Opposition Brief — Greater New Orleans Broadcasting Ass'n v. United States

FILED

JUN 20 1996

OFFICE OF {HE CLERK

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No. 95-1708

$n the Supreme Court of the Ginited States

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‘ER TERM, 1995

GREATER NEW ORLEANS BR

UNITED STA F AMI A

FEDERAL COMMUNICATIONS C¢

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Drew S. Days, II

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QUESTION PRESENTED

Whether 18 U.S.C. 1304, which prohibits the broad-

casting of advertisements for “any lottery, gift enter-

prise, or similar scheme,” violates the First Amend-

ment as applied to broadcast advertisements for legal

casino gambling.

(1)

TABLE OF CONTENTS

Page

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TABLE OF AUTHORITIES

Cases:

Anheuser-Busch, Inc. v. Schmoke, No, 95-685 (May

iat EN teabactabetlbebuiidgbedianeedndabsnesbursevvadasapainogeabbennees 9

Central Hudson Gas & Electric Corp. v. Public

Service Comm’n, 447 U.S. 557 (1980) ............ eee 5

FCC vy. American Broadcasting Co., 347 U.S, 284

CREPE sadancsveretnnsesvacesevwsiecucwgnstutoserseserneeppmesteseouetornecs 3

44 Liquormart, Inc. v. Rhode Island, 116 8. Ct.

DP TIIDEEED seinantendidupsteclvessnaessdesbeasieistientedsians 7, 8, 9, 10

Hospitality Investments of Philadelphia, Inc. v.

Pennsylunia State Police, No. 94-1247 (May 20,

STE -selciethaclteseddineligisdbidinsietbnguletiniunectaiweitakéesintebgees 9

New York State Broadcasters Ass'n v. United

States, 414 F.2d 990 (2d Cir. 1969), cert. denied,

es RR Ea ee en ae 5

Posadas de Puerto Rico Associates v. Tourism Co.

of Puerto Rico, 478 U.S. 328 (1986) ..........cccceeeeeeeees 6

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

NUE a UIINTE Sitichncinddddidadduntediniaeubndddidiqndddeiebtoeddetevabneer’ 2,5

Statutes and regulations:

Charity Games Advertising Clarification Act of 1988,

Pub. L. No. 100-625, 102 Stat. 3205 .............cccccssoseees 4

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RINNE URGENT pls het it ene ING

Miscellaneous:

134 Cong. Ree. (1988):

pp. 12,278-12,280

pp. 12,278-12,282

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pp. 12,280-12,282

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pp. 31,073-31,076

—_— — ==

Jn the Supreme Court of the Cnited States

OcTOBER TERM, 1995

No. 95-1708

GREATER NEW ORLEANS BROADCASTING ASSOCIATION,

INC., ET AL., PETITIONERS

v.

UNITED STATES OF AMERICA AND

FEDERAL COMMUNICATIONS COMMISSION

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

BRIEF FOR THE RESPONDENTS

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. la-

18a) is reported at 69 F.3d 1296. The opinion of the

district court (Pet. App. 19a-31la) is reported at 866 F.

Supp. 975.

JURISDICTION

The judgment of the court of appeals was entered

on November 30, 1995. A petition for rehearing was

denied on January 23, 1996. The petition for a writ of

certiorari was filed on April 22, 1996. The jurisdic-

tion of this Court is invoked under 28 U.S.C. 1254(1).

(1)

STATEMENT

1. Section 1304 of Title 18 prohibits television and

radio stations licensed by the Federal Communica-

tions Commission (FCC) from broadcasting adver-

tisements for “any lottery, gift enterprise, or similar

scheme, offering prizes dependent in whole or in part

upon lot or chanece.”' Section 1304 is part of a long-

standing body of federal restrictions on interstate

commerce involving lotteries and related gambling

activities. 18 U.S.C. 1301-1307; 39 U.S.C. 3001, 3005;

see generally United States v. Edge Broadcasting

Co., 509 U.S. 418, 421-423 (1993) (discussing statutory

history). Section 1304 was enacted in 1934 to com-

plement existing restrictions on the distribution of

lottery advertising and paraphernalia through the

mails and other forms of interstate transportation.

See 18 U.S.C. 1301 (interstate transportation), 1302

(mail); 89 U.S.C. 8001(a), 3005 (mail).

Section 1304 is a criminal statute. The govern-

ment’s practice, however, has not been to bring

criminal prosecutions for violations of the statute.

Instead, the advertising restriction has been enforced

administratively by the FCC, which has adopted

Section 1364 provides in pertinent part:

Whoever broadcasts by means of any radio or television

station for which a license is required by any law of the

United States, * * * any advertisement of or infor-

mation concerning any lottery, gift enterprise, or similar

scheme, offering prizes dependent in whole or in part

upon lot or chance, or any list of the prizes drawn or

awarded by means of any such lottery, gift enterprise, or

scheme, whether said list contains any part or all of such

prizes, shall be fined under this title or imprisoned not

more than one year, or both.

a regulation subjecting broadcasters to the same

restriction. See 47 C.F.R. 73.1211 (a).”

By its terms, Section 1304 applies to broadcast ad-

vertisements for any “lottery, gift enterprise, or

similar scheme.” In FCC v. American Broadcasting

Co., 347 U.S. 284 (1954), this Court construed that

language to encompass any undertaking involving

“(1) the distribution of prizes; (2) according to chance;

(3) for a consideration.” Jd. 290. That formulation

encompasses most if not all kinds of gambling ac-

tivities that take place in casinos, and Section 1304

has therefore been understood to apply to advertising

for casino gambling as well as “lotteries” in the more

traditional sense.*

In recent years, Congress has enacted several ex-

ceptions to Section 1304. In 1976, Congress adopted

a partial exemption for state lotteries, allowing the

broadcasting of advertisements for state lotteries

in States that conduct such lotteries. 18 U.S.C.

1307(a)(1). In 1988, Congress adopted exemptions for

broadcast advertisements for Indian gambling, chari-

table gambling, and government-conducted gambling

Section 73.1211(a) provides in pertinent part:

No licensee of an*AM, FM, or television broadcast

station, except as in paragraph (c) of this section, shall

broadcast any advertisement of or information concerning

any lottery, gift enterprise, or similar scheme, offering

prizes dependent in whole or in part upon lot or chance,

or any list of the prizes drawn or awarded by means of

any such lottery, gift enterprise or scheme, whether said

list contains any part or all of such prizes.

* In the proceedings below, petitioners contended that Sec-

tion 1304 does not apply to casino gambling. The district court

and the court of appeals both rejected that statutory argument

(Pet. App. 4a-5a, 23a-24a), and petitioners de not renew it here.

other than state lottemes. is U.S.C. Lb07(ay2. A);

25 U.S.C. 2720. The FCC has made corresponding

changes in its regulation, See 47C.F.R. T3121 he).

However, Congress has specifically rejected propos

ais to allow broadcast advertising for legal casino

gambling. See 134 Cong. Ree. 12,278-12,282 (1938)

(House); id. at 31,078-31,076 (Senate).”

2 Petitioners are New Orleans, Louisiana, tele

vision and radio stations that desire to broadcast ads

for Louisiana and Mississippi casino gambling. The)

commenced this action in February 1994, contending

that Section 1504, as applied to broadcast advertising

for casino gambling in States where casino gambling

is legal, violates the First Amendment. Pet. 8.

(CConvre has also adopted eXCePLION for adverti ny

related to promotional activities (e.g, an auto dealerships car

raffle): certain fishing contests; and sporting event see Is

5.{ 1305. 1807(av2)(B), DBo7id)

As originally proposed, the Charity Game \dvertising

Clarification Act of 1988, Pub. L. No 100-625, 102 Stat. 5205

codified principally at 18 USC 1307), would have removed

advertising restrictions on all lotteries allowed under state law,

including commercial casino gambling See 134 Cong. Ree

1? PTS-12.280 (1988). The House of Representatives, however,

adopted an amendment that specifically excluded casino gam

bling from the bill, over the objection t repre entatives trom

Nevada and New Jersey. /d. at 12,280-12,282, The Senate sub

equel redrafted the bill t wcomplish the same result la

at 31,078-31,076. In its report o» the bill, the Senate Judiciar

( ommittee empha ized that “ne provision of ithe billl is u tend

ed to chanyve current law as it appl to the interstate advet

I ne ot prol ional gambling iLIVilie li it 31,075.

Pet ne} lo not claim that Ss ion 1304 interfere

' eporting or other non-commercial speech Alth

Section 1304 refer to the broadcasting ol Lkavertise el i]

! rmati yyy nLEr the Federal Commu

Petitioners’ challenge was based on the First

Amendment principles recognized in Central Hudson

Gas & Electric Corp. v. Public Service Comm'n,

447 U.S. 557 (1980), and its progeny. Central Hud-

son subjects legislative restrictions on commercial

speech to a four-part inquiry: (1) whether the speech

concerns lawful activity and is not misleading, and

(2) if so, whether the asserted governmental interest

for the regulation is substantial; and if so, (3) whether

the regulation “directly advances” the asserted inter-

est and (4) whether it is no more extensive than Is

necessary to serve that interest. Jd. at 566. In Kdge,

supra, this Court applied that four-part test to the

federal regulation of state lottery advertising; the

Court upheld the scheme’s provisions whereby sta-

tions in States that conduct lotteries may broadcast

lottery advertisements, while stations in non-lottery

States may not, 509 U.S. at 426-435.

Petitioners and respondents filed cross-motions for

summary judgment regarding the constitutionality of

Section 1304. Relying on the principles articulated in

Edge, supra, the district court entered summary

judgment in favor of respondents. Pet. App. 19a-dla.

3. The court of appeals affirmed, Pet. App. la-1da.

kor purposes of review under Central Hudson, the

government advanced two distinct interests that are

served by Section 1304. The first is an interest in as-

sisting States that have chosen to prohibit casino

gambling and other “lotteries” covered by Section

1304. The second is an independent federal interest in

to “information” not to apply to non-commerca! sper ch ich as

news reporting. See New York State Broadeca fe) A

['nited States, 414 F.2d 990, 993-994, 997 (2d Cir. 1969), cert

denied, 296 U.S. 1061 (1970),

6

discouraging public participation in gambling and

thereby minimizing gambling’s attendant social ills.

The court held that both of those interests are

“substantial” for purposes of the second prong of

Central Hudson. Pet. App. 6a-10a.

The court further determined that Section 1304 di-

rectly advances those interests and is no more re-

strictive than necessary, thereby satisfying the third

and fourth prongs of the Central Hudson test. Pet.

App. 10a-13a. As to the third prong, the court ex-

plained that this Court’s cases have expressly recog-

nized that “the purpose and effect of advertising is to

increase consumer demand,” and it noted that “the

vigor with which the statute has been challenged con-

firms the efficacy of the prohibition.” /d. at 10a.

Relying on Edge, the court rejected petitioners’ claim

that the ban does not directly advance the govern-

ment’s interest, because the government permits

other forms of media to advertise casino gambling; as

the court explained, quoting Edge, the government is

not “require[d} * * * to make progress on every

front before it can make progress on any front.” Jd. at

lla-12a.

As to the fourth prong of the Central Hudson test,

the court noted that it is not a “least restrictive

means” test, but one that requires “only that the

regulation’s restrictions reasonably fit the desired

objective.” Pet. App. 12a. Because Section 1304 is

“equally tailored” to its objectives as the restrictions

that this Court upheld in Edge and in Posadas de

Puerto Rico Associates v. Tourism Co. of Puerto

Rico, 478 U.S. 328 (1986), the court found that Section

1304 satisfies the fourth Central Hudson prong. Pet.

App. 12a-13a.

7

Chief Judge Politz dissented. Pet. App. 14a-18a. He

believed that the statutory exceptions to Section 1304

prevent the statute from directly advancing the gov-

ernment’s interests, and that the application of the

statute to broadcast advertising in States that permit

casino gambling is unduly restrictive. Jd. at 14a-18a."

ARGUMENT

1. On May 13, 1996, after the petition was filed, this

Court struck down on First Amendment grounds two

Rhode Island statutes that prohibited the advertising

of retail liquor prices. See 44 Liquormart, Inc. v.

Rhode Island, 116 8. Ct. 1495 (1996). 44 Liquormart

produced four separate opinions, each of which found

the Rhode Island statutes unconstitutional, but none

of which commanded a majority of the Court regard-

ing the appropriate First Amendment standards for

government regulation of commercial speech.

Justice Stevens wrote the lead opinion, which was

joined in full by Justices Kennedy and Ginsburg and

in part by Justices Scalia, Souter, and Thomas. 116 S.

Ct. at 1501-1515. Justice Stevens concluded that the

Rhode Island statutes failed to satisfy the third and

fourth prongs of the Central Hudson test. Id. at

1508-1510 (Part V) (joined by Kennedy, Souter &

Ginsburg, JJ.). Justice Stevens, however, advocated

the adoption of stricter constitutional standards than

those of Central Hudson for laws, such as the Rhode

Island statutes, that “entirely prohibit|; the dis-

semination of truthful, nonmisleading commercial

’ Another case raising the same First Amendment claim,

brought by Nevada television stations, is currently pending

before the court of appeals for the Ninth Cireuit. Valley

Broadcasting Co. vy. United States, No. 93-16191 (argued Feb.

15, 1995).

8

messages for reasons unrelated to the preservation of

a fair bargaining process.” Jd. at 1507-1508 (Part IV)

(joined by Kennedy & Ginsburg, JJ.).

Justice O’Connor, joined by the Chief Justice and

Justices Souter and Breyer, concurred in the judg-

ment. 116 S. Ct. at 1520-1528. Justice O’Connor

agreed with the lead opinion that the Rhode Island

statutes failed to satisfy the fourth prong of Central

Hudson. Id. at 1521-1522. Unlike the lead opinion,

however, Justice O’Connor declined to depart from

the Central Hudson test. Ibid.

Justice Scalia and Justice Thomas wrote separate

opinions concurring in part and concurring in the

judgment. Justice Scalia agreed that the Rhode Is-

land statutes were unconstitutional under Central

Hudson, but expressed the view that the scope of

First Amendment protections for commercial speech

should conform to the “long accepted practices of the

American people.” 1168S. Ct. at 1515. Justice Thomas

called for a rule of per se unconstitutionality for ad-

vertising restrictions designed “to keep legal users of

a product or service ignorant in order to manipulate

their choices in the marketplace.” Jd. at 1515-1520.

2. In several respects, 44 Liquormart casts new

light on the First Amendment issues decided by the

court of appeals. While none of the opinions in 44

Liquormart commanded a majority of the Court re-

garding the general standards of First Amendment

protection for commercial speech, the opinions do

clarify the Court’s prior commercial speech prece-

dents in several respects. For example, the lead opin-

ion of Justice Stevens and Justice O’Connor’s con-

curring opinion both indicate that a blanket ban on

commercial speech will ordinarily not survive scru-

tiny under the fourth prong of Central Hudson if

9

the interests advanced in support of the ban can be

served equally well by alternative, non-speech-related

means. See 1168. Ct. at 1510 (Part V) (Stevens, J.,

joined by Kennedy, Souter & Ginsburg, JJ.); id. at

1521-1522 (O’Connor, J., joined by the Chief Justice

and Souter & Breyer, JJ.). Similarly, the lead opinion

and Justice O’Connor’s concurrence both question

the continued authority of Posadas de Puerto Rico,

supra, regarding judicial deference to legislative

choices between commercial speech restrictions and

other means of reducing consumption of legal prod-

ucts. See id. at 1511 (Part VI) (Stevens, J., joined by

Kennedy, Thomas & Ginsburg, JJ.); id. at 1522

(O’Connor, J., joined by the Chief Justice and Souter

& Breyer, JJ.).

Because the court of appeals did not have the bene-

fit of this Court’s views in 44 Liquormart, the Court

should grant the petition, vacate the judgment of the

court of appeals, and remand for further considera-

tion, as it did in two recent cases raising commercial-

speech issues. See Hospitality Investments of Phila-

delphia, Inc. v. Pennsylvania State Police, No. 94-

1247 (May 20, 1996) (remanding for further con-

sideration in light of 44 Liquormart); Anheuser-

Busch, Ine. v. Schmoke, No. 95-685 (May 20, 1996)

(same). In suggesting that the Court remand this

case, we do not mean to imply that the decision of the

court of appeals is erroneous, or that 44 Liquormart

renders Section 1304 unconstitutional in any respect.

44 Liquormart sheds additional light on the First

Amendment issues in this case, however, and it is

appropriate for the court of appeals in the first in-

Stance to reconsider those issues in light of the

guidance that may be drawn from 44 Liquormart.

10

CONCLUSION

The petition for writ of certiorari should be

granted, the judgment of the court of appeals should

be vacated, and the case should be remanded for fur-

ther consideration in light of 44 Liquormart, Inc. v.

Rhode Island, 116 S. Ct. 1495 (1996).

Respectfully submitted.

Drew S. Days, Ill

Solicitor General

FRANK W. HUNGER

Assistant Attorney General

ANTHONY J. STEINMEYER

Scott R. MCINTOSH

Attorneys

JUNE 1996

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