Petition — Pennsylvania State University v. American Future Systems, Inc.
Supreme Court brief1982
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| Office - Supreme Court, U.S
FILED
NOV 5 1962
82-776
IN THE a
Supreme Court of the United States
OCTOBER TERM, 1982
THE PENNSYLVANIA STATE UNIVERSITY,
BOARD OF TRUSTEES OF
THE PENNSYLVANIA STATE UNIVERSITY,
JOHN W. OSWALD and M. LEE UPCRAFT,
Petitioners,
Vv.
AMERICAN FUTURE SYSTEMS, INC.,
STEVEN BRUBAKER, RICHARD J. WINGERT,
W. BRUCE DEL VALLE, JOAN D. VARSICS,
DENNIS C. HABACHER, JOHN P. SPILLER,
and KEVIN GRAVES,
Respondents.
PETITION FOR A WRIT OF CERTIORARI TO
THE UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Delbert J. McQuaide
(Counsel of Record)
R. Mark Faulkner
McQUAIDE, BLASKO, SCHWARTZ,
FLEMING & FAULKNER, Inc.
811 University Drive
State College, Pennsylvania 16801
(814) 238-4926
Attorneys for Petitioners
THE CASILLAS PRESS. INC. ~ 1717 K Street N.W. — Washington, 0.C. — 223-1220
(i)
QUESTION PRESENTED
Whether a state university may control the use of its
property by imposing regulations on the manner and con-
tent of commercial speech which prohibit a commercial
vendor from the direct solicitation and sale of merchan-
dise to groups of students in university owned dormitories,
where the purpose of the regulation is to serve the universi-
ty’s interest in maintaining a proper study atmosphere in
the dormitories and in protecting the privacy of students?
(iii)
TABLE OF CONTENTS
Page
QUESTION PRESENTED ........ cc ccccccccecce re ceeeereues i
ED * vcck cp snswoucwadsssmenseebscteoncseNes 1
ts dn edn ids i edubndaneeeenensdeesssnnusees 2
CONSTITUTIONAL PROVISIONS INVOLVED .............. 2
i i a eee a ene ebecendeten 2
REASONS FOR GRANTING THE WRIT ..................... 7
i oe a te ea eee ennsnes 12
CONTENTS OF APPENDIX
Appendix A- Opinion of the United States District
Court for the Middle District of Penn-
SE dic ticnee meni edneds oeiiieadescéane la
Appendix B- Opinion of the United States Court of
Appeals for the Third Circuit ................ 26a
Appendix C - Opinion Sur Petition for Rehearing of the
United States Court of Appeals for the
PEE curbbaveddnbddddenss sedécecoast dtu
Appendix D- Opinion of the United States District
Court for the Middle District of Penn-
SE 4 bdedneneeesds dbvacdeendtwescoeers Sla
Appendix E- Opinion of the United States Court of
Appeals for the Third Circuit ................ 80a
(iv)
TABLE OF AUTHORITIES
Cases: Page
Adderly v. Florida,
I Da ie a eben an eben 8
American Future Systems, Inc. v. Pa. State
University, 464 F Supp. 1252 (M.D. Pa. 1979) ..............5. 4
American Future Systems, Inc. v. Pa. State
University, 618 F.2d 252 (3rd Cir. 1980) .... 2... 6. eee 4,5
American Future Systems, Inc. v. Pennsylvania, Etc.,
SP, EE OU, HEED x cndceccvcecccccesccccces 1,5
American Future Systems, Inc. v. Pa. State
University, Docket No. 81-2476, Slip Op.
EMD. occu gagudtssueseessccdcudoecss 2,5
American Future Systems, Inc. v. The Pennsylvania
State University, Sur Petition for Rehearing,
Docket No. 81-2674, Slip Op. (3rd. Cir.,
MD vc odendg ence cepeeck sbe0eecesccesense 2,7
Bates v. State Bar,
ie ek eeehdbes chbeuneeceuee ee 6,8
Bigelow v. Virginia,
ee cbs abebbebeted 6,7
Central Hudson Gas and Electric Corp. v. Public
Service Commission of New York, 447 U.S. 557
ts te ees eaed een dees 60800 e<e% 8,9, 10
Consolidated Edison Co. v. Public Service Comm.,
se de ons ed enccecesesses x
Dickinson v. Petroleum Conversion Corp.,
6 nus SOUR CREED CRORE doce pebesous 11
Heffron v. Intern. Soc. for Krishna Consciousness,
«2. ise dave ubledhebeeebdssdecene 10, 11
(v)
Page
Land v. Dollar,
Pe ES. cnccceuonessesvess ‘eg éaketébs veedeos li
Larson v. Domestic & Foreign Commerce Corp.,
eee es oe. ee re eseeteeweute de il
Ohralik v. Ohio State Bar Association,
ee es sc avebdebdsseceees 6, 8,9, 10
United States ex rel. Robinson v. Johnston,
es Se Ss nehbewedeosdecusoens 11
Virginia State Bd. of Pharmacy v. Virginia
Citizens Consumer Council, 425 U.S. 748 (1976) ............ 6,7
U.S. Constitutional Provisions
0 ee TT erry ere rT 2,4, 5,6, 7, 11
ee... ccyecnbesudesesecootesesceseses 2
Statutes:
an aie oan wines adunugttoeusyennehss 6ee agen 2
ME kc uetc i does cbadus6bee Sones veeoeseedenss 7
os eee ces age deatesheuns 7
a he cea ae en eee in end she enseeseucee 7
IN THE
Supreme Court of the United States
OCTOBER TERM, 1982
THE PENNSYLVANIA STATE UNIVERSITY,
BOARD OF TRUSTEES OF
THE PENNSYLVANIA STATE UNIVERSITY,
JOHN W. OSWALD and M. LEE UPCRAFT,
Petitioners,
Vv.
AMERICAN FUTURE SYSTEMS, INC.,
STEVEN BRUBAKER, RICHARD J. WINGERT,
W. BRUCE DEL VALLE, JOAN D. VARSICS,
DENNIS C. HABACHER, JOHN P. SPILLER,
and KEVIN GRAVES,
Respondents.
PETITION FOR A WRIT OF CERTIORARI TO
THE UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
OPINIONS BELOW
The opinion of the Court of Appeals, not yet reported,
appears in the Appendix hereto. The opinion of the
District Court for the Middle District of Pennsylvania,
reported at 522 F.Supp. 544 (M.D. Pa. 1981), also ap-
pears in the Appendix hereto.
2
JURISDICTION
The judgment of the Court of Appeals for the Third
Circuit was entered on August 9, 1982. A timely petition
for rehearing en banc was denied by an equally divided
Court of Appeals (five Circuit Judges voting in favor and
five Circuit Judges voting against rehearing en banc) on
September 21, 1982. The opinions of the Court of Appeals
in favor of and against rehearing en banc appear in the
Appendix hereto. This petition for certiorari was filed
within ninety (90) days of September 21, 1982. This
Court’s jurisdiction is invoked under 28 U.S.C. § 1254(1).
CONSTITUTIONAL PROVISIONS INVOLVED
First Amendment.
Congress shall make no law . . . abridging the
freedom of speech. . .
Fourteenth Amendment, Section 1.
No State shall make or enforce any law which
shall abridge the privileges or immunities of
citizens of the United States; . . .
STATEMENT OF THE CASE
Petitioner, The Pennsylvania State University (Penn
State) is a large, multi-campus, university which offers a
broad range of undergraduate and graduate educational
programs for the citizens of the Commonwealth of Penn-
sylvania. At its main campus in State College, Penn-
sylvania, it owns and operates 68 residence halls for over
13,000 students. For the most part, the residence halls are
like any typical college dormitory; the students share
rooms and communal facilities located along common
hallways. Study lounges and other common areas are also
provided in the residence halls.
3
Penn State policy generally prohibits commercial activi-
ty on its campuses. Historically, it has maintained its
residence hails exclusively for the private use of its
students and their guests. The public has never had access
to residence halls.
In order to accommodate the personal commercial
needs of student residents, a student is permitted to invite
a commercial vendor to that student’s room to conduct a
commercial transaction with that student only. However,
group solicitation and sales of merchandise or services is
prohibited. Students are permitted to conduct other kinds
of group activities in residence halls, such as educational
or social functions in the common areas, including
demonstrations by vendors of merchandise, so long as
there is no group solicitation or sales. Following such a
demonstration, a student is free to invite the vendor to the
student’s room to conclude a sale.
The Respondent, American Future Systems, Inc. (AFS)
is engaged in the sale of cookware, crystal and tableware
to college students throughout the United States. The par-
ticular sales method of AFS is to induce a student hostess
to invite other students to a group demonstration of mer-
chandise by a sales agent of AFS. At the conclusion of the
demonstration, the students are asked to sign consumer
finance contracts involving the purchase of hundreds of
dollars of merchandise.
In the fall of 1977, AFS attempted tc conduct at least 51
sales demonstrations in various locations in residence halls
of Penn State by sending its sales agents door to door to
secure hostesses. Penn State prohibited these demonstra-
tions, but did inform AFS that it could conduct
demonstrations in the common areas of the residence halls
if no attempt was made to solicit sales. AFS refused the in-
vitation, stating that “there would be no point in that.”
4
AFS brought suit against Penn State in the District
Court for the Middle District of Pennsylvania seeking to
enjoin enforcement of the policy on the ground that it
violated AFS’s commercial speech rights under the First
Amendment. In American Future Systems, Inc. v. Pa. State
University, 464 F.Supp. 1252 (M.D. Pa. 1979), the Court
held that Penn State’s policy was constitutional because (1)
AFS had ample alternative means to communicate its
message to students and (2) Penn State’s interests in pro-
tecting the privacy of its students and in preventing a com-
pany engaged in questionable business practices from
operating On its property were sufficient to constitution-
ally validate the policy. AFS appealed to the Circuit Court
of Appeals for the Third Circuit which affirmed the judg-
ment below in American Future Systems v. Pa. State
University, 618 F.2d 252 (3rc. Cir. 1980) (hereinafter
referred to as “AFS I”). In AFS I the Third Circuit held
that Penn State had articulated legitimate state interests in
maintaining a proper study atmosphere in residence halls
and in preserving the privacy of students, and that, since
its policy furthered these interests, it was constitutional.
The opinion of the District Court and of the Circuit Court
in AFS I also appear in the Appendix hereto.
Following AFS I, AFS requested permission to conduct
group demonstrations of its products in the common areas
of the residence halls. Penn State informed AFS that it
could conduct group demonstrations in the common
areas, but that it could not solicit sales by informing the
students of the prices and terms and conditions of sale
unless invited by a student to the room of that student to
conduct an individual transaction. AFS again refused to
conform to the policy and brought another suit in the
District Court, alleging violations of its right to First
Amendment protection of commercial speech. Several
students joined in the suit as plaintiffs, alleging that the
policy violated their First Amendment rights. The District
Court granted Penn State’s motion for summary judgment
5
against all plaintiffs in American Future Systems v. Penn-
sylvania, Etc., 522 F.Supp. 544 (M.D. Pa. 1981). The
District Court held, inter alia, (1) that the claim of AFS
that the policy was unconstitutional was barred by the res
judicata effect of AFS I, (2) that the disclosure of price
and other terms and conditions of sale was commercial
solicitation which violated the policy and (3) that the
policy did not violate any First Amendment right of
students to hear commercial speech, because such right is
the corollary of the right to speak, which was not violated
by the policy.
On appeal, the Circuit Court panel reversed the sum-
mary judgment in favor of Penn State and remanded the
action to the District Court for proceedings consistent
with its opinion and judgment. Penn State’s petition for
rehearing en banc was denied by an equally divided Circuit
Court. This petition for writ of certiorari followed.
In its opinion (AFS II), the panel analyzed the effect of
AFS I and decided that AFS I upheld the constitutionality
of the policy only insofar as it prohibited the consumma-
tion of sales in a group setting. It was the panel’s view that,
consequently, the claim of AFS of the right to conduct
sales demonstrations without restriction on the content of
the speech was not barred by res judicata. The panel then
reasoned that the policy’s prohibition on group solicita-
tion, i.e. disclosure of price and other terms and condi-
tions of sale was content-based “censorship” of commer-
cial speech, that to pass constitutional muster Penn State
had to show that the policy furthered its interests in main-
taining a proper study atmosphere and preserving the
privacy of students, and that Penn State had failed to
make such a showing. In the words of the panel, Penn
State failed to even make a “plausible explanation”
because “Restrictions on the contents of the demonstra-
tion as distinguished from the conduct of the demonstra-
tion cannot further these interests.” Slip Op. at 11 (3rd
Cir., August 9, 1982); emphasis in original.
6
The panel also reversed the summary judgment in favor
of Penn State with regard to the students’ claim of a First
Amendment right to participate in group commercial
demonstrations in the student's room. This part of the
clain, was also remanded to the District Court for a deter-
mination whether such a restriction furthered substantial
state interests.
Penn State’s petition for a rehearing en banc was denied
by an equally divided Court of Appeals. In dissenting
from the denial, Judge Adams reviewed the principal deci-
sions of the Supreme Court which established and
delineated the limited scope of First Amendment protec-
tion for commercial speech. He then stated:
“| have a serious question whether a reasonable
reading of Bigelow, Virginia Pharmacy, Bates,
and Ohralik can yield a conclusion that a state
university is constitutionally limited to a narrow
range of options in regulating third parties per-
mitted on schooi premises to promote sales of
merchandise. | believe this matter should be ad-
dressed by the entire Court and the subject
carefully considered before signals are sent to
state universities indicating that they may well
lose a significant portion of their control over
commercial activity on their campuses.
| am concerned that, unless the courts are
prepared to step back and take a careful review
of the precedents, the extension of a juridical
concept by a dry and remorseless logic can carry
us tO a position never contemplated by the
Supreme Court when this doctrine was first pro-
pounded. Moreover, it is a position totally in-
compatible with our societal concerns. '
‘As the Chief Justice has reminded us: * “All rights tend
to declare themselves absolute to their logical extreme. Yet
all in fact are limited by the neignborhood of principles of
policy which are other than those on which the particular
>
right is founded. . .” ° United States v. 12 200-Ft Reels of
Super 8 Mm. Film, 413 U.S. 123 (1973), quoting Hudson
County Vater Co. v. McCarter, 209 U.S. 349, 355 (1908)
(Holmes, J.).”
American Future Systems v. Pennsylvania State
University, Sur Petition for Rehearing, September 21,
1982, Opinion of Adams, J., Slip Op. p. 7.
The jurisdiction of the Court of Appeals for the Third
Circuit was pursuant to 28 U.S.C. § 1291. Jurisdiction of
the United States District Court for the Middle District of
Pennsylvania was predicated on 28 U.S.C. § 1331 and
§ 1343.
REASONS FOR GRANTING THE WRIT
The opinion of the Third Circuit is in conflict with the
applicable decisions of this Court on an important issue of
constitutional law. Because the Third Circuit has extended
the scope of First Amendment protection of commercial
speech far beyond any boundary suggested by this Court,
consideration of the issue is necessary at this time to pro-
vide guidance to state universities throughout the United
States. Failure to deal with this issue now will, in the
words of Judge Adams, send a signal “to state universities
indicating that they may well lose a significant portion of
their control over commercial activity on their campuses.”
American Future Systems, Inc. v. The Pennsylvania Staie
University, Sur Petition for Rehearing, Slip Op. at 7 (3rd
Cir., September 21, 1982). This may cause the unnecessary
development of a backlog of cases which will ultimately
have to be dealt with by the federal courts.
Generally, the commercial speech cases before this
Court have dealt with total prohibitions on certain kinds
of commercial speech. Bigelow v. Virginia, 421 U.S. 809
(1975) (state law banning all publications encouraging
abortion held to be unconstitutional); Virginia State Bd.
of Pharmacy v. Virginia Citizens Consumer Council, 425
U.S. 748 (1976) (state law banning pharmacists from all
advertising of the sale of prescription drugs held to be un-
constitutional); Bates v. State Bar, 433 U.S. 350 (1977)
(state rule which prohibited any advertising by a lawyer
held to be unconstitutional); Ohralik v. Ohio State Bar
Association, 436 U.S. 447 (1978) (state rule banning
lawyer from in-person solicitation of clients held to be
constitutional); Central Hudson Gas and Electric Corp. v.
Public Service Commission of New York, 447 U.S. 557
(1980) (state rule banning all advertising by electric utility
held to be unconstitutional, but a ban on advertising
designed to increase electrical consumption would serve
State interest in energy conservation, and consequently,
would be constitutional).
These decisions do not suggest that a state university
may not impose time, place and manner restrictions on the
commercial use of its property. Nor do they suggest that in
determining the manner in which a vendor will use its
property, a state university may not impose restrictions on
the content of commercial speech which are designed to
discourage and minimize that commercial use. As this
Court has stated, “[t}he state, no less than a private owner
of property, has power to preserve the property under its
control for the use to which it is lawfully dedicated.”
Adderly v. Florida, 385 U.S. 39 at 47 (1966). This court
has also recognized the validity of time, place and manner
regulations on the content of speech where the basis of the
regulation is not hostility to the ideas or facts stated, but
rather is intended to preserve property for the purposes to
which it is dedicated. Consolidated Edison Co. v. Public
Service Com’n, 447 U.S. 530 (1980).
The Third Circuit panel recognized that the vendor here
may solicit sales of its merchandise directly to an in-
dividual student who invites the vendor to that student’s
dormitory room. Where a vendor has ample alternative
means of communication, as in this case, a restriction on
9
group solicitation of sales should not be of constitutional
dimension. The federal courts should not be regulating the
specific manner in which a state university permits out-
siders to use its residence halls, particularly where, as in
this case, there has been a carefui effort to balance the per-
sonal commercial needs of students with the need to en-
sure a proper study atmosphere and personal privacy.
In any event, it is apparent on the face of the matter that
Penn State’s policy meets the test of Central Hudson,
which is whether “the regulation directly advances the
governmental interest asserted and whether it is not more
extensive than is necessary to serve that interest.” 447 U.S.
at 566.
The policy, like the proscription in Ohralik, supra, is a
prophylactic measure designed to reduce and minimize the
level of commercial activity which might intrude upon the
interests advanced by Penn State, rather than a measure
designed to control specific conduct or speech while it is
occurring in the residence hall. The policy is designed to
and does in fact discourage group commercial activity, in-
cluding both the propusal and consummation of group
sales transactions, in the residence halls, while not totally
banning commercial transactions because of the need to
balance the personal commercial needs of students with
the needs for a proper study atmosphere and personal
privacy. There can be no better proof that the policy serves
Penn State’s articulated interests than the fact that AFS
refused to conduct its sales activities under the policy. This
reduced the level of commercial activity in the residence
halls substantially, inasmuch as AFS proposes to conduct
large numbers of so-called demonstrations. Thus, the in-
terests of study and privacy were served on a prophylactic
basis.
Penn State may, under Ohralik, supra, and Central
Hudson, supra, impose such a limitation upon commercial
10
speech in the residence halls. In Ohralik, the Supreme
Court recognized that the state may impose limitations on
commercial speech which are “prophylactic measures
whose objective is the prevention of harm before it
occurs.” 436 U.S. at 464. In Central Hudson, the Supreme
Court also recognized that the state may impose restric-
tions on commercial speech in order to discourage com-
mercial transactions, reducing the level of commercial ac-
tivity in order to serve a state interest. There, the state had
banned all advertising by a utility. The court held the total
ban to be unconstitutional, but recognized that a more nar-
rowly drawn regulation could be valid. The court stated:
“In contrast, the state’s interest in energy conser-
vation is directly advanced by the Commission
order at issue here. There is an immediate con-
nection between advertising and demand for
electricity. Central Hudson would not contest the
advertising ban unless it believed that promotion
would increase its sales. Thus, we find a direct
link between the state interest in conservation
and the Commission’s order.” 447 U.S. at 569.
Like Central Hudson, there is a “direct link” between
Penn State’s policy and the interests of study and privacy.
It is obvious that there is an “immediate connection” be-
.ween group solicitation and sales and the level of de-
mand, i.e., commercial activity, in the residence halls.
Thus, Penn State’s articulated interests are directly served.
Nor is there a requirement that Penn State demonstrate
that the specific conduct of this vendor — AFS — will
violate the interests the policy protects. In both Ohralik
and Heffron v. Intern. Soc. For Krishna Consciousness,
452 U.S. 640 (1981), the Supreme Court stated that
specific evidence of harm was not required to uphold a
policy restricting speech related activities. In Ohralik, the
lawyer’s speech did not cause the harm the policy sought to
avoid. In Heffron, the impact of the plaintiff's solicita-
tions would have been minimal on the state interest of
crowd control. Yet, in both cases, the restrictions were
upheld because the Court focused on the potential for
harm to the state interests in the absence of the policy. By
requiring specific evidence of harm from the AFS sales
solicitation, and ignoring the potential for harm if AFS
and all commercial businesses may solicit sales, the panel
decision is contrary to Ohralik and Heffron.
Thus, the panel of the Third Circuit has made a radical
extension of the First Amendment protection of commer-
cial speech which calls for further review at this time.
Although there has been a remand to the District Court
for further proceedings, the importance of the issue and
the intracircuit conflict qualify this case for review despite
its interlocutory status. See, Land v. Dollar, 330 U.S. 731,
734, n.2 (1946); Larson v. Domestic & Foreign Commerce
Corp., 337 U.S. 682, 685, n.3 (1947); Dickinson vy.
Petroleum Conversion Corp., 338 U.S. 507, 508 (1950).
At the very least, the petition should be granted for the
purpose of remanding the action to the Third Circuit for
en banc review. See, e.g., United States ex rel. Robinson v.
Johnston, 316 U.S. 649 (1942).
12
CONCLUSION
For the reasons stated, the petition for writ of certiorari
should be granted.
Respectfully submitted,
Delbert J. McQuaide
R. Mark Faulkner
McQUAIDE, BLASKO,
SCHWARTZ,
FLEMING & FAULKNER, Inc.
811 University Drive
State College, Pennsylvania
16801
(814) 238-4926
Attorneys for Petitioners
November 1982
APPENDIX A
UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
AMERICAN FUTURE SYSTEMS,
INC., et al., :
Plaintiffs : Civil No. 81-0171
vs. : Complaint Filed
: 2/5/81
THE PENNSYLVANIA STATE : (Judge Muir)
UNIVERSITY, et al., :
Defendants
APPEARANCES:
For Plaintiffs Henry T. Reath, Esq.
George E. Pierce, Jr., Esq.
Duane, Morris & Heckscher
One Franklin Plaza
Philadelphia, Pa. 19102
For Defendants Delbert J. McQuaide, Esq.
R. Mark Faulkner, Esq.
McQuaide, Blasko, Schwartz,
Fleming & Faulkner
811 University Drive
State College, Pa. 16801
FILED
WILLIAMSPORT, PA
SEP 16 1981
DONALD R. BERRY, Clerk
DEPUTY CLERK
2a
UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
AMERICAN FUTURE SYSTEMS,
INC., et al., :
Plaintiffs : Civil No. 81-0171
VS. : Complaint Filed
: 2/5/81
THE PENNSYLVANIA STATE : (Judge Muir)
UNIVERSITY, et al., :
Defendants
OPINION
MUIR, District Judge.
Plantiffs filed this action alleging violations of their
constitutional rights and of rights granted by Pennsylvania
law on February 5, 1981. Jurisdiction is alleged to arise
under 28 U.S.C. §§ 1331 and 1343 and the doctrine of
pendent jurisdiction. Also on February 5, 1981, Plaintiffs
filed a motion for a preliminary injunction which was
denied by this Court in American Future Systems vs.
Pennsylvania State University, 510 F.Supp. 983 (M.D. Pa.
1981). On July 17, 1981, Defendants filed a motion for
summary judgment and supporting brief. On August 24,
1981, Plaintiffs responded, and on August 31, 1981,
Defendants filed a reply. For the reasons set forth below,
Defendants’ motion for summary judgment will be
granted.
This case is the second one before the Court involving
policies of Pennsylvania State University (Penn State)
relating to commercial activities in its dormitories. In the
first lawsuit, judgment was granted in favor of Penn State
upholding its regulations against an attack that they
3a
violated American Future Systems’ (AFS) First Amend-
ment rights American Future Systems, Inc. vs. Penn-
sylvania State University, 464 F.Supp. 1252 (M.D. Pa.
1979), affd 618 F.2d 252 (3d Cir. 1980) (“American
Future Systems 7”).
AFS is a corporation whose principal business is the sale
of cookware, china, crystal, and silverware through
demonstrations of its merchandise at colleges throughout
the United States. AFS seeks by this action to be permitted
to present sales demonstrations at the invitation of in-
dividual students in the common areas and dormitory
rooms within the residence halls of Penn State, to
disseminate commercial information to groups of students
through sales demonstrations at the invitation of in-
dividual host students in their individual dormitory
rooms, and to consummate sales to individual students in
the student hosts’ rooms and residence halls of Penn State.
Plaintiffs Wingert and Brubaker are Penn State students
who formerly resided in Penn State residence halls.
Wingert withdrew as a student at Penn State in February
1981 and is no longer enrolled. Brubaker, while still
enrolled as a student, no longer resides in a Penn State
residence hall. Wingert and Brubaker seek relief permit-
ting them to invite AFS to common areas and their in-
dividual dormitory rooms and residence halls, to conduct
in their rooms and in common areas of residence halls,
sales demonstrations to groups of invited students and to
invite AFS to their dormitory rooms for purposes of con-
summating sales of goods to other students following the
demonstrations. Plaintiffs DelValle, Varsics, Habacher
and Spilier are current Penn State students who do not
reside in residence halls. DelValle, Varsics, Habacher and
Spiller seek an order permitting them to attend and par-
ticipate in AFS group demonstrations in common areas
da
and dormitory rooms and to consummate sales from AFS
in those rooms.
As this Court already held in its denial of Plaintiffs’ mo-
tion for a preliminary injunction, the policy of Penn State
during the time that American Future Systems I was
litigated and now is that (1) AFS may conduct group
demonstrations in specified common areas of each
residence hall; (2) following those demonstrations a stu-
dent may invite an AFS representative to the student’s
room to purchase AFS goods; (3) AFS is free to solicit in-
vitations to individual students’ rooms at the group
demonstrations or by telephone or mail; (4) AFS is not
permitted to conduct group demonstrations in an in-
d'vidual dormitory room; (5) AFS is not permitted to con-
_ summate sales in dormitory rooms to a purchaser other
than the occupant of the room; (6) AFS is not permitted to
conduct group solicitations of sales in the common areas
of residence halls; (7) AFS is not permitted to consummate
commercial transactions in the common areas of residence
halls. American Future Systems vs. Pennsylvania State
University, 510 F.Supp. 983, 985 (M.D. Pa. 1981). It is
Plaintiffs’ position that under the ruling of the Court of
Appeals in American Future Systems I they are entitled to
the relief sought in this action. Defendants are of the view
that their policies relating to commercial activities in Penn
State’s dormitories are consistent with the Court of Ap-
peals’ opinion in American Future Systems I, and that
Plaintiffs are not entitled to relief.
Summary judgment is appropriate when the pleadings,
depositions, answers to interrogatories, and admissions in
the record, together with he affidavits, if any, show that
there is no genuine issue as to any material fact and that
the moving party is entitled to judgment as a matter of
iaw. Rule 56(c) of the Federal Rules of Civil Procedure.
Sa
Because the bases for granting summary judgment are
somewhat different as to Plaintiff AFS, to Plaintiffs
Wingert and Brubaker, and to Plaintiffs DelValle, Var-
sics, Habacher and Spiller, AFS and each group of in-
dividual Plaintiffs will be discussed separately.
I. AFS.
AFS’s primary contention is that the decision of the
Court of Appeals in American Future Systems I granted
AFS certain rights that Penn State has abridged. To the
contrary, the Court of Appeals’ opinion contains no
declaration of AFS’s rights, and in that opinion the Court
concluded that Penn State’s policies governing commercial
activity was wholly consistent with AFS’s First and Four-
teenth amendment rights. The Court of Appeals recogniz-
ed that a total suppression of AFS’s commercial speech
would probably violate AFS’s constitutional rights.
American Future Systems I, 618 F.2d at 258. In holding
that Penn State’s distinction between non-commercial and
commercial speech was valid, the Court of Ap»veals noted
that Penn State hau vu.ly restricted, rather than suppress-
ed, speech. “[AFS] sales representatives are allowed into
the residence halls to present demonstrations to groups of
students, [but] they cannot consummate sales at these
gatherings. Even that restriction is removed if the sales
representative is invited to the hall by an individual stu-
dent who decides to purchase the merchandise marketed
by AFS.” 618 F.2d at 258. There is a dispute as to whether
the Court of Appeals’ decision in American Future
Systems I actually vests in AFS the right to set up group
demonstrations of its products in the Penn State residence
halls. However, inasmuch as Penn State policies permit
such group demonstrations, this Court need not reach that
question. The issues now before the Court are (1) whether
6a
Penn State may limit AFS to presentations in common
areas, aS Opposed to private rooms, and may limit AFS’s
actual solicitation to private rooms and not permit such
solicitation in common areas; and (2) whether AFS’s pro-
posed presentation does in fact constitute solicitation, in
whole or in part.
Penn State’s policy governing commercial activity in its
residence halls has remained unchanged since AFS made
its initial attempts to conduct demonstrations of its pro-
ducts in 1977. Specifically, in effect at the time of the
American Fut. ~ Systems / litigation was Penn State’s
policy that AFS could present demonstrations, but not
solicitations of sales in the common areas of residence
halls, and that AFS is free to consummate commercial
transactions (i.e. solicitation) in student’s rooms, but not
in common areas. See American Future Systems 1, 464
F.Supp. 1252, 1258 (¢ 59); American Future Systems vs.
Pennsylvania State University, 510 F.Supp. 983, 985
(M.D. Pa. 1981). The record shows that AFS was aware of
this policy at the time that it filed the American Future
Systems I action. See American Future Systems 1, 464
F.Supp. at 1258 (€ 59). AFS’s attempt to relitigate the con-
stitutionality of Penn State’s policies regarding commer-
cial activities in dormitories is barred by the doctrine of res
judicata.
The doctrine provides that a party who has suffered an
adverse judgment may not, in subsequent litigation
against the same party, seek to relitigate any issue that was
or could have been determined in the first action. See
Montana vs. United States, 440 U.S. 147, 153-54 (1979).
The purpose of this doctrine is to ensure finality in the ad-
judication of disputes and to provide a conclusive resolu-
tion not only of matters that were actually considered but
also of all of those which could have been considered.
7a
Cramer vs. General Telephone & Electronics Corp., 582
F.2d 259, 266 (3d Cir. 1978), cert. denied, 439 U.S. 1129
(1979).
In order for res judicata to apply, three elements must
be present: (1) there must be an identity of parties; (2)
there must be in existence a valid, final judgment on the
merits by a Court of competent jurisdiction; and (3) the se-
cond action must concern the same subject matter or cause
of action as the prior suit. Sworob vs. Harris, 451 F.Supp.
96, 99-100 (E.D. Pa.) aff'd 578 F.2d 1376 (3d Cir. 1978)
(memorandum). There can be no dispute as to the first two
requirements. Here, AFS and the same Penn State defen-
dants have been involved in both actions. Further, there is
a final, valid judgment upholding Penn State’s policy
governing commercial activities in dormitories. As to the
third requirement, the second action may be said to in-
volve the same cause of action if liability is sought to be
imposed on a different theory but based on the same
“liability creating conduct” of the Defendant which gave
rise to the first action. Coggins vs. Carpenter, 463 F.Supp.
270, 280 (E.D. Pa. 1979), citing Williamson vs. Columbia
Gas & Electric Corp., 186 F.2d 464 (3d Cir. 1950), cert.
denied, 341 U.S. 921 (1951). Based on the allegations of
Plaintiffs’ complaint, the exhibits attached thereto, and
affidavits submitted in this matter, the Court concludes
that AFS is complaining about the same conduct of which
it complained in American Future Systems I, namely Penn
State’s regulations limiting access by AFS to the
university’s dormitories. The Court also concludes that
AFS had in that action opportunity to present to the Court
and to the Court of Appeals any claims it might have had
as to the precise contours of the permissible scope of
group demonstrations as well as any other matters relating
to any other constitutional rights that may have been
adversely affected by Penn State’s policies. Since the
8a
Court of Appeals has already upheld the validity of Penn
State’s policies with respect to commercial activities within
residence halls, and since AFS had a full and fair oppor-
tunity to litigate the validity of that policy, or any aspect
thereof, in the first action, res judicata operates to
preclude AFS’s challenge to that policy in this action.
Therefore, summary judgment will be granted in favor of
the Plaintiffs as to AFS’s claim that Penn State’s policy
with respect to commercial solicitation and activity in the
dormitories violates AFS’s First and Fourteenth Amend-
ment rights.
AFS’s second claim is that Penn State’s position that it
may censor the substance of AFS’s demonstrations
violates AFS’s constitutional rights. Penn State contends
that certain portions of the AFS demonstration involve the
solicitation of sales rather than educational or informa-
tional material within the normal meaning of “demonstra-
tion.” Penn State claims that these provisions which in-
volve price, credit and guarantee terms, are properly con-
sidered commercial rather than educational in nature, and
are therefore properly restricted to individual solicitation
in private rooms and may be excluded from the
demonstrations in common areas. (Defendants’ Brief in
Support of Motion for Summary Judgment at pp. 11-12.)
AFS, in response, claims that if it were to present its
demonstrations in the manner required by the University,
it might appear to its listeners to be engaging in sharp
business practices. AFS claims that if it is allowed to
demonstrate and display its products, but is not allowed to
give information regarding prices, guarantees, exchange
policies and specially designed credit terms to fit students’
budgets, its sales representatives’ credibility as legitimate
and honest people would be undermined. (Plaintiffs’ Brief
in Opposition to Defendants’ Motion for Summary Judg-
ment at pp. 8-9).
9a
The Court of Appeals’ decision in American Future
Systems I specifically upheld Penn State’s regulations to
the extent that they rested upon a distinction between com-
mercial and non-commercial speech. Addressing the ques-
tion of solicitation and consummation of sales in common
areas, the Court of Appeals first noted that Penn State
had advanced reasonable objectives to support its ban on
group commercial activity in its residence halls. Finding
that Penn State had not acted in an arbitrary, capricious,
or invidious manner in distinguishing between commercial
and non-commercial speech (i.e. solicitations as opposed
to demonstrations), the Court concluded that Penn State’s
policies do not violate the First Amendment. American
Future Systems I, 618 F.2d at 259. Thus, AFS’s position
that the Court of Appeals did not anticipate or recognize
distinctions between educational programs and commer-
cial solicitation (Plaintiffs’ Brief in Opposition to Defen-
dants’ Motion for Summary Judgment at p. 8) is clearly er-
roneous.
In American Future Systems I, this Court and the Court
of Appeals were not faced with the question of whether
particular aspects of AFS’s presentations were educational
or commercial. Thus, this aspect of AFS’s claim is not bar-
red by res judicata.
AFS’s proposed presentation is evidenced by the cue
cards that are attached to the complaint. The parties have
agreed in their statement of material facts that the cue
cards in Exhibit E of the complaint constitute substantially
all of AFS’s presentation. Cards 1 through 23 are clearly
educational and instructional in nature, and it is permissi-
ble to convey this information at AFS’s group demonstra-
tions. Cards 24 through 31 relate to guarantee and pay-
ment plans offered to the students. These cards constitute
solicitation of sales, and Penn State may constitutionally
10a
prohibit AFS from presenting this information as a part of
its demonstrations. The material contained in cards 32
through 36 is informational and permissible. The mate: ‘al
in the first paragraph of card 37 deals with the price of
AFS’s goods, and constitutes impermissible solicitation.
The material contained in the remainder of card 37 and
cards 38 through 51 is instructional and permissible. The
material contained ‘n cards 52 through 65, as well as those
portions of cards 66 and 67 that involve distribution of
contracts for purchase of AFS goods, involves impermissi-
ble solicitation.
The only portions of AFS’s demonstration that are at
issue in this segment of the lawsuit are those which the
Court has found to be impermissible pursuant to the
Court of Appeals’s ruling in American Future Systems 1.
Since there is no issue as to any material facts, summary
judgment is appropriate. The Court will therefore enter
summary judgment in favor of Defendants as to this issue.
Il. Plaintiffs Brubaker and Wingert.
Defendants first assert that the claims of Brubaker and
Wingert are moot because Wingert has withdrawn from
the university and Brubaker has not renewed his contract
for a university dormitory room during the upcoming
academic year. Plaintiffs, in an apparent attempt to solve
the “mootness” problem, on August 31, 1981, filed a mo-
tion to join an additional Plaintiff. The proposed Plain-
tiff, Kevin Graves, is a present Penn State student who
resides in a Penn State residence hall and who has notified
Penn State of his intention to hold an AFS demonstration
in his dormitory room on September 14, 1981. (Affidavit
of Kevin Graves at pp. 1-2). Graves has not, to the Court’s
knowledge, been denied permission to hold the AFS
demonstration in his dormitory room. (Memorandum of
Law in Support of Plaintiffs’ Motion to Join Kevin Graves
as an Additional Plaintiff at p. 2.) Since Graves has not
yet been denied permission to hold the AFS demonstra-
tion, the Court doubts whether his dispute with Penn
State is sufficiently ripe for the Court to adjudicate his
claim. However, the Court will not dismiss Brubaker’s and
Wingert’s claims on mootness grounds. Graves’s claims
will not materially alter the facts of this dispute and the
Court will today dismiss the entire lawsuit. Therefore, the
Court will consider the facts in the light most favorable to
Graves and will grant Plaintiffs’ motion that Graves be ad-
ded as an additional Plaintiff. Graves’s claims will be
treated as identical to those of Brubaker and Wingert.
The definition of mootness is well settled: A case is
moot when the issues presented are no longer “live” or the
parties lack a legally cognizable interest in the outcome of
the lawsuit. Powell vs. McCormack, 395 U.S. 486, 496
(1969). Despite this definition, a claim is not moot even
though the alleged violation is not presently in force or
continuing, where the alleged violation or challenged con-
duct is capable of repetition, yet evading review. Southern
Pacific Terminal Co. vs. ICC, 219 U.S. 498 (1911);
Winsett vs. McGinnis, 617 F.2d 996, 1003 (3d Cir. 1980);
cert. denied, sub nom., Anderson vs. Winsett, ____ U.S.
____. 101 S.Ct. 891 (1981). Where individual Plaintiffs are
suing, and there is no class action, the capable of repeti-
tion, yet evading review doctrine is limited to the situation
where (1) a challenged action was in its duration too short
to be fully litigated prior to its cessation or expiration, and
(2) there was a reasonable expectation that the same com-
plaining party would be subject to the same action again.
Weinstein vs. Bradford, 423 U.S. 147, 148-49 (1975),
citing Sosna vs. lowa, 419 US. 393 (1975). As defendants
12a
point out in their reply brief, the “capable of repetition yet
evading review” doctrine is inapplicable if there is no
reasonable expectation that the same Plaintiffs will be sub-
ject to the same policies again. (Defendants’ Reply Brief at
p. 5).
In order for the Court to grant summary judgment in
favor of Defendants as to Plaintiffs Brubaker’s and
Wingert’s claims, there must be no material issue of fact in
dispute. As to Brubaker, Defendants claim there is no
possibility that he will again be subject to Penn State’s
policies because Brubaker has not applied for dormitory
space in 1981 and all rooms have previously been assigned
to students making timely applications. Thus, Defendants
conclude Brubaker will no longer be able to reside in a
dormitory room, so his claim is moot. However, Plaintiffs
deny that the dormitories are filled for the 1981-82 school
year, sO a material issue of fact exists as to whether
Brubaker again will be able to live in a Penn State
residence hall. Thus, a question remains as to whether
Brubaker again will be subject to Penn State’s policies
regarding commercial transactions in residence halls.
Therefore, at least at this stage of the litigation, summary
judgment may not be granted in Defendants’ favor as to
Brubaker’s claims on mootness grounds.
As to Plaintiff Wingert, Defendants claim that since he
is no longer a student at Penn State and he has not filed an
application for readmission to the school, Wingert too will
no longer be residing in a Penn State dormitory room, so
his claim is not capable of repetition. Again, there is a
material issue of fact in dispute. Wingert, by affidavit,
States that he intends to re-enroll in Penn State as soon as
possible and intends to live in the Penn State residence
halls. Thus, as with Brubaker, Wingert’s claims cannot be
disposed of in Defendants’ favor on mootness grounds, at
least at this stage of the litigation.
13a
Defendants are entitled to summary judgment as to
Brubaker and Wingert on other grounds. Brubaker and
Wingert seek relief permitting them to invite AFS
representatives to common areas in the individual dor-
mitory rooms, to conduct sales demonstrations to groups
of invited students in their rooms and in common areas of
residence halls, and to invite AFS personnel to their dor-
mitory rooms for the purpose of consummating sales of
goods to other students following the demonstrations.
Brubaker and Wingert were not parties to American
Future Systems I, and are not bound by the doctrine of res
judicata by the decision in that case. However, American
Future Systems I constitutes binding legal precedent in-
sofar as the legal issues involved are concerned. This
Court in American Future Systems I did not address the
question of First Amendment rights of Penn State
students who are desirous of receiving information about
the products which AFS sells and concluded that AFS did
not have standing to assert the rights of those students.
American Future Systems I, 464 F.Supp. at 1259. AFS
again raised the claim that the First Amendment rights of
Penn State students were being violated by Penn State’s
policy with regard to commercial activities within dor-
mitories on its appeal in American Future Systems I. The
Court of Appeals, addressing that claim, stated that “[t}he
analysis contained in the text [of American Future Systems
1} concerning the legitimacy of the restriction on AFS
group sales in the residence halls applies as well to students
who desire to purchase AFS products at group meetings.
Also, we reiterate that the Penn State policy does allow an
individual student to invite a sales representative into his
or her room for the purpose of individually purchasing
goods.” American Future Systems I, 618 F.2d at 257, n.
16. To the extent that Brubaker and Wingert base their
First Amendment claims on the right to conduct the same
l4a
types of demonstrations and sales that AFS seeks to con-
duct, they stand in no different position than AFS itself
did in American Future Systems I. Indeed, Plaintiffs are in
agreement with this position, stating that the student
Plaintiffs’ commercial free speech rights as listeners are
reciprocal to AFS’s rights, and American Future Systems I
controls. (Plaintiffs’ Brief in Opposition to Defendants’
Motion for Summary Judgment at p. 13.) Since the Court
of Appeals in American Future Systems I upheld the
validity of Penn State’s policy with regard to commercial
activities in dormitories, and since Brubaker and Wingert
stand on the same footing as did AFS, Peni State’s
policies do not violate Brubaker’s and Wingert’s First
Amendment rights of commercial speech and Defendants
will be granted summary judgment on this issue.
Brubaker and Wingert also assert that Penn State’s
regulations unconstitutionally inhibit their right of
freedom of association arising under the First Amend-
ment. Brubaker and Wingert claim that they have a fun-
damental right to associate themselves with one another
and with AFS representatives in the setting of a group
demonstration of AFS merchandise where all of them
have the opportunity to hear and exchange information
and views relating to AFS products, the effectiveness and
fairness of the presentation, relevant price information,
and also to consummate sales, if any one so chooses.
(Plaintiffs’ Brief in Opposition to Defendants’ Motion for
Summary Judgment at pp. 17-18). Brubaker and Wingert
claim that Penn State’s regulations infringe upon those
associational rights. Brubaker and Wingert also claim that
since the private dormitory room serves as a student’s
“home away from home,” and the rooms are essentially
equivalent to the “interior of a private home,” the state
lacks the power to control legal, non-destructive, freely
formed associations within such rooms. (Plaintiffs’ Brief
lSa
in Opposition to Defendants’ Motion for Summary Judg-
ment at p. 19.)
Plaintiffs conclude that since Penn State has failed to
demonstrate a compelling state interest to sustain enforce-
ment of its regulation on commercial activities in the dor-
mitories, Penn State’s regulations must fall.
While Plaintiffs make the argument that their associa-
tional rights stand on some different footing than their
right as recipients of commercial speech, the Court is
unpersuaded by this distinction. Indeed, as set forth in the
Complaint, these associational rights are indistinguishable
from the rights sought with respect to making group
demonstrations and sales in dormitory rooms. In Count
III of the Complaint, Plaintiffs list in broadside fashion
their rights that have allegedly been violated: “[D]efen-
dants have deprived said Plaintiffs of their rights of
freedom of speech, privacy, and association under the
constitution of the United States.” Certainly, the primary
purpose of the demonstrations is to encourage the at-
tendees at the shows to purchase, merchandise. See
American Future Systems I, 464 F.Supp. at 1258 (€ 58).
The Court finds unpersuasive Plaintiffs’ argument that
since the Court of Appeals stated that Penn State had only
a “legitimate interest” in continued enforcement of its
regulations and not a “compelling interest” Brubaker’s and
Wingert’s associational rights have been violated. (Plain-
tiffs’ Brief in Opposition to Defendants’ Motion for Sum-
mary Judgment at p. 20.) Where political-type relation-
ships are impinged upon by regulation of the right to
association, such regulation must be supported by a com-
pelling state interest. E.g. NAACP vs. Alabama, 357 U.S.
449, 460 (1958). (Whether the beliefs sought to be advanc-
ed are political, religious, economic or cultural is im-
material). As is the case with commercial speech, commer-
16a
cial associational rights, even those which are economical-
ly motivated, are afforded some protection under the First
Amendment. E.g. International Union vs. National Right
to Work Legal Defense & Education Foundation, 590
F.2d 1139, 1148 (D.C. Cir. 1978). The Plaintiffs cite no
authority for the proposition that commercial associa-
tional rights such as those which are at issue in this case are
on equal footing with political associational rights. Quite
to the contrary, the relationship Setween political and
commercial associational rights is analogous to the rela-
tionship between political and commercial speech rights.
As the Supreme Court held in Ohralik vs. Ohio State Bar
Association, 436 U.S. 447, 455-56 (1978), commercial and
political activities must be treated differently.
We have not discharged the “common sense”
distinction between speech proposing a commer-
cial transaction, which occurs in an area tradi-
tionally subject to government regulation, and
other varieties of speech . . . . To require a pari-
ty of constitutional protection for commercial
and non-commercial speech alike would invite
dilution, simply by a levelling process, of the
force of the [First] Amendment’s guarantees with
respect to the latter kind of speech. Rather than
subject the First Amendment to such a
devitalization, we instead have afforded com-
mercial speech a limited measure of protection,
commensurate with its subordinate position in
the scale of First Amendment values, while
allowing modes of regulation that might be im-
permissible in the realm of non-commercial ex-
pression.
In Ohralik, the Court expressly held that commercial
associational rights, while entitled to some constitutional
protection, are subject to regulation in furtherance of im-
17a
portant state interests. 436 U.S. at 458-59. See Central
Hudson Gas & Electric Corp. vs. Public Service Commis-
sion of New York, ____ U.S. ___, 100 S.Ct. 2343 (1980);
Virginia State Board of Pharmacy vs. Virginia Citizens
Consumer Counsel, 425 U.S. 748 (1976).
The Court of Appeals has already held in American
Future Systems I that legitimate and important interests of
Penn State are furthered by its policy of governing com-
mercial activity in the dormitories. Penn State asserts that
AFS group sales significantly affect the primary activities
of college dormitories. Penn State argues that its residence
halls are exclusively dedicated to providing a living en-
vironment which is conductive to activities associated with
being a student and succeeding academically and that
AFS’s activity within the residence halls will disrupt the
proper study atmosphere and privacy of students. These
interests are important enough to sustain Penn State’s
policy as against a challenge based on the right of associa-
tion. American Future Systems I, 618 F.2d at 256-57.
Moreover, the Court fails to see how the restrictions im-
posed on Brubaker and Wingert infringe in any material
way on the right to associate. As indicated above,
Brubaker and Wingert may engage in sales demonstrations
in common areas, and may consummate sales in the rooms
of people purchasing the products. Brubaker and Wingert
are of course free to conduct more extensive commercial
activities at locations other than the dormitory halls of
Penn State. Given the close nexus between associational
freedoms and freedom of speech, NAACP va. Alabama,
357 U.S. 449, 460 (1958)), Brubaker and Wingert cannot
demonstrate that the policy governing commercial activity
violates their associational rights. The Defendants will
therefore be granted summary judgment on this issue.
18a
Brubaker and Wingert also claim that Penn State’s
regulations impermissibly infringe on their constitutional
right of privacy, which they assert requires that they be
permitted to conduct the commercial activity they desire in
the dormitory rooms. Brubaker and Wingert state that
they seek to establish their rights to be let alone in their
choice of whom they may invite to their rooms, or whom
they choose to visit, in a lawful, nondisruptive manner.
Brubaker and Wingert argue that because the privacy and
associational rights are so closely intertwined in this case,
if the regulations cannot withstand scrutiny with respect to
associational claims, the regulations must fall on privacy
grounds for the same reasons. (Plaintiff's Brief in Opposi-
tion to Defendants’ Motion for Summary Judgment at pp.
23-24.) The Court agrees with these Plaintiffs’ statement
that privacy and associational rights should be treated
equally in this case, but concludes that neither associa-
tional nor privacy rights have been violated. See Ohralik
vs. Ohio State Bar Association, 436 U.S. 447, 455-56
(1978).
While the genesis of privacy rights is somewhat obscure,
Griswold vs. Connecticut, 381 U.S. 479 (1965), a fun-
damental right to be free from unwanted governmental in-
trusions is implicit in the constitution. Roe vs. Wade, 410
U.S. 113 (1973); Stanley vs. Georgia, 394 U.S. 557, 564
(1965). It is equally true that the constitutional right of
privacy extends to a college dormitory room, Piazzola vs.
Watkins, 442 F.2d 284, 289-90 (Sth Cir. 1971), as a college
dormitory room is the equivalent of a student’s “home
away from home,” American Future Systems I, 464
F.Supp. at 1262, and dormitory rooms are compared with
the “interior of a private home,” Brush vs. Penn State, 489
Pa. 243, 414 A.2d 48, 51 (1980).
The fact that students have privacy interests in their dor-
mitory rooms, however, merely begins the inquiry. The
19a
Supreme Court has recognized two kinds of privacy that
are constitutionally protected. The first protects the in-
dividual from disclosure of certain matters and the second
protects the individual from unwarranted governmental
intrusion when the individual seeks to make certain per-
sonal decisions. Whalen vs. Roe, 429 U.S. 589, 599-600
(1977). Only the latter interest is relevant in this case. That
interest, however, has been restricted to so-called fun-
damental matters “relating to marriage, procreation, con-
traception, family relationships, child rearing, and educa-
tion.” Paul vs. Davis, 424 U.S. 693, 713 (1976). The Plain-
tiffs, in apparent recognition of the fact that privacy rights
established by Supreme Court decisions do not extend to
the facts of this case, state that “the fact that certain
aspects of the student-plaintiffs’ privacy claims have not
previously been considered and recognized by the Supreme
Court does not preclude such recognition, by this Court.”
(Plaintiffs’ Brief in Opposition to Defendants’ Motion for
Summary Judgment at p. 24.) This case does not involve
some intrusion into Brubaker’s and Wingert’s ability to
make decisions about personal matters of a fundamental
nature; nor does Penn State’s policy preclude personal
relationships, since it affects only relationships for com-
mercial purposes at certain locations. Further, it is not ap-
parent how the shifting of a group demonstration from a
dormitory room to a common area imposes any infringe-
ment at all upon Brubaker’s and Wingert’s freedom of
thought, action, or belief. Moreover, any conception that
privacy doctrines include the right to invite ten or more
persons into one’s room for a commercial demonstration
is inconsistent with the notion of the “right of privacy”
under Supreme Court case law. For these reasons, the
Court declines Plaintiffs’ invitation to expand the right of
privacy in this case. Since Defendants have shown that, as
a matter of law, Plaintiffs’ right of privacy has not been
violated by Penn State’s policy regarding commercial ac-
20a
tivities in dormitories, Defendants will be granted sum-
mary judgment as to this aspect of the case.
Brubaker and Wingert also claim that Penn State’s
policies abridge their rights under Pennsylvania Landlord
and Tenant Law. Under § 504-A of the Landlord-Tenant
Act, 68 P.S. § 250.554 (Supp. 1981), a tenant has the
right to invite to his apartment or dwelling units such
employees, business visitors, tradesmen, deliverymen,
suppliers of goods and services, and the like as he wishes.
Further, the tenant has the right to invite to this dwelling
for reasonable periods of time social guests, family
members and visitors. “It is the intent of this article to in-
sure that the landlord may in no way restrict the tenant’s
right to purchase goods, services and the like from the
source of the tenant’s choosing . . .” 68 P.S. § 250.554.
There is some controversy as to whether Pennsylvania’s
Landlord-Tenant Act is app. ible to Penn State’s dor-
mitories. Even assuming that ‘..e Act is applicable to Penn
State’s dormitories, Brubaker and Wingert have not
demonstrated that Penn State’s regulations with regard to
commercial activities in its dormitories violates the Act.
Penn Staie does not prohibit Brubaker and Wingert from
inviting an AFS representative to their rooms to make a
sale. Penn State also does not prohibit Brubaker and
Wingert from having social guests in their dormitory
rooms. No reasonable construction of the Landlord-
Tenant Act leads to the conclusion that Brubaker and
Wingert are permitted to engage in broad commercial
transactions in Penr: State’s dormitories. Thus, as a matter
of law, Brubaker’s and Wingert’s rights under Penn-
sylvania’s Landlord-Tenant Act have not been violated.
Summary judgment will therefore be granted to Defen-
dants on this issue.
2la
Ill. Plaintiff's DelValle, Varsics, Habacher, and Spiller.
DelValle, Varsicks, Habacher and Spiller are Penn State
students who do not reside in Penn State residence halls.
They seek an order permitting them to attend and par-
ticipate in AFS group presentations in common areas and
dormitory rooms and to consummate sales from AFS in
those rooms. (Complaint, Count IV.) These Plaintiffs
were allegedly invited by Brubaker and Wingert to attend
AFS demonstrations in private dormitory rooms. When
Penn State ordered that these demonstrations not take
place, on the ground that they were violative of Penn
State’s regulations regarding commercial activities in dor-
mitories, these Plaintiffs claimed that their right to attend
those demonstrations was violated.
In American Future Systems I, the Court of Appeals
recognized that the First Amendment rights of the reci-
pients of commercial speech are co-extensive with those of
the speaker. American Future Systems I, 618 F.2d at 257
and 257 n. 16. The restriction on these Plaintiffs’ ability to
engage in commercial activity is even less than that placed
on Brubaker and Wingert. The non-resident Plaintiffs are
able to participate in an AFS demonstration in a common
area of the residence hall but not in a dormitory room.
Moreover, they might consumate a purchase of AFS
goods anywhere except in a residence hall. It is presumed
that Penn State cannot and does not prohibit these Plain-
tiffs from inviting an AFS representative to their own
dwellings for demonstrations and sales. Thus, the Court
fails to see how Penn State’s regulations limiting commer-
cial activities in its dormitories constitute any significant
abridgement of these Plaintiffs’ rights of speech, privacy,
and association. Since these Plaintiffs have available all
the alternative means of access to information about AFS
products, the inconsequential restrictions imposed by
22a
Penn State’s regulations cannot be considered to be viola-
tions of these Plaintiffs’ First Amendment rights. Linmark
Associates, Inc. vs. Willingboro, 431 U.S. 85, 93 (1977).
Reid vs. Barrett, 467 F.Supp. 124, 128 (D. N.J. 1979),
aff'd 615 F.2d 1354 (3d Cir. 1980); Connecticut State
Federation of Teachers vs. Board of Education Members,
538 F.2d 471, 479 (2d Cir. 1976). Defendants are therefore
entitled to summary judgment as to these Plaintiffs’
claims.
IV. Arbitrary Enforcement of Penn State’s Regulations.
Plaintiffs’ final claim is that Defendants in violation of
Plaintiffs’ due process rights, have not enforced the
challenged regulations in an even-handed, fair, and non-
arbitrary manner. Plaintiffs argue in support of their due
process claim that Wolff vs. McDonnell, 418 U.S. 539,
558 (1974), stands for the proposition that “the touchstone
of due process is protection of the individual against ar-
bitrary action of government.” See also Chung vs. Park,
514 F.2d 382, 387 (3d Cir. 1975).
As Plaintiffs admit, “of course, the predicate of a due
process claim is governmental violation of a person’s liber-
ty interest.” (Plaintiffs’ Brief in Opposition to Defendants’
Motion for Summary Judgment at p. 26, adopting Plain-
tiffs’ Memorandum of Law in Support of Motion for a
Preliminary Injunction at pp. 34-35.) It is certainly the
case that were it established that Plaintiffs’ constitutional
rights of free speech, association and privacy were violated
by Penn State’s enforcement of its regulation regarding
commercial activity in dormitories, this violation of Plain-
tiffs’ rights would be within the zone of protected interest
under the Fourteenth Amendment. E.g. Madera vs. Board
of Education, 386 F.2d 778, 783-84 (2d Cir. 1967), cert
denied, 390 U.S. 1028 (1968), citing Allgeyer vs. Loui-
23a
siana, 165 U.S. 578 (1897). However, the Court has found
that Penn State’s enforcement of its dormitory regulations
does not violate any of Plaintiffs’ collective constitutional
rights or rights under Pennsylvania state law. Thus, even if
Penn State’s regulations were enforced in an arbitrary
manner Plaintiffs’ due process rights would not have been
violated.
In addition, Plaintiffs’ complaint and supporting af-
fidavits over insufficient facts to support a claim of
discriminatory enforcement of Penn State’s policies. In
this circuit, civil rights complaints must set forth facts with
specificity, Rotolo vs. Borough of Charleroi, 532 F.2d
920, 922 (3d Cir. 1976), and this complaint fails to do so.
Plaintiffs, in a conclusory manner, in Count II of their
complaint, state that “by enforcing their stated policy,
which purports to exclude from university residence halls
all persons seeking to demonstrate or sell merchandise, in
an arbitrary, capricious, selective, discriminatory, and
unreasonable manner, Defendants have deprived Plain-
tiffs of their rights to due process under the Fourteenth
Amendment of United States Constitution.” (Complaint,
Count II). The sole evidence now advanced in support of
its allegation is the affidavit of Joseph Healey, which
states in part:
Ms. Peterson explained that the University can-
not monitor the residence halls at all times.
Therefore, there may be illegal presentations go-
ing on that the University does not know about.
However, when the university becomes aware of
an illegal presentation through a student com-
plaint or other means, they enforce the rule.
This hardly establishes arbitrary and capricious enforce-
ment of Penn State’s policies. Indeed, it appears to
establish consistent enforcement of the policies as soon as
24a
the university is made aware of violations of its rules.
Since Plaintiffs have failed to state a claim upon which
relief can be granted with respect to this due process claim,
summary judgment will be granted in Defendants’ favor
on this issue.
V. Conclusion.
The Plaintiffs have not established that Penn State’s en-
forcement of its regulations with regard to commercial ac-
tivity in its dormitories violates any of the Plaintiffs’ con-
stitutional rights or rights under Pennsylvania state law.
Since there is no dispute of any material issue of fact in
this case, Defendants’ motion for summary judgment will
be granted.
An appropriate order will be entered.
MUIR, U.S. District Judge
DATED; September 16, 1981
25a
UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
AMERICAN FUTURE SYSTEMS,
INC., et al., :
Plaintiffs : Civil No. 81-0171
vs. : Complaint Filed
: 2/5/81
THE PENNSYLVANIA STATE : (Judge Muir)
UNIVERSITY, et al., :
Defendants
OPDER
1. Graves’s motion to be joined as an additional Plain-
tiff is granted.
2. Defendants’ motion for summary judgment is
granted.
3. The Clerk of Court shall enter judgment in favor of
all Defendants and against all Plaintiffs.
4. The Clerk of the Court shall close this file.
MUIR, U.S. District Judge
DATED: September 16, 1981
26a
APPENDIX B
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 81-2674
AMERICAN FUTURE SYSTEMS, INC.,
STEVEN BRUBAKER, RICHARD J. WINGERT,
W. BRUCE DEL VALLE, JOAN D. VARSICS,
DENNIS C. HABECKER, KEVIN GRAVES
and JOHN B. SPILLAR,
Appellants
v.
THE PENNSYLVANIA STATE UNIVERSITY,
BOARD OF TRUSTEES OF
THE PENNSYLVANIA STATE UNIVERSITY,
JOHN W. OSWALD, and M. LEE UPCRAFT
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
(D.C. Civil No. 81-0171)
Argued April 2, 1982
Before: GIBBONS, SLOVITER and BECKER,
Circuit Judges
(Filed August 9, 1982)
Henry T. Reath (Argued)
George E. Pierce, Jr.
Duane, Morris & Heckscher
One Franklin Plaza
Philadelphia, PA 19012
Attorneys for Appellants
27a
Virginia Lynn Hogben
2600 The Fidelity Building
Philadelphia, PA 19109
Attorney for Amicus Curiae
American Civil Liberties
Foundation of Pennsylvania
Carl N. Martin, II
1135 Land Title Building
Philadelphia, PA 19110
Attorney for Amicus Curiae
Commonwealth Association of
Students; Associated Students
of Kansas; California State
Student Association; Student
Association of the State
University of New York
Ronald H. Sinzheimer
8 Elk Street
Albany, New York 12207
Attorney for Amicus Curiae
Student Association of the
State University of New York
Delbert J. McQuaide
P. Mark FAulkner (Argued)
McQuaide, Blasko, Schwartz,
Fleming & Faulkner, Inc.
811 University Drive
State College, PA 16801
Attorneys for Appellees
OPINION OF THE COURT
SLoviTeER, Circuit Judge.
Plaintiff American Future Systems, Inc. (AFS) filed suit
against Pennsylvania State University, its trustees and
agents (jointly referred to as Penn State) alleging that
Penn State’s application of its policies relating to commer-
28a
cial activities in the common areas of its student residence
halls violated its First and Fourteenth Amendment rights
to free commercial speech as established by this court in an
earlier opinion. Several students at Penn State also joined
as plaintiffs alleging that Penn State’s policies with regard
to activities in the common areas and in the dormitory
rooms violated, inter alia, their noncommercial free
speech rights and right to privacy. Plaintiffs appeal the
district court’s grant of defendants’ motion for summary
judgment. We reverse and remand.
I.
BACKGROUND
AFS is a corporation which engages in the sale of
cookware, crystal, and tableware through demonstrations
of its merchandise at colleges throughout the United
States. These demonstrations are attended by a student
hostess, invited guests and a sales representative. Four of
the student plaintiffs, Bruce Del Valle, Joan D. Varsics,
Dennis C. Habecker and John B. Spillar, are current Penn
State students who do not reside in the University
residence halls. Plaintiff Keven Graves is a Penn State stu-
dent who currently resides in the residence halls. Plaintiffs
Steven Brubaker and Richard J. Wingert were living in the
University residence halls at the time the action was filed. '
It is conceded that as long as one plaintiff is a student who
resides in the residence halls to which the contested regula-
tions apply, the issues are properly before us.
‘Wingert withdrew from Penn State in February 1981. Brubaker is
still a student at Penn State, but no longer resides in the residence
halls.
29a
In the prior opinion rendered in the earlier action
brought by AFS we described Penn State’s policies and
regulations covering commercial activities in its dor-
mitories in detail. See American Future Systems, Inc. v.
Pennsylvania State University, 618 F.2d 252 (3d Cir. 1980)
(American Future Systems I). These regulations and
policies have not changed to any sign ficant extent. App.
at 322a. In summary, the student housing contract pro-
vides “[t}he conducting of any business enterprise for per-
sonal profit is prohibited in or around the university
operated units.” The student handbook states:
“The institution... has rights and respon-
sibilities of its own. The rights and respon-
sibilities of the institution include: ... [the]
{[rlight to prohibit individuals and groups who
are not members of the University community
from using its physical and operating facilities
for commercial . . . activities.”
“Lectures, conceris, demonstrations, displays, or
exhibits may not be used in any manner as a
means of promoting commercial companies,
products, or services.”
“The word ‘commercial’ . . . means any activity
or event which results in personal financial gain
to the peddler or organization thereof, provided
that contact between a peddler and a student
shall not be deemed commercial if such contact
was invited by the individual student involved.”
“Persons who are not students or employees of
the University, while on University property, are
required to . . . abide by University policies and
regulations.”
618 F.2d at 253 (citations omitted).
30a
Penn State’s interpretation of these policies and regula-
tions as relevant to the issues in this case is set forth in its
brief as follows: “Under that policy, AFS may conduct
group demonstrations of its products in common areas of
Penn State residence halls. No solicitation of sales or sales
may occur in those demonstrations. Following that
demonstration, or by direct mail or telephone, AFS may
secure invitations from a student to solicit sales and sell
merchandise to that student in his or her dormitory
room.” Brief of Appellees at 5.2 AFS challenges the man-
ner of application of the regulation to the demonstrations
in common areas of the residence halls. The student plain-
tiffs challenge the preclusion of demonstrations in the dor-
mitory rooms. The issues will be considered separately.
Il.
AFS’S CHALLENGE
In American Future Systems I, AFS had challenged
Penn State’s regulation of group commercial activities in
the residence halls. AFS had conducted and scheduled
future demonstrations in the residence halls of Penn State.
As part of such demonstrations, AFS conducts other
solicitation activity including door-to-door visits accom-
panied by the student hostess to seek guests for the
?In American Future Systems I, 464 F. Supp. 1252, 1256 (M.D.Pa.
1979), the district court found that:
A sales demonstration put on by American Future
Systms generally proceeds in two parts: A demonstration
of the American Prestige Series products including a com-
parison of those products with other merchandise and an
explanation of why American Prestige products are
superior, and a sales portion where interested students are
given an opportunity to purchase products on an install-
ment plan basis.
3la
demonstration. The demonstrations were halted by
University officials because they violated the policy bann-
ing commercial activity. “When AFS protested that it had
a constitutional right to solicit sales within the residence
hall, a Penn State official told AFS that it would be per-
mitted to conduct the demonstration portion of its show if
no attempts were made to sell merchandise to the students
during the presentation. AFS rejected that arrangement,
stating that the sales portion was absolutely crucial.” 618
F.2d at 254 (footnote omitted). In affirming the judgment
entered in Penn State’s favor, we emphasized that Penn
State had not “totally suppressed” commercial speech, but
“merely restricted that speech somewhat.” Jd. at 258. We
stressed that “not only is AFS free to sell its goods
elsewhere than in the residence halls, it can even enter
those halls, upon invitation, and set up group demonstra-
tions of its products. All that it is restricted from doing is
actually completing in those halls its desired commercial
transactions.” Jd. at 259.
Shortly thereafter, AFS requested that Penn State per-
mit it to conduct group demonstrations in individual
students’ rooms. App. at 20a. Under its proposed scheme
actual consummation of sales would occur in the pur-
chaser’s own room on a one-on-one basis. Penn State re-
jected this proposal on the ground that such activity would
not conform with University policy. Jd. at 22a.’ AFS
4In a letter dated October 3, 1980, counsel for Penn State explained
the reason or rejecting AFS’ proposal as follows:
Generally speaking, requests [to conduct group
demonstrations in the public areas of the dormitories} are
honored where the “demonstration” has educational value,
does not interfere with the normal activity of the area and
does not involve an outright solicitation of a commercial
sale.
The “demonstration” may result in the consummation of
a commercial transaction if the student pursues the matter
32a
then proposed that it be permitted to present group
demonstrations in the common rooms of the residence
halls. App. at 29. It forwarded to the University a copy of
the printed text (consisting of 76 cue cards) of its proposed
presentation and explained that the material contained in
cards | through 67 would be presented in the group
demonstration, whereas the material in the remaining
cards would be “modified for a one on one closing transac-
tion.” Jd. at 30a. Thereafter, University officials reviewed
the cards and determined that although “the presentation
does contain much material of an educational nature
which would be permitted,” certain of the material con-
tained “an outright group commercial solicitation which is
contrary to University policy.” /d. at 69a. In a letter to
AFS, dated November 20, 1980, Penn State’s counsel
enumerated which material — primarily those cue cards
at the place of business of the vendor or if the student in-
vites the vendor to his or her room to meet on an individual
basis. In addition, an individual student may invite a ven-
dor to the student’s room, whether or not a “demonstra-
tion” has occurred for the consummation of a commercial
solicitation and sale with that student only.
However, group “demonstrations” or group sales by
commercial organizations, or other who are not residents,
are not permitted in the private areas of the residence halls,
including the rooms of the students.
The purpose behind these distinctions is to try to achieve
a balance between the personal needs of the individual stu-
dent and the needs for privacy and maintenance of a prop-
er study atmosphere for large numbers of students living
in communal facilities.
Although these distinctions may not be entirely logical,
and although it may be difficult to tell the difference be-
tween a “demonstration” and an outright commercial
solicitation, the policy by an large has achieved its pur-
pose.
App. at 26a-27a.
33a
containing price, guarantee and payment plan information
— was not permissible.”*
In this action for injunctive and declaratory relief, AFS
seeks an order “requiring the University to comply with
this court’s prior interpretation of the effect of its regula-
tions” and thus to allow AFS to present uncensored group
demonstrations in the common areas of the residence halls
upon invitation by a resident student and to consummate
sales on a one-on-one basis with a student who has invited
an AFS representative back to his or her private dormitory
room. The district court denied plaintiffs’ motion for a
preliminary injunction without a hearing, American
Future Systems, Inc. v. Pennsylvania State University, 510
F.Supp. 1983 (M.D. Pa. 1981), and subsequently, again
without giving plaintiffs a hearing, granted Penn State’s
motion for summary judgment. American Future
Systems, Inc. v. Pennsylvania State University, 522
F.Supp. 544 (M.D. Pa. 1981).
AFS argues that Penn State’s refusal to allow it to pres-
ent uncensored sales demonstrations in the common areas
of University residence halls is violative of its First
Amendment rights and contrary to this court’s prior inter-
pretation of what commercial activity Penn State may per-
missibly prohibit in its residence halls. The district court
“The letter stated that “the material starting with the bottom
paragraph of card 14 through the second paragraph on card 18 is not
permissible because cooking by students, or anyone else, is not permit-
ted in the residence halls.” App. at 69a. The letter also rejected the
material on cards 24-31 (relating to the price of AFS’s china and
guarantee and payment plans offered to students); the first paragraph
of card 37 (relating to the price of AFS’s crystal); cards 52-65 (relating
to the price of AFS’s cookware and package plans, guarantee and pay-
ment plans, and tlic Florida holiday drawing); and “those portions of
cards 66-67 which involve the distribution of contracts to the group.”
Id.
34a
rejected these contentions primarily on the ground that
they were barred by the doctrine of res judicata. It con-
strued AFS’s claims as an attempt to relitigate claims
which either were advanced and decided in the first action
or which could have been advanced. 522 F.Supp. at 548. It
rejected AFS’s claim that the University’s attempt to cen-
sor its sales demonstrations was violative of the First
Amendment on the ground that this court had “specifical-
ly upheld Penn State’s regulations to the extent they rested
upon a distinction between commercial and non-
commercial speech.” Jd. at 549. Finding that “the question
of whether particular aspects of AFS’s presentations were
educational or commercial” was not barred by res
judicata, the district court independently examined the 67
cue cards at issue and found that those cards containing
price, credit and guarantee terms constituted impermissi-
ble solicitation. It therefore, upheld Penn State’s prohibi-
tion of cards 24-31, the first paragraph of card 37, 52-65,
and portions of cards 53-67. See note 4, supra.
We disagree with the district court’s conclusion that the
claims advanced by AFS in this appeal are barred by res
judicata. At the time of our prior decision, there had been
no attempt by the University to censor AFS’s sales
demonstrations by prohibiting those portions of its
demonstration containing information relating to the price
of AFS’s products and the company’s credit and guarantee
terms. The parties have agreed in oral argument before us
that no issue as to the contents of the demonstration, as
distinguished from the consummation of the transaction,
was involved in the first action.
It is important at the outset to clarify which issues are
not before us. Although AFS construes our decision in
American Future Systems I as having established its con-
stitutional free speech right to conduct demonstrations of
35a
a commercial product in common areas within the Univer-
sity’s residence halls we do not read that opinion so broad-
ly. Penn State has not sought to bar all commercial activi-
ty from its residence halls. It has limited what ostensibly
appears to be such a ban through its definition of “com-
mercial” which excludes student contact with a peddler “if
the contact was invited by the individual student
involved.” Therefore we need not decide whether a state
University may properly ban all commercial activity in its
residence halls. Similarly, AFS does not challenge the
distinction which the earlier opinion made between an ac-
tual consummation or completion of the “commercial
transaction” and a group demonstration of AFS’s pro-
ducts. 618 F.2d at 258-59. Instead it seeks only to conduct
the demonstration in the common areas without censor-
ship of the contents of that demonstration.
Finally, although the University has conceded that por-
tions of the demonstration may have some educational
value, and it and the district court sought to draw the line
between those portions of the demonstration which they
deem educational and those portions which they deem
commercial, it is unmistakable that the demonstration is
geared to the sales of the products and represents commer-
cial speech.‘ Thus the only issue is whether Penn State
may censor the content of AFS’s commercial speech con-
ducted in the dormitory common rooms where AFS has
been permitted by the University to conduct its sales
demonstrations.
‘It may be wishful thinking to assume that most student guests at-
tend the demonstrations for their educational value. Students are told
in advance that those who attend are eligible to participate in the
drawing of a winner of a four-day vacation in Florida. See American
Future Systems I, 618 F.2d at 254.
36a
The principle that commercial speech is protected from
unwarranted government interference by the First Amend-
ment, as applied to the states through the Fourteenth
Amendment, was established in Virginia State Board of
Pharmacy v. Virginia Citizens Consumer Council, Inc.,
425 U.S. 748 (1976). That protection extends to price in-
formation as well as advertising. See Bates v. State Bar of
Arizona, 433 U.S. 350 (1977). Commercial speech,
however, allows greater regulation than non-commercial
speech, Ohralik v. Ohio State Bar Ass’n, 436 U.S. 447,
455-56 (1978).
In Central Hudson Gas & Electric Corp. v. Public Ser-
vice Commission, 447 U.S. 557, 566 (1980), the Supreme
Court summarized the constitutional test for restrictions
on commercial speech as follows:
For commercial speech to come within [the First
Amendment], it at least must concern lawful ac-
tivity and not be misleading. Next, we ask
whether the asserted governmental interest is
substantial. If both inquiries yield positive
answers, we must determine whether the regula-
tion directly advances the government interest
asserted and whether it is not more extensive
than is necessary to serve that interest
In Ad World, Inc. v. Township of Doylestown, 672
F.2d 1136, 1139 n. 6 (3d Cir.), cert. denied, 102 S.Ct. 2240
(1982), we stated that advertisements may be regulated to
insure their truthfulness and to prevent harm to the public.
See also Beneficial Corporation v. F.T.C., 542 F.2d 611,
1619 (3d Cir. 1976), cert. denied, 430 U.S. 983 (1977), (“the
remedy for the perceived violation can go no further in im-
posing a prior restraint on protected commercial speech
than is reasonably necessary to accomplish the remedial
objective of preventing the violation”).
37a
In the instant situation, there has been no allegation that
AFS’s commercial speech activities are fraudulent,
misleading or otherwise unlawful. As the Supreme Court
emphasized in Central Hudson:
The limitation on expression must be designed
carefully to achieve the State’s goal. Compliance
with this requirement may be measured by two
criteria. First, the restriction must directly ad-
vance the state interest involved; the regulation
may not be sustained if it provides only ineffec-
tive or remote support for the government’s pur-
pose. Second, if the governmental interest could
be served as well by a more limited restriction on
commercial speech, the excessive restrictions
cannot survive.
447 U.S. at 564.
We, therefore, must first determine whether the University
has advanced a substantial government interest to be
achieved by the restrictions at issue. The only interest ad-
vanced by Penn State for precluding information on the
price of the company’s products and the nature of the con-
tract it enters into with purchasers is that asserted in the
prior action before this court — i.e. its interest in main-
taining the proper study atmosphere in its dormitories and
in protecting the privacy of the students residing in those
facilities. Restrictions on the contents of the demonstra-
tion as distinguished from the conduct of the demonstra-
tion cannot further these interests. The Supreme Court
cases provide ample precedent for the proposition that
price information has value. See Virginia State Board of
Pharmacy v. Virginia Citizens Consumer Council, Inc.,
U.S. at 364. The University does not contend that the mere
act of convening a group in the common areas of the
residence halls is inimical to the study atmosphere since its
38a
policy permits such group activity. We conclude thai Penn
State has failed to show a substantial state interest, much
less a plausible explanation, for its policy differentiating
between the nature of the information contained in the
AFS demonstration. We therefore reverse the summary
judgment entered in Penn State’s favor.
III.
STUDENT'S CLAIM
The claims of the students vary from that asserted by
AFS. In January 1981, plaintiffs Wingert and Brubaker
each informed the University that, with the consent of
their roommates, they would be hosting a group
demonstration of AFS products in their individual dor-
mitory rooms. App. at 71a, 73a. Plaintiffs Del Valle, Var-
sics, Habecker, and Spillar were invited and planned to at-
tend the group demonstrations. Penn State informed both
Wingert and Brubaker that they would not be permitted to
host such presentations in their dormitory rooms, but
would be allowed to host the demonstration in a common
room of the residence hall if the demonstration did not in-
volve “a solicitation to purchase or a sale of any
products.” Jd. at 72a, 74a. A common room was reserved
by the University for each student’s use. Jd. The students
joined this action, seeking relief permitting them “(1) to
make purchases in a group setting, if they so desire, at a
demonstration presented in a common room within the
residence halls, and, in addition, (2) to host and par-
ticipate in informational and sales demonstrations in a stu-
dent’s private dormitory room, including the right to com-
plete a sales contract at that time in the group setting or, at
their option, to make a purchase at a later time in a private
setting.” Appellants’ brief at 25.
39a
The students’ claim directed to the distinction which the
University makes between the demonstration and consum-
mation of the transaction in the common areas is one that
was before this court in American Future Systems I. In
granting summary judgment against the student plaintiffs,
the district court recognized that they were not parties to
American Future Systems I and are not bound by the doc-
trine of res judicata by the decision in that case. 522 F.
Supp. at 551. Nonetheless, the court considered that our
prior decision constitutes binding legal precedent insofar
as the legal issues are concerned. We also are bound by the
prior panel opinion. Internal Operating Procedures of the
Third Circuit, Ch. VIII. C. (1980). Fairly read, the court
in American Future Systems I sustained the validity of the
distinction between the demonstration and the consumma-
tion of the transaction, and it did so after considering not
only AFS’s right to deliver the speech but the “students”
rights to take part in the sales there.” See 618 F.2d at 257
n. 16. Therefore, the district court did not err in rejecting
the students’ claims with respect to the demonstration in
the common areas.
The students also challenge the University restriction of
the use to which they may put their dormitory rooms by
preventing the group demonstrations. They invoke their
rights to free speech, associational interests, privacy, due
process, and section 504-A of the Pennsylvania Landlord
Tenant Act. Each of these claims was rejected by the trial
court in granting summary judgment for Penn State. We
focus primarily on the students’ claimed right of free
speech and associational interests.
The students argue that they have established by af-
fidavit that the primary reasons for desiring to participate
in the AFS presentations were educational, social, and
cultural rather than commercial, that the district court
40a
failed to consider their noncommercial free speech rights,
and that such rights deserve a higher level of protection
than commercial speech. They claim that “the state must
demonstrate a compelling state interest for the regulation”
and that the regulation must be narrowly drawn. The
Amicus American Civil Liberties Union argues that to the
extent Penn State’s regulations prohibit students from
gathering in their own dormitory rooms to hear AFS’s
presentations, they violate the First Amendment because
the “interest in protection of privacy and study at-
mosphere, whatever its sufficiency as grounds for the
university’s restrictions on use of the common rooms, does
not meet constitutional requirements as a justification for
prohibitions against students hearing commercial presen-
tations in a student’s own room” American Civil Liberties
Union Brief at 8.
The district court does not appear to have considered
the students’ associational and free speech rights in the ac-
tivities in their dormitory rooms independently from the
activities conducted in the common areas. In its argument
before us, Penn State represented that all organized group
activity is prohibited in the dormitory rooms and must be
conducted in the common areas, and that this policy ap-
plied to political as well as commercial activity. If this
were the case, Penn State may indeed have a satisfactory
reason for distinguishing between group activity in in-
dividual dormitory rooms and in common areas which can
be observed by others. Such reasons may relate to the safe-
ty and well being of the students and the facility by which
their security can be protected. The difficulty is that on
this record we do not know whether there is a blanket pro-
hibition against all organized group activity, and there
have been no findings made by the district court as to the
basis for such a prohibition.
4la
It is undisputed that even speech entitled to the highest
First Amendment protection may be subject to reasonable
time, place, and manner regulations that are content-
neutral, serve a significant governmental interest, and that
leave open ample alternative channels for communication
of the information. Heffron v. International Society for
Krishna Consciousness, Inc., 452 U.S. 640, 647-48 (1981).
In this case the absence of any record on this issue and any
findings by the district court makes this an inappropriate
case for summary judgment. The University’s reliance on
the need to preserve a study atmosphere, asserted also in
defense cf this regulation, is unsupported by any evidence
in this record and there is no basis to bind the students,
who were not parties in the prior litigation, by any
evidence which may be on record in that case. Therefore
we will not speculate about the validity of the line drawn
by the University between activity in the common areas of
the dormitory and the dormitory rooms themselves.
As the district court found, plaintiffs’ due process claim
depends on finding some predicate right in the form of a
liberty interest. Since the district court had rejected plain-
tiffs’ proffered free speech right, it concluded there was no
such liberty interest implicated. Since we have concluded
that it was inappropriate to grant summary judgment
against the student plaintiffs on this ground, it follows
that the district court will need to reexamine the plaintiffs
due process claim. At that time, plaintiffs may seek to
amend the complaint to provide, if they can, the specifici-
ty which the district court found lacking.
Because we must remand this matter to the district
court, we will also reach for its guidance the students’ con-
tention that the Penn State policies violate their constitu-
tional right to privacy which encompasses their right to
receive visitors in their dormitory rooms and to be received
42a
as a visitor in the privacy of a fellow student’s room. We
have previously commented that “the full measure of the
constitutional protection of the right to privacy has not yet
been delineated.” United States v. Westinghouse Electric
Corp., 638 F.2d 570, 577 (3d Cir. 1980). In Whalen v.
Roe, 429 U.S. 589, 599-600 (1977) the Supreme Court
referred to two types of privacy interests: “One is the in-
dividual interest in avoiding disclosure of personal mat-
ters, and another is the interest in independence in making
certain kinds of important decisions.” The latter decisions
have encompassed “matters relating to marriage, procrea-
tion, contraception, family relationships, and child rear-
ing and education.” Paul v. Davis, 424 U.S. 693, 713
(1976). Anu individual student’s right to privacy is not
abrogated because the student has chosen to live in a
University dormitory. On the other hand, the intimate per-
sonal nature of the rights previously accorded privacy pro-
tection is a far cry from the right asserted here, the right to
host and attend a demonstration of cookware. We are un-
willing to extend the constitutional right of privacy to
commercial transactions completely unrelated to fun-
damental personal rights and therefore affirm the district
court’s rejection of that basis of plaintiffs’ claims.*
*The district court rejected the claim of Brubaker, Wingert, and
Graves that Penn State’s policies abridge their rights under § 504-A of
the Pennsylvania Landlord and Tenant Act, 68 P.S. § 250.544. That
section provides:
The tenant shall have a right to invite to his apartment or
dwelling unit such employees, business visitors, tradesmen,
deliverymen, suppliers of goods and services, and the like
as he wishes so long as his obligations as a tenant under
this article are observed. The tenant also shall have right to
invite to his apartment or dwelling unit, for a reasonable
period of time, such social guest, family or visitors as he
wishes so long as his obligations as a tenant under this arti-
cle are observed. These rights may not be waived by any
43a
For the foregoing reasons, we will reverse the grant of
summary judgment for the defendants and will remand
this matter to the district court for further proceedings
consistent with this opinion.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
provisions of a written rental agreement and the landlord
and/or owner may not charge any fee, service charge or
additional rent to the tenant for exercising his rights under
this act.
It is the intent of this article to insure that the landlord
may in no way restrict the tenant's right to purchase goods,
services, and the like from a source of the tenant’s choos-
ing and as a consequence any provision in a written agree-
ment attempting to limit this right shall be void and unen-
forceable in the courts of this Commonwealth.
The parties disagree as to whether this statute applies to Penn State’s
dormitories and have referred us to no relevant Pennsylvania court
decision construing this statute. Under these circumstances, and since
the student’s claims may be resolved on the basis of other federal
issues, it is unnecessary at this time to reach this issue.
d4a
APPENDIX C
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 81-2674
AMERICAN FUTURE SYSTEMS, INC., STEVEN
BRUBAKER, RICHARD J. WINGERT,
W. BRUCE DEL VALLE, JOAN D. VARSICS,
DENNIS C. HABACHER, JOHN P. SPILLER,
and KEVIN GRAVES,
Appellants
v.
THE PENNSYLVANIA STATE UNIVERSITY,
BOARD OF TRUSTEES OF
THE PENNSYLVANIA STATE UNIVERSITY,
JOHN W. OSWALD and M. LEE UPCRAFT,
Appellees
AMERICAN FUTURE SYSTEMS, INC., etc. et al.,
Appellants
SUR PETITION FOR REHEARING
Present: SEITZ, Chief Judge, ALDISERT, ADAMS,
GIBBONS, HUNTER, WEIS, GARTH,
HIGGINBOTHAM, SLOVITER, and
BECKER, Circuit Judges
The petition for rehearing filed by appellees, The
Pennsylvania State University, Board of Trustees of The
Pennsylvania State University, John W. Oswald and M.
Lee Upcraft, in the above entitled case having been sub-
mitted to the judges who participated in the decision of
45a
this court and to all the other available circuit judges of
the circuit in regular active service, and no judge who
concurred in the decision having asked for rehearing,
and a majority of the circuit judges of the circuit in regu-
lar active service not having voted for rehearing by the
court in banc, the petition for rehearing is denied.
By the Court,
Dated: September 21, 1982
OPINION SUR PETITION FOR REHEARING
SLOVITER, Circuit Judge.
Under ordinary circumstances, the petition for
rehearing and for rehearing in banc filed by appellees
(“Penn State”) which raises issues previously raised and
rejected by an undivided panel of this court in its deci-
sion would not warrant any comment in conjunction
with the order denying said petition. However, because
five members of this court have joined in a statement
which does not suggest that the panel's statement of the
law is incorrect, and have nonetheless voted
for rehearing in banc notwithstanding our general policy
to the contrary, see Internal Operating Procedures of the
Third Circuit, Ch. VIII. B (1980), this may create some
confusion when the case is remanded to the district
court. Therefore a reiteration of the issues raised in the
appeal, addressed in the opinion and decided by the
court is called for.
The statement of Judge Adams that the opinion in
this case may cause state universities to “lose a signifi-
cant portion of their control over commercial activity on
their campuses” overstates the issue, the record and the
opinion in this case. Neither in AFS I nor AFS II was this
46a
court presented with the issue of the scope of a state uni-
versity's power to close its residence halls to all commer-
cial activity.
The issue decided by the court in AFS I was the va-
lidity of the distinction made by Penn State between the
group demonstration and the consummation of sales. All
of the parties, including counsel for Penn State, agreed
at oral argument before this court that the issue of Penn
State’s restriction on the content of the group demon-
stration had not been raised or decided in AFS I. In AFS
Il, the court was faced with that issue, the right of the
University to review the material which AFS would
present in the group demonstration and to prevent AFS
from including material referring to price, guarantee
and payment plans in its group demonstration. Since the
restriction which Penn State has placed on AFS is a
content-based restriction on the material that it may in-
clude in its group demonstration, Judge Adams’ state-
ment that “The primary restriction [placed on plaintiff]
appears to be that sales may not be consummated in the
common areas of a dormitory” is surprising. Further-
more, a content-based restriction can hardly be charac-
terized as a “minimal limit”.
The suggestion implicit in Judge Adams’ statement
that the opinion in AFS I] may narrow the range of op-
tions open to a state university interested in resisting use
of the school premises to promote sales of merchandise
overlooks the significant fact that Penn State, for what-
ever reason, has not resisted such sales. The record and
the opinion in this case show that Penn State permits
group demonstrations in common areas and consumma-
tion of the commercial transaction in the individual stu-
dents’ rooms. The district court granted summary judg-
ment for Penn State on the challenge by AFS to Penn
State’s actions in restricting the content of the group
demonstrations in common areas and on the students’
challenge to the prohibition of group demonstrations in
their dormitory rooms. AFS II held the summary judg-
ment as to the AFS claim could not be upheld because
47a
Penn State had “failed to show a substantial state inter-
est, much less a plausible explanation, for its policy dif-
ferentiating between the nature of the information
contained in the AFS demonstration.” American Future
Systems, Inc. v. The Pennsylvania State University, No.
81-2674, slip op. at 12 (3d Cir. August 9, 1982). It also
held that there was no evidence in the record to justify
the restriction with regard to the dormitory rooms be-
cause Penn State had not introduced any relevant evi-
dence in this case in that regard. Id. at 15.
The opinion can hardly be considered to have enun-
ciated either a new or disputed legal principle by requir-
ing that a state university desirous of regulating com-
mercial speech must show that such regulation furthers
substantial state interests. In the most recent Supreme
Court decision omitted from the series of cases referred
to by Judge Adams, the Court cautioned that although a
state may regulate commercial speech, “the First and
Fourteenth Amendments require that they do so with
care and in a manner no more extensive than reasonably
necessary to further substantial interests.” The Court
stated that states retain the authority to regulate adver-
tising that “is inherently misleading or that has proven
to be misleading in practice” and to promulgate “careful-
ly drawn restrictions” which further other substantial
state interests. In re R- M. J-, 102 S.Ct. 929, 939 (1982).
See also Ad World, Inc. v. Township of Doylestown, 672
F.2d 1136, 1139 n.6 (3d Cir.), cert. denied, 102 S.Ct.
2240 (1982).
The decision in this case leaves open to Penn State
the opportunity on remand to produce evidence to show
a substantial state interest to support its policy. In light
of the incomplete record in this case and the preliminary
stage at which this issue reached the court, it would
ee preen ee Sony seneneeaty ve bee
banc consideration of the abstract issue alluded to by
[its Ried easiness osm Goakeet euee
to resist commercial activity.
48a
JUDGE ADAMS dissents from the denial of rehearing, and
makes the following statement.
Prior to 1975, commercial speech had no sanctuary
in the First Amendment. Then in Bigelow v. Virginia,
421 U.S. 809 (1975), the Supreme Court held that the
First Amendment protected the right of a Virginia news-
paper to run advertisements which announced that
abortions were legal in New York and offered the ser-
vices of a New York referral agency. The statute in ques-
tion banned all publications that prompted the procuring
of an abortion. The court emphasized the great public
interest in the subject matter. A year later, in Virginia
State Bd. of Pharmacy v. Virginia Citizens Consumer
Council, 425 U.S. 748 (1976), the Court relied on
Bigelow to hold that a Virginia statute that completely
barred pharmacists from advertising the sale of prescrip-
tion drugs was unconstitutional. A primary reason for
this result was the Court’s concern that “the poor, the
sick, and the aged” might be substantially disadvan-
taged by this law. The lack of important information re-
garding needed medication could seriously limit their
“enjoyment of basic necessities [of life].” 425 U.S. at
763-64.
The Supreme Court’s next decision in this area was
Bates v. State Bar, 433 U.S. 330 (1977), which struck
down an Arizona Supreme Court rule which completely
prohibited any advertising by a lawyer. One of the essen-
tial predicates of the Bates decision was that many citi-
zens in Arizona and elsewhere were not obtaining legal
assistance even when they needed counsel because of
their fears regarding the price of such advice or because
of their inability to locate a competent attorney.
In Ohralik v. Ohio State Bar, 436 U.S. 447 (1978),
the court ruled that a state may forbid in-person solicita-
tion of prospective clients by lawyers for pecuniary gain,
and noted the distinction between commercial and
noncommercial speech. Speaking for the Court, Justice
Blackmun said:
49a
We have not discarded the “commonsense” distinc-
tion between speech proposing a commercial trans-
action, which occurs in an area traditionally subject
to government regulation, and other varieties of
speech. Virginia Pharmacy. To require a parity of
constitutional protection for commercial and
noncommercial speech alike could invite dilution,
simply by a leveling process, of the force of the
Amendment's guarantee with respect to the latter
kind of speech. Rather than subject the First
Amendment to such a devitalization, we instead
have afforded commerical speech a limited measure
of protection, commensurate with its subordinate
position in the scale of First Amendment values,
while allowing modes of regulation that might be
impermissible in the realm of noncommercial
[expression].
In our case, a governmental unit, here a state uni-
versity, has not barred completely any advertising re-
garding plaintiff's products. Nothing prevents the plain-
tiff from communicating price information by placing
signs on the school’s bulletin boards or mailing circulars
to the students, or ever: coming on the premises and pre-
senting their merchandise to the students. The primary
restriction seems to be that sales may not be consum-
mated in the common areas of a dormitory. Penn State
apparently has attempted to implement this restriction
by placing minimal limits on the format of the group
demonstration. No one has shown the great need for
permitting sales of merchandise to be conducted in this
manner
I have a serious question whether a reasonable
reading of Bigelow, Virginia Pharmacy, Bates, and
Ohralik can yield a conclusion that a state university is
constitutionally limited to a narrow range of options in
regulating third parties permitted on school premises to
promote sales of merchandise. | believe this matter
should be addressed by the entire Court and the subject
50a
carefully considered before signals are sent to state uni-
versities indicating that they may well lose a significant
portion of their control ever commercial activity on their
campuses.
I am concerned that, unless the courts are prepared
to step back and take a careful review of the precedents,
the extension of a juridical concept by a dry and re-
morseless logic can carry us to a position never contem-
plated by the Supreme Court when this doctrine was
first propounded. Moreover, it is a position totally incom-
patible with our societal concerns.’
Judges Aldisert, Hunter, Weis and Garth join in this
statement.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
1. As the Chief Justice has reminded us: “ ‘All rights tend to
declare themselves absolute to their logical extreme. Yet all in fact
are limited by the neighborhood of principles of policy which are
other than those on which the particular right is founded... .’”
United States v. 12 200-Ft Reels of Super 8 Mm. Film, 413 U.S. 123
(1973), quoting Hudson County Water Co. v. McCarter, 209 U.S.
349, 355 (1908) (Holmes, J.).
Sla
APPENDIX D
UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
AMERICAN FUTURE SYSTEMS,
INC., et al., :
Plaintiff : Civil No. 78-262
vs. : Complaint Filed
: 3/17/78
THE PENNSYLVANIA STATE : (Judge Muir)
UNIVERSITY, et al., :
Defendants
APPEARANCES:
For Plaintiff Joseph S. Finkelstein, Esq.
Wolf, Block, Schorr and
Solis-Cohen
12th Floor Packard Bldg.
Philadelphia, Pa. 19100
For Defendants Grant H. Fleming, Esq.
Delbert J. McQuaide, Esq.
McQuaide, Blasko & Brown
811 University Drive
State College, Pa. 16801
Richard Z. Freemann, Jr.
Ballard, Spahr, Andrews &
Ingersoll
FILED 20th Floor, 30 S. 17th St.
“aa Philadelphia, Pa. 19100
DONALD &. BERRY, Clert
PER SE
DEPUTY CLERK
52a
UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
AMERICAN FUTURE SYSTEMS,
INC., et al., :
Plaintiff : Civil No. 78-262
vs. : Complaint Filed
: 3/17/78
THE PENNSYLVANIA STATE : (Judge Muir)
UNIVERSITY, et al., :
Defendants
OPINION
MUIR, District Judge.
1. Introduction
The Plaintiff, American Future Systems, Inc., a cor-
poration whose principal business is the sale of cookware,
china, crystal, and silverware to college women, brought
this action against the Pennsylvania State University
(Penn State), the Board of Trustees of that University,
John W. Oswald, the President of Penn State, and M. Lee
Upcraft, the Directors of Residental Life programs at Penn
State, seeking a judgment declaring that Penn State’s ac-
tions in banning American Future Systems representatives
from the University Park Campus in the fall of 1977 were
unconstitutional and requesting the Court to enjoin Penn
State from enforcing its policy against commercial
solicitation on the campus to preclude American Future
Systems from selling its wares to Penn State students. The
case was tried before the undersigned judge sitting with an
advisory jury from January 5, 1979 to January 11, 1979.
53a
The advisory jury answered a series of special verdict ques-
tions indicating its belief that the sole purpose of
American Future Systems’ visits to the Penn State campus
was to sell its merchandise, that American Future Systems
used gifts and other inducements as means of persuading
Penn State students to invite their representatives on cam-
pus, that American Future Systems had a policy of apply-
ing different credit practices to freshmen and minority
students than to upperclass Caucasian purchasers, that
American Future Systems either concealed or failed to
reveal certain information to persons in attendance at
American Future Systems shows at which its wares were
sold with respect to a Florida holiday drawing, and that
American Future Systems was excluded from the Penn
State Campus because it conducted commercial activities
for profit rather than because of Penn State’s disapproval
of either its credit practices or the “Florida holiday” draw-
ing. The following represent the Court’s findings of fact,
discussion, and conclusions of law.
Il. Findings of Fact.
1. American Future Systems, Inc. is a corporation
with a principal place of business at 715 Lancaster
Avenue, Bryn Mawr, Pennsylvania, 19010.
2. Edward M. Satell is the President of American
Future Systems.
3. Defendant John W. Oswald is the President of Penn-
sylvania State University (Penn State).
4. M. Lee Upcraft is the Director of Residential Life
Services at Penn State.
5. Penn State has adopted a policy with respect to
fund raising on campus which is set forth both in the
S4a
terms, conditions, and regulations of the housing and
food service contract for undergraduate residence halls
and dining halls of the Pennsylvania State University (P5)
and in the student handbook at page 82, ¢ 3, subsection
(a)(8).
6. The terms, conditions, and regulations of the hous-
ing and food service contract state on page 35 as follows:
“The conducting of any business enterprise for personal
profit is prohibited in or around the university-operated
units.”
7. The student handbook at page 82, ¢ 3, sub-§ (a)(8)
reads as follows: “Fund-raising activities are subject to the
following restrictions: (8) Lectures, concerts, demonstra-
tions, displays, or exhibits may not be used in any manner
as a means of promoting commercial companies, pro-
ducts, or services.”
8. In addition to regulating commercial sales, Penn
State has adopted certain policies relating to solicitation,
which is defined as donations or sales of products for the
benefit of non-university charitable organizations, can-
vassing, which is defined as any effort to influence student
opinions specifically excluding solicitation or fund-
raising, visitation of students in their rooms either by
university or non-university individuals, and the manner
by which students are permitted to have overnight guests
in a residence hall.
9. Although Penn State prohibits the use of residence
hall areas for the benefit of commercial organizations, an
individual student who intends to purchase goods or ser-
vices is permitted to invite a vendor of those goods or ser-
vices to the residence hall for the purpose of transacting
business with him.
55a
10. Penn State’s policy against commercial solicitation
does not prohibit vendors from attempting to sell their
merchandise to Penn State students by means of telephone
communication directed into the residence halls.
11. The telephone numbers of students residing in a
particular residence hall are available in the lobby of that
building.
12. Members of the general public who have not been
invited into a residence hall for a specific purpose may
enter the lobby of a dormitory in order to examine the list
of phone numbers.
13. A “no trespassing” sign is posted at or near the en-
trance of each residence hall on the Penn State Campus.
14. The residence halls at Penn State contain a number
of rooms ranging between 24 and 300 each and there are a
total of 6,900 rooms on the University Park Campus.
Residence hall facilities are reserved for the use of
residence hall residents and their properly invited visitors
or guests.
15. Most residence halls on the Penn State Campus
have a study lounge designed to be occupied by three to 12
persons as well as other common areas, including
bathrooms, storage rooms, and laundry rooms.
16. Any student living in the residence halls at Penn
State signs a housing contract which states that he has read
the terms and conditions regulating the use of such
residence halls and agrees to abide by those terms.
17. The basis of Penn State’s policy against commer-
cial activity within the residence halls is the view of the
members of the Residential Life Services department that
the proper study atmosphere and privacy of the students
56a
would be impossible to maintain if commercial vendors
were permitted to attempt to conduct sales activities within
the residence halls.
18. Penn State’s policy against commercial activities
on campus does not prevent commercial businesses from
advertising in student newspapers or on student radio sta-
tions.
19. There is no restriction placed by Penn State on the
content of commercial items mailed to Penn State students
by means of the United States mails.
20. American Future Systems is engaged in the
business of selling cookware, china, crystal, and silver-
ware to college-age women.
21. The sales activities of American Future Systems,
Inc. which are relevant to this case relate to attempted
sales of a selected number of patterns of china, crystal,
silverware and cookware known collectively as the
“American Prestige Series.”
22. American Prestige Series goods are generally sold
at demonstrations or shows attended by the “hostess,” a
“sales representative,” and a number of invited guests.
23. With respect to its sales to college students,
American Future Systems operates by having either its
“booking office,” located at its headquarters in Bryn
Mawr or its sales representative who has responsibility for
that geographic area in which the college is situated seek
out a particular college student by telephone and asking
her if she would like to host an American Prestige show on
campus.
24. At the time of the initial telephone contact, a stu-
dent hostess is informed that if she hosts the show, she will
57a
be given a tote bag and that there is the possibility that one
of the attendees of the show, including herself, will win a
“Florida holiday.”
25. The value of the tote bag mentioned in the
preceding paragraph is $6.00.
26. During the initial telephone conversation, the
American Future Systems representative indicates to the
student being solicited that the Florida holiday is a vaca-
tion in Florida for four days and three nights and does not
include meals and transportation.
z.. No other terms and conditions relating to the
Florida holiday are mentioned during the initial phone
contact.
28. Before the scheduled show, a student agreeing to
host such a demonstration receives a packet of informa-
tion containing a number of invitations for guests and a
description of what is involved at the show.
29. A sales demonstration put on by American Future
Systems generally proceeds in two parts: A demonstration
of the American Prestige Series products including a com-
parison of those products with other merchandise and an
explanation of why American Prestige products are
superior, and a sales portion where interested students are
given an opportunity to purchase oroducts on an install-
ment plan basis.
30. Each student attending the show receives a jade
necklace which has a value of $12-1/2.
31. At the times relevant to this proceeding, it was
American Future Systems’ policy to attempt to have 10 to
15 persons in attendance at a sales demonstration. That
ee or non-
college students.
58a
32. American Future Systems’ policy prohibited the
drawing of a winner of the Florida holiday or the awar-
ding of the tote bag to a hostess if 10 eligible person did
not attend the show although the latter aspect of that
policy is often violated by individual sales representatives.
33. The price of a “package” of merchandise sold to a
student by American Future Systems ranges from $450.00
to $600.00.
34. If 10 eligible persons do not attend a sales
demonstration, American Future Systems’ representatives
are under instructions to inquire of a student hostess
whether they can go door to door accompanied by the
hostess in a residence hall in order to secure the required
number of persons for attendance at a show.
35. Sales representatives of American Future Systems
generally do not reveal at sales demonstrations that the
“Florida holiday” which will be given away may not be us-
ed unless the winner is 21 years of age, that the certificate
which will be issued expires at a particular time which is
often well before a winner reaches the age of 21, that there
is an extra charge for the lodging if the vacation is used
between December 18 and April 2 of any year, and that a
person using the vacation is required to attend a meeting
of an organization known as the “VIP Vacation Club”
upon arrival in Florida or her certificate will not be
validated.
36. American Future Systems pays $2.00 for each |
llorida heliday vacation certificate issued as a result of
one of its drawings.
37. If the student decides to purchase American
Prestige Series merchandise at the end of a sales
demonstration, she is required to sign a sales contract at
that time.
59a
38. American Future Systems does comply with legal
provisions requiring it to permit a student signing a con-
tract for the sale of merchandise in the residence hall to
rescind the contract within three days of the date of its
signing.
39. An American Future Systems’ contract contains a
“code” at the bottom which consists of a number of letters.
Those letters and the explanation given to them by
American Future Systems’ representatives are as follows:
Letters Explanation
Deposit Turned In
Deposit kept by sales representative
General student
Minority (Black) student
Married Couple
Student of Spanish descen:
Student of Oriental descent
Student of Mexican descent
Regular 4-year college
Junior College
Nursing School
Vocational School
S)
:
<Z-2FKXOYNZOR
40. Sales representatives of American Future Systems
are instructed by the company to check those portions of
the code which are applicable to any particular purchaser.
41. At the top of an American Future Systems con-
tract there is a space for indicating whether merchandise
will be delivered immediately to the purchaser or whether
delivery will be deferred until after graduation or until
some other time.
60a
42. If the sale of merchandise is made to a minority
student who is a sophomore, junior, or senior, sales
representative are encouraged to attempt to have that stu-
dent request that delivery of his merchandise be by way of
deferred delivery rather than by immediate shipment.
43. It is a policy of American Future Systems to re-
quire freshmen purchasers to make at least three con-
secutive installment payments before merchandise can be
delivered.
44. No effort is made to encourage Caucasian
sophomore, junior, or senior students to request delivery
of their merchandise on a deferred basis.
45. In September of 1977, American Future Systems
representatives conducted a number of sales demonstra-
tions in the residence halls at Penn State.
46. Prior to that time, Edward M. Satell, the President
of American Future Systems, had been advised by Penn
State officials that commercial solicitation was prohibited
on the campus.
47. In the fall of 1977, without determining whether
that policy had been changed, Mr. Satell ordered his sales
representatives to begin booking shows on the Penn State
campus.
48. Although a number of such shows were conducted
from beginning to end in the fall of 1977, some shows were
interrupted by Penn State officials and American Future
Systems representatives were requested to leave the
residence halls because they were acting in violation of
university policy.
49. Mr. Satell wrote two letters to Robert Patterson, a
Penn State official, on September 14 and September 19,
1977 indicating that Mr. Satell believed that Penn State’s
6la
prohibition against commercial solicitation in the
residence halis was unconstitutional.
50. In response, Mr. Satell received a letter from
counsel for Penn State dated October 6, 1977 stating their
view that Penn State’s policy was legal and that further at-
tempts at solicitation on the campus would result in legal
action.
51. American Future Systems has not attempted to
conduct any shows on the Penn State campus since Oc-
tober of 1977.
52. In the fall of 1977 Penn State officials did not
know of American Future Systems’ credit policy or its
policy with respect to the “Florida holiday” drawings.
53. American Future Systems was prohibited from
conducting sales demonstrations at Penn State because of
Penn State’s policy against such commercial activity oc-
curring within the residence halls rather than because of
any view held by Penn State officials as to the propriety or
impropriety of American F::*ure Systems’ credit plans or
its policy with respect to th: “Florida holiday” drawing.
54. Mr. Satell was aware at least by September 15,
1977 that Penn State officials considered the holding of
American Future Systems demonstrations to be in viola-
tion of university policy.
55. With that knowledge, Mr. Satell instructed his
sales representatives, and particularly Karen Wintrey, to
attempt to hold such shows on the Penn State campus.
Mr. Satell did instruct his sales representatives to follow
the instructions of Penn State officials if they requested
the sales representatives to leave the campus.
56. Karen Wintrey was told by Mr. Satell that if she
encountered problems at Penn State with respect to the
62a
booking of sales demonstrations she should ignore the
problems because American Future Systems had a legal
right to put on such demonstrations.
57. Some of the persons who attended American
Future Systems’ sales demonstrations at Penn State believ-
ed that valuable consumer information relating to the
quality of china, cookware, silverware, and crystal was
imparted to them by the American Future Systems
representative.
58. The purpose of such “consumer information” at
American Future Systems sales demonstrations is to pro-
mote American Prestige Series merchandise and to en-
courage attendants of the shows to purchase such mer-
chandise.
59. Patricia Peterson, a Penn State official, informed
the sales representatives of American Future Systems in
September of 1977 that American Future Systems would
be permitted to conduct the educational portion of its
show in Penn State residence halls if no attempt were
made at the close of such shows to sell merchandise to
students and was told that “there would be no point in
that.”
60. At least one Penn State student was forced to wait
in the hall outside a study lounge on the evening prior to
an examination because of the presence of an American
Future Systems sales demonstration in that study lounge.
61. Mr. Satell stated that he would be willing to abide
by some time, place and regulations if American Future
Systems programs were permitted to be held on the Penn
State campus but that he would continue to pursue certain
policies of the company, including the minority credit
policy, which he believed the company had a legal right to
utilize.
63a
62. The credit policies of American Future Systems
are currently being litigated in a suit filed by the United
States Department of Justice filed on May 8, 1978 in the
Eastern District of Pennsylvania, Civil No. 78-1517.
63. Between 15 and 20% of the attendants at
American Future Systems sales demonstrations purchase
merchandise.
64. There is at least one student organization on the
campus of Penn State which would request an American
Future Systems sales representative to come on campus to
conduct a sales demonstration if it were permitted to do so
by the University.
65. American Future Systems agrees with a student
that if there is a dispute with respect to any of the terms of
the contract it will accept the results of arbitration before a
Better Business Bureau.
66. American Future Systems permits purchasers of
merchandise which has not been used to return that mer-
chandise to American Future Systems and receive full
credit for the amount paid to American Future Systems to
be applied to the purchase of similar merchandise at a
retail store of the student’s choice so long as the return is
made within two years of the date of purchase.
67. Under the installment sales contract entered into
between American Future Systems and the student pur-
chaser, no interest is paid during the remainder of that stu-
dent year and interest thereafter until the student’s gradua-
tion is at a rate less than that charged by most department
stores or credit card companies.
Ill. Discussion.
The Plaintiff's complaint in this case raises essentially
two issues which must be decided by the Court. First, the
Court must consider whether Penn State acted properly in
excluding sales representatives of American Future
Systems from the University Park campus in September of
1977. Second, the Court must determine whether Penn
State’s continued exclusion of such representatives is con-
sistent with the constitutional protection afforded to the
sales activities of American Future Systems. Following
consideration of the preliminary issues of standing and
state action, the Court will consider those two questions
seriatim.
The Defendants assert in their answer to the complaint
that the Plaintiff lacks standing to bring this action. It is
the view of the Court that the standing question in this
case has two separate facets: Whether American Future
Systems has standing to complain about the actions of
Penn State and, if so, whether it has standing to raise the
constitutional rights of persons not before the Court. With
respect to the former question, it is clear that American
Future Systems has suffered an injury in terms of sales lost
as a result of Penn State’s decision to exclude American
Future Systems representative from the campus. Further,
American Future Systems contends that as a disseminator
of commercial information it has standing to assert its
own First Amendment rights. The recognition of such
standing is in keeping with the decision of the United
States Supreme Court in Virginia State Board of Phar-
macy vs. Virginia Citizens Consumer Council, Inc., 425
U.S. 748 (1976), where the Court indicated that Virginia’s
prohibition of price advertising by state pharmacists im-
plicated the First Amendment rights both of potential reci-
pients of that information and the pharmacists who were
6Sa
attempting to communicate their prices. Therefore, the
Court concludes that American Future Systems does have
standing to raise First Amendment claims.
Arerican Future Systems also asserts, however, that it
has standing to raise the First Amendment rights of Penn
State students who are desirous of receiving information
about the products which American Future Systems sells.
In support of that contention, American Future Systems
cites the case of Craig vs. Boren, 429 U.S. 190 (1976),
where the Supreme Court held that liquor vendors in
Oklahoma had standing to raise the rights of Oklahoma
males between the ages of 18 and 21 who, unlike
Oklahoma females of a similar age, were prohibited from
purchasing 3.2% beer. The resolution of the standing
question in favor of the Plaintiff in that case, however,
had a practical difference from this case because it permit-
ted him to challenge the Oklahoma statutory scheme on
equal protection grounds, a constitutional challenge not
open to a liquor vendor suing on his own behalf only.
Here, American Future Systems is permitted to raise First
Amendment contentions based upon its own injury and it
is the Court’s view that to permit it to raise the First
Amendment rights of college students would add little or
nothing to the Court’s analysis of whether Penn State’s ac-
tions violated the First Amendment. Additionally, the
original complaint in this action was devoid of allegations
which would have permitted the Plaintiff to introduce
proof at trial that the First Amendment rights of Penn
State students had been violated or continued to be
violated. The Court denied a request to amend the com-
plaint which was made on the first day of the trial of this
case because of the possible prejudice which would result
to the Defendants from permission of the amendment.
Therefore, because assertion of the First Amendment
rights of Penn State students by American Future Systems
66a
would add nothing to the analysis of this case and because
facts in support of such a claim have not been pled nor
proven, the Court will decline to permit American Future
Systems to base its arguments on any asserted right of
Penn State students to receive its communications.
American Future Systems asserts that it is entitled to
raise the constitutional rights of other persons not before
the Court as well under the “overbreadth” doctrine.
American Future Systems has asserted that the regulations
adopted by Penn State are invalid both facially and as ap-
plied to the conduct of American Future Systems and
maintained the position throughout trial that evidence
relating to particular facets of American Future Systems’
presentation including its “Florida holiday” drawing and
its credit policy, were not relevant because American
Future Systems was not excluded from the campus
because of those policies but rather on the basis of a
general regulation prohibiting commercial activity on
campus. The Court agrees with the Defendants, however,
that the overbreadth doctrine should not be applied in the
area of commercial speech and that applicable Supreme
Court precedence prohibits the Court from permitting
American Future Systems to raise the constitutional rights
of other commercial vendors who are not before the
Court. In Virginia State Board of Pharmacy vs. Virginia
Citizens Consumer Council, Inc., 425 U.S. 748, 771-72, n.
24 (1976), the Court noted its view that because advertis-
ing, the form of commercial speech involved in that case,
is the “sine qua non” of commercial profits, there was little
likelihood that commercial organizations would ex-
perience a chilling effect from advertising regulations
which might be broader than constitutionally permissible.
This viewpoint was reiterated in Bates vs. State Bar. of
Arizona, 433 U.S. 350, 381 (1977), and in that case the .
Court held that in the commercial speech context, the con- ©
67a
duct of the particular party before the Court must be ex-
amined in order to determine whether it is properly subject
to regulation regardless of the breadth of the statute or or-
dinance under which it falls. See also Ohralik vs. Ohio
State Bar Association, 436 U.S. 447 (1978); Broadrick vs.
Oklahoma, 413 U.S. 601 (1973). Consequently, the Court
will not consider whether Penn State’s regulation pro-
hibiting commercial sales activity in its residence halls is
too broad but will limit its discussion to two questions:
whether Penn State properly could have requested
American Future Systems representative to leave the cam-
pus in 1977 based upon the manner in which they con-
ducted their activities at that time and whether the con-
tinued exclusion of American Future Systems represen-
tatives is constitutional based upon the manner in which
they propose to conduct their business at this time.
Before turning to resolution of those two issues, the
Court must determine whether the First Amendment is ap-
plicable to actions of Penn State University. Such a deci-
sion necessarily rests upon a resolution of the question of
whether Penn State engages in “state action” which makes
it susceptible to the dictates of the Fourteenth Amend-
ment. The Plaintiff read into the record at trial certain
stipulated facts relating to the state action issue, and this
Court held in Benner vs. Oswald, 444 F.Supp. 545 (M.D.
Pa. 1978) that the actions of Penn State were state actions.
That decision was recently affirmed by the United States
Court of Appeals for the Third Circuit. See Benner vs.
Oswald, No. 78-1338 (3d Cir., January 24, 1979). Conse-
quently, the Court concludes that the requisite state action
is present in this case.
The Court now turns to the question of whether
American Future Systems representatives could have been
excluded from Penn State’s campus in September of 1977
68a
consistent with the dictates of the First Amendment. A
decision on that question requires the Court to discuss the
law applicable to the issue of the amount of First Amend-
ment protection which must be given to commercial
speech and to apply that law to the facts of this case. The
leading “commercial speech” case and the one which over-
ruled Valentine vs. Cherestensen, 316 U.S. 52 (1942), to
the extent that it held that commercial speech did not
deserve First Amendment protection, is Virginia State
Board of Pharmacy vs. Virginia Citizens Consumer Coun-
cil, Inc., 425 U.S. 748 (1976). In that case, the Supreme
Court ruled that Virginia could not, consistent with the
First Amendment, prohibit pharmacists from advertising
the prices of prescription drugs. In so holding, the Court
noted that a commercial firm enjoys First Amendment in-
terests in communications of such information and that
the dissemination of consumer information such as the
price at which goods are sold serves a societal value in per-
mitting consumers to make free, rational and informed
decisions in the consumer marketplace. Further, the Court
indicated that such information is often of more interest to
the average citizen than “core” First Amendment com-
munications relating to political issues. In-that case, the
Court concluded that Virginia was attempting to prevent
any danger of misuse of commercial information by sup-
pressing it altogether and stated that such a manner of
regulation was not permissible, although commercial
speech could be regulated through a valid time, place and
manner restriction or by other means relating to its poten-
tial for deception, including requiring commercial adver-
tisements to contain warnings, disclaimers, or other infor-
mation needed to make them accurate. in Bates vs. State
Bar of Arizona, 433 U.S. 350 (1977), the Court stated thz°
newspaper advertisement by attorneys indicating the price
of standard legal services enjoyed constitutional protec-
69a
tion. In that case, a disciplinary rule adopted by the state
bar, like the rule in Virginia Pharmacy, attempted to cure
any possible deception inherent in price advertising by
prohibiting the communication altogether. Such a rule,
the Court stated, served “to inhibit the free flow of com-
mercial information and to keep the public in ignorance.”
Bates vs. State Bar or Arizona, 433 U.S. 350, 365 (1977).
Because the Court believed that any justification based
upon the benefits of public ignorance was inconsistent
with the rationale of the First Amendment, the blanket
prohibition was again struck down. In In Re Primus, 436
U.S. 412 (1978), the Court upheld the right of an attorney
associated with the American Civil Liberties Union to
communicate to a potential litigant that a cause of action
might exist, finding that such a communication partook of
the characteristics of “core” First Amendment com-
munication and was not “in person solicitation for
monetary gain.” The Court indicated that where core First
Amendment communications were at issue, exacting
scrutiny would be applied to state regulation and broad
prohibitions of such communications were inherently
suspect. However, in Ohralik vs. Ohio State Bar Associa-
tion, 436 U.S. 447 (1978), the Court indicated that the type
of inperson solicitation for :onetary gain engaged in by
attorneys which was abser in the Primus case could be
regulated by a state bar association in a manner different
from that by which other protected communications
could be governed. Th>= Court noted a number of factors
relating to such in-persoi solicitations which are relevant
to this case. First, it stated that commercial speech is not
wholly undifferentiable from other forms of speech and
indicated that commercial speech can be regulated in a
manner not necessarily permissible in the field of non-
commercial speech. Second, the Court stated that in-
person solicitation of sales is “a business transaction in
70a
which speech is an essential but subordinaie component”
and indicated that it differed even from the type of adver-
tising present in the Virginia Pharmacy and Bates cases
because it had the potential for exerting pressure on the
recipient of the information, it demanded an immediate
response from him, and it countervailed to some extent the
purpose of advertising which permits free, rational, and
informed consumer decision-making. Solicitation,
because of the pressure on the person being solicited and
the requirement that he react either negatively or positively
to the service or goods being offered, does not promote
reflective thinking on the content of the communication or
encourage comparison of different services and prices so
that it enjoys less protection than commercial .dvertising.
Consequently, the state’s interest in maintaining the pro-
fessionalism of attorneys and in prohibiting the type of
overreaching which was potentially present in in-person
solicitation of clients by attorneys justified the state’s pro-
hibition of such contacts.
It is beyond dispute that American Future Systems has a
right under the First Amendment to disseminate certain in-
formation with respect to the product which it sells. That
information probably includes the type of product, how it
compares with other products, and the price for which it
sells. It is the view of the Court that in this case, however,
American Future Systems asserts that it has a First
Amendment right which goes beyond the right to
disseminate such information to interested consumers. In
effect, American Future Systems argues that it has a con-
Stitutional right to conduct sales demonstrations which re-
quire the presence of an American Future Systems
representative, ten to fifteen interested consumers, and an
hour-long exposition on the virtues of American Future
Systems products followed by a short period of time dur-
ing which sales to interested students are consummated.
Tila
The Court is not convinced that American Future Systems
has a constitutionally protected right to sell its merchan-
dise to college students in the manner which it has selected
as being the most conducive to such sales. The programs
put on by American Future Systems representatives on
college campuses most closely resemble the conduct in
Ohralik vs. Ohio State Bar Association, 436 U.S. 447
(1978) which the Court characterized as a business transac-
tion in which speech is an essential but subordinate com-
ponent. The Court is not of the view that Penn State’s
regulations prohibiting commercial solicitation in the
residence halls o» %e University Park Campus can be fair-
ly characterized a. 4 restriction upon the First Amendment
rights of American Fuiure Systems. Essentially, Penn
State has attempted to separate business transactions from
the speech which accompanies them and has sought to
regulate only the former. The evidence presented at trial
shows that Penn State does not restrict the ability of com-
mercial organization, including American Future Systems,
to advertise in student newspapers or on student radio sta-
tions or to provide consumer information to students
either through use of the telephone or the United States
mails. Penn State has not attempted to prevent whatever
evils might be present in the solicitation of sales by
American Future Systems representatives by keeping the
student body in ignorance of the information American
Future Systems attempts to communicate to them. Rather,
its policies prohibit American Future Systems represen-
tatives only from appearing on campus without an invita-
tion in order to attempt to transact business or from ap-
_ pearing on campus with an invitation in an attempt to
transact business with more than one student. In the view
of the Court that Penn State’s regulations do not place any
burden upon American Future Systems’ ability to
disseminate information about its products to Penn State
72a
students although those regulations do preclude American
Fuiure Systems from using its chosen method for such
dissemination. So long as the information is reasonably
available to students, a commercial vendor has no First
Amendment right to disseminate it in the manner in which
he chooses.
Assuming, however, that Penn State’s residence hall
regulations render it more difficult for students to obtain
the type of information about commercial products which
American Future Systems seeks to distribute, it does not
follow that Penn State’s regulations must fall. Two
justifications support the exclusion of American Future
Systems representatives from Penn State in 1977, either of
which is sufficient to overcome any possible infringement
upon American Future Systems’ First Amendment rights.
First, Penn State asserts that its residence hall policy is
based upon a need for privacy of the students residing
therein and the desire-on the part of the institution to
maintain a study-like atmosphere within the residence
halls. Penn State produced evidence at the trial that
American Future Systems demonstrations, lasting as long
as an hour and a half, can be disruptive of the normal
routine of residence halls and can preclude students from
using common a:eas of the dormitories for purposes such
as studying for which they were originally intended. Addi-
tionally, the Court recognizes that residence walls are in
essence a student’s “home away from home” arid that the
university may adopt such regulations as are reasonable to
prohibit persons who are not university students or
residents of dormitories from utilizing space therein.
American Future Systems placed much emphasis on the
fact that their representatives did not go on the Penn State
campus or inio the residence halls unless they were invited
there by students. However, that contention is weakened
when placed in context. The evidence demonstrated that
73a
American Future Systems solicits invitations from in-
dividual students and that a representative will not go on
campus merely to talk with one student even for the pur-
pose of consummating a business transaction. Rather,
once an invitation has been solicited, the American Future
System representative induces the student hostess to invite
a number of other students to attend an American Future
Systems sales demonstration. Such a sales practice is in-
consistent with the premise that American Future Systems
speaks only to persons who have taken the initiative to in-
vite them on campus.
Penn State demonstrated at the trial that in 1977
American Future Systems engaged in certain deceptive or
potential coercive practices. The Supreme Court has
recognized that the type of in-person solicitation of sales
engaged in by American Future Systems differs from con-
ventional protected speech because of the pressure exerted
on the recipient of the sales talk, the fact that he must res-
pond immediately to a request made to purchase merchan-
dise, and the fact that persons in attendance at shows of
American Future Systems do not have adequate time to
reflect on the information which they have received and to
make an intelligent, rational, and informed choice. Cf.
Ohralik vs. Ohio State Bar Association, 436 U.S. 447
(1978). Therefore, the fact that American Future Systems
engages in in-person solicitation makes that type of con-
duct peculiarly subject to regulation which attempts to
avoid the dangers outlined above. Penn State’s prohibition
of group solicitation but permission of one student to in-
vite a commercial vendor on campus for the purpose of
conducting a business transaction with that student bears a
reasonable relationship to the goal of avoiding the
pressure tactics of in-person sales demonstrations. The
fact that federal law requires that a student who purchases
merchandise in the manner by which American Future
74a
Systems sells its products be given a unilateral right or
rescission for three days after the sale does not preclude
Penn State from attempting to regulate further the con-
duct of in-person sales solicitations. Further, in 1977
American Future Systems engaged in what this Court
views as deceptive practices relating both to its “Florida
holiday” drawing and its credit practice. American Future
Systems representatives did not disclose the manner in
which American Future Systems extended credit to
students and concealed at least some of the details relating
to the Florida holiday from Penn State students.
Therefore, even assuming that Penn State’s regulation
prohibiting commercial solicitation in the residence halls is
overbroad, it was properly applied to American Future
Systems in September of 1977. Penn State’s interest in the
privacy of its students and in preventing a company engag-
ed in questionable commercial practices from soliciting on
campus were sufficient to overcome any possible infringe-
ment upon American Future Systems’ First Amendment
rights occasioned by the prohibition of their sales
demonstrations. If there is a common theme running
through the Supreme Court’s recent decisions relating to
commercial speech, it is that deceptive and fraudulent
commercial speech is clearly subject to reasonable regula-
tion. See Young vs. American Mini Theatres, Inc., 417
U.S. 50 (1976); Virginia State Board of Pharmacy vs.
Virginia Citizens Consumer Council, Inc., 425 U.S. 748
(1976).
American Future Systems has also asked the Court to
enjoin Penn State from continuing to enforce its policy
against commercial solicitation so as to preclude American
Future Systems from holding sales demonstrations on the
University Park campus. In support of this position,
American Future Systems argues that it is willing to abide
by any reasonable time, place and manner regulations im-
7Sa
posed by Penn State in the future even though it may not
have done so in the past. It is the view of the Court that an
injunction should not be issued in this case for a number
of reasons. First, as noted above, the Court is not convinc-
ed that Penn State’s current policy has any effect on
American Future Systems’ ability to disseminate informa-
tion which is entitled to First Amendment protection.
Therefore, because the current policy with respect to
American Future Systems is constitutional, there is no
legal basis upon which this Court could enter an order en-
joining the enforcement of that policy. Second, the Court
is not convinced that American Future Systems is willing
to abide by reasonable time, place and manner regula-
tions. Mr. Satell’s instructions to his sales representatives
in September of 1977 to attempt to book shows although
he was aware that Penn State considered the holding of
such demonstrations to be a violation of its policy, taken
together with this testimony concerning whether he would
discontinue certain features of American Future Systems’
credit policy with respect to minorities, convinces this
Court that American Future Systems will abide only by
those regulations which are constitutional in its view.
Third, if American Future Systems is interested solely in
communicating information about its products and prices
to Penn State students, it was offered a means for doing so
in September of 1977 when Patricia Peterson, a Penn State
Official, informed American Future Systems sales
representative that substantially the same sales demonstra-
tions could be conducted on campus if American Future
Systems representatives did not attempt to engage in the
sale of merchandise at those shows. That offer was re-
jected by American Future Systems. Such a position
makes it abundantly clear that Penn State’s regulations,
including its willingness to permit American Future
Systems representatives to conduct shows on campus so
76a
long as no commercial transactions are proposed at that
time, do not infringe upon American Future Systems First
Amendment rights. Although American Future Systems
may have a first amendment right to communicate to
students information relating to the virtues of its products
and their price, it has no First Amendment right to sell
merchandise at that time on campus. The regulation
relating to sales imposed by Penn State is simply an “infr-
ingement on profits rather than on First Amendment
rights.” National Market Reports, Inc., vs. Brown, 447
F.Supp. 1301, 1304 (S.D.W. Va. 1978) (3-judge court). The
Court does not construe Penn State’s regulations to pro-
hibit individual students from seeking out American
Future Systems representatives at a time following the
holding of a show in order to enter into business transac-
tions so long as American Future Systems representatives
do not attempt to sell their merchandise at the show to the
persons in attendance. Finally, even if the Court were to
conclude that Penn State’s current policy does infringe
upon American Future Systems’ First Amendment rights,
the interests of privacy and avoidance of the dangers of in-
person solicitation served by that policy remain the same
today as they did in 1977 and the Court reaches the same
conclusion, namely that any such incidental infringement
of the First Amendment rights is completely justified by
those interests. Therefore, the request for an injunction
will be denied.
The Court reaches the following
IV. Conclusions of Law.
1. American Future Systems, Inc. has standing to
challenge Penn State’s residence hall regulations only as
they apply to the past and present conduct of American
Systems, Inc.
77a
2. Penn State engages in state action sufficient to sub-
ject it to the strictures of the Fourteenth Amendment.
3. American Future Systems, Inc. has the right pur-
suant to the First and Fourteenth Amendments to the
United States Constitution to disseminate certain con-
sumer information to students at Penn State, including
descriptions of the products which it sells, comparisons of
those products with similar merchandise, and the price at
which its products can be purchased.
4. The regulations prohibiting commercial solicitation
in the residence halls adopted by Penn State do not in-
fringe on the First Amendment rights of American Future
Systems, Inc.
5. Assuming that Penn State’s residence hall regula-
tions infringe upon the First Amendment rights of
American Future Systems, Inc., the regulations as applied
to American Future Systems in 1977 were justified either
by Penn State’s interest in preventing a commercial vendor
from engaging in deceptive or coercive trade practices on
the campus of Penn State or, alternatively, by the privacy
interests of Penn State’s students in their residence halls.
6. The continuing exclusion of American Future
Systems representatives from the campus of Penn State
does not infringe upon the First Amendment rights of
American Future Systems.
7. Assuming that the continuing exclusion of
American Future Systems representatives from the Penn
State campus infringes upon the First Amendment rights
of American Future Systems, that infringement is justified
by Penn State’s interest in preventing the dangers inherent
in in-person solicitation or sales, or alternatively, by Penn
State’s interest in protecting the privacy of its students
within the residence halls.
78a
8. American Future Systems is not entitled to a
declaratory judgment that Penn State’s expulsion of
American Future Systems representatives from the
University Park campus in September of 1977 violated the
United States Constitution.
9. American Future Systems is not entitled to an in-
junction prohibiting Penn State from enforcing its policy
excluding commercial vendors from residence halls on the
University Park campus against representatives of
American Future Systems, Inc.
An appropriate order will be entered.
/s/ MUIR
MUIR, U.S. District Judge
DATED: February 2, 1979
79a
UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
AMERICAN FUTURE SYSTEMS,
INC., et al., :
Plaintiff : Civil No. 78-262
vs. : Complaint Filed
: 3/17/78
THE PENNSYLVANIA STATE : (Judge Muir)
UNIVERSITY, et al., :
Defendants
ORDER
1. American Future Systems, Inc.’s request for a
preliminary and permanent injunction prohibiting the
Defendants from enforcing their policy of prohibiting
commercial activity in the residence halls of the Penn-
sylvania State University is denied.
2. American Future Systems, Inc.’s request for a judg-
ment declaring the policy of the Pennsylvania State
University prohibiting commercial solicitation in the
residence halls of the University Park campus to be in
violation of the United States Constitution is denied.
/s/ MUIR
MUIR, U.S. District Judge
DATED: February, 2, 1979
80a
APPENDIX E
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 79-1440
AMERICAN FUTURE SYSTEMS, INC., Appellant
v.
THE PENNSYLVANIA STATE UNIVERSITY and
BOARD OF TRUSTEES OF THE PENNSYLVANIA
STATE UNIVERSITY and JOHN W. OSWALD.
Individually and as President of The
Pennsylvania State University and
M. LEE UPCRAFT, individually and as
Director of Residential Life Programs of
The Pennsylvania State University
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
(D. C Civil No. 78-0262)
Argued January 11. 1980
Before: SEITZ, Chief Judge, and VAN DUSEN and WEIS.
Circuit Judges
(Opinion filed April 3. 1980)
Bernard G. Segal. Esq.
James D. Crawford. Esq. ‘Argued)
Schnader. Harrison. Segal & Lewis
Philadelphia, Pa.
Attorneys for Appellant
Seth F. Kreimer. Esq.
Fine. Kaplan and Black
Philadelphia. Pa.
Attorneys for American Civil
Liberties Foundation. Amicus Curiae
and
Thomas B. Harvey. Esq..
American Civil Liberties Foundation,
Of Counsel
Davis Carliner. Esq..
Carliner and Gordon.
Washington, D. C.
Attorneys for United States
Student Association, Amicus Curiae
Delbert J. McQuaide. Esq. (Argued)
R. Mark Faulkner. Esq.
McQuaide. Blasko & Brown, Inc.
State College. Pa..
Attorneys for Appellees
OPINION OF THE COURT
VAN DUSEN. Circuit Judge
Plaintiff. American Future Svstems, Inc. (AFS),
challenges on this appeal the Pennsvlvania State Uni-
versity (Penn State) regulaticn forbidding sales demon-
strations and Solicitations in the university owned and
operated residence halls. AFS asserts that the First and
Fourteenth Amendments prohibit such a policy. After a
trial to the court based on a complaint seeking a declara-
t
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