& Young, 901 F.3d 624, 627 (7th Cir. 1990). Rule 9(b) is intended to “protect defendants’
reputations, prevent [discovery] fishing expeditions, and to provide adequate notice to defendants
of the claims against them.” Fugman v. Aprogenex, Inc., 961 F. Supp. 1190, 1194 (N.D. IIL. 1997).
Il. Sufficiency of Pleadings under Rule 9(b)

Waldron asserts that the allegations set forth in the complaint fail to show she has violated
the IACA. However, Count satisfies Rule 9(b)’s standards. First, the complaint identifies the dates
on which the goods were displayed, offered for sale, and sold. Pucci v. Litwin, 828 F. Supp. 1285,
1297 (N.D. Ill. 1993). NAA alleges Waldron displayed, offered for sale, and sold goods to Earth
Dweller. Photographs are attached to the complaint as exhibits. Second, NAA identifies the parties
to the transaction by alleging the products were sold by Waldron to Earth Dweller, and to the public
through Earth Dweller. Third, NAA sufficiently describes the method in which the
misrepresentation occurred. The complaint alleges Waldron displayed, offered for sale, and sold
these products to Earth Dweller, and to the public through Earth Dweller, by attaching advertising,
marketing, and promotional tags that falsely suggested they were “Indian made, an Indian product
or a product of an Indian tribe or Indian arts and crafts organization.” Complaint | 29. The

promotional tags attached to the complaint as exhibits refer to the Zuni and Plains tribes.’

2 Waldron submits numerous exhibits, contending that Fed. R. Civ. P. 10(c) permits the
attachment of these documents because they were referred to in NAA’s complaint. Documents
attached to a motion to dismiss are considered part of the pleadings where they are referred to in
the complaint and are central to plaintiff's claim. See Venture Assoc. Corp. v. Zenith Data
Systems Corp., 987 F.2d 429, 431 (7th Cir. 1993); see also Village Originals, 25 F. Supp.2d at
880 n.1. Waldron’s Exhibits B and D can be considered. Exhibit B consists of brochures, and
catalogues that are referred to in [29 of the complaint. Exhibit D are sale tags referred to in
29. However, Exhibit C is a complete printout of Waldron’s website that is not mentioned
anywhere in the complaint. Hence, the court shall consider only the contents of the tags,
brochures, and catalogues in Exhibits B and D without converting this motion into one for
summary judgment.

-4-


and discriminatory enforcement. Walton, 36 F.3d at 35. Economic regulation is subject to a less
strict vagueness test because its subject matter is often more narrow, and because businesses can be
expected to consult relevant legislation in advance of action. /d. at 498.

Waldron contends that the IACA is unconstitutionally vague because any person who creates
artwork in Indian style can be subject to civil liability under the IACA. According to Waldron, the
IACA is vague because that Act, and the Code of Federal Regulations promulgated by the Secretary
of Interior in 25 C.F.R. § 309.2 - 309.3, do not define the terms “traditional or nontraditional Indian
style”, “falsely suggests” and “unqualified”.

The court finds the purported use of brochures, catalogues and tags used by Waldron
clearly proscribed by the IACA. Waldron allegedly displayed, offered for sale, and sold goods that
falsely suggested it was Indian through these brochures, catalogues and sales tags. See Complaint
429. The application of the [ACA to Waldron’s actions is not vague, and Waldron’s facial challenge
fails. The court further rejects Waldron’s argument regarding the vagueness of various terms in the
TACA. The term “traditional or nontraditional Indian style” constitutes part of the Code of Federal
Regulations that only serves to illustrate the term “Indian product” as used in 25 U.S.C. §305e(a).
The definition of “Indian product” in the Code of Federal Regulations is clear - it is defined as a
product “made by an Indian.” 25 C.F.R. §309.2. Additionally, as the court notes above, the creation
of artwork is not covered by the IACA because the Act primarily concerns “false suggestions” and
the “manner” in which the display, offer for sale, or sale of an Indian product occurs. Village
Originals, 25 F Supp.2d at 80-81 (rejecting vagueness challenge on the same grounds); Nature ’s

Gifis, 1999 WL 169319, at *4-5 (same).

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overbreadth and vagueness, and have held the Act constitutional. See Village Originals, 25
F.Supp.2d at 880-81 (Manning, J.); Nature's Gifts, 1999 WL 169319, at *3-4 (Holderman, J.).
Waldron attempts to distinguish Village Originals and Nature's Gifts by asserting that she is the
designer and creator of the arts and crafts in question, whereas Village Originals and Nature's Gifts
involved defendants who were retailers. That distinction is immaterial. Waldron is sued for her role
as a retailer and not as an artist. The IACA “does not interfere with the artistic content of
[defendant’s] merchandise and only regulates the purely commercial aspect stemming from potential
false advertising that is unprotected conduct.” Village Originals, 25 F.Supp.2d at 881.

The United States Supreme Court in Hoffman Estates v. Flipside, 455 U. .S. 489, 494 (1982),
established a two-part test to determine whether a statute is unconstitutional on grounds of vagueness
and overbreadth. First, the court must determine whether the statute significantly impacts
constitutionally protected conduct. Hoffman Estates, 455 US. at 494. If it does not, then the
overbreadth challenge fails. Second, “[t]he court should then examine the facial vagueness challenge
and, assuming the enactment implicates no constitutionally protected conduct, should uphold the
challenge only if the enactment is impermissibly vague in all its applications.” Jd. at 494-95.

Applying the first part of the Hoffman Estates test, the IACA requires First Amendment
scrutiny because it involves the expressive aspects of commercial advertising. Village Originals,
25 F. Supp. at 880. Commercial speech is defined as expression solely related to the economic
interests of the speaker and its audience. Virginia Pharmacy Bd. v. Virginia Citizens Consumer
Council, 425 U.S. 748, 762 (1976). Since the IACA regulates the manner in which the display, offer
for sale, and sale of goods takes place, the Act must be examined under the standards applicable to

the protection of commercial speech. Waldron disputes this conclusion, contending instead that the

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Furthermore, the brochures and catalogues attached as Exhibit B to Waldron’s motion to dismiss
depict Native American people and discuss the contribution of Waldron’s profits to Native American
causes. See Village Originals, 25 F.Supp.2d at 880 n.1 (declining to grant motion to dismiss because
tags depicted Native American females handcrafting various products). Exhibit B also refers to
jewelry designated as Zuni, Sioux, Hopi, Cherokee, and Plain tribes. Finally, NAA identifies the
place where the alleged transaction occurred. The complaint states that on January 4, 1997, the
goods depicted in Exhibits A and B were sold at Earth Dweller’s store at Lincolnwood Town Center,
in Lincolnwood, Illinois.

In support of her motion to dismiss, Waldron makes much of the fact that, as stated in ] 33
of the complaint, an agent of Waldron admitted that Waldron’s products were not Indian-made. The
alleged statement by Waldron’s agent merely gives rise to a dispute of fact as to whether the goods
have been offered, displayed and sold in a manner falsely suggesting they are Indian-made. While
Waldron is free to use an admission against NAA in future proceedings, that statement does not
diminish the fact that the NAA has met the pleading requirements of Rule 9(b) by stating the “who,
what, where, when and how” of the violation. Moreover, a fair reading of the complaint
demonstrates NAA has provided sufficient notice to Waldron. Haroco, Inc. v. American Nat'l Bank
and Trust Co. of Chicago, 747 F.2d 384, 405 (7th Cir. 1984). Accordingly, the court finds that NAA

has satisfied the pleading requirements of Rule 9(b).

Ill. Constitutionality of the IACA
Waldron challenges the constitutionality of the IACA by arguing it is overbroad and vague.

At the outset, two judges of this court have addressed challenges to the IACA on grounds of

5-


The IACA bans only false and misleading statements regarding the authenticity of Indian arts
and crafts. It seeks to protect “Indian sellers of arts and crafts by preventing non-Indians from
exploiting the market value and goodwill associated with authentic, Indian-made products; this also
benefits consumers who prefer authentic goods and are willing to pay more for them.” Flordine v.
State Farm Insurance, Co., No. 99 C 7466, 2001 WL 2047865, at * 6 (N.D. Ill. March 1, 2001).
Non-Indian makers of such goods must not “pass off” their products as ones made by Indians, Indian
tribes or Indian arts and crafts organizations when they are not. See Ho-Chunk Nation v. J.C.
Penney, No. 98 C 3924, 1999 WL 1068700 (N.D Ill. Nov. 17, 1999) (noting that the IACA’s
“falsely suggests” clause “was intended to be construed as parallel and analogous to the Lanham
Act”). Thus, under the first prong of the Hoffinan Estates test, the IACA regulates misleading
commercial speech unprotected by the overbreadth doctrine. Additionally, the overbreadth doctrine
does not even apply to commercial speech. Village Originals, 25 F.Supp.2d at 880 (citing Central
Hudson, 447 U.S. at 565 n.8); see also United States v. Walton, 36 F.3d 32, 35-36 (7th Cir. 1994).

Turning to the second prong of the Hoffian Estates test, the court must examine the conduct
alleged in NAA’s complaint for vagueness before reaching any hypothetical applications of the law.
Hoffman Estates, 455 U.S. at 495. A plaintiff who engages in some conduct that is clearly
proscribed cannot complain of the vagueness of the law as applied to the conduct of others. Jd.
“One to whose conduct a statute clearly applies may not successfully challenge it for vagueness.”
/d. at n.7 (citing Parker v. Levy, 417 U.S. 733, 756 (1974)). A statute may be vague to the point of
unconstitutionality in two ways: (1) if it does not give a person of ordinary intelligence a reasonable
opportunity to comply with the law; and (2) if the law lacks explicit standards for its application and

thereby creates the danger that the law will be imposed on an ad hoc basis with the risk of arbitrary

-8-


eT

3
Minute Order Form (06/97)

United States District Court, Northern District of Illinois

Name of Assigned Judge Suzanne B. Conlon Sitting Judge if Other
or Magistrate Judge . than Assigned Judge
CASE NUMBER 01 C 2370 DATE 8/8/2001
CASE NATIVE AMERICAN ARTS, INC. vs. EARTH DWELLER, ET AL.
TITLE _|
{in the following box (a) indicate the party filing the motion, 8.» Plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.]
DOCKET ENTRY:
(0) o Filed motion of [ use listing in “Motion” box above.]
(2) o Brief in support of motion due
(3) a Answer brief to motion due . Reply to answer brief due___.
(4) ia} Ruling/Hearing on _ set for _ at
(5) aq Status hearing[held/continued to] [set for/re-set for] on set for at
(6) Oo Pretrial conference{held/continued to] [set for/re-set for] on set for at :
(7) im) Trial[set for/re-set for] on at
(8) o (Bench/Jury trial] [Hearing] held/continued to at
(9) im} This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
CrRcP4(m) General Rule 21 COFRCP41(a)(1) 1 FRCPAI(a)(2).
qo [Other docket entry] The motion to dismiss the complaint [10-1] is denied. Defendant Waldron
is ordered to answer the complaint by August 17, 2001. Defendants Earth Dweller, Ltd. and John Doe
1 to 10 are dismissed without prejudice pursuant to Fed. R. Civ. P. 4(m). ENTER MEMORANDUM
OPINION AND ORDER. 6. Oboe
di) [For further detail see order attached to the original minute order-]
No notices required, advised in open court.
No notices required. umber of notices
oY | Notices mailed by judge’s staff. AUG 1G 200%
Notified counsel by telephone, ate docketed
Docketing to mail notices.
Mail AO 450 form. & docking doputy tas
Copy to judge/magistrate judge. eg i Q
. “ ~ a 3/8/2001 C
4 naa
courtroom GE AUG -9 F wus 27 ate mailed notion
sb deputy’s 8
initials
Date/time received in
central Clerk's Office rmaiing deputy intiais



The court notes that Waldron waited until her reply brief to raise the vagueness argument
with respect to the terms “falsely suggests” and “unqualified”, It is well-settled that arguments not
raised until the reply brief are waived. United States v. Turner, 203 F.3d 101 0, 1019 (7th Cir. 2000);
Marshall v. Golfview Development Center, Inc., No. 99 C 7384, 2001 WL 648628, at * 7 (N.D. HL
June 7, 2001). Hence, the court will not address those arguments.

Finally, a number of Waldron’s additional arguments are moot. Waldron attempts to
characterize the IACA as a content-based restriction subject to strict scrutiny. Texas v. Johnson, 491
U.S. 397, 412 (1989). However, the ACA merely regulates misleading commercial speech and
therefore does not receive the protections of the First Amendment under Central Hudson. For
similar reasons, Waldron’s argument that intermediate scrutiny review for commercial speech is

warranted under Central Hudson lacks merit.

CONCLUSION

The motion to dismiss is denied.

ENTER:

SuzanngB. Conlon
August 8, 2001 United States District Judge

-10-


IACA does not concern commercial speech but artwork that is entitled to full First Amendment
protection. Waldron’s assessment of the scope of the IACA misses the mark. The [ACA does not
restrict the design or manufacture of products in traditional or nontraditional Indian style or motif.
Neither does the IACA deter or hinder the creative and artistic expression of an artist like Waldron.
Waldron’s argument is flawed because the IACA restricts the manner in which the product is
displayed, offered for sale and sold, not the artistic quality of the merchandise. Simply put, the
IACA regulates the means of promoting the Indian product, not the product itself.

Furthermore, Waldron attempts to escape classification of her material as commercial speech
by arguing that the goal of her advertising and promotional materials is to “spread her message” and
educate people about Native American culture through her stories. Where the primary purpose of
the work is commercial, the addition of non-commercial information will not mask the commercial
nature of the work. Bolger v. Youngs Drug, 463 U.S. 60, 68 (1983). The brochures, catalogues, and
sales tags, depicted in various exhibits, clearly show that the primary purpose of these “messages”
is to promote the sale of Waldron’s products.

The First Amendment protects commercial speech in order to safeguard its informational
function of advertising. Central Hudson Gas & Electric Corp. v. Public Service Commission of New
York, 447 U.S. 557, 563 (1980). The Supreme Court, in analyzing first amendment challenges to
commercial speech, promulgated a four-part test in Central Hudson. For commercial speech to
receive protection under the First Amendment: (1) it must concern lawful activity and not be
misleading; (2) the asserted governmental interest must be substantial; (3) the regulation should
directly advance the governmental interest asserted; and (4) it must not be more extensive than is

necessary to serve that interest. /d. at 566.


iL Standard of Review

In ruling on a motion to dismiss, the court considers “whether relief is possible under any set
of facts that could be established consistent with the allegations.” Pokuta v. Trans World Airlines,
Inc., 191 F.3d 834, 839 (7th Cir. 1999) (citing Conley v. Gibson, 355 U.S. 41, 45-46 (1957). A
claim may not be dismissed if there is a set of facts that, if proven, would entitle a plaintiff to relief.
Travel All Over the World, 73 F.3d at 1430. A motion to dismiss tests the sufficiency of the
complaint, not its merits. Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990).
However, a court is not required to accept conclusory allegations as true. Baxter v. Vigo County Sch.
Corp., 26 F.3d 728, 730 (7th Cir. 1994).

Both Waldron and NAA incorrectly assert that the applicable standard of review in a motion
to dismiss concerning an IACA claim is Rule 8(a) of the Federal Rules of Civil Procedure. Actions
brought pursuant to the IACA, which inherently concern misrepresentation, are subject to the
heightened pleading requirements of Rule 9(b) of the Federal Rules of Civil Procedure. Native
American Arts, Inc. v. Village Originals, 25 F.Supp.2d 876, 879-80 (N.D. Ill. 1998); Ho-Chunk
Nation v. Nature’s Gifts, Inc., No. 98 C 3961, 1999 WL 169319, at *5 (N.D. Ill. March 19, 1999).
Rule 9(b) requires that complaints “[iJn all averments of fraud or mistake shall be stated with
particularity.” Fed. R. Civ. P. 9(b). Rule 9(b) requires plaintiffs to state with particularity the factual
basis for the alleged fraud, including: (1) the identity of the person(s) who made the
misrepresentations; (2) the time, place, and content of the misrepresentations; and (3) the method
by which the misrepresentation was communicated to the plaintiff. General Electric Capital Corp.
y. Lease Resolution Corp., 128 F.2d 1074, 1078 (7th Cir. 1997). In other words, Rule 9(b) requires

the “who, what, when, where, and how” of the circumstances of the fraud or mistake. DiLeo v. Ernst

3.


1618, 2001 WL 811147 (N_D. II. July 17, 2001) (Judge Shadur). The last duplicative action has also
been dismissed. Native American Arts, Inc. v. Buckboard, et al, No. 01 C 753 (Judge Lindberg).
The present action is the only remaining case brought by NAA against Waldron. Thus, the first
ground raised by Waldron in its motion to dismiss — duplicity of actions — is moot. Accordingly,
the court will address the remaining grounds for Waldron’s motion to dismiss.

BACKGROUND

For purposes of a motion to dismiss, the court accepts all well-pleaded allegations in the
complaint as true. Travel All Over the World, Inc. v. Kingdom of Saudi Arabia, 73 F.3d 1423, 1428
(7th Cir. 1996). NAA is a wholly Indian-owned arts and crafts organization involved in distribution
of authentic Indian arts and crafts. NAA is an Indian arts and crafts organization as defined in 25
U.S.C. § 305e(d)(4). Waldron’s business is located in Rapid City, South Dakota, and is involved
in the wholesale, manufacture, and supply of Indian art, craft and jewelry products in traditional
Indian style, motif, and design.

The Indian Arts and Crafts Act prohibits “a person who, directly or indirectly, offers or
displays for sale or sells a good ... in a manner that falsely suggests it is Indian produced, an Indian
product, or the product of a particular Indian or Indian tribe or Indian arts and crafts organization.”
25 U.S.C. §305e(a). Section 30S5e was amended by the Indian Arts and Crafts Enforcement Act of
2000 to allow Indian arts and crafts organizations to bring civil actions on their own behalf. 25
U.S.C. § 305e(c)(1)(C). The thrust of NAA’s complaint is that Waldron violated the IACA by
displaying, offering for sale, and selling bear fetish earrings and other Indian arts and crafts using
tags, brochures and catalogues that falsely suggested they were manufactured by Native Americans,

when in fact they were not.

2-


IN THE UNITED STATES DISTRICT COURT

ty

FOR THE NORTHERN DISTRICT OF ILLINOIS bee be
EASTERN DIVISION .

AUG 1 7008
NATIVE AMERICAN ARTS, INC. )
)

Plaintiff, ) | No.01C 2370
)
v. ) Suzanne B. Conlon, Judge

)
EARTH DWELLER, LTD., ET AL. )
Defendants. )

MEMORANDUM OPINION AND ORDER

Native American Arts, Inc. (“NAA”) filed a two-count complaint! against Earth Dweller,
Ltd., Trisha Waldron, The Alchemists, Inc., and John Doe 1 to 10 Unidentified Suppliers to Earth
Dweller, Ltd. for violations of the Indian Arts and Crafts Act of 1990 and The Indian Arts and Crafts
Enforcement Act of 2000 (collectively “IACA” or “the Act”), 25 U.S.C. §305e (Count J), and for
punitive damages under the IACA pursuant to 25 U.S.C. § 305e(b) (Count II). The claims arose
from defendants’ alleged fraudulent offer, display, and sale of goods as Indian-produced. Waldron
moves to dismiss the complaint on three grounds, arguing that: (1) the complaint is duplicative of
three other actions filed in the Northern District of Illinois; (2) Waldron has not violated the IACA;
and (3) the IACA is unconstitutionally vague and overbroad.

NAA has voluntarily dismissed a duplicate action. Native American Arts, Inc. v. Trisha
Waldron, No. 01 C 1693 (Judge Norgle). Another duplicative action has been dismissed without

prejudice. Native American Arts, Inc. v. Bundy-Howard, Inc. d/b/a/ Bear Tracks et al, No. 01 C

‘The Alchemists, Inc. was voluntarily dismissed.

-1-
QS