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
september 25, 1998
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 in Opposition to the Application for Preliminary Injunction filed by the Plaintiff, American Charities for Reasonable Fundraising, Inc., and dated June 4, 1998.
I. PROCEDURAL BACKGROUND
The Plaintiff, American Charities for Reasonable Fundraising Regulation, Inc., commenced this action by Complaint and Application for Preliminary Injunction dated June 4, 1998 (the "Complaint"). According to the Complaint, the Plaintiff "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. The Plaintiff seeks, inter alia, 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 > The Plaintiff claims to bring its action in a representative capacity on behalf of its member organizations. Complaint, at ¶¶ 2 and 13.
On July 24, 1998, the Plaintiff filed an Amended Complaint which seeks to add one of its purported member organizations, The Bill of Rights Foundation, Inc., as an additional plaintiff. 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, the Plaintiff has no standing to being a Section 1983 claim on behalf of its members, the Court lacks jurisdiction over the Plaintiff's original Complaint and is thus without authority to accept the filing of the Amended Complaint, which attempts to retroactively cure the jurisdictional infirmity.
In its Amended Complaint, the Plaintiff seeks, in addition to declaratory relief, preliminary and permanent injunctions enjoining the Defendants from enforcing Sections 42-110b, 42-110d, 42-110k, 42-110m, 42-110o and 42-110p of CUTPA, as well as the sweepstakes statutes and regulation (Conn. Gen. Stat. §42-295, et seq., and Conn. Agencies Reg. §42-110b-23) in their entirety or, in the alternative, in order to regulate charitable speech. On August 27, 1998, the Defendants filed a Motion to Dismiss the Plaintiff's action on the grounds, inter alia, that the Plaintiff lacks standing to bring this action and that the Court should abstain from hearing its claims.
The Plaintiff claims to have standing to assert the constitutional rights of its members in this Section 1983 action. For the reasons set forth in their Memorandum of Law in Support of Motion to Dismiss and in their Objection to Filing of Amended Complaint, the Defendants maintain that the Plaintiff lacks standing to assert the constitutional rights of its member organizations in an action brought pursuant to 28 U.S.C. Section 1983. The Defendants refer the Court to the discussion of standing set forth in those pleadings, which discussion the Defendants incorporate by reference herein.
In support of its Application for Preliminary Injunction, the Plaintiff asserts that CUTPA and Connecticut's statutes and regulation governing sweepstakes are unconstitutional in that they are impermissively vague and overbroad. Moreover, the Plaintiff claims that CUTPA and the sweepstakes statutes grant the Commissioner of Consumer Protection unbridled discretion with regard to their enforcement and therefore constitute a prior restraint on its members' speech. The Plaintiff's arguments are unavailing.
A. Standard For Granting A Preliminary Injunction
Where an injunction is sought to stay government action taken in the public interest pursuant to a statutory scheme, the Second Circuit has determined that the movant must demonstrate: (a) irreparable harm; and (b) likelihood of success on the merits. International Dairy Foods Ass'n. v. Amestoy, 92 F.2d 67, 70 (2d Cir. 1996). That court has also stated that although "impairment of First Amendment rights can undoubtedly constitute irreparable injury [citation omitted], we think it often will be more appropriate to determine irreparable injury by considering what adverse factual consequences the plaintiff apprehends if an injunction is not issued, and then considering whether the infliction of those consequences is likely to violate any of the plaintiff's rights." Time Warner Cable of New York City v. Bloomberg, 118 F.3d 917, 924 (2d Cir. 1997). Moreover, "[w]henever a request for a preliminary injunction implicates public interests, a court should give some consideration to the balance of such interests in deciding whether a plaintiff's threatened irreparable injury and probability of success on the merits warrants injunctive relief." Time Warner, 118 F.3d at 929. The Plaintiff cannot make the necessary showing and is thus not entitled to the preliminary injunction requested.
B. The Plaintiff Is Not Entitled To The Preliminary Injunction Requested
1. The Plaintiff's claim of irreparable injury is insubstantial.
While it is true that "[t]he loss of First Amendment freedoms, for even minimal periods of time, unquestionably constitutes irreparable injury," International Dairy Foods Ass'n v. Amestoy, 92 F.3d 67, 71 (2d Cir. 1996) (citation omitted), the Plaintiff offers in support of its claim of loss of First Amendment rights only the conclusory assertion that its members' exercise of their right to freedom of speech has been chilled by the existence of CUTPA and the sweepstakes statutes and regulation. Rita Smith, President of the Plaintiff organization, attested that "[a]t least one of [the Plaintiff's] members have [sic] suffered injury as a result of the Defendants' and/or their agents [sic] application of [CUTPA] to public education activities of nonprofit charities wishing to disseminate their message in the State of Connecticut." Affidavit of Rita Smith (hereinafter the "Smith Affidavit"), appended to the Plaintiff's Memorandum in Support of Application for Preliminary Application (hereinafter the "Plaintiff's Memorandum"), at ¶ 2. The Plaintiff fails, however, to identify that member, to explain the nature of the injury suffered and to explain the causal relationship between the Defendants' activities and the purported "injury." Ms. Smith further attested that "the vagueness and overbreadth of CUTPA have inhibited [the Plaintiff's] members from sending public education materials into the State of Connecticut." Smith Affidavit, at ¶ 4.
However, when asked at her deposition to explain her statement that CUTPA is overbroad, Ms. Smith was utterly unable to do so. < 2 > (Ms. Smith admitted that her "understanding" of the overbreadth claim on the day she signed her Affidavit was the same as her understanding on the day her deposition was taken. Exh. A, at 55.) Although Ms. Smith stated, in her Affidavit, that the Plaintiff's members have been inhibited by the overbreadth of CUTPA from sending materials into Connecticut, she acknowledged that she does not know how many of the Plaintiff's members claim to have been so inhibited. Exh. A, at 49. The basis of her "knowledge" of the impact of the statute's overbreadth is a discussion which occurred at a meeting of the board of the Plaintiff organization, the date of which she could not recall, although she believes it was held sometime within the past year. Exh. A, at 48-49. Ms. Smith was unable, however, to recall anything whatsoever that was said at that meeting regarding the overbreadth of CUTPA. Exh. A, at 49. She did confirm, however, that none of the Plaintiff's current members, and only one former member, the Children's Charity Fund Corp., had been sued by the State of Connecticut for CUTPA violations, Exh. A, at 41-42.
In support of their claim that the sweepstakes statutes and regulations are constitutionally infirm, the Plaintiff offers Ms. Smith's statement that "[t]he additional cost of a charity having to comply with the mandatory disclosures demanded by the Defendants and/or their agents in the above-captioned case pursuant to Connecticut General Statutes 42-295 et. seq. substantially increases the cost of their disseminating public education messages to Connecticut residents." Smith Affidavit, at ¶ 7. Notwithstanding the questionable relevance of this statement, Ms. Smith admittedly does not know how many of the Plaintiff's members have conducted sweepstakes in Connecticut or whether any past or present member of the Plaintiff has been sued by the State in connection with a sweepstakes or threatened with suit. Exh. A, at 76-77. She testified that she was aware of only one member who had a "legal problem" with the State concerning a sweepstakes, which she described as a concern about mailing the sweepstakes materials into Connecticut because of the existence of CUTPA. Exh. A, at 78. She testified that some unknown number of the Plaintiff's members have refrained from disseminating sweepstakes materials in Connecticut, but admitted that the source of her knowledge was the statement of another member of Plaintiff's Board of Directors. Exh. A, at 79.
Plainly, the Plaintiff has offered the Court, in support of its Application, nothing more than the general conclusory statement that its members feel chilled in the exercise of their First Amendment rights. The Plaintiff fails to identify even one member which feels so chilled, fails to describe the nature of any solicitation or sweepstakes which any member wishes to conduct within the State, and fails to disclose the nature of any possible CUTPA or sweepstakes violation. Yet, the Plaintiff asks this Court to accept its bald assertion that its members' First Amendment rights have been chilled by the State's enforcement of its laws prohibiting unfair and deceptive business practices and to prohibit the State from further enforcement of those laws, either with regard to charitable solicitation or in their entirety. The Plaintiff's showing of "irreparable harm" is insufficient to justify the relief requested.
2. The balance of interests weighs heavily in favor of the Defendants.
The Plaintiff's claim of injury to its members' First Amendment rights is ephemeral, at best. The damage to be suffered by the State of Connecticut and its citizens, if the State's enforcement of CUTPA and the sweepstakes statutes and regulation is enjoined, will be concrete, substantial and, perhaps, irremediable.
The Connecticut Unfair Trade Practices Act prohibits "unfair or deceptive acts or practices in the conduct of any trade or commerce." Conn. Gen. Stat. § 42-110b. The state's interest in protecting its citizens from fraud and deception is unquestioned. As the United States Supreme Court stated in Donaldson v. Read Magazine, 333 U.S. 178, 190 (1948), the governmental power to protect people against fraud "has always been recognized in this country and is firmly established."
CUTPA is a vitally important tool, both to prosecute persons and entities that have engaged in unfair or deceptive acts in the course of charitable solicitations and to prospectively protect Connecticut citizens from such conduct. Indeed, the Plaintiff concedes that the defendants frequently employ CUTPA. Plaintiff's Memorandum, at 33, fn 17. Moreover, CUTPA is not, as the Plaintiff suggests, simply duplicative of the Connecticut Solicitation of Charitable Funds Act (Conn. Gen. Stat. § 21a-175, et. seq.). Although Section 21a-190h lists certain prohibited practices, people with "ingenious business minds" but ulterior motives soliciting in the name of charity, like their commercial counterparts, are capable of creating new and as yet undefined acts and practices that unfairly and deceptively separate people from their wallets. See, E. I. Du Pont De Nemours & Co. v. F.T.C., 729 F.2d 128, 136 (2d Cir. 1984). CUTPA is necessary both to prosecute such conduct and to deter others from engaging therein.
In addition to its substantive prohibition of unfair and deceptive acts and practices, CUTPA offers a broad array of remedies designed both to punish and deter those who engage in such conduct. Many of those remedies are not found in the Solicitation of Charitable Funds Act, such as: the ability of the Commissioner to order restitution in amounts less than $5,000.00 (Conn. Gen. Stat. § 42-110d(d)); the judicial appointment of a receiver (Conn. Gen. Stat. §§ 42-110f and 42-110m); the award of attorneys' fees (Conn. Gen. Stat. § 42-110m); the judicial imposition of civil penalties for willful violations (Conn. Gen. Stat. § 42-110o); and judicial dissolution, suspension, or forfeiture of corporate franchises (Conn. Gen. Stat. § 42-110p). Enjoining the use of those remedies will substantially and significantly lessen the capacity of the Defendents to protect the citizens of Connecticut from fraudulent and deceptive practices. < 3 >
However, the reach of CUTPA, and the regulations promulgated thereunder, is far broader than the solicitation of charitable contributions. Under CUTPA, regulations have been promulgated by the Department of Consumer Protection relating to, inter alia, representations of guarantees (Conn. Agencies Regs. § 42-110b-1, et seq.), deceptive pricing (Conn. Agencies Regs. § 42-110b-9, et seq.), comparison price advertising (Conn. Agencies Regs. § 42-110b-9a, et seq.) and advertising and sales (Conn. Agencies Regs. § 42-110b-18, et seq.). The legislature thought CUTPA sufficiently important to the State's interest in preventing fraud to incorporate it by reference in statutes concerning, inter alia, car rental disclosures (Conn. Gen. Stat. § 14-15b), odometer tampering (Conn. Gen. Stat. § 14-106b(d)), home improvement contracts (Conn. Gen. Stat. § 20-427(b)), mail order businesses (Conn. Gen. Stat. § 42-126c), home solicitation sales (Conn. Gen. Stat. § 42-141(b)), funeral service contracts (Conn. Gen. Stat. § 42-206), and the automobile lemon law (Conn. Gen. Stat. § 42-184).
The State's interest in enforcing the sweepstakes statutes and regulation is equally significant. The promulgation of the sweepstakes statute was prompted by the finding that:
Connecticut residents are constantly bombarded with mailings that offer the lure of winning thousands of dollars, great trips and valuable prizes. These deceptive but seductive enticements implore the recipient to return the sweepstakes entry form and more: in an effort to increase their chances of winning, consumer victims send thousands of dollars in magazine purchases, membership fees and other payments - many hard earned or saved dollars lost forever. Sweepstakes fraud has a devastating impact on victims. Two examples, dramatically demonstrating this impact are Mrs. M., who wrote 119 checks to one company over a 9 month period, and Mrs. C. who sent over $43,000 to various contests and sweepstakes over an 18 month period... .This legislation will ... require sweepstakes to disclose clearly the odds of winning and any restrictions on receiving any prize in the same type and size print as the description of the prize. Too often, the sweepstakes promotion will announce that the recipient has "already qualified to win" a prize. However, the restrictions on winning the prize and the odds of winning are buried in small print, often on another page in the mailer. If consumers more clearly understood the astronomical odds of winning a prize, they would not be so commonly lured into participating.
Testimony of Attorney General Richard Blumenthal before the General Law Committee of the Connecticut General Assembly, given March 7, 1996. (A copy of which is appended hereto as Exhibit B.)
The granting of the preliminary injunction requested by the Plaintiff, regardless of whether enforcement of the statutes and regulation at issue are enjoined in their totality or only with regard to charitable solicitations, would work a significant hardship on the State of Connecticut, and place its citizens at a real and substantial risk of loss as a result of deception and fraud. The Plaintiff's generalized claim of a chilling of the First Amendment rights of some unspecified number of its members does not justify the imposition of such a hardship. The Plaintiff has not demonstrated that a realistic danger exists that the enforcement of the subject statutes would significantly compromise the First Amendment rights of its members. The Plaintiff has not identified even one of its members which is poised to commence a solicitation campaign or sweepstakes in Connecticut. Thus, the enjoining of the further enforcement of CUTPA and the sweepstakes statutes by the Defendants is completely unwarranted. Moreover, as the Defendants will demonstrate below, the Plaintiff is unlikely to succeed on the merits of its claim. Accordingly, the injunctive relief its request should be denied.
C. The Plaintiff cannot demonstrate that it is likely to succeed on the merits.
As the Defendants will demonstrate in the discussion following, the Plaintiff cannot demonstrate that it is likely to succeed on the merits of its action. Accordingly, its request for a preliminary injunction should be denied.
1. The Plaintiff's Reliance Upon Strict Scrutiny Is Without Merit
As the United States Supreme Court has recognized, "not every interference with speech triggers the same degree of scrutiny under the First Amendment." Turner Broadcasting System, Inc. v. F.C.C., 512 S.Ct. 622, 637 (1994). Thus, the initial determination to be made in evaluating the constitutionality of a particular statute or regulation is the level of scrutiny to be applied. Id. See also, Southern New England Telephone Co. v. United States, 886 F.Supp. 211, 217 (D.Conn. 1995).
The Plaintiff claims that strict scrutiny is the appropriate standard with which to determine the constitutionality of CUTPA and Connecticut's sweepstakes statutes and regulation. The Plaintiff cites, in support of its position, Schaumburg v. Citizens for a Better Environment, 444 U.S. 620 (1980), Secretary of State of Maryland v. Joseph H. Munson Co., 467 U.S. 947 (1984) and Riley v. National Federation of the Blind of North Carolina, 487 U.S. 781 (1988). The cases cited by the Plaintiff are distinguishable on their facts.
The statute at issue in Schaumburg directly prohibited charitable solicitation activities by charitable organizations which did not use at least seventy-five percent (75%) of their receipts for "charitable purposes," defined in the statute to exclude solicitation expenses, salaries, overhead, and other administrative expenses. Schaumburg, 444 U.S. at 622. The Court held the statute unconstitutional for the reason that "[t]he Village's legitimate interest in preventing fraud can be better served by measures less intrusive than a direct prohibition on solicitation. Fraudulent misrepresentations can be prohibited and the penal laws used to punish such conduct directly." Schaumburg, 444 U.S. at 637.
The statute at issue in Secretary of State of Maryland v. Joseph H. Munson Co., like that at issue in Schaumburg, constituted a direct restriction on protected First Amendment activity. Munson, 467 U.S. 950, 967 (1985). The statute prohibited a charitable organization, in connection with fundraising activity, from paying or agreeing to pay as expenses more than twenty-five percent (25%) of the amount raised, thus prohibiting solicitation activity which could not satisfy the percentage limitation.
Finally, Riley v. National Federation of the Blind of North Carolina concerned the constitutionality of the North Carolina Charitable Solicitations Act, which, inter alia, defined the "prima facie 'reasonable fee' that a professional fundraiser may charge as a percentage of the gross revenues solicited; require[d] professional fundraisers to disclose to potential donors the gross percentage of revenues retained in prior charitable solicitations; and require[d] professional fundraisers to obtain a license before engaging in solicitation." Riley, 487 U.S. at 784 (1988). Because the statute mandated speech that the fundraiser would not otherwise make, the Court considered the statute a content-based regulation of speech subject to exacting scrutiny Riley, 487 U.S. at 795-98.
Exacting scrutiny was applied by the Court in Schaumburg, Munson and Riley, because the statutes at issue therein constituted direct restrictions on protected First Amendment activity or constituted content-based regulation. Unlike the statutes at issue in Schaumburg, Munson and Riley, CUTPA and the sweepstakes statutes and regulation are neither directed at nor constitute a direct restriction on protected First Amendment speech. Nor are they content-based.
CUTPA and Connecticut's sweepstakes statute are economic measures meant to protect the public from deceptive and unfair acts and practices, regardless of whether those practices are engaged in by a natural person, corporation, partnership association or other legal entity (see Conn. Gen. Stat. § 42-100a(3)), and regardless of whether the entity is a for-profit or non-profit organization. (See, e.g., Stamford Hospital v. Farenga, 2 CSCR 789 (1987), a copy of which is appended hereto as Exhibit C.) The statutes and regulation apply to activities which consist of speech, as well as to those which do not. As Chief Justice Rehnquist opined in his dissent in Riley, the Supreme Court "has never held that an economic regulation with some impact on protected speech, no matter how small or indirect, must be subjected to strict scrutiny under the First Amendment." Riley, 487 U.S. at 807.
In determining whether a statute which affects the ability to engage in protected speech violates the First Amendment, "the appropriate level of scrutiny is initially tied to whether the statute distinguishes between prohibited and permitted speech on the basis of content." Frisby v. Schultz, 487 U.S. 474, 481 (1988). "As a general rule, laws that by their terms distinguish favored speech from disfavored speech on the basis of the ideas or views expressed are content based. [Citations omitted.] By contrast, laws that confer benefits or impose burdens on speech without reference to the ideas or views expressed are in most instances content neutral." Turner Broadcasting System, Inc. v. F.C.C., 512 U.S. 622, 643 (1994). "[R]egulations that are unrelated to the content of speech are subject to an intermediate level of scrutiny [citation omitted], because in most cases they pose a less substantial risk of excising certain ideas or viewpoints from the public dialogue." Turner Broadcasting System, Inc., 512 U.S. at 642.
In Turner Broadcasting System, Inc., the Court applied intermediate scrutiny to must-carry provisions of the Cable Television Consumer Protection and Competition Act of 1992, which required carriage of local broadcast stations on cable systems. The Court noted that the purpose behind the provisions was not to regulate speech because of the message it conveyed, but rather to prevent unfair competition and ensure access to free television programming for those Americans who were without cable. Turner Broadcasting System, Inc., 512 U.S. at 646.
Similarly, in Southern New England Telephone Co. v. United States, 886 F.Supp. 211, 217 (D.Conn. 1995), the Court held that the Cable Communications Policy Act, a content-neutral restriction, was subject to intermediate scrutiny. At issue was Section 533(b) of the Act, which imposed certain restrictions on the provision of video programming by common carriers, "a form of speech protected by the First Amendment." Southern New England Telephone Co., 886 F.Supp. at 217. The Court declined to subject Section 533(b) to rational basis review, because it "directly abridges Plaintiffs' right to express themselves by prohibiting them from engaging in video programming" and because "[i]t is not a generally applicable economic law." Southern New England Telephone Co., 886 F.Supp. at 217. Rather, because the Act was a content-neutral restriction, intended "to prevent the development of local media monopolies, and to encourage a diversity of ownership of communications outlets," the Court subjected the Act to intermediate scrutiny. Southern New England Telephone Co., 886 F.Supp. at 215, 218.
CUTPA and Connecticut's sweepstakes statutes and regulation are, like the statutes addressed in Turner Broadcasting and in Southern New England Telephone, content-neutral regulations aimed at the prevention of unfair and deceptive economic practices. Neither CUTPA nor the sweepstakes statutes and regulation are content-based, as contrasted with the statutes declared unconstitutional in Riley, Schaumburg and Munson. The Connecticut statutes and regulation do not seek to regulate speech because of the subject-matter of the message conveyed. CUTPA and the sweepstakes statutes and regulation prohibit certain acts and practices without regard to the ideas or views expressed by the speaker. Indeed, the statutes and regulation apply to certain acts and practices even if no ideas or views are expressed at all. Being content-neutral regulations which may tangentially impact protected First Amendment speech, they are, at best, subject to intermediate scrutiny. < 4 >
2. CUTPA And The Sweepstakes Statutes And Regulation Survive Intermediate Scrutiny
In determining whether a content-neutral speech-restricting statute is justified, the Second Circuit applies the following factors: "' if it is within the constitutional power of the Government;  if it furthers an important or substantial governmental interest;  if the governmental interest is unrelated to the suppression of free expression; and  if the incidental restriction of alleged First Amendment freedoms is no greater than is essential to the furtherance of that interest.'" Able v. United States, 88 F.3d 1280, 1295 (2d Cir. 1996) (quoting Wayte v. United States, 470 U.S. 598, 611 (1985), quoting United States v. O'Brien, 391 U.S. 367, 377 (1968)). "In evaluating the final prong of the O'Brien test, whether the [statute] is unnecessarily suppressive of speech, the court must apply a balancing test which weighs the state's goals against the impact on protected speech." G. & A. Books, Inc. v. Stern, 604 F.Supp. 898, 910 (S.D.N.Y. 1985), aff'd, 770 F.2d 288 (2d Cir. 1985). Moreover, "so long as the neutral regulation promotes a substantial government interest that would be achieved less effectively absent the regulation . . .[t]he validity of such regulations does not turn on a judge's agreement with the responsible decisionmaker concerning the most appropriate method for promoting significant government interests. United States v. Albertini, 472 U.S. 675, 688-89 (1985).
The enactment and enforcement of CUTPA and the sweepstakes statutes clearly constitute a valid exercise of the state's police power. As the United States Supreme Court stated in Donaldson v. Read Magazine, 333 U.S. 178, 190 (1948), the governmental power to protect people against fraud "has always been recognized in this country and is firmly established." See also: 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"); Riley v. National Federation of the Blind of North Carolina, 108 S.Ct. 2667, 2676 (1988) (North Carolina may enforce its antifraud law against fraudulent practices of fundraisers).
The enactment and enforcement of CUTPA and the sweepstakes statutes and regulation furthers the important government interest of protecting Connecticut's citizens from fraud. As the Third Circuit noted in Regina Corp. v. FTC, 322 F.2d 765, 768 (3d Cir. 1963), "it is in the public interest to stop any deception at its incipiency." (Citing Progress Tailoring Co. v. F.T.C., 153 F.2d 103, 105 (7th Cir. 1946).) Accordingly, "[a]ll fifty states and the District of Columbia have enacted at least one statute with broad applicability to most consumer transactions, aimed at preventing consumer deception and abuse in the marketplace." Jonathan Sheldon and Carolyn L. Carter, Unfair and Deceptive Acts and Practices, Fourth Ed., § 1.1 (1997).
CUTPA is Connecticut's primary vehicle for advancing this substantial government goal. The importance of protecting the public from unscrupulous practices is reflected in the fact that the legislature granted to the Commissioner of Consumer Protection the authority 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 State's interest in protecting its citizens from fraudulent and deceptive practices, furthered through the enactment and enforcement of CUTPA and the sweepstakes statutes and regulation, is unrelated to the suppression of free expression. The statutes are blind to the content of any "message" of the speaker. CUTPA applies regardless of whether the deceptive and/or unfair practice relates to the sale of a product, the lending of money, or the solicitation of charitable contributions. The sweepstakes statutes and regulation apply to all sweepstakes, regardless of the identity or for-profit or non-profit character of the sweepstakes promoter and the subject matter of any "message" it purports to convey. < 5 > In addition, CUTPA includes within its purview a significant amount of conduct which contains no speech aspect whatsoever. < 6 > Moreover, the purpose of CUTPA and the sweepstakes statutes and regulation is to prohibit only unfair or deceptive speech which has the potential to defraud Connecticut's citizens. Such speech is not protected by the First Amendment. See, e.g.: Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748, 771 (1976) ("Untruthful speech, commercial or otherwise, has never been protected for its own sake."); Donaldson v. Read Magazine, 333 U.S. 178 (1948) (freedom of the press does not include a right to use the press as a medium for raising money by deception of the public)).
The state's interest in protecting its citizens from fraudulent and deceptive practices outweighs any marginal impact the statutes and regulation may have on protected speech. Not only is the State's general interest in preventing fraud and deception compelling, as the Fifth Circuit has recognized, "'[p]ublic awareness of abuses in the administration of charitable fund- raising practices has increased over the past twenty years.'" International Society for Krishna v. City of Houston, 689 F.2d 541, 543 (5th Cir. 1982) (quoting Rakay and Sugarman, A Reconsideration of the Religious Exemption: The Need for Financial Disclosure of Religious Fund Raising and Solicitation Practices, 9 Loy.U.L.Jour. 663 (1978)).
CUTPA and the sweepstakes statutes are aimed at the regulation, not of fundamental rights, but of unfair, fraudulent and deceptive practices. The statutes encroach, if at all, only incidentally upon the First Amendment rights of the Plaintiff's members. Conversely, the ability to enforce the statutes is of crucial importance to the State. Both CUTPA and the sweepstakes statutes are invaluable tools in the State's efforts to protect its citizens from loss due to fraud and deception. Accordingly, this Court should apply intermediate scrutiny in assessing the statutes' constitutionality.
D. Neither CUTPA Nor The Sweepstakes Statutes And Regulation Are Unconstitutionally Vague Or Overbroad
When considering a facial challenge to the overbreadth and vagueness of a statute as measured against the first amendment, "a court's first task is to determine whether the enactment reaches a substantial amount of constitutionally protected conduct. If it does not, then the overbreadth challenge must fail[,]" and the court should then examine the vagueness challenge. Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 494 (1982).
1. CUTPA is not unconstitutionally overbroad.
Although its claim is not clearly articulated, the Plaintiff appears to argue that CUTPA is overbroad by virtue of its purported vagueness. However, the United States Supreme Court has stated that "[a] law is constitutional unless it is 'substantially overbroad.'" New York State Club Ass'n. v. City of New York, 487 U.S. 1, 14 (1988) (quoting Broadrick v. Oklahoma, 413 U.S. 601, 615 (1973)). An act's overbreadth "must not only be real, but substantial as well, judged in relation to the statute's plainly legitimate sweep." Broadrick, 413 U.S. at 615. "The overbreadth doctrine is 'strong medicine' that is used 'sparingly and only as a last resort.'" New York State Club Ass'n., 487 U.S. at 14 (quoting Broadrick, 413 U.S. at 613).
To succeed in its overbreadth challenge, the Plaintiff must demonstrate from the text of the statutes and regulation "and from actual fact that a substantial number of instances exist in which the [statutes and regulation] cannot be applied constitutionally." New York State Club Ass'n., 487 U.S. at 14. If it fails to do so, its overbreadth challenge must fail.
In New York State Club Ass'n., the plaintiff consortium challenged as overbroad a city law which prohibited discrimination by clubs which provided benefits to business entities and to persons other than their own members, thereby assuming sufficient public character so as to forfeit the 'distinctly private' exemption under the law. In rejecting the overbreadth challenge, the Court noted that
[t]o succeed in its challenge, appellant must demonstrate from the text of Local Law 63 and from actual fact that a substantial number of instances exist in which the Law cannot be applied constitutionally. Yet appellant has not identified those clubs for whom the antidiscrimination provisions will impair their ability to associate together or to advocate public or private viewpoints... . [W]e are not informed of the characteristics of any particular clubs, and hence we cannot conclude that the Law threatens to undermine the associational or expressive purposes of any club, let alone a substantial number of them. We therefore cannot conclude that the Law is substantially overbroad and must assume that "whatever overbreadth may exist should be cured through case-by-case analysis of the fact situations to which its sanctions, assertedly, may not be applied.
New York State Club Ass'n., 487 U.S. at 14 (quoting Broadrick, 413 U.S. at 615-16).
The Plaintiff herein similarly fails to make the requisite showing. The Plaintiff has neither identified any constitutionally protected speech which might be improperly prohibited by the application of CUTPA nor described the characteristics which such speech might possess. The Plaintiff has not identified even one of its members which is poised to conduct a solicitation campaign or sweepstakes in Connecticut and which has refrained from doing so because of the existence of the subject statutes. In support of its Application the Plaintiff has offered nothing more than the conclusory and admittedly hearsay statements of Rita Smith, President of the Plaintiff organization, that "the vagueness and overbreadth of CUTPA have inhibited [the Plaintiff's] members from sending public education materials into the State of Connecticut." Smith Affidavit, at ¶ 4. (See discussion under Section III.B.1, above.)
There is simply no basis upon which the Court could conclude that the enforcement of CUTPA threatens the free speech rights of any of the Plaintiff's members, let alone a substantial number of them. CUTPA prohibits only that speech which constitutes an unfair or deceptive act or practice. As the Defendants noted in Section III C. 2, supra, such speech is not protected by the First Amendment. Moreover, assuming, arguendo, that the existence of the statutes may chill the speech of some charitable speakers who claim to be unable to determine whether their statements are untruthful or deceptive (not one example of which has Plaintiff provided), the Plaintiff has made no showing that the amount of such speech is anything but insubstantial compared with the broad spectrum of activity legitimately within the purview of the statutes.
Furthermore, it is well recognized that the language of certain statutory enactments is, of necessity, broad. "As Professor Tribe has noted, 'in any particular area, the legislature confronts a dilemma: to draft with narrow particularity is to risk nullification by easy invasion of the legislative purpose; to draft with great generality is to risk ensnarement of the innocent in a net designed for others.'" Kreimer v. Bureau of Police, 958 F.2d 1242, 1268 (3d Cir. 1992) (quoting Lawrence H. Tribe, American Constitutional Law, Section 12-31, at 1033 (2d 1988). The drafters of Section 5 of the Federal Trade Commission Act, upon which CUTPA is modeled (see Bailey Employment System, Inc. v. Hahn, 655 F.2d 473, 476, on remand, 545 F.Supp. 62 (D.Conn. 1982), aff'd 723 F.2d 895 (2d Cir. 1983)), deliberately chose the latter option.
Congress, in the process of drafting §5, gave up efforts to define specifically which methods of competition and practices are competitively harmful and abandoned a proposed laundry list of prohibited practices for the reason that there were too many practices to define and many more unforeseeable ones were yet to be created by ingenious business minds.
E.I. Du Pont De Nemours & Co. v. F.T.C., 729 F.2d 128, 136 (2d Cir. 1984) (citing Report of the Senate Committee on Interstate Commerce, S.Rep. No. 597, 63d Cong. 2d Sess. 13 (1914); Report of the Conference Committee, H.R.Rep. No. 1142, 63d Cong. 2d Sess. 19 (1914)).
In addition, what limited overbreadth which may exist may "be cured through case-by-case analysis of the fact situations to which [the statutes'] sanctions, assertedly, may not be applied." New York State Club Ass'n., 487 U.S. at 14. CUTPA provides that "[a]ny person required by an order of the commissioner to cease and desist from using any method, act, or practice declared unlawful by section 42-110b or to make restitution may appeal therefrom [to the Superior Court] in accordance with the provisions of section 4-183. Appeals under this section shall be privileged cases to be heard by the court as soon after the return day as shall be practicable." Conn. Gen. Stat. § 42-110e. Thus, there is nothing to preclude judicial review of constitutional claims that may be raised on appeal from administrative enforcement proceedings.
2. Neither CUTPA Nor The Sweepstakes Statutes And Regulation Are Unconstitutionally Vague
The purported vagueness of a statute must be such that the statute is incapable of 'giv[ing] the person of ordinary intelligence a reasonable opportunity to know what is prohibited' by failing to provide 'explicit standards' ensuring that it is not arbitrarily enforced. Grayned v. City of Rockford, 408 U.S. 104, 108 (1972)." Dorman v. Satti, 862 F.2d 432, 436 (2d Cir. 1988), cert. denied, 490 U.S. 1099 (1989). An unconstitutional statute "is vague, 'not in the sense that it requires a person to conform his conduct to an imprecise but comprehensible normative standard, but rather in the sense that no standard of conduct is specified at all.'" Smith v. Goguen, 415 U.S. 566, 578 (1974) (quoting Coates v. City of Cincinnati, 412 U.S. 611, 614 (1971) (concerning challenge to statute as violating First Amendment right to freedom of association)).
However, "[c]ondemned to the use of words, we can never expect mathematical certainty from our language." Grayned, 408 U.S. at 110. "It will always be true that the fertile legal 'imagination can conjure up hypothetical cases in which the meaning of [disputed] terms will be in nice question.' [Citation omitted.]" Grayned 408 U.S. at 110 n.15. Because perfect precision is neither possible nor required, however, the doctrine does not mandate the invalidation of all imprecisely drafted statutes. Rose v. Locke, 423 U.S. 48, 49 (1975). "'While some ambiguous statutes are the result of poor draftsmanship, it is apparent that in many instances the uncertainty is attributable to a desire not to nullify the purpose of the legislation by the use of specific terms which would afford loopholes through which many could escape.' W. LaFave & A. Scott, Criminal Law (1972) § 11, pp. 84-85. Unconstitutional vagueness must, therefore, be contrasted with mere ambiguity, which the court has within its power to correct through a narrow interpretation of the statute. 1 W. LaFave & A. Scott, Substantive Criminal Law (1986) S 2.3, p. 127." State v. Wilchinski, 242 Conn. 211, 219, 700 A.2d 1, 6 (1997). < 7 >
As the Supreme Court has recognized, "[t]here are areas of human conduct where, by the nature of the problems presented, legislatures simply cannot establish standards with great precision." Smith v. Goguen, 415 U.S. 566, 581 (1974). "The degree of vagueness tolerated under the Constitution . . . will depend in part on the nature of the enactment, and the determination of vagueness must be made in light of the contextual background of the particular law, with a firm understanding of its purpose." Leonen v. Johns-Manville Corp., 717 F.Supp. 272, 279 (D.N.J. 1989) (citing Village of Hoffman Estates v. Flipside, Hoffman Estates, 455 U.S. 489, 498 (1982)). "The fact that 'doubts as to the applicability of the language in marginal fact situations may be conceived' does not make an enactment unconstitutionally vague on its face." Harper v. Crockett, 868 F.Supp. 1557, 1582 (E.D.Ark. 1994) (quoting United States v. Powell, 423 U.S. 87, 93 (1975)). Because both CUTPA and the sweepstakes statutes require compliance with comprehensible normative standards, the Plaintiff's contentions are without merit.
Section 42-110b(a) of the Connecticut General Statutes states that "[n]o person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." The Plaintiff complains that the phrase "unfair or deceptive acts or practices" is unconstitutionally vague. While the phrase may admit of some imprecision, it is not unconstitutionally vague.
"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, 515-16, 461 A.2d 938, 941 (1983). It is based on Section 5 of the Federal Trade Commission Act, with regard to which the United States Supreme Court noted:
When Congress created the Federal Trade Commission in 1914 and charted its power and responsibility under § 5, it explicitly considered and rejected the notion that it reduce the ambiguity of the phrase 'unfair methods of competition' by tying the concept of unfairness to a common law or statutory standard or by enumerating the particular practices to which it was intended to apply.
F.T.C. v. Sperry & Hutchinson Co., 405 U.S. 233, 239-40 (1972). < 8 > Similarly, in promulgating CUTPA, "[t]he Connecticut General Assembly deliberately chose not to define the scope of unfair or deceptive acts proscribed by CUTPA so that courts might develop a body of law responsive to the marketplace practices that actually generate such complaints." Sportsmen's Boating Corp. v. Hensley, 192 Conn. 747, 755, 474 A.2d 780, 786 (1984). It declined to "codify a comprehensive list of 'unfair or deceptive acts or practices,' but rather articulated its intent that, in construing the scope of the statutory prohibition, 'the [named defendant] and the courts . . . shall be guided by interpretations given by the Federal Trade Commission and the federal courts to Section 5(a)(1) of the Federal Trade Commission Act (15 U.S.C. 45(a)(1)) [prohibiting 'unfair or deceptive acts or practices'], < 9 > as from time to time amended.'" Caldor, Inc., 215 Conn.at 591-92, 577 A.2d at 1011. < 1 >
"[F]or centuries courts have thought it sufficient that specificity may be created through the process of construction. Clarity via interpretation is enough, even when the law affects political speech, see Civil Service Commission v. Letter Carriers, 413 U.S. 548, 575-80, 93 S.Ct. 2880, 2895-98, 37 L.Ed.2d 796 (1973) (Hatch Act), or defines crimes, see Parker v. Levy, 417 U.S. 733, 752-57, 94 S.Ct. 2547, 2559-62, 41 L.Ed.2d 439 (1974) (provision of the Uniform Code of Military Justice punishing 'conduct unbecoming an officer and a gentleman.')" K-S Pharmacies, Inc. v. American Home Products Corp., 962 F.2d 728, 732 (7th Cir. 1992).
Although there appear to be no federal court decisions directly addressing the application of CUTPA or the Federal Trade Commission Act to the solicitation of charitable contributions, < 1 > myriad decisions relating to certain practices deemed unfair are clearly applicable and provide sufficient guidance. Such decisions include those concerning misleading representations as to nature of one's business or product: see, e.g., National Trade Publications Service, Inc. v. F.T.C., 300 F.2d 790 (8th Cir. 1962) (deceptive and unfair practices in solicitation of magazine subscriptions); Lane v. F.T.C., 130 F.2d 48 (9th Cir. 1942) (misrepresentation of defendant's business as a national nonprofit consumer's research and educational organization constituted unfair and deceptive act); Gimbel Bros., Inc. v. F.T.C., 116 F.2d 578 (2d Cir. 1941) (misrepresentation of seller's product as "woolens" constituted unfair trade practice); Bear Mill Manufacturing Co. v. F.T.C., 98 F.2d 67 (2d Cir. 1938) (misrepresentation of business as manufacturer of textiles constituted unfair trade practice). < 1 >
The Connecticut Supreme Court, in Heslin v. Connecticut Law Clinic of Trantolo and Trantolo, 190 Conn. 510, 461 A.2d 938 (1983), applied just such an approach in determining whether CUTPA applied to attorneys. Although noting that the federal courts had not directly addressed the issue of whether the Federal Trade Commission Act applied to attorneys, the Court relied upon the decisions of various federal courts relating to the Act's applicability to other professions, as well as interpretations given the Act by the Federal Trade Commission, in determining that CUTPA did not exclude from its purview all conduct of the profession of law. Heslin, 190 Conn. at 518-19, 461 A.2d at 942. Clearly, by pooling both federal and state law, in the form of statutes, regulations and judicial and Federal Trade Commission interpretation of both, an understanding of what acts or practices are deceptive or unfair sufficient to guide compliance with the statute has developed.
In keeping with the command that the commissioner and the courts be guided by interpretations given by the Federal Trade Commission and the federal courts to Section 5(a)(1) of the Federal Trade Commission Act (15 USC 45(a)(1)), the Connecticut Supreme Court, in determining whether a practice violates CUTPA, has
adopted the criteria set out in the 'cigarette rule' by the federal trade commission for determining when a practice is unfair: '(1) [W]hether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise - whether, in other words, it is within at least the penumbra of some common-law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers [competitors or other businessmen]. Conaway v. Prestia, [191 Conn. 484, 492-93, 464 A.2d 847 (1983)], quoting FTC v. Sperry & Hutchinson Co., 405 U.S. 233, 244-45 n.5, 92 S.Ct 898, 31 L.Ed.2d 170 (1972) [Sperry] . . . .
McLaughlin Ford, Inc. v. Ford Motor Co., 192 Conn. 558, 567-68, 473 A.2d 1185, 1191 (1984) (citations omitted). "All three criteria do not need to be satisfied. A practice may be unfair because of the degree to which it meets one of the criteria or to a lesser extent it meets all three." Brandeweide v. Emery Worldwide, 890 F.Supp. 79, 82 (D.Conn. 1991), aff'd 66 F.3d 308 (2d Cir. 1995). "Thus a violation of CUTPA may be established by showing either an actual deceptive practice; see, e.g., Sprayfoam, Inc. v. Durant's Rental Center, Inc., 39 Conn. Sup. 78, 468 A.2d 951 (1983); or a practice amounting to a violation of public policy. See, e.g., Sportsmen's Boating Corp. v. Hensley, [192 Conn. 747, 474 A.2d 780 (1984)]." Web Press Services Corp. v. New London Motors, Inc., 203 Conn. 342, 355, 525 A.2d 57 (1987). See also Shell Oil Co. v. Wentworth, 822 F.Supp. 878, 885 (D.Conn. 1993).
This language, commonly referred to as the "cigarette rule," has received additional gloss from the Connecticut Supreme Court. That Court has stated that assessment of the first of the Sperry factors requires consideration of "whether the unfair practice alleged . . . offends public policy to the extent that it constitutes a breach of established concepts of fairness." Cheshire Mortgage Service, Inc. v. Montes, 223 Conn. 80, 107, 612 A.2d 1130, 1144 (1992) (violation of "two different statutes, each implementing different public policies and effectuating those policies through different legislative means" breached established concepts of fairness). The Court has also determined that an act or practice causes substantial injury to consumers if: (i) the injury is substantial; (ii) it is not outweighed by any countervailing benefits to consumers or competition that the practice produces; and (iii) it is an injury that consumers themselves could not reasonably have avoided. McLaughlin Ford, Inc., 192 Conn. at 569-70, 473 A.2d at 1192. Attributes of a practice which may be considered "immoral, unethical, oppressive, or unscrupulous" have also been addressed by Connecticut's courts. See, e.g., Halloran v. Spillane's Servicenter, Inc., 41 Conn. Supp. 484 (1990).
The Connecticut Supreme Court has also delineated a means of evaluating whether an act or practice is deceptive under CUTPA. The Court has determined that an act or practice is deceptive if three conditions are met. "First, there must be a representation, omission, or other practice likely to mislead consumers. Second, the consumer must interpret the message reasonably under the circumstances. Third, the misleading representation, omission, or practice must be material - that is, likely to affect consumer decisions or conduct." Caldor, Inc. v. Heslin, 215 Conn. 590, 597, 577 A.2d 1009, 1013 (1990), cert. denied, 498 U.S. 1088 (1991).
Clearly, the language of CUTPA, considered in conjunction with the interpretive decisions rendered by both the Federal Trade Commission and the federal and state courts, provides sufficiently comprehensible normative standards to survive constitutional scrutiny. The soundness of this conclusion is buttressed by the fact that vagueness challenges to statutes prohibiting unfair and deceptive business practices have been consistently rejected by the courts of other states. < 1 > The Supreme Court of Washington, in State v. Reader's Digest Association, 501 P.2d 290, 301 (Wash. 1973), in rejecting a vagueness challenge, explained that
[t]he language of the amended federal act, from which [the Washington Consumer Protection Act] is taken, has been with us since 1938. The federal courts have amassed an abundance of law giving shape and definition to the words and phrases challenged by respondent. Now, more than 30 years after the Supreme Court said that the phrase 'unfair methods of competition' does not admit to 'precise definition,' we can say that phrase, and the amended language has a meaning well settled in federal trade regulation law. [The Consumer Protection Act] directs us to be guided by the federal law. Thus, in interpreting the language of [the Act] we must hold that the phrases 'unfair methods of competition' and 'unfair or deceptive acts or practices' have a sufficiently well established meaning in common law and federal trade law, by which we are guided, to meet any constitutional challenge of vagueness.
In Scott v. Association for Childbirth at Home, 430 N.E.2d 1012 (Ill. 1982), the Supreme Court of Illinois, in rejecting a vagueness challenge to the Illinois Consumer Fraud and Deceptive Practices Act, < 1 > similarly opined that the language "unfair acts or practices . . . taken from section 5(a) of the Federal Trade Commission Act - has a venerable history of interpretation and definition by the Federal Courts, and now can be said to have a well-settled meaning in Federal trade-regulation law." Scott, 430 N.E.2d at 1018. The Court noted that the term "unfair practice" is "inherently insusceptible of precise definition. . . . [E]ffective regulation requires that the concept be flexible, defined on a case-by-case basis 'in view of the futility of attempting to anticipate and enumerate all the [unfair] methods' and practices that fertile minds might devise." Id.
The phrase "unfair or deceptive acts or practices" is admittedly, and of necessity, imprecise. However, the language of the statute and of the regulations promulgated thereunder, considered in light of the myriad federal and state court decisions interpreting both CUTPA and the Federal Trade Commission Act, provide a comprehensible normative standard to which a person of ordinary intelligence can conform his or her conduct. Accordingly, CUTPA is not impermissively vague and passes constitutional muster.
b. The sweepstakes statutes and regulation
Section 42-297 of the Connecticut General Statutes provides that
(a) A person advertising a sweepstakes in this state shall disclose in immediate proximity to and in at least the same size and face type as the description of each prize in the advertisements: (1) The verifiable retail value of such prize; (2) if the element of chance is involved, the odds of winning such prize, expressed in arabic numerals as a fraction or ratio or, if the odds depend upon the number of entries received, a statement that the odds depend upon the number of entries received; and (3) whether the receipt of the prize is restricted or qualified in any way, including, but not limited to, travel dates or times, classes of travel or airlines, provided the person advertising the sweepstakes may include a statement substantially similar to the following: "major restrictions may apply to the use, availability or receipt of this prize" and include the specific rules or restrictions in a separate statement in the advertisement.
Plaintiff claims that the phrase "in immediate proximity" is impermissively vague. Plaintiff's Memorandum, at 25. While the phrase does not admit of mathematical certainty, it is not unconstitutionally vague.
Section 1-1 of the Connecticut General Statutes directs that "[i]n the construction of the statutes, words and phrases shall be construed according to the commonly approved usage of the language; and technical words and phrases, and such as have acquired a peculiar and appropriate meaning in the law, shall be construed and understood accordingly." Federal courts have relied upon dictionary definitions of commonly approved usage in determining whether language of a statute is unconstitutionally vague. See, e.g., Doyon v. Home Depot U.S.A., Inc., 850 F.Supp. 125, 131 (D.Conn. 1994).
Webster's Third New International Dictionary defines "immediate" as "1a: acting or being without the intervention of another object, cause or agency . . . 4: characterized by contiguity: existing without intervening space or substance . . . ; broadly: being near at hand: not far apart or distant." "Proximity" is defined as "the quality or state of being proximate, next, or very near (as in time, place, relationship): immediate or close propinquity: nearness . . . ." "Proximate" is defined as "1a: very near: immediately adjoining: close . . . ." Clearly, the regulation mandates that the required disclosures be placed sufficiently close to the description of the prize to be easily noticed by the recipient of the mailing. This interpretation accords with the purpose of the disclosure provision of the sweepstakes statute and the reason why the statute was promulgated. See, Section III B.2, supra.
The limitless variety of sweepstakes mailings, which differ significantly in size and presentation, makes the promulgation of precise proximity limitations impossible. Although the subject phrase is, of necessity, imprecise, a person of ordinary intelligence should be able to determine whether he or she has made the required disclosures and has placed those disclosures sufficiently close to the description of the prize to be easily noticed by the intended recipient of the mailing. Thus, the statutory language is not unconstitutionally vague and the Plaintiff's challenge must ultimately fail.
E. Neither Statute Constitutes A Prior Restraint
The Plaintiff herein claims that the Commissioner can issue and enforce cease and desist orders in his unbridled discretion, without judicial supervision (Plaintiff's Memorandum, at 20), and that the issuance of such orders constitutes a prior restraint. The Plaintiff has intentionally mischaracterized the pertinent statutes in an obvious attempt to mislead the Court.
The term "prior restraint" is used to describe "administrative and judicial orders forbidding certain communications when issued in advance of the time that such communications are to occur." Alexander v. United States, 509 U.S. 544, 550 (1993), reh'g denied, 510 U.S. 909 (1993). Thus,
governmental action constitutes a prior restraint when it is directed to suppressing speech because of its content before the speech is communicated. This may take the form of orders prohibiting the publication or broadcast of specific information [citations omitted], or systems of administrative preclearance that give public authorities the power to bar the publication or presentation of material [citations omitted].
G. & A. Books, Inc. v. Stern, 770 F.2d 288, 296 (2d Cir. 1985) (emphasis added). The issuance of cease and desist orders by the Commissioner, following the commission of the allegedly prohibited activity, does not constitute a prior restraint.
Section 42-110d(d) of the Connecticut General Statutes provides that the Commissioner,
whenever he has reason to believe that any person has been engaged or is engaged in an alleged violation of any provision of [CUTPA], shall mail to such person, by certified mail, a complaint stating the charges and containing a notice of a hearing, to be held upon a day and at a place therein fixed at least fifteen days after the date of such complaint. The person so notified shall have the right to file a written answer to the complaint and charges therein stated and appear at the time and place so fixed for such hearing, in person or otherwise, with or without counsel and submit testimony and be fully heard.... If upon such hearing the commissioner is of the opinion that the method of competition or the act or practice in question is prohibited by this chapter, the commissioner shall make a report in writing to the person complained of in which he shall state his findings as to the facts and shall forward by certified mail to such person an order to cease and desist from using such methods of competition or such act or practice, or, if the amount involved is less than five thousand dollars, an order directing restitution, or both.
Section 42-110e further provides that "[a]ny person required by an order of the commissioner to cease and desist from using any method, act or practice declared unlawful by section 42-110b . . . may appeal therefrom [to the Superior Court] in accordance with the provisions of section 4-183. Appeals under this section shall be privileged cases to be heard by the court as soon after the return day as shall be practicable."
The Attorney General has been delegated the duty of enforcing cease and desist orders issued by the Commissioner, but may do so only by applying to the Connecticut Superior Court for an appropriate order. See, Conn. Gen. Stat. §42-110d(d). In lieu of proceeding in accordance with Section 42-110d, the Commissioner may request that the Attorney General apply directly to the Connecticut Superior Court for an appropriate restraining order. See, Conn. Gen. Stat. §42-110m. Neither the Commissioner nor the Attorney General are authorized by CUTPA to issue a cease and desist order forbidding a communication in advance of its making.
Nor, contrary to the Plaintiff's assertions, are the Commissioner and the courts vested with unbridled discretion in enforcing CUTPA. In interpreting and enforcing CUTPA, the Commissioner and the courts are to be guided by "interpretations given by the Federal Trade Commission and the federal courts to Section 5 (a) (1) of the Federal Trade Commission Act (15 USC 45 (a) (1)), as from time to time amended." Conn. Gen. Stat. § 42-110b(b). The discretion vested in them is thus not "unbridled." See, e.g., Kreimer v. Bureau of Police, 958 F.2d 1242, 1267 (3d Cir. 1992).
Plaintiff offers as an example of the delegation of these "unbridled powers" the Commissioner's singling out of a particular form of charitable speech for regulation - namely charitable sweepstakes. < 1 > The Plaintiff then proceeds to identify "problems" with the regulation. The Plaintiff claims that "when a charity decides to disseminate its message by means of a sweepstakes, it is by definition a 'promotional scheme designed to make contact with prospective customers [i.e., donors].' Hence, the Commissioner is simply prohibiting all such solicitations from containing certain words of which the government does not approve." Plaintiff's Memorandum, at 21-22. The Plaintiff proceeds to conclude that the regulation constitutes a content-based prior restraint on speech. Plaintiff's Memorandum, at 22.
The Plaintiff misrepresents the regulation. The regulation prohibits use of the words "winner," "selected," "contest," "sweepstakes," "drawing" . . . only if "the enterprise is simply a promotional scheme designed to make contact with prospective customers, or all or a substantial number of those 'entering' receive the same 'prize' or 'opportunity.'" In other words, the regulation is intended merely to prohibit someone from representing a promotional scheme as a contest or sweepstakes when it in fact is not. A regulation prohibiting sham sweepstakes or contests hardly constitutes a prior restraint on speech. Moreover, the Plaintiff's admission that the regulation applies to all sweepstakes, whether charitable or not, reveals the disingenuousness of its claim that the regulation is content-based censorship of charitable solicitations.
The Plaintiff proceeds to claim that the Commissioner is vested with unbridled discretion to punish those whose messages he disapproves. Plaintiff's Memorandum, at 22. From this erroneous premise the Plaintiff illogically leaps to the conclusion that the sweepstakes regulation constitutes a licensing scheme which violates First Amendment protections. Plaintiff's Memorandum, at 22. Plaintiff misinterprets the regulation. A review of the statutes and regulation governing sweepstakes reveals no provision whatsoever relating to the obtaining of a license or permit of any sort before a sweepstakes is conducted.
Neither the issuance of cease and desist orders by the Commissioner, following the commission of allegedly prohibited activity, nor the promulgation of regulations governing sweepstakes, can conceivably be construed to constitute an order forbidding communications, issued in advance of the time the communications are to occur. Thus, neither constitutes a prior restraint violative of First Amendment rights.
The Plaintiff's request for preliminary injunctive relief should be denied. The Plaintiff has failed to establish that even one of its members is likely to suffer adverse consequences if the preliminary injunctions sought by the Plaintiff are not granted. The injunctive relief which the Plaintiff seeks will not, as the Plaintiff contends, merely preserve the status quo. Rather, entry of the injunctions sought by the Plaintiff will prohibit the Defendants from further prosecuting pending CUTPA actions, and will prevent the Defendants from initiating future actions against those defrauding Connecticut's citizens through unfair and deceptive practices. Clearly, the damage to be suffered by the citizens of the State of Connecticut, if the injunctions are entered, will be concrete, substantial, and perhaps irremediable. Moreover, the Plaintiff has not demonstrated that it is likely to succeed on the merits of its claims. The statutes which the Plaintiff attacks provide sufficiently comprehensible normative standards to survive constitutional scrutiny. The statutes are neither unconstitutionally vague nor overbroad, and their enforcement does not constitute a prior restraint on the exercise of the Plaintiff's members' First Amendment rights. Accordingly, the Plaintiff's Application for Preliminary Injunction should be denied.
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 25th day of September, 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 Floor
New York, NY 10001.
Holly Jean Bray
Commissioner of the Superior Court
1. Economic regulation enacted in furtherance of police power - rational relationship test applies. Police power of state includes enactment of statutes and regulations designed to protect its citizens against the consequences of fraud. 16A AmJur 2d, Constitutional Law, § 371. "A social and economic regulation will be upheld against constitutional challenges as long as the regulation has a rational relationship to a legitimate goal of government." Price v. Heckler, 733 F.2d 699, 701 (9th Cir. 1984) (citing New Orleans v. Duke, 427 U.S. 297 (1976).
Dane von Breichenruchardt, President of the Bill of Rights Foundation, Inc., which claims to be one of the Plaintiff's members, testified at a deposition conducted July 13, 1998, that he found CUTPA confusing and frightening. Exh. __, at 27. He testified that his concern is that he does not know what the State would consider to be unfair. Exh. __, at 27. He fears that the Defendants will "come after him" because they disagree with what he says. Exh. __, at 27. He testified that "the Second Amendment is a very unpopular thing with some people. I could take an opinion on the Second Amendment and you might come back and say, well you're wrong. And not only are you wrong but we think you're being deceitful about it. So here's a $5,000 fine for you." Exh. __, at 27-28.
"In evaluating a facial challenge to a state law, a federal court must . . . consider any limiting construction that a state court or enforcement agency has proferred." Hoffman Estates, 455 U.S. at 494, n. 5.
In New York State Club Ass'n., the plaintiff consortium challenged as overbroad a city law which prohibited discrimination by clubs which provided benefits to business entities and to persons other than their own members, thereby assuming sufficient public character so as to forfeit the 'distinctly private' exemption under the law. In rejecting the overbreadth challenge, the Court noted that
[t]o succeed in its challenge, appellant must demonstrate from the text of Local Law 63 and from actual fact that a substantial number of instances exist in which the Law cannot be applied constitutionally. Yet appellant has not identified those clubs for whom the antidiscrimination provisions will impair their ability to associate together or to advocate public or private viewpoints. . . . [W]e are not informed of the characteristics of any particular clubs, and hence we cannot conclude that the Law threatens to undermine the associational or expressive purposes of any club, let alone a substantial number of them. We therefore cannot conclude that the Law is substantially overbroad and must assume that "whatever overbreadth may exist should be cured through case-by-case analysis of the fact situations to which its sanctions, assertedly, may not be applied.
New York State Club Ass'n., 487 U.S. at 14 (quoting Broadrick, 413 U.S. at 615-616).
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).
See, transcript of the deposition of Rita Smith, conducted July 9, 1998, at 42-43. Copies of cited pages of the transcript are appended hereto as Exhibit A.
Moreover, enjoining the Defendants from enforcing CUTPA would prevent the State from further prosecuting its action presently pending against The Children's Charity Fund Corp. ("CCF") (a member of the Plaintiff at the time the Complaint in this action was filed), in the Connecticut Superior Court for the Judicial District of Hartford/New Britain at Hartford (Docket No. CV-96-0558744 S). The Amended Complaint filed in the state court action asserts counts based on CUTPA and the Connecticut Solicitation of Charitable Funds Act, and alleges that CCF misrepresented its primary charitable purpose in connection with the solicitation of charitable contributions in the State. (A copy of the State's Amended Complaint against CCF is appended to the Defendants' Memorandum of Law in Support of Motion to Dismiss, dated August 27, 1998, as Exhibit A.)
The Defendants submit, however, that even if the Court were to apply strict scrutiny to the subject statutes, they would pass constitutional muster. As will become evident from the discussion which follows, although CUTPA does not list the acts or practices which it proscribes, and although the sweepstakes statutes do not delineate with mathematical precision the location of mandated disclosures, the statutes are as narrowly tailored as they can possibly be and still protect the State's compelling interest in protecting its citizens from fraud and deception in the myriad forms, both known and unknown, in which it may be practiced.
The Plaintiff does not appear to claim that the Defendants have enforced the subject statutes in such a way as to burden unpopular speech or speech of a particular content disfavored by the State.
See, e.g.: Daddona v. Liberty Mobile Home Sales, Inc., 209 Conn. 243, 550 A.2d 1061 (1988) (mobile home operator's self-help eviction); Woronecki v. Trappe, 228 Conn. 574, 637 A.2d 783 (1994) (failure of home imporvement contractor to register with the State); Nielson v. Wisniewski, 32 Conn. App. 133, 628 A.2d 25 (1993) (renting of uninhabitable apartment).
See, e.g., Rathle v. Grote, 584 F.Supp. 1128, 1132 (M.D. Ala., 1984) (because "health sciences are dynamic, it is impossible to compile a list of every conceivable form of 'acceptable' and 'unacceptable' medical practice. Courts have therefore recognized that 'statutes affecting medical practice need not delineate the precise circumstances constituting the bounds of permissible practice. [Citations omitted.] Instead, the health professions are regulated by statutes of general terminology, complemented by continually evolving and changing non-statutory standards fashioned to meet contemporary norms.")
In Sears Roebuck & Co. v. FTC, 258 F. 307 (7th Cir. 1919) the Seventh Circuit, in rejecting a claim that Section 5 of the Federal Trade Commission Act must be held void for indefiniteness, explained that the phrase 'unfair methods of competition' "is not more indefinite than 'due process of law.' The general idea of that phrase as it appears in Constitutions and statutes is quite well known; but we have never encountered what purported to be an all-embracing schedule or found a specific definition that would bar the continuing process of judicial inclusion and exclusion based upon accumulating experience. If the expression 'unfair methods of competition' is too uncertain for use, then under the same condemnation would fall the innumerable statutes which predicate rights and prohibitions upon 'unsound mind,' 'undue influence,' 'unfaithfulness,' 'unfair use,' 'unfit for cultivation,' 'unreasonable rate,' 'unjust discrimination,' and the like." Sears Roebuck & Co., 258 F. at 311.
Connecticut courts are not, however, limited by such interpretations. Caldor, Inc. v. Heslin, 215 Conn. 590, 598, 577 A.2d 1009, 1014 (1990), cert. denied, 498 U.S. 1088 (1991).
It follows that federal courts called upon to construe CUTPA also should look for guidance to decisions interpreting Section 5(a)(1) of the Federal Trade Commission Act. McKeown Distributors, Inc. v. Gyp-Crete Corp., 618 F.Supp. 632, 643 (D.Conn. 1985).
Although the Federal Trade Commission may have acknowledged that it does not have jurisdiction over non-profit organizations, it has exercised jurisdiction over for-profit entities which solicit charitable contributions, ostensibly on behalf of non-profit organizations. See, e.g., decision and order entered in the matter of Civic Development Group, Inc. and Community Network, Inc., Federal Trade Commission Docket No. C-3810, dated June 5, 1998 (a copy of which is appended hereto as Exhibit D).
Moreover, "prior decisions of [the Connecticut Supreme Court] which delineate a statute's reach can constitute sufficient notice of the acts prohibited to render the statute constitutional as applied to particular facts of a case." State v. Pickering, 180 Conn. 54, 63, 428 A.2d 322 (1980).
See e.g.: State v. O'Neill Investigations, Inc., 609 P.2d 520 (Alaska 1980) (words of statute have a "well-defined" meaning in the area of trade regulation); Department of Legal Affairs v. Rogers, 329 S.2d 257 (Fla. 1976) (phrases "unfair methods of competition and unfair or deceptive acts or practices" not unconstitutionally vague); Kansas ex rel. Sanborn v. Koscot, 512 P.2d 416, 424 (Kan. 1973) (terms "deception," "fraud," "false pretense," "false promise," and "misrepresentation" all have established meanings in law); Dare to be Great, Inc. v. Kentucky, 511 S.W.2d 224, 227 (Ken. 1974) ("words false, misleading and deceptive have meanings which are generally well understood by those who want to understand them"); Inman v. Ken Hyatt Chrysler Plymouth, Inc., 363 S.E.2d 691, 693 (S.C. 1988) (section of Unfair Trade Practices Act prohibiing unfair methods of competition and unfair or deceptive acts or practices in conduct of trade or commerce is not unconstitutionally vague: FTC Act, upon which South Carolina act is based, "has long been upheld against this challenge").
The plaintiff in Scott asserted that Act impacted constitutionally protected speech. In rejecting the plaintiff's claim, the Court noted that "the investigation and regulation of unfair or deceptive business practices under the Act does not, because it cannot, impinge upon constitutionally protected speech. Since the Act prohibits only such speech as amounts to a fraudulent or deceptive practice . . . it can affect only speech that is by definition outside the ambit of first amendment protection, and within the scope of permissible State regulation." Scott, 430 N.E.2d at 1016.
The Plaintiff's argument is absurd. The Plaintiff itself admits that the regulation at issue, § 42-110b-23, applies to all sweepstakes, "whether charitable or not." Plaintiff's Memorandum, at 21 (emphasis supplied).