Case ID: ny-2d_38/html/0364-01.html
Source: Caselaw Access Project
Author: {"author": "Gabrielli, J. Fuchsberg, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Eric G. Urowsky, Appellant, v Board of Regents of the University of the State of New York, Respondent.
    Argued November 19, 1975;
    decided December 22, 1975
    
      
      Robert A. Kennedy and Robert J. Aurigema for appellant.
    I. Insofar as it purports to prohibit "the use of the words 'cut rate’, 'discount’ or other words having a similar connotation in connection with the offering of professional services by a pharmacist”, the regulation (8 NYCRR 63.3 [c]) exceeds the Legislature’s delegation of rule-making power and is, therefore, invalid. (Brown v University of State of N. Y., 242 App Div 85, 266 NY 598; Matter of Rubenstein v Board of Regents of Univ. of State of N. Y., 177 Misc 253, 264 App Div 745, 289 NY 639; Matter of Cherry v Board of Regents of Univ. of State of N. Y., 177 Misc 253, 264 App Div 23, 289 NY 148; Matter of Dubin v Board of Regents of State of N. Y., 286 App Div 9, 1 NY2d 58.) II. The statutes delegating rule-making authority to respondent (Education Law, §§ 207, 6506, 6507, 6509), if construed as authorizing adoption of the regulation challenged herein, violate article III of section 1 of the Constitution of this State since those statutes totally fail to state the policies and purposes of the Legislature, or to supply standards, guidelines or limitations of any sort on the rule-making authority of respondent. (Schechter Corp. v United States, 295 US 495; Packer Collegiate Inst. v University of State of N. Y., 298 NY 184.) III. Statutory or regulatory prohibition of prescription price advertisements contravenes the due process requirements of both the Federal and State Constitutions, since such prohibition bears no reasonable relationship to any legitimate State objective nor does it serve to preserve or promote the public health or welfare. (United States v Carolene Prods. Co., 304 US 144; People v Bunis, 9 NY2d 1; Defiance Milk Prods. Co. v Du Mond, 309 NY 537; Virginia Citizens Consumer Council v State Bd. of Pharmacy, 373 F Supp 683; Head v New Mexico Bd., 374 US 424; Williamson v Lee Opt. Co., 348 US 483; Finlay Strauss, Inc. v University of State of N. Y., 270 App Div 1060; Matter of Dubin v Board of Regents of State of N. Y., 1 NY2d 58.) IV. Statutory or regulatory prohibition of prescription price advertisements violates the First Amendment guarantee of freedom of speech. (Patterson Drug Co. v Kingery, 305 F Supp 821; Virginia Citizens Consumer Council v State Bd. of Pharmacy, 373 F Supp 683.)
    
      Donald O. Meserve and Robert D. Stone for respondent.
    I. The regulation in question and the pending administrative proceeding against plaintiff should not be held invalid as in improper exercise of legislative power. (People v De Renzzio, 19 NY2d 45; People v Friola, 11 NY2d 157; Von Diezelski v 
      
      Food Fair Stores, 18 AD2d 724; Brown v Brown, 34 AD2d 727; People v Bergerson, 24 AD2d 772; Matter of Bell v Board of Regents of Univ. of State of N. Y., 295 NY 101; Matter of Mandel v Board of Regents of Univ. of State of N. Y., 250 NY 173; Matter of Cherry v Board of Regents of Univ. of State of N. Y., 289 NY 148; Brown v University of State of N. Y., 266 NY 598.) II. The prohibition of discount price advertising in pharmacy is not a violation of constitutional due process of law. (Nebbia v New York, 291 US 502; Mayo v Canning Co., 309 US 310; People v Arlen Servs. Stas., 284 NY 340; State Bd. of Pharmacy v Matthews, 197 NY 353; Le Drugstore Etats Unis v New York State Bd. of Pharmacy, 33 NY2d 298; North Dakota Pharmacy Bd. v Snyder’s Stores, 414 US 156; Semler v Dental Examiners, 294 US 608; Williamson v Lee Opt. Co., 348 US 483; Head v New Mexico Bd., 374 US 424; Finlay Strauss, Inc. v University of State of N. Y., 270 App Div 1060, 296 NY 1057.) III. The prohibition against discount advertising of prescription required drugs does not violate the First Amendment guarantee of freedom of speech. (Virginia Citizens Consumer Council v State Bd. of Pharmacy, 373 F Supp 683; Head v New Mexico Bd., 374 US 424; Semler v Dental Examiners, 294 US 608; Williamson v Lee Opt. Co., 348 US 483; Patterson Drug Co. v Kingery, 306 F Supp 821; Valentine v Chrestensen, 316 US 52; Pittsburg Press Co. v Human Relations Comm., 413 US 376.)
   Gabrielli, J.

Petitioner has challenged on both First and Fourteenth Amendment grounds the validity of a regulation promulgated by the Commissioner of Education, pursuant to statutory authority, prohibiting the advertising of discount prescription prices. Both Special Term and the Appellate Division have upheld the constitutionality of the regulation which petitioner now seeks to have invalidated by this court.

Petitioner is the supervising pharmacist and owner of U. P. C. Prescription Center of Schenectady, Inc., a pharmacy engaged in providing discount prescription and nonprescription medicines to the public. In February, 1972, the State Board of Pharmacy, a licensing board subject to the supervision of the Board of Regents, directed petitioner to appear and answer the charge that he was engaging in "unprofessional conduct” by advertising discounts on "all drug needs” through local newspapers and indiscriminately distributing two-dollar discount certificates. Shortly thereafter, petitioner commenced this action in the Supreme Court, Albany County, seeking (1) a declaration that the regulation is invalid and (2) a permanent injunction restraining respondent Board of Regents and its agents, including the Board of Pharmacy, from taking any disciplinary action against petitioner pursuant to the challenged regulation.

The following regulation barring discount advertising had been promulgated by the Commissioner of Education:

"Unprofessional conduct. Unprofessional conduct in the practice of pharmacy within the meaning of section 6804 of the Education Law shall include but shall not be limited to the following:
* * *
"(c) a registered pharmacist, or the owner of a pharmacy participating in any plan, agreement or arrangement which advertises fixed or discount prescription prices or permitting any agent or any other person, group or organization to use such advertising in his behalf” (8 NYCRR 63.3).
During the pendency of this action, the regulation was amended, effective June 1, 1972, by replacing former subdivision (c) with new subdivision (c) and adding new subdivision (m), so that the regulation now reads as follows:
"Unprofessional conduct. Unprofessional conduct in the practice of pharmacy within the meaning of section 6804 of the Education Law shall include but shall not be limited to the following:
* * *
"(c) advertising of fixed fees or prices for professional services or the use of the words 'cut rate’, 'discount’ or other words having a similar connotation in connection with the offering of professional services by a pharmacist, the owner of a pharmacy or by any other person, group or organization in behalf of and with the permission of a pharmacist or the owner of a pharmacy, provided, however, that proper actions taken in meeting the requirements of subdivision (m) shall not be construed as constituting advertising;
* * *
"(m) failure to make prescription fee or price information readily available by:
"(1) providing such information upon request and upon the presentation of a prescription for pricing or dispensing; or
"(2) offering to provide such information by posting a sign measuring 9 inches by 12 inches in the window or within the pharmacy at the area where prescriptions are normally received or, in the case of pharmacies located in general merchandising establishments at the registered area reading:
" 'the price for which your prescription will be dispensed will be provided upon request and upon presentation of such prescription for pricing or dispensing.’ ” (8 NYCRR 63.3.)

To sustain the regulation, respondent relies upon two sections of the Education Law, delegating to it the authority to adopt rules and regulations governing the professions generally. Section 6506 of the Education Law provides in pertinent part:

"The board of regents shall supervise the admission to and the practice of the professions. In supervising, the board of regents may:
"(1) Promulgate rules;
* * *
"(9) Establish by rule, standards of conduct with respect to advertising, fee splitting, practicing under a name other than that of the individual licensee (when not specifically authorized), proper use of academic or professional degrees or titles tending to imply professional status, and such other ethical practices as such board shall deem necessary”.

Furthermore, subdivision (9) of section 6509 of the Education Law broadly proscribes professional misconduct and authorizes respondent Board of Regents to define such conduct.

There should be an affirmance. The challenged regulation was , within the power of the Commissioner of Education and the Board of Regents to adopt pursuant to the cited sections of the Education Law (cf. Matter of Bell v Board of Regents, 295 NY 101, 108). Furthermore, the regulation was rationally related to this State’s interest in the preservation of local pharmacies which serve a vital function in the convenient, rapid filling of prescriptions and in the prevention of destructive competition in the pharmaceutical profession. We therefore conclude that the action of the Board of Regents did not contravene the due process guarantees of the United States and New York Constitutions (see North Dakota Pharmacy Bd. v Snyder’s Stores, 414 US 156, 165-167).

We note that section 6826 of the Education Law provides that:

"(1) Every pharmacy shall post a list of drugs together with their current selling price in the manner prescribed by this section.
* * *
"(4) The list shall be conspicuously posted at or adjacent to the place in the pharmacy where prescriptions are presented for compounding and dispensing.”

In light of these provisions, we see no need to decide whether the regulation barring advertisement of discount prices, adopted pursuant to sections 6506 and 6509 of the Education Law, violates a purported consumer "right to know” grounded in the First Amendment of the United States Constitution. Unlike the statute invalidated in Virginia Citizens Consumer Council v State Bd. of Pharmacy (373 F Supp 683, probable jurisdiction noted 420 US 971), where no posting of prescription prices was mandated, the New York regulatory scheme also enables consumers to obtain information concerning the prices of prescription drugs. It is noteworthy that the Commissioner of Education amended the regulation to provide that, in addition to "advertising of fixed fees or prices for professional services”, unprofessional conduct shall also include "failure to make prescription fee or price information readily available by: (1) providing such information upon request and upon the presentation of a prescription for pricing or dispensing; or (2) offering to provide such information "(8 NYCRR 63.3 [m]).

Furthermore, even assuming such a "right to know” were found to exist, petitioner, a pharmacist, does not have standing to assert the rights of consumers (Tileston v Ullman, 318 US 44; Virginia Citizens Consumer Council v State Bd. of Pharmacy., supra, p 685-686), since he is not an organizational or individual representative of the class of persons whose rights are claimed to have been violated (see NOW v State Div. of Human Rights, 34 NY2d 416, 420; NAACP v Alabama, 357 US 449, 458-460).

The advertising prohibited by the Board of Regents is the type of commercial speech to which no First Amendment protection is afforded (Bigelow v Virginia, 421 US 809; Pittsburgh Press Co. v Human Relations Comm., 413 US 376, 384-387; Population Servs. Int. v Wilson, 398 F Supp 321, 337; cf. Valentine v Chrestensen, 316 US 52). Contrary to the assertions of the dissent, this case does not fall within that zone of expression, which, although in a commercial setting, is nevertheless protected by the First Amendment. Unlike Bigelow v Virginia (421 US 809, 822, supra), the regulation here does not prohibit the dissemination of knowledge concerning services intimately related to the exercise of a constitutional right (cf. Roe v Wade, 410 US 113). Similarly, the advertising barred in this case is vastly different from that in New York Times Co. v Sullivan (376 US 254) which involved an expression of views and criticism of official action. The presentation of ideas in a context involving remuneration for the publisher did not remove expression in advertising form from First Amendment protection. In the instant case, we have an invitation to transact business, an offer to engage in a purely commercial transaction. It should be noted, with some emphasis, that the advertising prohibited by the Board of Regents relates exclusively to price competition, an area of particular concern to the State because of the probable deleterious effects of uncontrolled advertising upon the availability of prescription drugs from neighborhood pharmacies.

We think, further, that the court in Bigelow (supra) recognized the validity of State regulation of destructive price competition among professionals, a type of advertising clearly distinguishable from the dissemination of information relating to the availability of services, when it stated that "[advertising, like all public expression, may be subject to reasonable regulation that serves a legitimate public interest” (Bigelow, supra, p 826). The Bigelow decision was circumscribed by the disclaimer that it was not to be considered inconsistent with the Supreme Court’s holdings in cases concerning the regulation of professional activity (Bigelow, supra, p 825, n 10) and the proviso that the court was not deciding the "precise extent to which the First Amendment permits regulation of advertising that is related to activities the State may legitimately regulate or even prohibit” (Bigelow, supra, p 825). At least one other court agrees with our interpretation of Bigelow. A three-Judge United States District Court for the Southern District of New York concluded that after Bigelow, "it is still the law that purely commercial speech—whatever the scope of that term—does not enjoy constitutional protection” (Population Servs. Int. v Wilson, 398 F Supp 321, 337, supra).

The dissent’s conclusion that "States may encompass the speech aspects of commercial activities within their regulations only when State interests meet a test of real necessity, not merely a rational basis test” is patently erroneous and unsupported by Bigelow itself, or, in fact, any other authority. Indeed, the dissent relies only upon a series of cases, cited without comment in footnote 11 of the court’s opinion in Bigelow, all of which deal with statutes regulating the dissemination of ideas rather than commercial transactions. After paying lip service to the standard that (p 826) "advertising * * * may be subject to reasonable regulation that serves a legitimate public interest”, the dissent then infers from Bigelow a test based on "real necessity.” The court, as indicated above did not restrict the State’s regulatory power to areas of "outright” or "potential illegality”. The line differentiating unprotected commercial from "pure” speech was not erased by Bigelow; rather it was redrawn with the recognition that some forms of commercial speech should be entitled to First Amendment protection and that the "commercial speech” label of Valentine v Chrestensen (316 US 52, supra) did not appropriately demarcate the scope of First Amendment protection of speech in a commercial context. In sum, the dissent basically confuses advertising which brings knowledge to the public of the availability of services or drug products with advertising which is related to price competition which has been found to be destructive and which may well prevent the required availability of such services or products to the needy public in neighborhood stores, a service recognized as fulfilling the immediate and emergency needs of the public.

Finally, it is manifest that the prohibition of "discount” and "cut-rate” advertising affects only the manner in which price information is conveyed to the public since other provisions of the State Education Law and the amended Commissioner of Education regulation mandate the posting of price information in conspicuous locations in a pharmacy. Bigelow (supra, p 819) expressly preserved the State’s authority to regulate the "manner in which commercial advertising could be distributed”.

Accordingly, the order of the Appellate Division should be affirmed.

Fuchsberg, J.

(dissenting). I most respectfully dissent. In my view, the challenged regulations constitute an impermissible interference with appellant’s Federal and State constitutional rights to freedom of speech. That violation distinguishes the case from those which involve merely economic regulation by the State of commercial activities within its borders. As the Supreme Court has noted in North Dakota Pharmacy Bd. v Snyder’s Stores (414 US 156, 164-165): " 'This Court beginning at least as early as 1934, when the Nebbia case [Nebbia v New York, 291 US 502] was decided, has steadily rejected the due process philosphy enunciated in the Adair-Coppage line of cases [Adair v United States, 208 US 161; Coppage v Kansas, 236 US 1]. In doing so it has consciously returned closer and closer to the earlier constitutional principle that states have power to legislate against what are found to be injurious practices in their internal commercial and business affairs, so long as their laws do not run afoul of some speciAc federal constitutional prohibition, or some valid federal law’ ” (emphasis added).

I believe that the regulation before us does in fact "run afoul” of the First Amendment to the Constitution and must therefore be measured by the more stringent test which that amendment requires (see People v Taub, 37 NY 2d 530). In rejecting the appellant pharmacist’s First Amendment challenge based on his right to speak, the majority cites Pittsburgh Press Co. v Human Relations Comm. (413 US 376) and Valentine v Chrestensen (316 US 52). It further states that it does not find the rationale of these cases vitiated by the Supreme Court’s recent holding in Bigelow v Virginia (421 US 809), a case upholding the right to advertise abortion referral services. But it would appear to me that the applicability of these two cases to the situation now before us has been cast into serious doubt by that decision.

The Valentine case, which involved handbilling to advertise a submarine available to the public for viewing for a fee, did indeed establish the premise that speech directed solely to an offer to do business was not protected under the First Amendment. In Bigelow (p 819), however, the court characterized that earlier holding as limited to the "reasonable regulation of the manner in which commercial advertising could be distributed” (emphasis added). It went on to note, with approval, that Justices Douglas and Brennan, in intervening cases, had characterized Valentine thusly:

" 'The ruling was casual, almost offhand. And it has not survived reflection.’ ” (421 US, at p 820, n 6, citing Cammarano v United States, 358 US 498, 514 [Douglas, J., concurring].)
" 'There is some doubt concerning whether the "commercial speech” distinction announced in Valentine v. Chrestensen . . . retains continuing validity.’ ” (421 US, at p 820, n 6, citing Lehman v City of Shaker Hgts., 418 US 298, 314, n 6 [Brennan, J., dissenting, joined by Stewart, J., Marshall, J., and Powell, J.].)

Moreover, the court in Bigelow redefined its Pittsburgh Press Co. holding as well. Acknowledging that it had there made at least a passing reference to Valentine, when it commented that advertisements for jobs which were classified by sex were still only offers of employment, Bigelow explained that the essential basis for the Pittsburgh holding was a refusal to extend First Amendment protection to editorial judgments as to where advertisements should be placed when such judgments aided and abetted employers in wholly illegal sex discrimination. (421 US, at p 821.)

In contrast, the Bigelow opinion referred favorably to the decision in New York Times Co. v Sullivan (376 US 254), where it was held that advertisements containing matter of general public interest were entitled to protection under the First Amendment. More significantly, Bigelow indicated an unwillingness to limit notions of what may interest the public to purely or obviously political matter. (See, also, Note, The Commercial Speech Doctrine: The First Amendment At A Discount, 41 Brooklyn L Rev 60, 86-90.)

That is not to say that the Bigelow decision interdicts all State regulation of advertising. After indicating that it intended to be consistent with its prior decisions under the due process cases, where regulation of the business aspects, rather than speech aspects, of commercial endeavors was involved (421 US, at p 825, n 10), it added that broadcasting and speech which also involved such conduct as handbilling or picketing were still vulnerable to more regulation than is pure speech used in the commercial context. The court also reaffirmed States’ right to control advertising when it touches upon matters which a State considers illegal or in the regulation of which it has a legitimate interest (at p 825).

It is this last ruling which needs to be considered in applying Bigelow to the case now before us. Especially pertinent is the following language: "Advertising, like all public expression, may be subject to reasonable regulation that serves a legitimate public interest. See Pittsburgh Press Co. v. Human Rel. Comm’n, supra; Lehman v. City of Shaker Heights, 418 U. S. 298 (1974). To the extent that commercial activity is subject to regulation, the relationship of speech to that activity may be one factor, among others, to be considered in weighing the First Amendment interest against the governmental interest alleged. Advertising is not thereby stripped of all First Amendment protection.” (421 US, at p 826.)

Pittsburgh involved illegal discrimination. Lehman involved the right of a city to permit commercial advertisements on its transit vehicles while banning political advertisements; the city’s right to do so was upheld on the ground that, since the commercial purveyor was also a political entity, a city, its need to protect citizens from political advertisements which might be placed on vehicles out of favoritism or corruption was a valid State need. In its "note 11” the court listed additional cases in which First Amendment rights were upheld and which make clear that the test of regulations in this context is a stringent one.

From the court’s citations as well as its discussion of the Pittsburgh and the New York Times cases, it seems clear that States may encompass the speech aspects of commercial activities within their regulations only when State interests meet a test of real necessity, not merely a rational basis test.

The involvement of the First Amendment in a State regulation, whether commercial or otherwise, inevitably brings with it a test more demanding than the rational basis test. It is surprising that the majority finds this notion unsupportable. The very distinction with which I began here, so clearly made in the above-cited passage from the North Dakota case, supports the applicability of the more stringent test whenever a State regulation "runs afoul” of a specific prohibition contained in the Constitution. The Bigelow court’s citation to the North Dakota line of cases, in pointing out the distinction between purely economic regulation and that which touches on the First Amendment, lends further support to that proposition.

It seems to me, rather, that, on analysis, the difference in our views centers on the question of where the court, in Bigelow, has drawn the line between what it will call a First Amendment involvement and what it will not. The majority appears to read Bigelow to say that speech directed toward an offer of a product or service for sale at a price is still not protected, while speech in an advertisement of political views is. But that was the Valentine holding, and Bigelow plainly disavowed Valentine. Bigelow’s point is that speech is speech and the First Amendment applies to it; its protected status is no longer to be determined simply on the basis of whether it is commercial or noncommercial.

Of course Bigelow acknowledges that there are areas in whose regulation a State’s interest is so great that it is permitted to override the constitutional protections. It is interesting to note, however, that the Supreme Court’s choice of citations to illustrate this premise involved such conduct as racial discrimination in housing, sex discrimination in employment, and corruption in government (in addition to cases already discussed see 421 US, at p 825, n 10, par 1).

Assuredly, both the ethics of the pharmaceutical profession and the health of the public are areas in which the State may regulate. But, as this court has had occasion to note elsewhere, the fact that a State has an interest in an area does not, in and of itself, mean that any attempt to regulate, no matter how overbroad or unnecessary, is permissible (see Matter of Schulman v New York City Health & Hosps. Corp., 38 NY2d 234 [majority and dissenting opns]; see, also, Eisenstadt v Baird, 405 US 438, 463-464; Griswold v Connecticut, 381 US 479, 485).

Indeed, the fact that Bigelow itself involved advertisements for a New York abortion referral service ought to deal the coup de grace to argument that any regulation of advertising of drug prices by pharmacists automatically falls within the permissible area left by that decision. Surely there is no more regulated area than medical practice in general and abortion in particular (see Matter of Schulman v New York City Health & Hosps. Corp., supra). Yet the advertisement in Bigelow was protected and upheld. The court noted that the public had a strong interest in its informative content and that an advertisement which informed the public of the existence of a perfectly legal medical service was not within the area of a State’s legitimate interest in medical practice or public health.

The public has a strong interest in easy access to information about the cost of prescription drugs, a necessity which it must, in any event, purchase (see Virginia State Bd. of Pharmacy v Virginia Citizens Consumer Council, 373 F Supp 683, probable jurisdiction noted 420 US 971, and see the appendix to brief for appellees before the Supreme Court in the same case). It also has an obvious interest in obtaining such drugs at the lowest possible cost. The appellant pharmacist, like the abortion service advertiser in Bigelow, may assert these interests as they have bearing on his own freedom of speech; his interests are intertwined with the public’s.

I find it inescapable that before the State may prevent speech of the kind involved here it must demonstrate that such a regulation is necessary. I do not believe that it has met that burden. Indeed, its own statutes do not even require the sort of regulation which the board adopted here. Significantly, in another case decided on the same day as was Bigelow, (Goldfarb v Virginia State Bar, 421 US 773), the Supreme Court struck down regulations providing for a minimum fee schedule for lawyers counseling clients who seek to buy homes. The court observed that the challenged regulations were not required by State law, and went on to hold that, in any event, protection of ethical standards in a profession could not justify such anticompetitive acts. While the decision is based on antitrust law and not on the First Amendment, it is most relevant here, for it calls into question the concept that the professions may, under color of State law, take steps against the public’s economic interest in the name of ethical regulation. Here, despite the public’s need both for information and for reasonable pricing of prescription drugs, the regulation, in order to prevent abuses in advertising, banned all advertising. Such means are impermissively overbroad.

Accordingly, I would find the regulations in issue invalid.

Chief Judge Breitel and Judges Jasen, Jones and Wachtler concur with Judge Gabrielli; Judge Fuchsberg dissents and vote's to reverse in a separate opinion; Judge Cooke taking no part.

Order affirmed, with costs.