Amicus Curiae Brief — Greater New Orleans Broadcasting Assn., Inc. v. United States

Supreme Court, U.S

FILED

No. 98-387

OFFICE OF BHP CLERK

IN THE ak

Supreme Court of the United States

OCTOBER TERM, 1998

GREATER NEW ORLEANS BROADCASTING ASSN., et al.,

Petitioners,

Vv.

UNITED STATES, et al.,

Respondents.

On Writ of Certiorari to the

United States Court of Appeals

for the Fifth Circuit

BRIEF OF AMICI CURIAE

VALLEY BROADCASTING COMPANY AND

SIERRA BROADCASTING COMPANY

IN SUPPORT OF PETITIONERS

GERALD S. ROURKE

7501 Hackamore Drive

Potomac, MD 20854

(301) 983-0776

Counsel for Amici Curiae

EE ER CEA Oe RAE EL TR TN A TS SN SN NN Ce

WILSON - Eres PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

TABLE OF CONTENTS

BARE GE ATO saercnbiinnccticstseneschtienrinneesenctsinen

STATEMENT OF INTEREST ............................ stnsscciag

SUMMARY OF ARGUMENT ............0.0.0000

A. The Central Hudson Test ............................-..-......

B. The Statutory Scheme on Its Face Violates the

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TE, cietatiaenietiteassetgubceiniaigtinnatigplinninsqgapiminainits

I.

Il.

THE FIFTH CIRCUIT’S APPLICATION OF

THE CENTRAL HUDSON TEST IN THIS

CASE WAS ERRONEOUS ........0...... jiclidwidicbhites

A. The Regulatory Scheme Does Not Directly

Advance the Governmental Interests As-

(1) The regulatory scheme is irrational as

regards the interest in reducing public

participation in commercial lotteries...

(2) The regulatory scheme is irrational as

regards the interest in assisting states

which prohibit casino gambling ............

THE STATUTORY SCHEME OF DISCRIMI-

NATION BASED ON THE IDENTITY OF

THE SPEAKER OF AN OTHERWISE AC-

CEPTABLE COMMERCIAL ANNOUNCE-

MENT, OR THE IDENTITY OF THE PARTY

ON WHOSE BEHALF IT IS BROADCAST,

ON ITS FACE VIOLATES THE FIRST

RR IIITEIEEIE GS cccntseesensennessiniecicenenenisiigibicisinainpeianias

CORTON ote ce ceesesecnseevensvsvencnememncisiiiinnigutsiittltintocariettinies

10

ii iii

TABLE OF AUTHORITIES TABLE OF AUTHORITIES—Continued

CASES Page Page

Sates 9. State Ser of AG, Se Oe. Or Indian Casino Regulatory Act, 25 U.S.C. 2701,

(1997) ....... excessathppesreninenisineneupneiimiaihaaiaall 20 Bev eek. |. (“iinet ap ere: 5, 9, 11

Central Hudson Gas & Elec. Corp. v. Public Serv. 8 Use. RR laa eM 5, 8, 11, 15, 16, 22

Comm’n., 447 U.S. 557 (1980) 2. passim EES a cS 5

Cincinnati v. Discovery Network, Inc., 507 U.S.

GD CRIED | ctenisuiccosscisnctnnnenhiieieieaabaiaiesdinasa ia 20, 21

Edenfield v. Fane, 507 U.S. 761 (1998) no Se

Friedman v. Rogers, 440 U.S. 1 (1979) ............... 20

44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484

CUED anyvsccines sveinas tonttcneishessniieeigealiel dais naenniaiiad 20, 23

Greater New Orleans Broadcasting Ass'n v. U.S.,

69 F.3d 1296 (5th Cir. 1995), vacated 117 S.Ct.

39 (1996), remanded 116 S.Ct. 1495 (1996) ..6, 7, 9, 11,

12, 21

Greater New Orleans Broadcasting Ass'n v. U.S..,

149 F.3d 334 (5th Cir. 1998)... 6,12

Ibanez v. Florida Dept. of Business and Profes-

sional Regulation, Bd of Accountancy, 114 S.Ct.

BG COED citedieeidestsateuinedine ee 20

Linmark Associates, Inc. v. Township of Willing-

boro, 431 U.S. 85 (1977) ... sabi we Tiadieaitbie tad thee. 20

Red Lion Broadcasting Co. v. FCC, 395 U.S. 367 |

(1969) .......... secioeisidinlipeiniuniaceililleasenidiltiall Iii OE 2 21

Rubin v. Coors Brewing Co., 514 U.S. 476 (1995). passim

Simon & Schuster v. Members of New York State

Crime Victims Bd., 502 U.S. 105 (1991) 21

Turner Broadcasting System, Inc. v. FCC, 512

ot ge RAT Dee eos oe ae ee 21, 22

United States v. Edge Broadcasting Co., 509 U.S.

GT SED weninderingiittnats stant a Si sk | 3,10

CONSTITUTION, STATUTES AND RULE

pF Gs | EAS is ys passim

RE FS ee eT nan tt Wanda, oy REE ts. passim

18 U.S.C. 1807 (a) (1). pales elas tigeidigaisinbaabteetoike Mepdeeaaniae 10

BD i Ue CN GUD eeisishic a cinis <isnSin eddnawdesadibion tens, .. passim

Supreme Court of the United States

OcTOBER TERM, 1998

No. 98-387

GREATER NEW ORLEANS BROADCASTING ASSN., ef al.,

. Petitioners,

UNITED STATES, et al.,

Respondents.

On Writ of Certiorari to the

United States Court of Appeals

for the Fifth Circuit

BRIEF OF AMICI CURIAE

VALLEY BROADCASTING COMPANY AND

SIERRA BROADCASTING COMPANY

IN SUPPORT OF PETITIONERS

STATEMENT OF INTEREST

Amici Curiae Valley Broadcasting Company ( Valley)

and Sierra Broadcasting Company (Sierra)' are broad-

casters who are the licensees of television stations KVBC-

TV, Las Vegas, Nevada, and KRNV-TV, Reno, Nevada,

respectively, and were the plaintiffs in the case of Valley

Broadcasting Company v. United States, 107 F.3d 1328

1This brief was authored by counsel for amici curiae and no

person or entity other than amici curiae made a monetary contribu-

tion to the preparation and submission of this brief. The brief is

filed with consent of the parties, and copies of the consent letters

have been filed with the Clerk.

2

(9th Cir. 1997), cert. denied, 118 Sup. Ct. 1050 (1998).

In Valley the Ninth Circuit held that 18 U.S.C. Sec. 1304,

as amended, which prohibits the broadcast of advertising

for commercial casino gambling, violates the First Amend-

ment. The Valley decision is in conflict with this case

where the Fifth Circuit considered the same question and

reached a contrary result, upholding the constitutionality

of 18 U.S.C. Sec. 1304, as amended, and holding that the

Government may prohibit the broadcast of advertising

for commercial casino gambling. Since effectively Valley

will be overturned if this Court upholds the Fifth Circuit

in this case, Amici Curiae are interested parties.

SUMMARY OF ARGUMENT

A. The Central Hudson Test

This commercial speech case turns on the third part of

the test stated in Central Hudson Gas & Elec. Corp. v.

Public Serv. Comm'n., 447 U.S. 557 (1980), which is

whether the government restriction on otherwise protected

speech directly advances the governmental interest asserted.

To justify its prohibition on the broadcast of advertising

of only state licensed casino gambling in 18 U.S.C. 1304,

as amended, the Government asserts two interests, reduc-

ing public participation in commercial lotteries and assist-

ing states which do not permit casino gambling. However,

as this Court found in Rubin v. Coors Brewing Co., 514

U.S. 476 (1995), the statute cannot directly and materi-

ally advance its asserted interests because of the overall

irrationality of the Government's regulatory scheme.

The statutory scheme cannot reduce public participation

in commercial lotteries because it has been changed from

a complete ban on broadcast advertising of all commer-

cial lotteries to a ban which now applies only to state

licensed casino gambling. As was pointed out in Valley

Broadcasting Company v. United States, 107 F.3d 1328,

1334 (9th Cir. 1997), cert. denied, 118 Sup.Ct. 1050

(1998), the regulatory scheme now permits many other

3

types of lotteries to advertise over the airwaves, including

state-run lotteries, fishing contests, not-for-profit lotteries,

lotteries conducted as promotional activities by commer-

cial organizations, and most significantly, gambling con-

ducted by Indian casinos. As this Court found in Rubin,

there is little chance that the regulatory scheme can di-

rectly and materially advance its aim, while other provi-

sions of the same act directly undermine and counteract

its effect (514 U.S. at 489).

The statutory scheme also cannot directly advance the

purpose of assisting states which do not permit casino

gambling, because there is no restriction on the carriage

by broadcasting stations in such states of advertising for

Indian casino gambling, or governmental casino gambling,

or non-profit casino gambling in states which permit such

activities. Unlike the part of the statute involved in United

States v. Edge Broadcasting Co., 509 U.S. 418 (1993),

there is no restriction of Indian or other permitted casino

advertising to broadcast stations licensed to states which

permit such gambling. Under the provisions of 18 U.S.C.

1304, as amended, at issue in this case, once a state

permits Indian or governmental or non-profit casino gam-

bling within its borders, that gambling can be advertised

‘on broadcasting stations anywhere. Thus, for example,

under this statutory scheme, an Indian casino in Oklahoma

is free to advertise its gambling on radio or television

stations in Texas, a state which does not permit casino

gambling. How can this advance the interest of the state

which does not permit casino gambling? The answer is

that it cannot.

As in Rubin, the statutory scheme in this case is irra-

tional from the point of view of the governmental pur-

poses supposedly being served. The Sth Circuit in this

case attempts to distinguish Rubin, which the 9th Circuit

in Valley cited in support of its decision, but the Sth

Circuit never addresses the irrationality of the statutory

scheme on which the 9th Circuit relied.

4

B. The Siatutory Scheme on Its Face Violates the First

Amendment.

The statutory scheme in this case requires broadcasters

to discriminate among advertisers solely on the basis of

the identity of the speaker of an otherwise acceptable

commercial announcement, or the identity of the party

on whose behalf the announcement is broadcast. As such,

the statutory scheme on its face violates the First Amend-

ment. It is not disputed that ads for state licensed casino

gambling concern lawful activity and are not misleading.

Since ads for Indian casino gambling and ads for not-for-

profit, governmental and occasional and ancillary com-

mercial casino gambling are now permitted to be broad-

cast over the air, it also cannot be disputed that the casino

gambling ads which the state licensed casinos wish to

broadcast are themselves acceptable for broadcast. That

being the case, there is no basis under the First Amend-

ment for the Government ban on such ads.

Over-the-air casino gambling advertising is either in-

jurious to the public or it is not. It cannot be both injuri-

ous and not injurious at the same time. If a broadcaster

is permitted to carry a commercial announcement saying

“Play our slot machines” over the air on behalf of an

Indian casino, it is presumably because that announce-

ment is not injurious to the public. If that is the case,

however, how can the same broadcaster’s carriage of the

same announcement, “Play our slot machines”, on behalf

of a state licensed casino ten minutes later be injurious

to the public? The answer is that it cannot be. The

statutory scheme of Sec. 1304, as amended, in which

broadcasters are both permitted to and barred from carry-

ing the same commercial announcement, is irrational.

Whatever governmental purpose there may be behind this

restriction cannot save it, because the selective nature of

the restriction is self defeating.

By permitting the audience to receive broadcast an-

nouncements about Indian, not-for-profit, governmental

oe

5

and occasional and ancillary commercial casino gambling,

but not permtting the audience to receive broadcast an-

nouncements about state licensed casino gambling, the

Government is depriving consumers of information con-

cerning casino gambling choices lawfully available ‘to

them in the marketplace. That is precisely what the First

Amendment prohibits the Government from doing in the

area of commercial speech under Virginia Pharmacy Bd.

v. VA, Consumer Council, 425 U.S. 748 (1976), and the

many cases which have applied the principles set out

there by this Court.

ARGUMENT

I. THE FIFTH CIRCUIT’S APPLICATION OF THE

CENTRAL HUDSON TEST IN THIS CASE WAS

ERRONEOUS.

The question at issue in this case is whether 18 U.S.C.

1304, as amended by 18 U.S.C. 1307(a)(2) and the

Indian Gaming Regulatory Act, 25 U.S.C. 2701, 2720,

violates the First Amendment rights of broadcasters when

applied by the Government to prohibit the television and

radio broadcast of advertising for commercial casino gam-

bling in states which permit such gambling.* The Peti-

tioners are broadcasters licensed to operate stations in

Louisiana, who seek to carry advertising for legal casinos

in Louisiana and Mississippi. The Fifth Circuit twice held

that the statutory scheme probiting the broadcast of ad-

vertisements for commercial casino gambling is a valid

restriction on commercial speech and does not violate the

218 U.S.C. See. 1304 is set forth in the Appendix to the Petition

for writ of Certiorari in this case at page 6la, and 18 U.S.C. Sec.

1307 is set forth at pages 62a-63a. 25 U.S.C. Sec. 2720 states:

“Consistent with the requirements of this chapter, sections 1301,

1202, 1308 and 1304 of Title 18 shall not apply to any gaming

conducted by an Indian tribe pursuant to this chapter.” These three

statutes are repeated virtually verbatim in 47 C.F.R. 73.1211,

which is set forth in the Appendix to the Petition for writ of

Certiorari at pages 63a-66a.

6

First Amendment.’ Prior to the second 5th Circuit deci-

sion the 9th Circuit addressed the same question in Valley

Broadcasting Company v. United States, 107 F.3d 1328

(9th Cir. 1997), cert. denied, 118 Sup.Ct. 1050 (1998),

and ruled that the statutory scheme does violate the First

Amendment. We submit that the 9th Circuit decision in

Valley is correct and that this Court should reverse the

5th Circuit in this case.

It is undisputed that the advertisements at issue consti-

tute commercial speech, and that accordingly, whether the

Government’s restriction on speech is permissible under

the First Amendment depends upon the application to the

case of the four part test set forth by this Court in Central

Hudson Gas & Electric Corp. v. Public Serv. Comm'n,

447 U.S. 557, 566 (1980).4 The Government does not

dispute that the casino gambling in question is legal and

that the advertising which the broadcasters wish to carry

is truthful, so the first part of the Central Hudson test is

not at issue (See GNOBA I, 69 F.3d at 1299). The

second part of the Central Hudson test is whether the as-

serted governmental interest is substantial. In this case,

as in Valley, the Government asserted two interests, dis-

couraging public participation in commercial lotteries and

3 Greater New Orleans Broadcasting Ass'n v. U.S., 149 F.3d 334

(5th Cir. 1998) (hereinafter “GNOBA II"); and an earlier decision,

Greater New Orleans Broadcasting Ass'n v. U.S., 69 F.3d 1296

(5th Cir. 1995), vacated, 117 S.Ct. 39, 136 L.E.2d 3 (1996),

remanded in light of 44 Liquormart, Inc. v. Rhode Island, 116 S.Ct.

1495 (hereinafter “GNOBA I’).

4 In Central Hudson the test was stated as follows:

At the outset, we must determine whether the expression is

protected by the First Amendment. For commercial speech to

come within that provision, it at least must concern lawful

activity 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 Governmental interest asserted, and

whether it is not more extensive than is necessary to serve

that interest. Jd. at 566.

NN

7

assisting states that do not permit casino gambling (See

GNOBA I, 69 F.3d at 1299). Since both the 5th Cir-

cuit below (See GNOBA I, 69 F.3d at 1299-1301) and

the 9th Circuit in Valley (See 107 F.3d at 1331-1333),

ruled that both governmental interests asserted are sub-

stantial, in this amicus curiae brief we shall assume, argu-

endo, that those interests are substantial.

The third part of the Central Hudson test is whether

the regulation directly advances the governmental interest

asserted. It is here that the 5th and 9th Circuits part com-

pany, the 5th Circuit ruling in this case that the regula-

tion of speech directly advances the Governmental in-

terests asserted, while the 9th Circuit ruled in Valley that

the Government had failed to meet is burden of so prov-

ing. We submit that the 9th Circuit has the better of the

argument.

A. The Regulatory Scheme Does Not Directly Ad-

vance the Governmental! Interests Asserted.

On part 3 of the Central Hudson test the 9th Circuit

took its guidance from this Court’s decision in Rubin v.

Coors Brewing Co., 514 U.S. 476 (1995), but the Sth

Circuit * undertook to distinguish Rubin and thus to avoid

following it. In Rubin this Court stated:

“We conclude that § 205(e)(2) cannot directly and

materially advance its asserted interest because the

overall irrationality of the Government’s regulatory

scheme.” 514 U.S. at 488.

The same is true with respect to lottery advertising over

the air. 18 U.S.C. 1304, as amended, cannot directly and

materially advance its asserted interests because of the

overall irrationality of the Government’s regulatory

scheme.

5 Chief Judge Politz dissented from both of the 5th Circuit deci-

sions below on substantially the grounds which the 9th Circuit

relied upon in Valley. References to “the 5th Circuit” in this

amicus curiae brief are to the majority decision.

8

(1) The regulatory scheme is irrational as regards

the interest in reducing public participation in

commercial lotteries.

Over the years, since its adoption in 1934, Sec. 1304

has been amended repeatedly, with each amendment eas-

ing the restriction on the broadcast advertising of lotteries.

The most recent amendments, in 1988, which led to the

filing of the Valley case in 1992 and this case in 1994,

added 18 U.S.C. Sec. 1307(a)(2) and Sec. 2720 of the

Indian Gaming Regulatory Act, 25 U.S.C. Sec. 2720,

which authorize the broadcast advertising of lotteries by

not-for profit organizations, governmental organizations,

commercial organizations when promotional, occasional

and ancillary to the primary business of the organization,

and by Indian casinos. What has happened is that a sta-

tute which constituted a complete ban on all over-the-air

commercial lottery advertising for over 50 years, from

1934 until 1988, has been changed to a regulatory scheme

in which all forms of commercial lottery advertising, in-

cluding Indian casino advertising, are now permitted, ex-

cept for state-licensed casino advertising. The Govern-

ment contends that this regulatory scheme directly and

materially advances a governmental interest in reducing

public participation in commercial lotteries, without ever

explaining how its exemption of all other forms of com-

mercial lotteries from the ban is not fundamentally con-

trary to that purpose.

The Government's position is simply irrational. As the

9th Circuit states:

The government has consistently characterized its

primary interest as “discouraging public participa-

tion in commercial lotteries, including casino gam-

bling, and thereby minimizing the wide variety of

social ills that have historically been associated with

these forms of gambling.” By the government’s own

description then, its interest is an extremely broad

one—reducing public participation in all commerciai

lotteries. Taking the government’s claim at face

9

value, the statutory scheme here would appear to be

flawed in the same manner as section 205(e)(2) was

in Coors Brewing. That is, because section 1304

permits the advertising of commercial lotteries by

not-for-profit organizations, governmental organiza-

tions and Indian Tribes, it is impossible for it ma-

terially to discourage public participation in com-

mercial lotteries. To use the language of Coors

Brewing, “[t]here is little chance that [the challenged

regulation] can directly and materially advance its

aim, while other provisions of the same act directly

undermine and counteract its effects.” Coors Brew-

ing, 115 S.Ct. at 1593. (Valley, 107 F.3d at 1335)

In short, the Government purports to directly and ma-

terially reduce public participation in commercial lotteries

by permitting the broadcast advertising of such lotteries

for the first time, which does not make sense.®

Moreover, as the 9th Circuit points out, even if the

Government's -interest is recast to be merely the reduction

of public participation in casino gambling, the Govern-

ment fares no better. The statutory scheme contains an

exception even for casino gambling—casinos operated by

Indian Tribes pursuant to the Indian Gaming Regulatory

Act are exempt from the provisions of 18 U.S.C. 1304,

Valley, 107 F.3d 1335-1336. Thus, the regulatory scheme

6In GNOBA I (69 F.3d at 1301-1302), on the question whether

permitting other forms of media to advertise casino gambling

undercuts the governmental purposes of decreasing public demand

for gambling, the 5th Circuit quotes this Court’s statement in

Edge:

Nor do we require that the Government make progress on

every front before it can make progress on any front. If there

is an immediate connection between advertising and demand,

and the federal regulation decreases advertising, it stands to

reason that the policy of decreasing demand for gambling is

correspondingly advanced. (113 S.Ct. at 2707)

It also stands to reason, if the federal regulation increases adver-

tising, as the 1988 amendments do most certainly, that the policy

of decreasing demand for gambling is not advanced.

10

is irrational whether the governmental interest being served

is to reduce public participation in commercial lotteries or

to reduce public participation in casino gambling.

(2) The regulatory scheme is irrational as regards

the interest in assisting states which prohibit

casino gambling.

The irrationality of the regulatory scheme with regard

to the Government’s second governmental interest can be

shown by contrasting 18 U.S.C. Sec. 1307(a)(2), the

statutory amendment to Sec. 1304 at issue in this case,

with 18 U.S.C. Sec. 1307(a)(1), its companion provis-

sion which was before this Court in United States v. Edge

Broadcasting Co., 509 U.S. 418 (1993). Sec. 1307(a)

(1), which was at issue in Edge, on its face applies to an

ad for a lottery “conducted by a state” and “broadcast

by a radio or television station licensed to a location in

that state or a state which conducts such a lottery” (Sec.

1307(a)(1)(B). On the other hand, Sec. 1307(a)(2),

the section of the statute at issue in this case, on its face

applies to an ad for a lottery other than a lottery con-

ducted by a state (e.g., a casino game), “that is authorized

or not otherwise prohibited by the State in which it is con-

ducted.” (Sec. 1307(a)(2)). In Sec. 1307(a)(2), how-

ever, there is no limitation as to the location of broad-

casting stations which can carry the ad. There are ad-

ditional restrictions addressed to the nature of the entity

which may conduct the lottery (casino game), i.e., not-

for-profit or governmental organizations, etc., but there is

no restriction on the broadcast of such an ad by any radio

or television station anywhere.

Thus, for example, under Sec. 1307(a)(2)(A) an ad

for the slot machines at Las Vegas’ McCarran Interna-

tional Airport, which are conducted by a governmental

organization, Clark County, can be carried by radio and

television stations in Nevada, which permits casino gam-

bling or by stations in Utah, which does not permit casino

il

gambling. How does this “assist states which do not per-

mit casino gambling”?

The same is true of ads for Indian casinos. Under the

Indian Gaming Regulatory Act, 25 U.S.C. Sec. 2701, et

seq., a Tribe is required to obtain Department of the In-

terior approval of a compact with the state in which it is

located before it can operate a casino,’ but once that is

done, under 25 U.S.C. Sec. 2720, the Indian casino is

wholly exempt form 18 U.S.C. Sec. 1304 and is free to

broadcast ads for its casino games anywhere, in states

which permit casinos or in states which prohibit them.

Thus, for example, Indian casinos in Louisiana, Okla-

homa and New Mexico are free to advertise their gambling

on radio and television stations in Texas, although, as

the 5th Circuit states (See GNOBA I 69 F.3d at 1301),

Texas does not permit casino gambling. In Rubin this

Court said:

“The failure to prohibit the disclosure of alcohol

content in advertising, which would seem to con-

stitute a more influential weapon in any strength war

than labels, makes no rational sense if the Govern-

ment’s true aim is to suppress strength wars.” (514

U.S. at 488)

To paraphrase Rubin, permitting television and radio sta-

tions in states which do not permit casino gambling to car-

ry ads for Indian casinos makes no rational sense if the

Government’s true aim is to assist states which do not

permit casino gambling. As the Ninth Circuit states with

reference to the exemption for ads for Indian casinos:

“Such exemption permits Indian Tribes to advertise

both in states which allow casino advertising and

in those which forbid it. This would appear to under-

mine the Government’s purported interest in protect-

7™The Department of the Interior’s official updated Tribal-State

Compact List is available online at http://www.doi.gov/bia/foia/

compact/htm. It currently shows 157 Tribes in 24 States with 196

Compacts.

12

ing non-casino states from the reach of casino adver-

oo on the airwaves.” (Valley, 107 F.3d at

The 9th Circuit’s holding that the Government has

failed to meet its burden of showing that the restriction

on speech in this case directly and materially advances its

interests is on strong ground with respect to both interests

asserted. As this Court said in Edenfield v. Fane, 507

U.S. 761, 769 (1993): “The regulation may not be sus-

tained if it provides only ineffective or remote support for

the government’s purpose.” Rather, the Government must

demonstrate that “its restrictions will in fact allieviate

[the asserted harms] to a material degree.’ /d.

The 5th Circuit, in its first decision in this case below

simply distingished this ~ourt’s ruling in Rubin, that an

irrational regulatory scheme could not directly and ma-

terialy advance its governmental interest, on the ground

that that situation does not exist here (GNOBA I at

1301). The court does so, however, not by examining

the statutory provisions in question from the point of view

of the governmental interests alleged, but by relying on

broad generalities:

Congress has singled out particular forms of gaming

for which broadcast advertising is permitted, and in

so doing made legitimate, quintessentially legislative

choices that the social costs of these activities were

less than those of casino gambling, or the social ben-

efits, e.g. of staterun lotteries, Indian and chari-

table gambling, were greater. (Footnote omitted.)

GNOBA I, 69 F.3d at 1301.

In its second decision the 5th Circuit reaffirmed this hold-

ing, stating:

We remain persuaded, for the reasons stated in

our previous opinion, that Rubin does not compel

the striking down of § 1304. The government

may legitimately distinguish among certain kinds of

gambling for advertising purposes, determining that

13

of activities such as staterun lot-

charitable gambling include social

well as costs and that these other activi-

have dramatically different geographic

the broadcast advertising ban in

§ 1304 directly advances the government's policies

must be evident from the casinos’ vigorous pursuit of

litigation to overturn it (Citations omitted): There

is also no doubt that the prohibition on broadcast

advertising reinforces the policies of states, such

as Texas, which do not permit casino gambling.

GNOBA II, 149 F.3d at 338.

The Sth Circuit simply refuses to see any conflict between

a governmental interest in reducing public participation in

commercial lotteries and a statutory scheme which for

the first time permits the broadcast advertising of many

commercial lotteries, or any conflict between a govern-

mental interest in assisting states which do not permit

casino gambling and a statutory scheme which permits

the broadcast advertising of Indian casino gambling in

those states.®

As this Court found in Rubin, the problem with the

Government's restriction on commercial speech in this

case is that the regulatory scheme does not make sense

from the point of view of the governmental interests pur-

portedly being served. That being so, the restriction can-

not directly and materially advance those interests, so it

must fail the third part of the Central Hudson test. The

failure of the Sth Circuit to so find was error.

Having found that 18 U.S.C. 1304, as amended, fails

the third part of Central Hudson, the 9th Circuit did not

reach the fourth part, and Amici will do the same here.

8 It should also be noted that this Court stated in Rubin: “Nor

do we think that respondent's litigating positions can be used

against it as proof that the Government's regulation is necessary.”

514 U.S. at 490.

14

ll. THE STATUTORY SCHEME OF DISCRIMINATION

BASED SOLELY ON THE IDENTITY OF THE

SPEAKER OF AN OTHERWISE ACCEPTABLE

COMMERCIAL ANNOUNCEMENT, OR THE IDEN-

TITY OF THE PARTY ON WHOSE BEHALF THE

ANNOUNCEMENT IS BROADCAST, ON ITS FACE

VIOLATES THE FIRST AMENDMENT.

There is a fundamental problem with 18 U.S.C. 1304,

as amended, under the First Amendment, entirely apart

from any questions regarding the governmental purposes

behind the statute. The problem is that the statutory

scheme discriminates solely on the basis of the identity

of the speaker of an otherwise acceptable commercial an-

nouncement, or the identity of the party of whose behalf

the announcement is broadcast. With respect, we submit

that even though this is “merely” commercial speech, such

discrimination on its face violates the First Amendment.

18 U.S.C. 1304 itself, standing alone, does not present

any problem in this regard. While it is Draconian in its

criminalizing of broadcast speech, Sec. 1304 treats every-

one who falls within its ambit equally: “Whoever broad-

casts * * * or * * * knowingly permits the broadcasting

of, any advertisement of or information concerning any

lottery, gift enterprise, or similar scheme” shall be fined

or imprisoned, or both. The statute is straightforward:

it punishes anyone who broadcasts an advertisement con-

cerning a lottery. It targets the content of the advertise-

ment, the speech. The effect of Sec. 1304 is to ban certain

speech, namely advertisements concerning lotteries, from

the airwaves.

Sec. 1307(a) (2), however, does not treat everyone who

falls within its ambit equally. That section of the statute

creates an exception to the ban of Sec 1304 for an ad-

vertisement concerning a lottery, other than a state lottery,

that is authorized or not otherwise prohibited by the State

in which it is conducted, and which is—

“(A) conducted by a not-for-profit organization or a

governmental organization; or

15

(B) conducted as a promotional activity by a com-

mercial organization and is clearly occasional and

ancillary to the primary business of that orgainza-

tion.”

Sec. 1307(a)(2) creates an exception to the restriction

on speech of broadcasters stated in Sec. 1304 not on

the basis of what is spoken in the announcement, but on

the basis of the type of organization which conducts the

lottery, that is, the exception is based on the identity of

the party who speaks in the announcement or on whose

the announcement is spoken.

Sec. 2720 of the Indian Gaming Regulatory Act, 25

U.S.C. 2701, et seq., is like Sec. 1307(a)(2) in this re-

gard. It creates an exception to the restriction on the

speech of broadcasters contained in Sec. 1304 for any

gaming conducted by an Indian tribe under the Act.

Again, the exception is based on the identity of the party

conducting the gaming, in this case an Indian tribe.

Sec. 1307(a)(2) by its terms discriminates against a

class of broadcast advertisements, namely, those concern-

ing lotteries that are authorized or not otherwise pro-

hibited by the state in which they are conducted and

which do not come within either section (A) or (B). In

reality, since there is also an exception for 'ndian casinos,

the only lottery advertisements which come within the

class discriminated against, that is, the only lottery ad-

vertisements that are not excepted from the ban of Sec.

1304, are ads for state licensed and regulated casinos and

casino games.

As indicated above, Sec. 1304 standing alone consti-

tutes a ban on lottery advertising over the air. It is im-

portant to note what effect the exceptions set forth in Sec.

1307(b)(2) and the Indian Gaming Regulatory Act have

on the ban. The effect is simple: advertisements concern-

ing lotteries are no longer banned from the airwaves, they

are now acceptable for broadcast. Broadcasters are now

permitted to carry ads concerning lotteries which are con-

16

ducted by the organizations named in subsections (A)

and (B) of Sec. 1307 ard Sec. 2720 of the Indian Gam-

ing Regulatory Act.

This raises a practical question regarding the statutory

scheme. What basis is left for barring ads for state li-

censed casinos from the air waves? It is not disputed

that these ads concern lawful activity and are not mislead-

ing. And now it cannot be disputed that the ads them-

selves are acceptable for broadcast. What basis is left for

a governmental restriction on speech here? What we are

left with is a statutory scheme which discriminates against

certain ads solely on the basis of the identity of the

speaker or the entity on whose behalf the ads are broad-

cast. Is such discrimination permissible under the First

Amendment? We submit that it is not and cannot be.

This case presents the question under the First Amend-

ment whether the Congress can make a law authorizing

broadcasters to carry commercial announcements for one

group of advertisers and prohibiting them from carrying

the same commercial announcements for another group

of advertisers, even though it is conceded that the ads for

the second group are truthful and about lawful activities.

It appears this question is a matter of first impression in

the Court.

If the first part of the Central Hudson test is met, as it

concededly is here, the ads for state licensed casinos are

“protected by the First Amendment”, Central Hudson, 447

U.S. at 566. Assuming, arguendo, that because it is

merely commercial speech the Government may have a

right to restrict this speech to some extent, the fact re-

mains that it is still speech that is being broadcast over

the air to the public, it is about lawful activity, and it is

not misleading. The fact that this speech is protected

by the First Amendment must mean, at the least, that the

Government must have a rational basis for whatever re-

striction it imposes, and that such restriction must some-

how be related to the public good, whether it is called the

17

public interest, or ing the public from inj

whatever. Weert ago sis ere

The problem with the statutory scheme under Sec.

1304, as amended, is that over-the-air casino gambling

advertising is either injurious to the public or it is not.

It cannot be both injurious and not injurious at the same

time. If a broadcaster is permitted to carry a commercial

announcement saying “Play our slot machines” over the

air on behalf of an Indian casino, it is presumably because

that announcement is not injurious to the public. If that

is the case, however, how can the same broadcaster's car-

riage of the same announcement, “Play our slot machines”,

on behalf of a state licensed casino ten minutes later be

injurious to the public? The answer, we submit, is chat it

cannot be. The statutory scheme of Sec. 1304, as

amended, in which broadcasters are both permitted to and

age! ae carrying the same commercial announcement,

irrational. Whatever governmental purpose there ma

be behind this restriction cannot save it, because the se-

lective nature of the restriction is self defeating.

This Court has recognized that it is not only the rights

of the speaker, in this case the broadcaster or the state

licensed casino operator, that are at issue in commercial

speech situations, but also the rights of the audience.

What is the effect on the audience of this governmental

restriction on speech? Plainly, by permitting the audience

to receive broadcast announcements about Indian, not-for-

profit, governmental and occasional and ancillary com-

mercial casino gambling, but not permitting the audience

to receive broadcast announcements about state licensed

casino gambling, the Government is depriving consumers

of information concerning casino gambling choices law-

fully available to them in the marketplace.

As was shown in the first part of this brief, the

tory scheme here is irrational from the point of view of

Regardless of what the cn Ages Ber he, be

however, the effect of the scheme is clear: it provides

consumers with information about casino gambling con-

ducted by parties who are favored by the Government

and deprives them of information about casino gambling

conducted by parties who are disfavored by the Govern-

ment. The Government here is manipulating the casino

gambling marketplace indirectly by depriving the con-

sumer of information about choices lawfully available in

the market.®

In Virginia Pharmacy Bd. v. VA. Consumer Council,

425 U.S. 748, 756 (1976), which involved a ban on

price advertising of prescription drugs by pharmacists,

this Court said:

Freedom of speech presupposes a willing speaker.

But where a speaker exists, as is the case here, the

protection afforded is to the communication, to its

source and to its recipients both. * * * If there is a

right to advertise, there is a reciprocal right to re-

ceive the advertising (footnote and citations omitted.)

The Court went on to state:

Focusing first on the individual parties to the trans-

action that is proposed in the commercial advertise-

ment, we may assume that the advertiser’s interest

is a purely economic one. That hardly disqualifies

him from protection under the First Amendment.

* * * As to the particular consumer’s interest i1 the

free flow of commercial information, that interest

may be as keen, if not keener by far, than his in-

terest in the day’s most urgent political debate. * * *

Generalizing, society also may h.. 'e a strong interest

in the free flow of commercial information. Even

an individual advertisement, though entirely “com-

mercial”, may be of general public interest, * * *

Advertising, however tasteless and excessive it some-

times may seem, is nonetheless dissemination of in-

formation as to who is producing and selling what

® Under the First Amendment could the Congress permit broad-

casters to carry ads for General Motors and Ford cars, for example,

and forbid them to carry ads for Toyota, Volkswagen and other

‘foreign based auto manufacturers?

19

eames, for what reason, and at what price. So

ong as we preserve a predominantly free enterprise

economy, the allocation of our resources in large

measure will be made through numerous private eco-

nomic decisions. It is a matter of public interest that

those decisions, in the aggregate, be intelligent and

well informed. To this end, the free flow of com-

mercial information is indispensable. (Footnotes and

citations omitted, 425 U.S. at 762-765).

The Court in Virginia Pharmacy Board then responded

to the State’s arguments that consumers would make ir-

responsible choices if they were able to choose between

higher priced but higher quality pharmaceuticals with high

quality prescription monitoring services on the one hand,

and cheaper but lower quality pharmaceuticals without

such services on the other:

[Ojn close inspection it is seen that the State’s pro-

tectiveness of its citizens rests in large measure on

the advantages of their op be in ignorance. The

advertising ban does not directly affect professional

standards one way or the other. It affects them only

through the reactions it is assumed people will have

to the free flow of drug price information.

* * *

There is, of course, an alternative to this highly

paternalistic approach. That alternative is, to as-

sume that this information is not in itself harmful,

that people will perceive their own best interests if

only they are well enough informed, and that the

best means to that end is to the channels of

communication rather than to close them. oe s6 Ie

is precisely this kind of choice, between the dangers

of suppressing information, and the dangers of its

misuse if it is freely available, that the First Amend-

ment makes for us. Virginia is free to require what-

ever professional standards it wishes of its pharma-

cists; it may subsidize them or them from

rn mag ¥... <= ways ne omitted). But

it may so by keeping public in ignorance

of the entirely lawful terms that competing eee,

cists are offering. (425 U.S. at 769-770).

20

While the Court has split on several aspects of commer-

cial speech law in the years since Virginia Pharmacy Bd,

these notions have remained at the heart of the Court’s

First Amendment jurisprudence in this area. Illustrative

of this is the fact that in 44 Liquormart, Inc. v. Rhode

Island, 517 U.S. 484, 116 S. Ct. 1495 (1996), in their

opinions both Justice Stevens (116 S. Ct. at 1505) and

Justice Thomas (116 S. Ct. at 1516) quoted extensively

from Virginia Pharmacy Bd. As Justice Thomas said in

his concurring opinion (116 S. Ct. at 1517):

In case after case following Virginia Pharmacy Bd.,

the Court, and individual Members of the Court, have

continued to stress the importance of free dissemina-

tion of information about commercial choices in a

market economy; the antipaternalistic ises of

the First Amendment; the impropriety of manipulat-

ing consumer choices or public opinion through the

suppression of accurate “commercial” information;

* * * [?°] and the dangers of permitting the govern-

ment to do covertly what it might not have been

able to muster the political support to do openly.

fn. 2.

Footnote 2 cites to the Court’s decisions in Linmark As-

sociates, Inc. v. Township of Willingboro, 431 U.S. 85,

96-97 (1997); Bates v. State Bar of Arizona, 433 US.

350, 364-365, 368-369, 374-375, 376-377 (1997);

Friedman v. Rogers, 440 U.S. 1, 8-9 (1979), Central

Hudson, 447 U.S. at 561-562; Zauderer v. Office of Dis-

ciplinary Counsel of Supreme Court of Ohio, 471 U.S.

626, 646 (1985), Cincinnati v. Discovery Network, Inc.,

507 U.S. 410, 421-422, n.17 (1993); Edenfield v. Fane,

507 U.S. 761, 767, 770 (1993); Ibanez v. Florida Dept.

of Business and Professional Regulation, Bd. of Account-

ancy, 114 §. Ct. 2084, 2088-2089 (19994); Rubin, 514

U.S. at 481 (1995); and numerous concurring and dis-

senting opinions in these and other cases.

10The omitted clause is “the near impossibility of severing

‘commercial’ speech from speech necessary to democratic decision-

making”, a question not at issue here.

21

With regard to discrimination, the Court in Cincinnati

v. Discovery Network, Inc., 507 U.S. 410 (1993) struck

down a regulation which discriminated between newsracks

distributing commercial handbills and those which distrib-

uted newspapers, and stated: “[J]ust last term we ex-

pressly rejected the argument that ‘discriminatory .. .

treatment is suspect under the First Amendment only

when the legislature intends to suppress certain ideas,’”

citing Simon & Schuster v. Members of New York State

Crime Victims Bd., 502 U.S. 105, 117 (1991). The

discrimination at issue in this case, between lawful com-

mercial speakers of the same message solely on the basis

of the identity of the speaker, is also suspect under the

First Amendment and should also be struck down by the

Court.

In its first decision below the Fifth Circuit stated, in

defense of its ruling on the third part of the Central

Hudson test, “Additionally, Congress is permitted more

intrusive regulation of the broadcast media than other

forms of media,” citing Turner Broadcasting System, Inc.

v. FCC, 512 US. 622, 114 S.Ct. 2445, 2456 (1994),

and Red Lion Broadcasting Co. v. FCC, 395 U.S. 367,

388-9 (1969) (GNOBA I, 69 F.3d at 1302, fn. 7).

The scarcity rationale of Red Lion, however, has no bear-

ing on the commercial free speech question at issue in

this case, and does not in any way justify the discrimina-

tion among speakers of the same mesage which is im-

posed on broadcasters here. The Court in Turner stated:

[T]}he inherent physical limitation on the number of

speakers who may use the broadcast medium has

been thought to require some adjustment in tradi-

tional First Amendment analysis to permit the Gov-

ernment to place limited content restraints, and im-

pose certain affirmative obligations, on broadcast

licensees. Red Lion, 395 U.S., at 390. As we said in

Red Lion: “[{w)here there are substantially more in-

dividuals who want to broadcast than there are fre-

quencies to allocate, it is idle to posit an unabridge-

22

able First Amendment right to broadcast comparable

to the right of every individual to speak, write, or

publish.” Jd., 395 U.S. at 388. (512 U.S. at 638)

Whatever the viability of the scarcity rationale may be

today," it has no bearing on the issues in this case.

Among the “limited content restraints” placed on broad-

casters has always been 18 U.S.C. 1304, which forbade

the broadcast of all lottery advertising, as discussed above.

For over 50 years, from 1934 until 1988, although news-

paper advertising of casino gambling was common in

jurisdictions where such gambling was legal, no broad-

caster ever challenged the ban on broadcast advertising

of casino gambling on the basis of “an unabridgeable

First Amendment right to broadcast comparable to the

right of every individual to speak, write, or publish.”

It was not until Sec. 1307(a)(2) and Sec. 2720 of the

Indian Gaming Regulatory Act, which discriminated

among lawful advertisers who wished to speak the same

message, became the law that these amendments were

challenged. In this regard it should be noted that in

Turner the Court also stated:

[T]he argument exaggerates the extent to which the

FCC is permitted to intrude into matters affecting

the content of broadcast programming. The FCC is

forbidden by statute from engaging in “censorship”

or from promulgating any regulation “which shall

interfere with the [broadcasters’] right of free speech.”

47 U.S.C. § 326. 512 U.S. at 650.

What we contend here is that the Government’s require-

ment that broadcasters discriminate between lawful adver-

tisers seeking to air the same message solely on the basis

of the identity of the advertisers constitutes censorship and

interference with the broadcasters’ right of free speech

under the First Amendment.

11 The Court in Turner noted that “courts and commentators

have criticized the scarcity rationale since its inception”. 512 U.S.

at 638.

23

As indicated at the start of this discussion, Amici sub-

mit that the discriminatory nature of the statutory scheme

at issue here violates the First Amendment on its face.

This may raise a question as to how our view of this case

comports with the Central Hudson test. It is not our

purpose to argue, on the basis of this one case, that the

Central Hudson test is flawed, although we recognize that

some members of the Court believe it is, or that strict

scrutiny should necessarily apply to all commercial speech

cases, although we recognize that that view is also held

on the Court, and that other amici in this case so con-

tend. In our view this case turns on the particular statu-

tory scheme employed and om the type of restriction on

commercial speech which results, matters presently not

specifically addressed in the Central Hudson test.

The First Amendment analysis must start, we agree,

with the first part of the Central Hudson test, an inquiry

into the type of speech involved, that is, whether the activ-

ity is lawful and the speech not misleading. Once that is

determined, however, we suggest that before turning to

the governmental purpose behind the restriction on speech,

the Court might examine, perhaps in a part 1B, the re-

Striction on speech itself, to determine whether it is a

type of restriction which is or is not acceptable under the

First Amendment. Is it, for example, a time, place or

manner restriction which is content neutral, or is it such

a restriction which is not content neutral, and thus

presumably contrary to the First Amendment, regardless

of the governmental interest being served. Or it is, as in

this case, a restriction on commercial speech which dis-

criminates solely on the basis of the identity of the speaker,

which we submit is also contrary to the First Amendment,

without regard to whatever governmental interest there

may be behind the restriction. Or is it a restriction which

protects consumers from misleading, deceptive or aggres-

sive sales practices, or conversely, one which is unrelated

to the preservation of a fair bargaining process? Should

there be, as Justice Stevens proposed in 44 Liquormart

(116 S. Ct. at 1507) a different degree of scrutiny de-

24

pending upon which of these types of restriction is in-

vcived? Although the commercial speech cases which

have come before the Court tend to group themselves by

the type of restriction on speech which is involved, the

Central Hudson test does not take cognizance of that

factor in measuring them under the First Amendment. In-

stead of looking for a single talisman for all commercial

speech cases, the Court might consider merely adding a

part 1B to the Central Hudson test, so as to focus more

on the type of governmental restriction on commercial

speech which is involved in each case, and less on the

governmental purpose behind the restriction.

CONCLUSION

Because of the overall irrationality of 18 U.S.C. 1304,

as amended, the statutory scheme at issue here, it can-

not directly and materially advance the Government’s in-

terests in reducing public participation in commercial

lotteries and assisting states which do not permit casino

gambling. That being the case, the Government’s re-

striction on the commercial speech of broadcasters fails

the third part of the Central Hudson test and, accordingly,

violates the First Amendment. It is not necessary for

the Court to reach part three of Central Hudson, however,

because the statutory scheme of discrimination based

solely on the identity of the speaker of an otherwise ac-

ceptable commercial announcement, or the identity of the

party on whose behalf the announcement is broadcast, on

its face violates the First Amendment. In either event, the

statutory scheme at issue in this case violates the First

Amendment rights of broadcasters.

Respectfully submitted,

GERALD S. ROURKE

7501 Hackamore Drive

Potomac, MD 20854

(301) 983-0776

February 24, 1999 Counsel for Amici Curiae