NOTE: This text was converted to HTML/Web format from a copy of the electronic file used to print the official document that was submitted to the court. This text was not derived from the official printed document itself, and may not be considered a legal copy of the official document. Although the text itself is believed to be identical to that of the originating electronic file, the nature of HTML format makes the exact layout of the text on the page somewhat unpredictable. As a result, this text will not exactly duplicate the appearance of the official printed document, and page numbers in particular should be discounted.
united states district court
district of connecticut
AMERICAN CHARITIES FOR REASONABLE
|CIVIL ACTION NO.:
MARK SHIFFRIN, in his capacity as
AUGUST 27, 1998
memorandum of law in support of motion to dismiss
The Defendants, Mark Shiffrin, in his capacity as Commissioner of the Connecticut Department of Consumer Protection and Richard Blumenthal, in his capacity as the Attorney General of the State of Connecticut, hereby submit this memorandum of law in support of their Motion to Dismiss the above-captioned action, commenced by the Plaintiff, American Charities for Reasonable Fundraising Regulation, Inc.
I. PROCEDURAL BACKGROUND
A. The District Court Proceeding.
The Plaintiff, American Charities for Reasonable Fundraising Regulation, Inc., (hereinafter "American Charities") commenced this action by Complaint and Application for Preliminary Injunction dated June 4, 1998 (the "Complaint"). According to the Complaint, American Charities "is a nonprofit organization whose members consist of numerous charities, nonprofit 'umbrella' organizations (membership organizations which support [American Charities] on behalf of their members), and whose supporters are professional fundraisers, fundraising counsel and nonprofit associations of fundraisers." Complaint, at ¶ 10.
The Complaint sets forth three causes of action based on 42 U.S.C. § 1983. The First and Second Causes of Action seek, respectively, declarations that the Connecticut Unfair Trade Practices Act (Conn. Gen. Stat. § 42-110a, et seq.) (hereinafter "CUTPA") and Connecticut's statutes and regulation governing sweepstakes (Conn. Gen. Stat § 42-295, et seq., and Conn. Agencies Regs. § 42-110b-23), as applied to charitable speech, violate the First and Fourteenth Amendments to the United States Constitution. The Third Cause of Action sets forth American Charities' claim for injunctive relief. American Charities seeks preliminary and permanent injunctions enjoining the Defendants from enforcing CUTPA and the sweepstakes statutes and regulation in order to regulate charitable speech. Complaint, "Relief Requested," at ¶¶ 1, 3, 5 and 6. < 1 > In addition to declaratory and injunctive relief, American Charities seeks an order requiring the Defendants to pay the costs, interest and attorneys' fees incurred by it in connection with this action, pursuant to 42 U.S.C. § 1988. Complaint, "Relief Requested," at ¶ 8. According to the Complaint, American Charities brings its action in a representative capacity on behalf of its members. Complaint, at ¶¶ 2 and 13.
During a telephone conference with the Court held on June 19, 1998, the Defendants raised the issue of American Charities' standing to bring a Section 1983 action on behalf of its member organizations and stated their intention to seek dismissal of the Complaint on that basis, among others. Thereafter, on July 24, 1998, American Charities filed an Amended Complaint (hereinafter the "Amended Complaint") which seeks to add one of its purported member organizations, The Bill of Rights Foundation, Inc. (hereinafter the "Foundation"), as an additional plaintiff. The Foundation asserts, in the Amended Complaint, Section 1983 claims identical to those asserted by American Charities in the original Complaint. In addition, the Amended Complaint contains an additional claim, namely that the enforcement of CUTPA by the Defendants violates the right of American Charities' member organizations to freedom of association. < 2 > In the Amended Complaint, American Charities again claims that it brings this case in a representative capacity on behalf of its members. Amended Complaint, at ¶¶ 3 and 16.
On or about August 12, 1998, the Defendants filed an Objection to Filing of Amended Complaint. In their Objection, the Defendants asserted that because, under Second Circuit precedent, American Charities has no standing to being a Section 1983 claim on behalf of its members, the Court lacks jurisdiction over American Charities' original Complaint. Thus, it is without authority to accept the filing of the Amended Complaint, which attempts to retroactively cure the jurisdictional infirmity. Because the Court has not yet ruled upon the Defendants' Objection, this Motion to Dismiss will address both the Complaint and the Amended Complaint.
B. The Pending State Court Proceeding.
More than two years ago, by Complaint dated February 28, 1996, the State of Connecticut (hereinafter the "State") commenced a civil action against The Children's Charity Fund Corp. (hereinafter "CCF"), entitled State of Connecticut vs. The Children's Charity Fund Corp., in the Superior Court for the Judicial District of Hartford/New Britain at Hartford (Docket No. CV-96-0558744 S). < 3 > CCF was, at the time this federal court action was commenced, a member organization of the Plaintiff, American Charities, of which the Foundation also claims to be a member. < 4 > In the state court action the State asserts that CCF, which is registered in Connecticut as a charitable organization pursuant to Section 21a-190b of the Connecticut General Statutes, solicited money in the State on the representation that its primary purpose is to provide equipment, such as wheelchairs and walkers, to handicapped and disabled children. (See, Exh. A, First Count, at ¶¶ 3 and 4.) The State further asserts that providing such equipment is not in fact CCF's primary purpose. Exh. A, First Count, at ¶ 5. Rather, CCF's primary purpose, as evidenced by information returns filed with the Internal Revenue Service and the Connecticut Department of Consumer Protection, is public education conducted in conjunction with fundraising appeals. By comparison, CCF spends a relatively insignificant amount of money on medical equipment for handicapped and disabled children. The State claims that in soliciting charitable donations on the basis of this misrepresentation, CCF has violated Section 21a-190h(2) of the Connecticut Solicitation of Charitable Funds Act (the First Count), as well as CUTPA (the Second Count), and that CCF engaged in this conduct willfully (the Third Count). The State seeks injunctive relief as well as the imposition of civil penalties against CCF pursuant to Section 42-110b of CUTPA.
CCF moved to strike the second and third counts of the State Complaint, on the grounds that, inter alia, "the application of [CUTPA] to charitable solicitations would . . . be an unconstitutional restriction of CCF's First Amendment rights as set forth by the U.S. Supreme Court in the trilogy of cases of Village of Schaumberg v. Citizens for a Better Environment, 444 U.S. 620 (1980), Secretary of State of Maryland v. Munson, 467 U.S. 947 [(1984)], and Riley v. National Federation of the Blind of North Carolina, 487 U.S. 781 (1986)." < 5 > While acknowledging that the prevention of fraud is a compelling government interest, CCF claimed that "using CUTPA as the means to regulate charitable solicitations is even less narrowly tailored than the statutes invalidated in Schaumberg, Munson, and Riley." Exh D, at 21. CCF subsequently filed a supplemental memorandum in support of its motion to strike, in which it argued that the State's broad interpretation of CUTPA chilled CCF's free speech rights. < 6 >
In a Memorandum of Decision dated June 25, 1997, the trial court (Sullivan, J.) denied CCF's Motion to Strike. < 7 > The Court rejected CCF's claim that the enforcement of CUTPA by the State violated its First Amendment rights, stating that "[t]he cases cited by [CCF] belie [CCF's] contention, as it is clear that antifraud laws can be enforced against charitable fundraising." Exh. F, at 2. CCF filed a Motion to Reargue, which was denied by the Court on November 3, 1997.
On July 24, 1998, CCF filed its Answer and Special Defenses in the state court proceeding. < 8 > CCF has asserted, as a special defense to the Second and Third Counts of the State Complaint, that the State's application of CUTPA to its activities violates the First and Fourteenth Amendments to the United States Constitution.
In support of their Motion to Dismiss, the Defendants submit that American Charities lacks standing to bring this § 1983 action on behalf of its member organizations. Because the filing of the Amended Complaint cannot cure this jurisdictional defect, this action must accordingly be dismissed. The Defendants further submit that the Foundation fails to state a cause of action for violation of its First Amendment Rights and lacks standing to seek the declaratory and injunctive relief requested in the Amended Complaint. In addition, the Defendants assert that the Court should abstain from hearing the claims asserted in the First Cause of Action of the original and Amended Complaints under the doctrine enunciated in Younger v. Harris and its progeny, as well as under the Rooker-Feldman doctrine, and that the Court should abstain from entertaining any of the Plaintiffs' claims under the doctrine enunciated in Railroad Commission of Texas v. Pullman Co. Finally, the Defendants submit that the Court should exercise its discretion to decline to entertain the Plaintiffs' declaratory judgment action.
A. American Charities Lacks Standing To Assert The Claims Of Its Member Organizations.
According to its original Complaint, American Charities brings this action pursuant to 42 U.S.C. §1983, "in a representative capacity on behalf of its members." Complaint, at ¶¶ 1 and 2. < 9 > Because American Charities lacks standing to bring a Section 1983 action on behalf of its member organizations, this action must be dismissed.
42 U.S.C. § 1983 confers a cause of action on "any citizen of the United States or other person within the jurisdiction thereof" who has been deprived under color of state law "of any rights, privileges, or immunities secured by the Constitution and laws." The Second Circuit Court of Appeals has "restricted organizational standing under § 1983 by interpreting the rights it secures to be personal to those purportedly injured." League of Women Voters v. Nassau County Board of Supervisors, 737 F.2d 155, 160 (2d Cir. 1984), cert. denied, 469 U.S. 1108 (1985) (emphasis supplied).
As the Second Circuit explained in League of Women Voters, "'[n]either [the] language nor the history . . . [of § 1983] suggests that an organization may sue under the Civil Rights Act for the violation of rights of members.'" League of Women Voters, 737 F.2d at 160 (quoting Aguayo v. Richardson, 473 F.2d 1090, 1099 (2d Cir. 1974), cert. denied, 414 U.S. 1146 (1974). The Court thus held that the League lacked standing to assert, on behalf of its members, an equal protection challenge to Nassau County's weighted voting system for its board of supervisors. League of Women Voters, 737 F.2d at 160-161. Similarly, the District Court for the Northern District of New York held in Roxbury Taxpayers Alliance v. Delaware County Board of Supervisors, 886 F. Supp. 242 (N.D.N.Y. 1995), that the plaintiff, "an association concerned with its members' voting rights and political representation," lacked standing to challenge, on behalf of its members, a weighted voting plan adopted by the defendant Board. Roxbury Taxpayers Alliance, 886 F. Supp. at 245.
American Charities similarly brings this Section 1983 action in a representative capacity on behalf of it members. Complaint, at ¶¶ 1 and 2. Under the Second Circuit's holding in League of Women Voters, American Charities lacks standing to do so. Accordingly, this action must be dismissed.
In a transparent attempt to cure the jurisdictional deficiency, on July 24, 1998, American Charities filed an Amended Complaint which adds the Foundation, a member of American Charities, as an additional plaintiff and includes an additional claim, namely that CUTPA adversely affects the ability of American Charities' member organizations "to associate with potential new members residing in the State of Connecticut." Amended Complaint, at ¶ 24. American Charities' efforts to cure the jurisdictional infirmity are, however, unavailing.
It is a "fundamental principle of procedure, uniformly adhered to by the federal courts, that jurisdiction is to be tested by the conditions of the parties at the commencement of the suit." Field v. Volkswagenwerk AG, 626 F.2d 293, 306 (3d Cir. 1980). "The longstanding and clear rule is that 'if jurisdiction is lacking at the commencement of [a] suit, it cannot be aided by the intervention of a [plaintiff] with a sufficient claim.'" Pressroom Union-Printers League Income Security Fund v. Continental Assurance Co., 700 F.2d 889, 890 (2d Cir. 1983), cert. denied, 464 U.S. 845 (1983) (quoting Pianta v. H. M. Reich Co., 77 F.2d 888, 890 (2d Cir. 1935) (plaintiff's attempt to cure defect in diversity jurisdiction by intervention of creditor with claim exceeding jurisdictional minimum rejected for reason that "[t]he right to intervene presupposes an action duly brought, and if jurisdiction is lacking at the commencement of the suit, it cannot be aided by the intervention of a creditor with a sufficient claim." Pianta, 77 F.2d at 890.)).
The plaintiff in Pressroom, a pension fund, brought an action asserting breach of fiduciary duty claims against the defendant consultants and insurance companies. The defendants moved to dismiss the action claiming that neither the Employee Retirement Income Security Act nor the Welfare and Pension Plans Disclosure Act afforded the plaintiff fund a federal cause of action. The District Court for the Southern District of New York agreed and granted the motion to dismiss. The plaintiff filed a motion to amend its complaint to substitute individual plan participants as plaintiffs, which was denied by the District Court.
The Second Circuit agreed that the plaintiff lacked standing and affirmed the District Court's dismissal of the complaint. It also held that because the District Court was without jurisdiction, it had properly denied the plaintiff's request to amend its complaint. The Court rejected the plaintiff's reliance on 28 U.S.C. § 1653, which permits the amendment of defective allegations of jurisdiction, stating that "we have never allowed that provision to create jurisdiction retroactively where none existed. Section 1653 allows 'amendment only of defective allegations of jurisdiction; it does not provide a remedy for defective jurisdiction itself.'" Pressroom, 700 F.2d at 893 (quoting Field v. Volkswagenwerk AG, 626 F.2d 293, 306 (3d Cir. 1980)) (emphasis in original). < 1 > Because the plaintiff attempted "not to remedy inadequate jurisdictional allegations, but rather to substitute a new action over which there is jurisdiction for one where it did not exist," the Court concluded that its request to amend the complaint was properly denied by the court below. Pressroom, 700 F.2d at 893.
The Amended Complaint filed by American Charities in this action similarly attempts to substitute a new action over which this Court might have jurisdiction for one where it does not exist. Because American Charities is without standing to pursue Section 1983 claims on behalf of its members, this Court lacks jurisdiction over the original Complaint. The Amended Complaint filed by American Charities does not seek merely to correct defective allegations of jurisdiction. Rather, it seeks to remedy the total lack of jurisdiction which existed at the commencement of its suit. The rule is clear that if the Court lacks jurisdiction over a suit as commenced, the filing of an amended complaint which seeks to confer jurisdiction cannot cure that deficiency. Accordingly, this action must be dismissed.
Moreover, assuming, arguendo, that the Amended Complaint is accepted by the Court, the insertion of the additional claim does not confer upon American Charities standing to assert a Section 1983 claim on behalf of its members. The additional claim, that the enforcement of CUTPA adversely affects the ability of American Charities' member organizations to associate with potential new members residing in the State of Connecticut, is included by American Charities in an attempt to bring itself under the line of cases beginning with NAACP v. Alabama ex rel. Patterson, 357 U.S. 449 (1958). The attempt is futile.
In NAACP v. Alabama, the plaintiff organization challenged a state court contempt order entered against it for its failure to provide the state's Attorney General with copies of its membership lists. NAACP v. Alabama, 357 U.S. at 452-453. The NAACP had "made an uncontroverted showing that on past occasions revelation of the identity of its rank-and-file members has exposed these members to economic reprisal, loss of employment, threat of physical coercion, and other manifestations of public hostility." NAACP v. Alabama, 357 U.S. at 462. The Court observed that "[i]f petitioner's rank-and-file members are constitutionally entitled to withhold their connection with the Association despite the production order, it is manifest that this right is properly assertable by the Association. To require that it be claimed by the members themselves would result in nullification of the right at the very moment of its assertion." NAACP v. Alabama, 357 U.S. at 459. The Court thus concluded that although it had "generally insisted that parties rely only on constitutional rights which are personal to themselves . . . [t]he principle is not disrespected where constitutional rights of persons who are not immediately before the Court could not be effectively vindicated except through an appropriate representative before the Court." NAACP v. Alabama, 357 U.S. at 459. Moreover, the Court determined that "[t]he reasonable likelihood that the Association itself through diminished financial support and membership may be adversely affected if production is compelled is a further factor pointing towards our holding that petitioner has standing to complain of the production order on behalf of its members." NAACP v. Alabama, 357 U.S. at 459-460. < 1 >
NAACP v. Alabama and its progeny carve out a very narrow exception to the general rule that an association lacks standing to assert the constitutional rights of its members. That exception, recognized in order that constitutional rights otherwise incapable of protection will be championed, is applicable only when the association asserts the constitutional right of its members to associate with itself and when the members' right to freedom of association cannot be effectively vindicated except through a suit commenced by the association.
The claim newly asserted by American Charities in the Amended Complaint does not bring it within the exception to the general rule denying it standing to bring a Section 1983 action on behalf of its members. In stark contrast to the claims asserted by the NAACP, American Charities claims only that "[f]or the numerous members of [American Charities] that are membership organizations, CUTPA has adversely affected their ability to associate with potential new members residing in the State of Connecticut." Amended Complaint, at ¶ 24. American Charities does not assert that the enforcement of CUTPA impacts the ability of its member organizations to associate with it. Nor are there any facts alleged by American Charities which would support a finding that the associational rights of its members could not be effectively vindicated except through a suit commenced by American Charities. Nor has American Charities claimed that it has itself been adversely affected, through diminished financial support and membership, by the enforcement of CUTPA by the Defendants. Thus, it lacks standing to assert its members' constitutional right to freedom of association. Nor, under League of Women Voters, does it have standing to assert its members' constitutional right to freedom of speech. Accordingly, should the Court overrule the Defendants' Objection and permit the amendment of the Complaint, the Section 1983 claims asserted by American Charities in the First and Second Causes of Action of the Amended Complaint must nonetheless be dismissed.
The Court need not, however, reach the allegations of the Amended Complaint. According to the original Complaint, this is a civil action brought by American Charities, in a representative capacity on behalf of its members, pursuant to 42 U.S.C. § 1983. Complaint, at ¶¶ 1 and 2. Under League of Women Voters, American Charities clearly lacks standing to bring such an action. The filing of the Amended Complaint cannot cure this jurisdictional deficiency. Because the Court lacks jurisdiction over this action, the Complaint must be dismissed.
B. The Foundation Fails To State A Claim For, And Lacks Standing To Seek, The Declaratory And Injunctive Relief Requested In The Amended Complaint.
1. The Foundation fails to state a claim for infringement of its First Amendment rights.
In the Amended Complaint, American Charities seeks to add the Foundation, one of its purported members (see Amended Complaint, at ¶ 15), as an additional plaintiff. The Foundation asserts Section 1983 claims premised on its assertion that the Defendants' enforcement of CUTPA and the sweepstakes statutes and regulation violates its First Amendment right to free speech. The Foundation fails, however, to state a claim for infringement of its First Amendment rights.
While it is true that "governmental action which falls short of a direct prohibition on the free exercise of speech may be subject to constitutional challenge, see Laird v. Tatum, 408 U.S. 1, 12-13, 92 S.Ct. 2318, 2325, 33 L.Ed.2d 154 (1972), 'not every assertion of a chilling effect will be considered a judicially cognizable First Amendment violation.'" Hankard v. Town of Avon, 126 F.3d 418, 423 (2d Cir. 1997) (quoting Levin v. Hartleston, 966 F.2d 85, 89 (2d Cir. 1992)). "[T]o entitle a private individual to invoke the judicial power to determine the validity of executive or legislative action he must show that he has sustained, or is immediately in danger of sustaining, a direct injury as the result of that action." Laird v. Tatum, 408 U.S. at 13 (quoting Ex parte Levitt, 302 U.S. 633, 634 (1937)). In order to allege a viable cause of action, a plaintiff "must make specific allegations that indicate a deprivation of constitutional rights; general, indirect and conclusory allegations are not sufficient." Hankard, 126 F.3d at 423. See also, Spear v. Town of West Hartford, 771 F.Supp. 521, 527 (D.Conn. 1991), aff'd, 954 F.2d 63 (2d Cir. 1992) ("[A]llegations which are nothing more than broad, simple and conclusory statements are insufficient."); Davidson v. Mann, 129 F.3d 700, 701 (2d Cir. 1997) ("It is well settled that to state a civil rights claim under § 1983, a complaint must contain specific allegations of fact which indicate a deprivation of constitutional rights." (quoting Alfaro Motors, Inc. v. Ward, 814 F.2d 883, 887 (2d Cir. 1987)).
The Foundation fails to offer anything but general and conclusory allegations to support its claim of a constitutional violation. The Amended Complaint contains merely an allegation that the Foundation "plans to solicit funds in the State of Connecticut, but has refrained from doing so due to a genuine fear of prosecution under CUTPA," and that it has "plans to solicit funds in the State of Connecticut utilizing sweepstakes promotions." Amended Complaint, at ¶¶ 25 and 33. The Amended Complaint is devoid of allegations that the Foundation has solicited charitable contributions in Connecticut or in any other state or that it is registered in any state to do so, < 1 > that any portion of its revenue is derived from charitable solicitations, that it has mailed "public education" or sweepstakes materials into Connecticut or any other state, that it has prepared "public education" or sweepstakes materials for dissemination anywhere or that it has conducted sweepstakes in Connecticut or in any other state.
In fact, according to its President, Dane Von Breichenruchardt, although the Foundation was incorporated more than a year ago, it has generated no revenue whatsoever. Exh. C, at 15. The Foundation has not even attempted to register to solicit charitable donations in Connecticut or in any other state. Exh. C, at 16 and 24. Moreover, the Foundation does not even know if it will be exempt from federal income taxation or be able to solicit tax-deductible contributions, which are the life-blood of any charity dependent on public support. The Foundation has yet to receive a determination from the Internal Revenue Service that it is an organization described in Section 501(c)(3) of the Internal Revenue Code, that is, a corporation organized and operated exclusively for charitable purposes. Exh. C, at 15-16.
Any fundraising to be conducted by the Foundation is still in the planning stage. Exh. C, at 17. Although Mr. Von Breichenruchardt claims that the Foundation is contemplating setting up a web site, purchasing mailing lists and conducting a sweepstakes, he acknowledges that the Foundation has no revenue and that before any of these activities may be undertaken, he will have to raise money via a speaking tour, which is also still in the planning stage. Exh. C, at 18 and 20. The Foundation has neither contracted with a fundraising firm nor obtained lists of persons to be contacted by phone or mail. Exh. C, at 17 and 19. Although the Foundation claims to be planning a sweepstakes, Mr. Von Breichenruchardt admits that they are at the stage of "designing it in [their] heads." Exh. C, at 29. Because it has absolutely no assets, the Foundation's only concrete plan is to contact four corporations in Connecticut by telephone and solicit their support. Exh. C, at 19-20. However, because it has not even attempted to register to solicit charitable donations in Connecticut, it is not in a position to undertake even this plan.
It is evident that the Foundation has no genuine plans to solicit funds or to conduct a sweepstakes in the state of Connecticut. < 1 > Clearly, any chilling effect allegedly suffered by the Foundation is purely speculative and remote. Accordingly, the Foundation fails to state a cause of action for infringement of its constitutional rights and its claims should be dismissed
2. The Foundation lacks standing to seek the declaratory and injunctive relief requested in the Amended Complaint.
"The doctrine of standing focuses on whether the plaintiff before the court is the proper party to request adjudication of a particular issue." Flast v. Cohen, 392 U.S. 83, 99-100 (1968).
The purpose of the standing requirement is to ensure the parties have "such a stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which the court so largely depends for illumination of difficult constitutional questions." Baker v. Carr, 369 U.S. 186, 204, 82 S.Ct. 691, 703, 7 L.Ed.2d 663 (1962); McLain v. Meier, 851 F.2d 1045, 1048 (8th Cir. 1988).
United Food and Commercial Workers International Union v. IBP, Inc., 857 F.2d 422, 426 (8th Cir. 1988).
In order to have standing to seek declaratory and injunctive relief, a plaintiff must establish more than a conjectural or hypothetical threat of future injury. See Whitmore v. Arkansas, 495 U.S. 149, 155 (1990). Rather, he must demonstrate a "likelihood of substantial and immediate irreparable injury." O'Shea v. Littleton, 414 U.S. 488, 502 (1974). Thus, in Virginia v. American Booksellers Association, Inc., 484 U.S. 383, 392 (1988), the plaintiff booksellers were held to have standing to challenge a statute making it unlawful to knowingly display sexually explicit material accessible to juveniles, inasmuch as, if the statute were upheld, plaintiffs would have to undertake significant and costly compliance measures or risk criminal prosecution. Similarly, in Mendelsohn v. Meese, 695 F.Supp. 1474, 1477-1478 (S.D.N.Y. 1988), the plaintiffs, who had accepted speaking engagements funded by the Palestine Liberation Organization, were determined to have standing to challenge the constitutionality of the Anti-Terrorism Act, in light of Attorney General's refusal to stipulate that enforcement actions would not be taken against them if they honored those engagements.
Unlike the plaintiffs in American Booksellers and Mendelsohn, the Foundation has engaged in no conduct whatsoever which might conceivably come within the purview of an allegedly unconstitutional statute (in this case CUTPA or the Connecticut sweepstakes statute), nor has it taken any concrete steps toward engaging in such conduct. (See, discussion under Section B.1. above.) The Foundation has nothing more than amorphous intentions to engage, at some undetermined future time, in some form of solicitation activity. It clearly lacks such a stake in the outcome of this litigation as would "assure that concrete adverseness which sharpens the presentation of issues upon which the court so largely depends for illumination of difficult constitutional questions." Accordingly, the Foundation lacks standing to pursue its First Amendment claims and its action must be dismissed.
C. This Court Should Dismiss The Plaintiffs' Claims Relating to CUTPA Under The Doctrine Enunciated In Younger v. Harris And Its Progeny.
The doctrine of equitable restraint, also known as "Younger abstention," is a "doctrine of federal court noninterference in pending state judicial proceedings which involve important state interests. [Citation omitted.] It applies typically when a party to the state proceeding might assert a federal constitutional claim as a defense to a state criminal or civil enforcement action, but chooses instead, or in addition, to file a federal suit, concerning the same matter, for declaratory and/or injunctive relief." Obeda v. Connecticut Board of Registration for Professional Engineers and Land Surveyors, 570 F. Supp. 1007, 1011 (D. Conn. 1983).
In Younger v. Harris, 401 U.S. 37 (1971), the United States Supreme Court affirmed the "national policy forbidding federal courts to stay or enjoin pending state court proceedings except under special circumstances." 401 U.S. at 41. The Court explained that the reason underlying the policy was "comity,"
that is a proper respect for state functions, a recognition of the fact that the entire country is made up of a Union of separate state governments, and a continuance of the belief that the National Government will fare best if the States and their institutions are left free to perform their separate functions in their separate ways. This, perhaps for lack of a better and clearer way to describe it, is referred to by many as 'Our Federalism' . . . .
Younger, 401 U.S. at 44. This concept represents a "system in which there is sensitivity to the legitimate interests of both State and National Governments, and in which the National Government, anxious though it may be to vindicate and protect federal rights and federal interests, always endeavors to do so in ways that will not unduly interfere with the legitimate activities of the States." Younger, 401 U.S. at 44.
The Court in Younger refused to enjoin an ongoing criminal prosecution which afforded the defendant an opportunity to raise his constitutional claims, absent a showing of "bad faith, harassment, or any other unusual circumstance that would call for equitable relief." Younger, 401 U.S. at 57. The Court, in later cases, applied the doctrine enunciated in Younger to state civil and administrative proceedings, Huffman v. Pursue. Ltd., 420 U.S. 592, 594 (1975), Rizzo v. Goode, 423 U.S. 362, 380 (1976), Middlesex County Ethics Committee v. Garden State Bar Association, 457 U.S. 423, 432 (1982), as well as to actions seeking declaratory judgments and injunctive relief. Samuels v. Mackell, 410 U.S. 66, 73 (1971).
The Supreme Court also held that the principles articulated in Younger and Huffman are likewise applicable "where injunctive relief is sought, not against the judicial branch of the state government, but against those in charge of an executive branch of an agency of state or local government . . . ." Rizzo, 423 U.S. at 380 (1976). The Court cautioned that "[w]here . . . the exercise of authority by state officials is attacked, federal courts must be constantly mindful of the 'special delicacy of the adjustment to be preserved between federal equitable power and State administration of its own law.'" Rizzo, 423 U.S. at 378 (citations omitted).
Abstention under Younger is appropriate when: (1) the plaintiff is involved in an ongoing state proceeding; (2) that proceeding involves an important state interest; (3) the injunctive and declaratory relief sought by the plaintiff in the federal suit would interfere with that proceeding; and (4) the constitutional claims asserted by the plaintiff in the federal action can be raised in the state court proceeding. Obeda v. Connecticut Board of Registration for Professional Engineers and Land Surveyors, 570 F. Supp. 1007, 1011 (D. Conn. 1983). When these conditions are satisfied, abstention is obligatory. See, Colorado River Water Conservation District v. United States, 424 U.S. 800, 816 n. 22 (1976). All four of the these factors are satisfied here.
1. There is an ongoing state proceeding.
The analysis consistently employed by the federal courts in determining whether Younger abstention should bar the suit of a federal plaintiff not a party to a pending state court action is whether the interests of the federal plaintiff are sufficiently related to those of the party to the state court litigation that the interests of the federal plaintiff will be adequately represented in the state court proceedings. Application of this analysis to the instant case compels the conclusion that this Court should abstain from hearing the claims set forth in American Charities' First Cause of Action.
State judicial proceedings are currently ongoing against CCF, which, at the time this federal suit was commenced, was a member of American Charities. According to Kenneth Bowron, CCF's Executive Director, CCF became a member of American Charities in May of 1998. It remained a member until the first week of July, 1998, shortly after the June 19th telephone conference with this Court at which the abstention issues were first discussed. See, Exhibit B at 6 and 10-11. It therefore appears that CCF terminated its membership in American Charities only when American Charities realized that CCF's membership could result in the dismissal of its CUTPA claim. However, the termination of CCF's membership in American Charities is irrelevant, as the proper reference for determining the applicability of Younger is the time the federal complaint was filed. Sun Refining and Marketing Co. v Brennan, 921 F.2d 635, 639 (6th Cir. 1990); Bettencourt v. Board of Registration in Medicine, 904 F.2d 772, 777 (1st Cir. 1990). For this reason, the attempted addition of the Foundation as an additional plaintiff in this action is also irrelevant to the Younger analysis.
The State has asserted, in the State court proceedings, that CCF made certain misrepresentations in the course of soliciting charitable contributions in the State, in violation of the Connecticut Solicitation of Charitable Funds Act and CUTPA. CCF has asserted, in defense of the state court proceedings, the same constitutional claims which have been asserted in this action. Because the interests of CCF, the defendant in the state court proceeding, are closely related to those of American Charities, this Court should apply the Younger abstention doctrine and dismiss the claims set forth in the First Cause of Action.
The United States Supreme Court has determined that "there plainly may be some circumstances in which legally distinct parties are so closely related that they should all be subject to the Younger considerations which govern any one of them . . . ." Doran v. Salem Inn, 422 U.S. 922, 928 (1975). Courts have not hesitated to apply Younger principles to federal parties not subject to ongoing state court proceedings when sufficient commonality exists between their interests and those of the state court litigants that the interests of the federal parties will be adequately represented in the state court proceedings. See, e.g., Hicks v. Miranda, 422 U.S. 332 (1975), Aristocrat Health Club of Hartford, Inc. v. Chaucer, 451 F.Supp. 210, 219-220 (D. Conn. 1978), Obeda v. Connecticut Board of Registration for Professional Engineers and Land Surveyors, 570 F.Supp. 1007 (D. Conn. 1983).
In Hicks v. Miranda, 422 U.S. 332 (1975), the Supreme Court found such commonality of interest. In Hicks, a theater owner, his property holding company and theater corporation sued police officers and prosecuting attorneys in federal court seeking a declaration as to the constitutionality of a California obscenity statute and an injunction ordering the return of certain films seized in state proceedings. Prior to the commencement of the federal suit, state officials had seized the films and arrested two of the theater's employees under the obscenity statute. In holding that the federal court erred in reaching the merits of the case, the Supreme Court explained that although when federal plaintiffs filed their federal complaint, no state proceedings were pending against them,
two employees of the theater had been charged and four copies of "Deep Throat" belonging to [plaintiffs] had been seized, were being held, and had been declared to be obscene and seizable by the Superior Court. [Plaintiffs] had a substantial stake in the state proceedings, so much so that they sought federal relief, demanding that the state statute be declared void and their films be returned to them. Obviously, their interests and those of their employees were intertwined; and, as we have pointed out, the federal action sought to interfere with the pending state prosecution. Absent a clear showing that [plaintiffs], whose lawyers also represented their employees, could not seek the return of their property in the state proceedings and see to it that their federal claims were presented there, the requirements of Younger v. Harris could not be avoided on the ground that no criminal prosecution was pending against [plaintiffs] on the date the federal complaint was filed.
Hicks, 422 U. S. at 348-349.
In Aristocrat Health Club of Hartford, Inc. v. Chaucer, 451 F.Supp. 210, 219-220 (D. Conn. 1978), the United States District Court for the District of Connecticut relied upon Hicks in dismissing an action commenced by a massage establishment and its employee, although the employee was not the subject of state court proceedings. Noting that the employer was a plaintiff in both actions and that the employer and the employee were represented by the same legal counsel, the Court determined that the interests of the employee were adequately represented in the state court proceeding and that abstention was therefore proper.
Similarly, in Obeda v. Connecticut Board of Registration for Professional Engineers and Land Surveyors, 570 F.Supp. 1007 (D. Conn. 1983), the Court, relying upon Hicks, determined that the interests of the individual plaintiff were sufficiently intertwined with those of the consulting firm of which she was the president and principal stockholder, and which was the subject of ongoing state court proceedings, for her federal claims to be barred. See also Hjelle v. Brooks, 424 F.Supp. 595 (D. Alaska, 1976) (abstention proper where interests of thirty-seven federal plaintiffs, individual crab fisherman who were members of the North Pacific Vessel Owners Association, held to be adequately represented by seven other members of the Association, who were also the subject of ongoing state proceedings), Stivers v. Minnesota, 575 F.2d 200 (8th Cir. 1978), cert. denied, 439 U.S. 1127 (1979) (abstention proper where federal plaintiffs were co-members with parties to state court civil action in association also subject of state court suit).
CCF, the defendant in the state court enforcement proceeding, was, at the time the federal suit was commenced, a member of American Charities. CCF, like American Charities, holds itself out as a charitable organization. According to Mr. Bowron, CCF's main purpose is educating the public about handicapped and disabled children. Exh. B, at 15. This purpose is accomplished primarily through telemarketing conducted in conjunction with fundraising. Exh. B, at 15-16. CCF is registered in Connecticut as a charitable organization and has solicited charitable donations within Connecticut. < 1 >
It is as the result of certain of those solicitations that CCF is currently the subject of a state enforcement proceeding. In the state court action, the State claims that in connection with its solicitation activity, CCF has made certain misrepresentations as to its primary purpose, and that in so doing, CCF has violated the Connecticut Solicitation of Charitable Funds Act and CUTPA. In defense of that state litigation, CCF has asserted that the application of CUTPA to its activities violates its First Amendment rights (see Exhs. D, E and G), the very claim being asserted by the Plaintiffs in this case. CCF is represented in the state court proceedings by the very same law firm, Perlman and Perlman, which represents the Plaintiffs in this federal action.
The Plaintiff in this action also claims to be an organization engaged in charitable speech. American Charities purports to champion the constitutional rights of its non-profit members which solicit support from the citizens of the State of Connecticut, or would solicit such support were it not for the existence of the offending statutes. Those members included, at the time suit was commenced, CCF. The Plaintiff claims, as does CCF in the state court litigation, that the application of CUTPA to charitable solicitation activities chills the exercise of First Amendment rights by those who engage or would engage in charitable speech. American Charities commenced this suit only after those same First Amendment claims were rejected in the state court action currently defended by CCF.
Clearly, the First Amendment interests of American Charities are identical to those of CCF. American Charities and CCF each claim to be a charitable organization. Each claims that the application of CUTPA to charitable speech chills the First Amendment rights of charities and professional solicitors. There can be no doubt that the First Amendment claims asserted by the Plaintiff in this action, and by CCF in the pending state court proceedings, will be vigorously advocated by CCF. This conclusion is strengthened by the fact that in pressing their First Amendment claims, the parties are represented by the same legal counsel, Perlman and Perlman. Moreover, it is CCF, not the Plaintiff in this action, which is the subject of the ongoing enforcement proceeding. Thus, CCF's interests in vigorously defending the First Amendment rights at issue here are far keener than those of the federal suit Plaintiff, which does not claim to have engaged in charitable solicitation in the State or to have been threatened with any enforcement action. There can be no doubt that the interests of American Charities in advocating the First Amendment rights of charitable speakers will be adequately advocated by CCF in the state court enforcement proceeding pending against it.
2. The state proceeding involves an important state interest.
Abstention is appropriate under Younger if the proceedings implicate "important state interests." Middlesex County Ethics Commission v. Garden State Bar Association, 457 U.S. 423, 432 (1982). Important state interests include "[p]roceedings necessary for the vindication of important state policies or for the functioning of the state judicial system." Middlesex County Ethics Commission, 457 U.S. at 432.
The state court enforcement proceeding seeks civil penalties and injunctive relief against CCF for violations of CUTPA. "CUTPA was designed by the legislature to 'put Connecticut in the forefront of state consumer protection.' 16 H.R.Proc., Pt. 14, 1973 Sess., p. 7324 (remarks of Representative Howard A. Newman)." Heslin v. Connecticut Law Clinic of Trantolo and Trantolo, 190 Conn. 510, 515-516, 461 A.2d 938, 941 (1983). In recognition of the importance of protecting the public from unscrupulous practices, CUTPA expressly authorizes the Commissioner of Consumer Protection to monitor, investigate and take action to prevent unfair and/or deceptive trade practices affecting the Connecticut public. See, e.g., Conn. Gen. Stat. §§ 42-110d, 42-110k and 42-110m. The civil action which the State has commenced against CCF seeks to protect what the Connecticut legislature, by virtue of its grant of enforcement powers to both the Commissioner of Consumer Protection and the Attorney General, deems an important state interest.
The United States Supreme Court has also long recognized that the regulation of trade and commerce is a fundamental and traditional area of state activity. See, California v. Arc America Corp., 490 U.S. 93, 101 (1989) ("state common-law and statutory remedies against monopolies and unfair business practices" are among the "historic police powers of the States"). Accordingly, the Supreme Court, and federal courts generally, have routinely held that the regulation of business conduct is a sufficiently important state interest to justify the invocation of Younger abstention. See, e.g., Middlesex County Ethics Commission v. Garden State Bar Association, 457 U.S. 423, 434 (state's interest in regulating conduct of lawyers); Levy v. Lewis, 635 F.2d 960, 965 (2d Cir. 1980) (state's interest in carrying out duties in insurance liquidation proceedings in its own courts); Mission Oaks Mobile Home Park v. City of Hollister, 989 F.2d 359, 361 (9th Cir. 1993), cert. denied, 125 L.Ed.2d 373 (1994) (state's interest in regulating conduct of mobile home park operators); Federal Express v. Tennessee Public Service Commission, 925 F.2d 962, 969 (6th Cir. 1991) (state's interest in regulating the conduct of intrastate truckers). < 1 >
Finally, the importance of the State's interest in ensuring fair trade in Connecticut is reflected in the nature of the relief sought by the state in its proceeding against CCF. The State is not seeking merely monetary penalties pursuant to CUTPA. The State is also seeking an injunction restraining CCF from further misrepresenting its purpose in connection with the solicitation of funds within the State.
3. The injunctive and declaratory relief sought in the federal action would interfere with the pending state court proceeding.
The Complaint filed in this action seeks preliminary and permanent injunctions enjoining the Defendants from enforcing CUTPA "to regulate charitable speech." < 1 > The State's ongoing state court proceeding against CCF clearly constitutes enforcement of CUTPA in connection with what CCF claims to be charitable speech. The injunctions sought in this action, if granted, would prevent the State from further prosecuting its action against CCF. Accordingly, the injunction sought by the Plaintiffs would interfere with the pending state court proceeding.
As the Supreme Court stated in Huffman v. Pursue, Ltd., 420 U.S. 562, 604 (1975), considerations of federalism counsel heavily toward federal restraint when confronted with a suit seeking an injunction against state judicial proceedings. As the Court explained, "interference with a state judicial proceeding prevents the state not only from effectuating its substantive policies, but also from continuing to perform the separate function of providing a forum competent to vindicate any constitutional objections interposed against those policies. Such interference also results in duplicative legal proceedings, and can readily be interpreted 'as reflecting negatively upon the state courts' ability to enforce constitutional principles.'" Huffman, 420 U.S. at 604 (cf. Steffel v. Thompson, 415 U.S. 452, 462 (1974)).
The declaratory relief requested in the Complaint would also interfere with the pending state court proceeding. As the United States Supreme Court noted in Samuels v. Mackell, 401 U.S. 66, 72 (1971), "ordinarily a declaratory judgment will result in precisely the same interference with and disruption of state proceedings that the long-standing policy limiting injunctions was designed to avoid."
4. The constitutional claims asserted in the First Cause of Action can be reviewed by the state court.
Younger "applies to state judicial . . . proceedings, so long as the state court has a means of reviewing [federal] constitutional claims." Cullen v. Fliegner, 18 F.3d 96, 103 (2d Cir. 1994), cert. denied, 115 S.Ct. 480 (1994). See also: Ohio Civil Rights Commission v. Dayton Christian Schools, Inc., 477 U.S. 619, 629 (1986); Middlesex County Ethics Commission v. Garden State Bar Association, 457 U.S. 423, 432 (1982); University Club v. City of New York, 842 F.2d 37, 41 (2d Cir. 1988). A defendant to a state court action therefore "should first set up and rely upon his defense in the state courts . . . unless it plainly appears that this course would not afford adequate protection." Younger v. Harris, 401 U.S. 37, 45 (1971). If "a litigant has not attempted to present his federal claims in related state-court proceedings, a federal court should assume that state procedures will afford an adequate remedy, in the absence of unambiguous authority to the contrary." Pennzoil Co. v. Texaco, Inc., 481 U.S. 1, 15 (1987). "[O]ne of the fundamental policies underlying the doctrine of Younger abstention is the recognition that state courts are fully competent to decide federal constitutional questions." Levy v. Lerner, 853 F. Supp. 636, 642 (E.D.N.Y. 1994), aff'd, 52 F.3d 312 (2d Cir. 1995) (quoting Simmonds v. Deutch, 1989 WL 32835, at *10 (E.D.N.Y. Mar. 27, 1989)).
Connecticut's state courts are competent to adjudicate the constitutional claims asserted in the Plaintiff's' First Cause of Action. Indeed those claims have already been asserted by CCF in defense of the state court enforcement proceeding commenced against it. Although the Motion to Strike, in which CCF's constitutional claims were asserted, was denied by the court, < 1 > CCF has reasserted those claims by way of affirmative defense. See, Exhibit G. Moreover, CCF can seek appellate review of the denial of its Motion to Strike.
In conclusion, the Defendants submit that the interests of American Charities are sufficiently aligned with those of CCF that Younger abstention should apply to the First Cause of Action notwithstanding that American Charities is not currently a party to the pending state court proceedings. The First Amendment interests asserted in the First Cause of Action, which are identical to those asserted by CCF in the state court proceeding, will be adequately advocated in the state court action by the parties' legal counsel, Perlman and Perlman. The state court proceedings involve an important state interest, enforcement of the State's Unfair Trade Practices Act. The injunctive and declaratory relief sought herein would interfere with, if not halt the prosecution of, those proceedings. Accordingly, under the doctrine first enunciated in Younger, this Court should abstain from hearing the claims set forth in the First Cause of Action.
D. The Rooker-Feldman Doctrine Bars The Plaintiffs' First Cause of Action.
It has long been held by the Supreme Court that federal courts cannot review the judgment of state courts, except for the Supreme Court itself on direct review. Rooker v. Fidelity Trust Co., 263 U.S. 413, 415-416 (1923); District of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 482 (1983). "[F]ederal district courts are without authority to review state court judgments where the relief sought is in the nature of appellate review." Anderson v. Colorado, 793 F.2d 262, 263 (10th Cir. 1986). This principle applies to interlocutory, as well as final, state court decisions. Ashton v. Cafero, 920 F.Supp. 35, 37 (D.Conn. 1996). "The Rooker-Feldman doctrine creates a jurisdictional obstacle to collateral review, one which we must respect even if the parties do not present the issue for decision." GASH Associates v. Village of Rosemont, Ill., 995 F.2d 726, 727 (7th Cir. 1993). The decisions of the Second Circuit are in accord. See, Texaco, Inc. v. Pennzoil Company, 784 F.2d 1133, 1137 (2d Cir. 1986), rev'd on other grounds, 481 U.S. 1 (1987); Zimmerman v. Grievance Committee of the Fifth Judicial District of the State of New York, 726 F.2d 85, 86 (2d Cir. 1984), cert. denied, 467 U.S. 1227 (1984).
The Rooker-Feldman doctrine reflects a strong policy of avoiding federal court intrusion into matters that are adjudicated in state court. The import of this concept is that the District Court is not available, essentially as an appellate tribunal, to a party that litigates a matter without success in state court. CCF, which unsuccessfully asserted a First Amendment challenge to CUTPA in the Connecticut Superior Court, joined American Charities in May of 1998. See, Exh. B, at 10. This fact, coupled with the nature of the allegations of the Plaintiffs' First Cause of Action, strongly suggest that CCF is seeking, through this action, federal court review of claims which it unsuccessfully asserted before the Connecticut state court. This court should apply the Rooker-Feldman doctrine to dismiss the First Cause of Action in order to avoid being placed in the position of improperly sitting as an appellate tribunal reviewing the interlocutory proceedings of a Connecticut state court.
E. This Court Should Exercise Its Discretion To Decline To Entertain Plaintiffs' Request For A Declaratory Judgment That CUTPA Is Unconstitutional.
The Declaratory Judgment Act is "an enabling Act, which confers a discretion on the courts rather than an absolute right upon the litigant." Public Service Commission v. Wycoff Co., 344 U.S. 237, 241 (1952). The Supreme Court has concluded that "the propriety of declaratory relief in a particular case will depend upon a circumspect sense of its fitness informed by the teachings and experience concerning the functions and extent of federal judicial power." Wycoff, 344 U.S. at 243.
Clearly "district courts possess discretion in determining whether and when to entertain an action under the Declaratory Judgment Act, even when the suit otherwise satisfies subject matter jurisdictional prerequisites." Haagen-Dazs Shoppe Co. v. Born, 897 F.Supp. 122, 125-126 (S.D.N.Y. 1995) (quoting Wilton v. Seven Falls Co., 515 U.S. 277, 115 S.Ct. 2137, 2140 (1995)). In determining whether to proceed in a declaratory judgment suit where another suit is pending in a state court proceeding, the district court "must inquire into 'whether the questions in controversy between the parties to [the district court] suit can better be settled in the proceeding pending in the state court,' Brillhart v. Excess Insurance Co. of America, 316 U.S. 491, 495 (1942), including 'inquiry into the scope of the pending state court proceeding and the nature of defenses open there.' Id." Haagen-Dazs Shoppe Co., 897 F.Supp. at 126-127.
As the Defendants have previously noted, the claim that the application of CUTPA to charitable speech violates the First Amendment rights of charitable speakers has already been asserted in the state court proceeding ongoing against the CCF. The Plaintiffs can well anticipate that that claim will be vigorously litigated by CCF. CUTPA implicates the State's compelling interest in protecting its citizens from unfair and deceptive trade practices. The Connecticut state courts have entertained numerous suits relating to the interpretation and applicability of CUTPA. Clearly, the First Amendment claims presented by the Plaintiffs in this suit can be better settled in the pending state court action. The District Court should therefore exercise its discretion and decline to entertain the Plaintiffs' CUTPA claims.
F. This Court Should Abstain From Adjudicating The Plaintiffs' Constitutional Claims Under The Pullman Doctrine.
Under Railroad Commission of Texas v. Pullman Co., 312 U.S. 466 (1941), "[a]bstention is appropriate 'in cases presenting a federal constitutional issue which might be mooted or presented in a different posture by a state court determination of pertinent state law.'" Colorado River Water Conservation District v. United States, 424 U.S. 800, 814 (1976) (quoting County of Allegheny v. Frank Mashuda Co., 360 U.S. 185, 189 (1959)). The exercise of abstention in these circumstances ensures that the federal judgment "will be based on something that is a complete product of the State, the enactment as phrased by its legislature and as construed by its highest court." Harrison v. NAACP, 360 U.S. 167, 178 (1959).
Moreover "[p]ermitting review by the state courts first in a case of doubtful state law avoids needless friction with the notions of comity and federalism that smooth the relationships between our parallel federal and state court systems, as Pullman itself explains." Greater New York Metropolitan Food Council v. McGuire, 6 F.3d 75, 77 (2nd. Cir. 1993). Thus, "[w]hen a federal court litigant in a Section 1983 action contests the constitutionality of a state law that is unclear and susceptible of a state court determination that may avoid or modify the constitutional question, the federal court may abstain from the matter until the state's highest court resolves the state law issue." Dorman v. Satti, 678 F.Supp. 375, 384 (D. Conn. 1988), aff'd, 862 F.2d 432 (2d Cir. 1988). See also, LaJoie v. Connecticut State Board of Labor Relations, 837 F.Supp. 34, 38 (D. Conn. 1993) (Pullman abstention appropriate where state court had not addressed question of whether special deputy sheriffs were deemed "employees" for purposes of State Employees Relations Act, and where issue implicated vital issues of state policy); Naylor v. Case and McGrath, Inc., 585 F.2d 557, 564 (2d Cir. 1978) (abstention appropriate to afford Connecticut state courts opportunity to interpret the relatively new and recently amended Unfair Trade Practices Act). Such abstention is appropriate in the case presently before the court.
In their First Cause of Action, the Plaintiffs claim that "[t]he application of CUTPA to charitable speech is impermissibly vague in that persons of ordinary intelligence may have to guess at the meanings of certain [unspecified] terms, words or phrases in the Act." Complaint, at ¶ 35(c), Amended Complaint, at ¶ 43(c). The Plaintiffs further claim that the application of CUTPA to charitable speech "provides inadequate notice to charities of what acts and practices are prohibited" under CUTPA, and that the vague wording of the statute allows arbitrary and selective enforcement on a constitutionally suspect basis by the Defendants. Complaint, at ¶¶ 35(d) and (e), Amended Complaint, at ¶¶ 43(d) and (e).
In their Second Cause of Action, the Plaintiffs claim that the Connecticut sweepstakes statutes, Section 42-295, et seq., of the Connecticut General Statutes, and the regulations promulgated thereunder, are vague and overbroad. The Plaintiffs generally assert that "[a] person of ordinary intelligence may have to guess at the meaning of certain [unspecified] terms, words, or phrases of these provisions." Complaint, at ¶ 43(a), Amended Complaint, at ¶ 52(a). Specifically, the Plaintiffs contend that Section 42-295, et seq., "compels charitable speakers who purvey public information materials via sweepstakes campaigns to make certain mandatory disclosures 'in immediate proximity' to the description of the prize offered in the sweepstakes. However, that term is not adequately defined in the statute . . . ." Complaint, at ¶ 43(b), Amended Complaint, at ¶ 52(b). The Plaintiffs further claim that the phrases "promotional scheme" and "promotional scheme designed to make contact with prospective customers," set forth in Section 42-110b-23 of the Regulations," are vague and that a reasonable person must therefore guess as to the regulation's meaning. Complaint, at ¶¶ 43(d) and (e), Amended Complaint, at ¶¶ 52 (d) and (e).
Although inferior Connecticut courts have addressed the issue of whether charitable solicitation constitutes "trade or commerce" subject to regulation under CUTPA, see, e.g., State of Connecticut v. Cancer Fund of America, 1 Conn. L. Rptr. 311 (1990), this issue has not been presented to, or ruled upon, by the Connecticut Supreme Court. Nor has any Connecticut court been afforded the opportunity to interpret the allegedly vague language which, Plaintiffs claim, when applied to charitable speech, "provides inadequate notice to charities of what acts and practices are prohibited under the Act" and permits arbitrary and selective enforcement against charitable speakers. < 1 > Notably, the language about which the Plaintiffs complain so vociferously, namely the application of CUTPA to speech which is "unfair," "immoral," and "unethical" (see, Amended Complaint, at ¶ 27), does not appear in the statute itself. Commonly referred to as the "cigarette rule," it was recognized by the United States Supreme Court in FTC v. Sperry & Hutchinson Co., 405 U.S. 233 (1972), and has been employed by the Connecticut Supreme Court in a variety of contexts, including cases involving commercial speech. See, e.g., Sportsmen's Boating Corp. v. Hensley, 192 Conn. 747, 474 A.2d 780 (1984). The Connecticut courts should be afforded the opportunity to address the applicability of the cigarette rule to what the Plaintiffs characterize as "core speech."
The Plaintiffs' claims that the statutes and regulations relating to sweepstakes are constitutionally infirm also depend upon an interpretation of statutes and regulations which have not been construed by Connecticut's courts. The Plaintiffs claim that the meaning of phrases such as "in immediate proximity" is not readily apparent. However, the federal court should not be the first to construe this and other phrases found lacking by the Plaintiffs.
Abstention is warranted to give the Connecticut courts an opportunity to construe the cited statutes and regulations. The claims presented by the Plaintiffs "bear importantly on the formation of enforcement policy" around both CUTPA and the Connecticut sweepstakes statutes, both important consumer protection statutes. See, Naylor, 585 F.2d at 564. As the Second Circuit cautioned in Naylor, "[i]t is well for federal courts to remember that . . . a federal court can only try to ascertain state law, whereas the state has provided a unified method for the formation of policy and the determination of issues by the Commissioner of Consumer Protection and in the state courts." Naylor, 585 F.2d at 565. Moreover, the interpretation given these statutes and regulations could substantially alter or even eliminate the Plaintiffs' constitutional challenges.
Under the legal precedent clearly established in this Circuit, American Charities lacks standing to bring the Section 1983 action set forth in the original Complaint on behalf of its member organizations. The filing of the Amended Complaint cannot cure that jurisdictional defect. This action must therefore be dismissed.
Assuming, arguendo, that the Court permits the amendment of American Charities' Complaint and the addition of the Foundation as an additional plaintiff, the Foundation nonetheless fails to assert a cause of action for violation of its First Amendment rights, and lacks standing to maintain its suit. Accordingly, each of its claims should be dismissed.
In addition, dismissal of the First Cause of Action is warranted under the doctrine enunciated in Younger v. Harris and its progeny. The claims asserted in the First Cause of Action are currently being litigated in ongoing state court enforcement proceedings commenced by the State of Connecticut against CCF, which was a member of American Charities at the commencement of this action. Moreover, the First Cause of Action is nothing more than a transparent attempt by CCF, through American Charities, to obtain federal court review of a constitutional claim rejected by an inferior Connecticut court. The federal suit attempts to place this Court in the position of improperly sitting as an appellate tribunal reviewing the interlocutory proceedings of a Connecticut state court. Accordingly, the Rooker-Feldman doctrine compels the conclusion that the First Cause of Action should be dismissed. These circumstances also compel the conclusion that the Court should exercise its discretion and decline to hear the Plaintiffs' First Amendment challenge to CUTPA.
Finally, abstention is warranted as to each of the Plaintiffs' causes of action to give the Connecticut courts an opportunity to construe the cited statutes and regulations. The claims presented by the Plaintiffs bear significantly on the formation of policy concerning the enforcement of both CUTPA and the Connecticut sweepstakes statutes, both important consumer protection statutes in which the State has a compelling interest. Moreover, the interpretation given these statutes and regulations could substantially alter or even eliminate the Plaintiffs' constitutional challenge. Thus, under the doctrine enunciated in Railroad Commission of Texas v. Pullman Co., this Court should abstain from entertaining any of the Plaintiffs' claims.
MARK SHIFFRIN, in his capacity as Commissioner of the Connecticut Department of Consumer Protection, and RICHARD BLUMENTHAL, in his capacity as the Attorney General of the State of Connecticut
David E. Ormstedt
Assistant Attorney General Federal Bar No. ct09077
P.O. Box 120
Hartford, CT 06141-0120
Tel.: (860) 808-5020
Holly Jean Bray
Assistant Attorney General
Federal Bar No. ct00751
P.O. Box 120
Hartford, CT 06141-0120
Tel.: (860) 808-5020
I hereby certify that on this 27th day of August, 1998, a copy of the foregoing was mailed, via first class mail, postage prepaid, to:
Richard C. Robinson, Esq.
Sorokin, Gross & Hyde, P.C.
One Corporate Center
Hartford, CT 06103;
Clifford Perlman, Esq.
Perlman & Perlman
220 Fifth Avenue, 7th
New York, NY 10001.
Holly Jean Bray
Assistant Attorney General
American Charities claims, in support of its request for a preliminary injunction, that the issuance of a preliminary injunction "will not cause substantial harm to the Defendants, or the people of the State of Connecticut. Injunctive relief will only preserve the status quo." Complaint, at ¶ 50 (emphasis in original).
The Amended Complaint also differs from the original Complaint in that the claim for declaratory relief is set out as the Third Cause of Action, in place of the allegations offered in support of the request for a preliminary injunction. The declaratory relief sought in the Amended Complaint is broader than that sought in the original Complaint. In the Third Cause of Action, the Plaintiffs request that the Court declare CUTPA unconstitutional and strike it down "in its entirety or limit its application to activities not comprised of charitable speech." Amended Complaint, at ¶ 57 (emphasis supplied). The Plaintiffs seek a similarly broad declaration as to the sweepstakes statutes and regulation. See, Amended Complaint, "Relief Requested," at ¶¶ 2 and 4.
A copy of the Amended Complaint filed in State of Connecticut vs. The Children's Charity Fund Corp., dated July 19, 1996 (hereinafter the "State Complaint"), is appended hereto as Exhibit A. (References within the text to exhibits shall hereinafter be noted as "Exh.__, at __.")
See, Transcript of deposition of Kenneth Bowron, conducted July 13, 1998, at pp. 10-11. (Copies of cited pages of the transcript of the deposition of Mr. Bowron are appended hereto as Exibit B.) The Foundation was not a member of American Charities when the original Complaint was filed. It claims to have become a member of American Charities on the date of or immediately prior to the date upon which the deposition of its President, Dane Von Breichenruchardt, was taken, namely July 13, 1998. See, Transcript of deposition of Dane Von Breichenruchardt, conducted July 13, 1998, at pp. 21-23. (Copies of cited pages of the transcript of the deposition of Mr. Von Berichenruchardt are appended hereto as Exhibit C.)
See, CCF's Memorandum in Support of Defendant's Motion to Strike, dated August 7, 1996 (a copy of which is appended hereto as Exhibit D), at 17-18.
See, CCF's Supplemental Memorandum in Support of Motion to Strike, dated December 9, 1996 (a copy of which is appended hereto as Exhibit E), at 3-4.
A copy of the Memorandum of Decision is appended hereto as Exhibit F.
A copy of CCF's Answer and Special Defenses is appended hereto as Exhibit G.
American Charities makes the same assertion in its Amended Complaint. See, Amended Complaint, at ¶ 16.
Presumably, American Charities relies upon Fed.R.Civ.P. 15(a) in filing its Amended Complaint. However, the same analysis should govern an attempt to amend to cure a jurisdictional defect, whether made pursuant to Rule 15(a) or 28 U.S.C. § 1653.
See also: Bates v. City of Little Rock, 361 U.S. 516 (1960) (City did not challenge right of local branches of the National Association for the Advancement of Colored People to assert their members' right to freedom of association); Louisiana v. NAACP, 366 U.S. 293 (1961) (NAACP had standing to assert its members' constitutional right to freedom of association).
Approximately forty states, including Connecticut, have statutes requiring registration prior to the solicitation of funds. See, e.g., Conn. Gen. Stat. § 21a-190b.
It is obvious to the Defendants that the Foundation was added as a plaintiff in this action for the sole purpose of attempting to prevent dismissal of the Section 1983 claim and the concomitant loss of American Charities' claim for attorneys' fees.
Defendants have reason to believe that CCF is currently soliciting charitable donations within the State of Connecticut. CCF contracted with Community Relations, a paid solicitor, to conduct a telephone and mail solicitation campaign which began on November 1, 1997 and is to terminate on October 30, 1998. See, Affidavit of Stephen E. Eaton, appended hereto as Exhibit H.
Connecticut trial courts have held that the activities of non-profit entities, including the solicitation of funds, fall with the ambit of CUTPA. See, e.g., State of Connecticut v. Cancer Fund of America, Inc., 1 Conn.L.Rptr. 311 (Judicial District of Hartford/New Britain at Hartford, Freed, J., February 23, 1990). See also Exhibit F.
The Amended Complaint seeks even broader relief, namely preliminary and permanent injunctions preventing the Defendants from enforcing CUTPA and the sweepstakes statutes and regulation "in their entirety" or in order to regulate charitable speech. See, Amended Complaint, "Relief Requested," at ¶¶ 1, 3, 5 and 6.
CCF could have sought a direct appeal from the denial of its Motion to Strike pursuant to Section 52-265a of the Connecticut General Statutes, which provides, in pertinent part, that "[a]ny party to an action who is aggieved by an order or decision of the Superior Court in an action which involves a matter of substantial public interest and in which delay may work a substantial injustice, may appeal under this section from the order or decision to the Supreme Court within two weeks from the date of the issuance of the order or decision." It chose not to do so.
The Connecticut Supreme Court was confronted with vagueness and overbreadth challenges to CUTPA in State v. Leary, 217 Conn. 404, 587 A.2d 85 (1991). However, the Court declined to review the vagueness challege due to an inadequate record. Although the Court determined that the overbreadth doctrine did not apply, the Court was concerned in Leary with only commercial, not "core" speech.