See, e.g., Utah Code Ann., secs.=20 76-10-1801, 78-27-24; 18 U.S.C. secs. 1341-1346; 39 U.S.C., sec. 3005. =