Congress' express provision that the term “Indian product” was to
have the meaning given by the Secretary of the Interior was
unquestionably intended to delegate the authority for defining
the term and to render that agency's elucidation controlling

(see, €.g., such cases as National Med. Enters., Inc. v.

Sullivan, 957 F.2d 664, 667-69 (9th Cir. 1992) and Wint v.
Yeutter, 902 F.2d 76, 81 (D.C. Cir. 1990)). That intent was
plainly manifested by the express delegation itself, coupled with

the Board's power to engage in notice-and-comment rulemaking.

Moreover, Congress’ enactment of the year 2000 amendments to
the Act without any change in the meaning reflected in the
regulations inferentially conveys approval of the Board's
existing interpretation (CFTC v. Schor, 478 U.S. 833, 846 (1986);

Geldermann, Inc. v. CFTC, 836 F.2d 310, 316 (7th Cir. 1987)).

And that inference is rendered even stronger than if
congressional silence alone were involved--here one of the year
2000 amendments (Section 305e(f)) explicitly directs the Board to
promulgate regulations providing specific examples of the
definition of “Indian product” to provide further guidance to
artisans and consumers. If Congress had disapproved of the
already-promulgated definition, it surely would have said so

rather than asking for a further expansion.

Second, the Board’s regulations were promulgated in the
exercise of properly delegated authority. Section 305a provides
that the function of the Board is to promote the economic welfare

of Indians through the development of Indian arts and crafts and

19


the same may be said of countless statutes that confer the right
to seek such relief, instead leaving it to the courts to create
and apply standards. It is really unnecessary to say more than
that about fee-shifting, and only brief thought is needed to

dispatch the vagueness challenge as to punitive damages.

As for that remedy, universal caselaw teaches that such
damages may be imposed to achieve the objectives of punishment
and deterrence where defendants act “wantonly and wilfully...or
were motivated in their actions by ill will, malice, or a desire
to injure the plaintiffs” (Allahar_v. Zahora, 59 F.3d 693, 696
(7th Cir. 1995), quoting earlier caselaw; see also BMW of North

America, Inc. v. Gore, 517 U.S. 559, 568 (1996)). In applying

the constitutional prohibition against punitive damage awards
that are “grossly excessive” (Gore, id.), the Supreme Court has

established three guideposts (Cooper Indus., Inc. v. Leatherman

Tool Group, Inc., 532 U.S. 324, --, 121 S.Ct. 1678, 1687 (2001)):

In Gore, we instructed courts evaluating a punitive
damages award's consistency with due process to
consider three criteria: (1) the degree or
reprehensibility of the defendant's misconduct, (2) the
disparity between the harm (or potential harm) suffered
by the plaintiff and the punitive damages award, and
(3) the difference between the punitive damages awarded
by the jury and the civil penalties authorized or
imposed in comparable cases.

Although those standards are not spelled out in the Act, the
same may be said of like statutory provisions in every
jurisdiction. Certainly the Act does not call for punitive

damage awards in excess of those permitted by the Gore

13


Constitutionality of the Act

In support of their motion for judgment on the pleadings,
Movants contend that the Act is unconstitutional because (1) it
violates procedural due process, (2) it also violates substantive
due process and (3) Board’s regulations exceed the scope of its
authority. Those arguments will be addressed in turn.

Procedural Due Process Challenge

Movants' procedural due process attack has two prongs:
first, various provisions assertedly fail to provide fair notice
to putative defendants, and second, there is assertedly no
standard for application of the punitive damages and attorney’s
fees provision. Because the Act provides adequate notice of what
is prohibited by the statute and provides adequate standards for
non-arbitrary enforcement, both challenges are rejected.

1. Void-for-Vagueness Doctrine

Under the void-for-vagueness doctrine, a law is
unconstitutional “if its prohibitions are not clearly defined”
(Karlin v. Faust, 188 F.3d 446, 458 (7th Cir. 1999), quoting

Grayned v. City of Rockford, 408 U.S. 104, 108 (1972)). There

are two parts of the vagueness test: Laws must “give the person
of ordinary intelligence a reasonable opportunity to know what is
prohibited,” and they must contain “explicit standards” to avoid
“arbitrary and discriminatory enforcement” (Grayned, 408 U.S. at

108-09; Karlin,188 F.3d at 458-59). What level of vagueness is


the expansion of the market for such products. Section 305b
expressly requires the Board to prescribe rules and regulations
to execute its function effectively--and those become effective
on the approval of the Secretary of the Interior, to whom

Congress has delegated the authority at issue.

As stated earlier, the Board followed formal notice-and-
comment procedures in promulgating the regulations--a proper
exercise of delegated authority. It defined “Indian product” as
it was specifically instructed to do. All other terms about
which Movants complain, including “Indian,” were defined in the
Act by Congress itself (Section 309e(d)). So it misstates the

situation to charge that the Board “add[ed] definitions.”

Finally, it likewise distorts the record to label the
regulations as arbitrary, capricious or manifestly contrary to
the statute. It was neither arbitrary nor capricious for the
Board to conclude that a design in a traditional Indian style or
the “unqualified use” of the terms “Indian” or “Native American”
in connection with a product suggests that the product is Indian-
made. Instead the Act is a “truth-in-advertising law designed to
prevent products from being marketed as ‘Indian made,’ when the
products are not, in fact, made by Indians as defined in the Act”
(Protection for Products of Indian Art and Craftsmanship, 59 Fed.
Reg. 51908, 51909 (proposed Oct. 13, 1994)). It was entirely

reasonable for the Board to conclude as it did that its

20


the statutory term “Indian product.” Section 305e(d) (2)
delegated that definitional task to the Board by stating that the
terms “Indian product” and “product of a particular Indian tribe
or Indian arts and crafts organization” have “the meaning given
such term[s] in regulations which may be promulgated by the
Secretary of the Interior.” In turn the Board engaged in Notice

and Comment rulemaking proceedings and adopted Reg. §309 in 1996.

After Reg. §309.2(d) first says that an “Indian product” is
in general “any art or craft product made by an Indian,” Reg.
§309.3 goes on to specify that the “unqualified use” of the terms
“Indian” or “Native American” or of the name of an Indian tribe
in connection with an art or craft product will be interpreted to
mean in part that the product is an “Indian product.”’? Those
regulations are plainly within the authority expressly delegated

to the Board by Congress, and they are neither arbitrary,

7 Here is the relevant text of Reg. §309.3:

§309.3 How will statements about Indian origin of art or
craft products be interpreted?

(a) In general. The unqualified use of the term
“Indian” or of the term “Native American” or the
unqualified use of the name of an Indian tribe, in
connection with an art or craft product, is interpreted
to mean for purposes of this part that --

(1) the maker is a member of an Indian tribe,
is certified by an Indian tribe as a non-member
Indian artisan, or is a member of the particular
Indian tribe named; and

(2) The art or craft product is an Indian
product.

17


ss coment ese pment eset

or the product of a particular Indian tribe or Indian arts and
erafts organization.” While Movants' attack on the emphasized
language may perhaps pose a less tautological question than their

challenge to the term “aggrieved,” that attack also fails.

Native American does not allege that Movants! products are
Act-violative simply because they are designed in a traditional
Indian style or motif. Instead Count I (37 alleges that such
products in a traditional Indian style or motif were advertised,
marketed, and sold in a manner falsely suggesting they were
authentic Indian products, including express representations by
Bear Tracks' sales clerks, Count I 944 asserts the unqualified
use of the word “Indian” and other terms on advertising
materials, and Count I 939 charges Movants with advertising and
marketing products in a traditional Indian style along with other
products expressly represented to be Indian products. Again

those allegations must be accepted as true.

It will be recalled that Congress conferred on the Board the
regulatory power to flesh out various of the statutory terms--and
the Board had done just that. For example, Reg. §309.3(a)
specifies that “the unqualified use” of the term “Indian” or
“Native American” or of the name of an Indian tribe in connection
with an art or craft product conveys to the reader both that (1)
the maker is a member of an Indian tribe or is a certified non-
member artisan and (2) that the art or craft is an Indian
product. And Reg. §309.2(d) defines “Indian product” as “any art

or craft product made by an Indian,” including art works in a

9


este be

unprotected conduct .5

Second, it is true that the Act requires some products to
contain affirmative representations about their origin to avoid
creating a “false suggestion” (goods that May appear to be
“Indian products” but were actually not Indian-produced). But
that relatively minor infringement on expression--in this
instance, the imposition of compelled expression--does not
appreciably increase the stringency of a vagueness test.

Again the speech involved is commercial speech, afforded
less constitutional protection than other forms of expression

(Central Hudson, 447 U.S. at 562-63). And that being so,

Zauderer v. Office of Disciplinary Counsel of Supreme Court of

Qhio, 471 U.S. 626, 651 & n.14 (1985) teaches there are “material

differences between disclosure requirements and outright

prohibitions on speech,” such that “the First Amendment interests
implicated by disclosure requirements are substantially weaker
than those at stake when speech is actually suppressed.”

2. Vagqueness of the Act's Lanquage?

With those principles established, this opinion turns to

®° Several of this Court's colleagues have likewise held
that speech characterized in that fashion is unprotected because
there is no right to make false or deceptive speech: Native
American Arts, Inc. v. Village Originals, Inc., 25 F. Supp.2d
876, 880 (N.D. Ill. 1998); Ho-Chunk Nation v. Nature’s Gifts
inc., No. 98 C 3951, 1999 WL 169319, at *3-5 (N.D. Tll.); Native
American Arts, Inc. v. Earth Dweller Ltd., No. 01 C 2370, 2001
WL 910394, at *3 (N.D. Ill.).



constitutionally tolerable depends on a congeries of factors--and
in this case those factors not only counsel in favor of
tolerating some imprecision in the statute but also compel the
rejection of Movants' position even apart from any generous
construction of the language employed.

First, economic regulations are subject to a less stringent
vagueness test than laws that inhibit the noncommercial exercise
of constitutionally protected rights (Village of Hoffman Estates

v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 498-99 (1982)).

Here the parties agree that the Act impacts commercial speech (M.
Mem. 5), and although such commercial speech is also protected by

the First Amendment (Virginia State Bd. of Pharmacy v. Virginia

Citizens Consumer Council, Inc., 425 U.S. 748, 762 (1976)), the

fact that such protection is grounded in providing the public
with truthful and accurate information deprives commercial speech
that is deceitful, misleading or fraudulent of such protection

(Central Hudson Gas & Elec. Corp. v. Public Serv. Comm’n of N.Y.,

447 U.S. 557, 561-64 (1980); United States v. Raymond, 228 F.3d
804, 815-16 (7th Cir. 2000)).

In that respect Section 305e(a) prohibits displaying,
offering for sale, or selling an item in a manner that creates
the false impression that the item was Indian-made when in fact
it was not. So the statute directly addresses false and

misleading speech that misrepresents authenticity--hence


capricious, nor manifestly contrary to the statute. That being
so, the familiar teaching of Chevron U.S.A. Inc. v. Natural

Resources Defense Council, Inc., 467 U.S. 837 (1984) is that this

court is bound to give deference (Chevron's seminal decision has
been reiterated and applied by virtually innumerable cases, the
Supreme Court's most recent opinion in that respect being United

States v. Mead Corp., -- U.S. --, 121 S.Ct. 2164 (2001)).

When “Congress has explicitly left a gap for the agency to
fill, there is an express delegation of authority to the agency
to elucidate a specific provision of the statute by regulation.
Such legislative regulations are given controlling weight unless
they are arbitrary, capricious, or manifestly contrary to the
statute” (Chevron, 467 U.S. at 843-44; accord, Mt. Sinai Hosp.
Med. Ctr. v. Shalala, 196 F.3d 703, 708 (7th Cir. 1999)). Mead,
121 8.Ct. at 2171 has recently reconfirmed the circumstances in

which Chevron deference applies:

We hold that administrative implementation of a
particular statutory provision qualifies for Chevron
deference when it appears that Congress delegated
authority to the agency generally to make rules
carrying the force of law, and that the agency’s
interpretation claiming deference was promulgated in
the exercise of that authority. Delegation of that
authority may be shown in a variety of ways, as by an
agency’s power to engage in adjudication or notice-and-
comment rulemaking, or by some other indication of a
comparable Congressional intent.

What Congress and the Board did in this instance fits that

holding like a glove.

First, wholly unlike the situation addressed in Mead,

18


obviously “aggrieved” and may therefore recover such damages.

And that of course tracks Article III's standing requirements,
under which a plaintiff must show (1) a concrete and
particularized injury, (2) a causal connection between the injury
and the challenged conduct and (3) the likelihood that the injury
is redressable by a favorable decision (Lujan_v. Defenders of

Wildlife, 504 U.S. 555, 560-61 (1992); United States Court of

Appeals v. Tribal Dev. Corp., 49 F.3d 1208, 1211 (7th Cir.

1994)). Surely any defendant of ordinary intelligence is on fair
notice that if that defendant's actions cause a concrete and
particularized injury to a member of a statutory class, the

offender can expect to be sued.

As an “Indian arts and crafts organization,” Native American
is within a class authorized to sue under Section 309e(c). And
the Complaint (which must be taken as true) alleges that Movants
sold and marketed items in a manner falsely suggesting they were
Indian-made when in fact they were not. Under any sensible
reading of the term “aggrieved,” Native American--competing in
the market place by offering legitimate Indian-made

products--fits comfortably within that term. Enough said.

(b) “Falsely Suggests”

As stated earlier, Section 305e(a) (emphasis added) imposes
liability against a person who “offers or displays for sale or
sells a good, with or without a Government trademark, in a manner

that falsely suggests it is Indian produced, an Indian product,


4 %
Minute Order Form (06/97)

United States District Court, Northern District of Illinois

Name of Assigned Judj i Sitting Judge if Other
rar Magistrate Jee Milton 1. Shadur chan Assigned Jadge
CASE NUMBER 01 C 1618 DATE 10/15/2001
CASE Native American Arts, Inc. vs. Bundy-Howard, Inc.
TITLE

[in the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
of the motion being presented.]

MOTION:
DOCKET ENTRY:

() oa Filed motion of [ use listing in “Motion” box above.]

Q) gq Brief in support of motion due

(3) gO Answer briefto motion due___. Reply to answer brief due

(4) Oo Ruling/Hearing on setfor ss at_

(5) Q Status hearing[held/continued to] [set for/re-set for]on___—set for___—_att

(6) a Pretrial conference{held/continued to] [set for/re-set for]on__setfor__—sat_
(©) im} Trial[set for/re-set for]on___—_at

(8) QO {Bench/Jury trial] [Hearing] held/continued to___—_at

(9) Oo This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

QFRCP4m) O General Rule21 CIFRCP41(a)(1) O FRCP41(a)(2).

ao) [Other docket entry] Enter Memorandum Opinion and Order. Movants challenges to the Act and
its implementing regulations, based on their claimed violations of procedural and substantive due process
and on the regulations assertedly exceeding the bounds or regulatory authority, are rejected in their
entirety. Movants’ rule 12(c) motion for judgment on the pleadings is denied, and they are ordered to
answer the Complaint on or before October 22,2001. (24- ip)

(1) lf [For further detail see order attached to the original minute order.]

No notices required, advised in open court.

No notices required

Ww, | Notices mailed by judge's staff.

Notified counsel by telephone.

Docketing to mail notices. QQ
Mail AO 430 form -

docketing deputy initials

Copy to judge/magistrate judge.

10/16/2001

date mailed notice

Uf OCT 5 PH

in

oT]

SN deputy’s sw
initials

courtroom

Date/time received in
central Clerk's Office soiling deputy iitals



resolved via a Rule 12(c) motion.

(c) Compensatory Damages Provision

Movants also urge that the Act's compensatory damages
provision is unconstitutionally vague, though they fail to cite
any supporting caselaw and rely instead on a series of confusing
hypothetical damages calculations. In that regard Section

305e(a) provides:

A person specified in subsection (c) of this section
may, in a civil action in a court of competent.
jurisdiction, bring an action against a person who
offers or displays for sale or sells a good, with or
without a government trademark, 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,
resident within the United States, to...

(1) obtain injunctive or equitable relief; and
(2) recover the greater of -
(A) treble damages; or

(B) in the case of each aggrieved
individual Indian, Indian tribe, or Indian
arts and crafts organization, not less than
$1,000 for each day on which the offer or
display for sale or sale continues.

That language is certainly not so ambiguous that it fails to
provide fair notice of the extent of potential liability under
the Act. It is sufficiently plain from the use of the words
“good” and “product” that the $1,000-per-day damages floor
applies to each different type of product rather than to each
item of inventory, as Movants speculate. Had Congress instead
intended to impose the potentially astronomical liability of

$1,000 per day for each individual piece of a falsely suggestive

il


“traditional or non-traditional Indian style or medium.” It
follows then that if “Indian” or “Native American” is used in
connection with a product, for purposes of the Act that equates
to a representation that the product has been made by an Indian
or certified artisan. If no Indian or certified artisan has in
fact made the product, that representation falsely suggests that
the product is of Indian origin, in violation of the statute. No

vagueness whatever is even arguably involved.

Hoffman Estates and like cases confirm that for a court to
resolve alleged void-for-vagueness contentions, it is unnecessary
to go beyond what the commercial speaker has itself done. Hence
this opinion need not go on to consider whether that flaw
attaches to the notion that products in a traditional Indian
style or motif, but that are silent as to their origin, can also
“falsely suggest” that they are “Indian products.” If Native
American delivers as is advertised (an admittedly bad pun) by the
Complaint, any such silence is not at issue--in each instance

Movants are said to have made their false suggestions either by
express misrepresentations or by misleading conduct. Again that

suffices to withstand any challenge on vagueness grounds.

Finally in that respect, Movants have argued that there can
be reasonable differences of opinion as to whether a product made
in a traditional Indian style falsely suggests Indian origin.

But whether a particular manner of advertising or sale has
actually conveyed a false suggestion is a question of fact to be
determined by the factfinder. Such disputes are not properly

10



Movants’ challenges to several of the statutory terms on that
basis. They will be dealt with seriatim. And because the speech
at issue is commercial in nature, the focus will be on the
statute's impact on Movants--as Hoffman Estates, 455 U.S. at 496-
97 (among other cases) has made plain:
Finally, it is irrelevant whether the ordinance has an
overbroad scope encompassing protected commercial

speech of other persons, because the overbreadth
doctrine does not apply to commercial speech.

(a) “Aggrieved” Party

Movants contend that the lack of a statutory definition of
the term “aggrieved” party renders the Act unconstitutional
because it does not give a person of ordinary intelligence fair
notice of the extent of that person's potential liability.
Section 305(e) (a) (2) (emphasis added) provides for the greater of
treble damages, or, “in the case of each aggrieved individual
Indian, Indian tribe, or Indian arts and crafts organization, not
less than $1,000 for each day on which the offer or display for

sale or sale continues.” On that score Federal Election Comm'n
v. Akins, 524 U.S. 11, 19 (1998) counsels that “[h]istory
associates the word ‘aggrieved’ with a congressional intent to

cast the standing net broadly.”

It is frankly difficult to understand Movants! quarrel with
the use of “aggrieved,” which is patently tautological: Any
private party within any of the statutorily specified categories

who or that has sustained damages from a statutory violation is


definition of “Indian product” would help curb sales of
counterfeit goods that used the referenced terms to suggest
falsely that the products were Indian-made. Such a conclusion
cannot be contrary (let alone manifestly so) to the statute, for
it directly advances the Act’s purpose of eliminating

counterfeiting.

Conclusion

Movants' challenges to the Act and its implementing
regulations, based on their claimed violations of procedural and
substantive due process and on the regulations assertedly
exceeding the bounds of regulatory authority, are rejected in
their entirety. Movants' Rule 12(c) motion for judgment on the
pleadings is denied, and they are ordered to answer the Complaint

on or before October 22, 2001.

Milton I. Shadur
Senior United States District Judge

Date: October 15, 2001

21


(Count I §§18, 25, 29-38). Section 305e(a) prohibits:
directly or indirectly, offer[ing] or display[ing] for
sale or sellfing] a good, with or without a Government
trademark, 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, resident within the United
States....

Several of the terms in that subsection have statutory
definitions. Thus Section 305e(d) (1) says an “Indian” is “a
member of an Indian tribe” or a person “certified as an Indian
artisan by an Indian tribe.” While “Indian product” is not
defined in the statute, Section 305a(d) (2) says the term is to be
defined in regulations promulgated by the Secretary of the
Interior. Sections 305 through 305d vest power in the Indian
Arts and Crafts Board (“Board”), an Interior Department agency,
to enforce much of the Act--and Section 305b specifies “[t]hat
all rules and regulations proposed by the Board shall be

submitted to the Secretary of the Interior and shall become

effective upon his approval.” In turn the Board has defined

“Indian product” as “any art or craft product made by an Indian”
(Reg. §309.2(d). Under Sections 305e(a) and (b) plaintiffs may
recover the greater of treble damages or $1,000 per day for each
day that the offending product is offered for sale or sold, as

well as punitive damages and attorney’s fees.

* Board's--and hence the Secretary's--regulations

implementing that power, reprinted in 25 C.F.R., are cited “Reg.
g--."


formulation. Like other similar legislation, it merely states
that “judges may award punitive damages.” Courts are certainly
capable of applying the Supreme Court standards to the Act.

Movants' challenge on vagueness grounds is an empty one.

Substantive Due Process Challenge

Movants also argue that the $1,000 per day per good damages
floor specified in Section 305e(a) (2) (B) violates substantive due
process. As with punitive damages, the specification of
compensatory damages by legislatures is not without limit.®

Browning-Ferris Indus. of Vermont, Inc. v. Kelco Disposal, Inc.,

492 U.S. 257, 276 (1988) at least suggests that “the Due Process
clause places outer limits on the size of a civil damages award

made pursuant to a statutory scheme.”

To begin with, the Act deals with the selfsame problem that
is addressed in trademark cases in pointing out the need for
injunctive relief because of the inadequacy of a remedy at law
against the infringer. As this Court has said in Instrumentalist

Co. v. Marine Corps Leaque, 509 F.Supp. 323, 333 (N.D. Ill. 1981)

quoted and followed by our Court of Appeals in Hyatt Corp. v.

Hyatt Legal Servs., 736 F.2d 1153, 1158 (7** Cir. 1984):

6 Movants seek to invoke the Gore-specified criteria to

argue that the $1,000 per day provision is unconstitutional. But
in addition to failing to recognize the distinction between
punitive damages and the $1,000 per day provision now under
consideration, Movants completely overlook the language in Gore,
517 U.S. at 583 that says “a reviewing court engaged in
determining whether an award of punitive damages is excessive
should ‘accord “substantial deference” to legislative judgments
concerning appropriate sanctions for the conduct at issue.’”

14


amount to the public wrong rather than the private injury” St.

Louis, Iron Mt. & S. Ry. v. Williams, 251 U.S. 63, 66 (1919);

accord, United States v. Dotterweich, 320 U.S. 277, 280-81

(1943)). That consideration meshes with the already-described
difficulty in quantifying the amount of actual damages suffered
by any aggrieved plaintiff because of the statutorily defined
wrong (a difficulty created by the wrongdoer's own prohibited
activity) --those factors combine to validate Congress'
establishment of the $1,000 per day floor. And to boot, such a
provision for substantial compensatory damages is an effective
way to provide an incentive to injured individuals to bring suits
as well as to generate effective deterrence on the part of the
offenders.

In sum, the complained-of damages provision, when examined
in light of the harms that Congress was trying to prevent and the
strong public interest in deterrence, is not “so severe and
oppressive as to be wholly disproportioned to the offense or

obviously unreasonable” (St. Louis Ry., 251 U.S. at 67). Movants

are of course free to argue to Congress that the $1,000 figure is
ill-advised, but such a contention is not properly addressed to

this Court.

Validity of the Board’s Regulations

Finally, Movants would have it that the regulations
promulgated by the Board exceed the regulatory authority granted
by Congress by “adding definitions” to the Act (M. Mem. 15). To
that end Movants seek to focus primarily on the interpretation of

16


plaintiff and must draw all reasonable inferences from the
pleadings in plaintiff's favor (id.; Gillman v. Burlington N.
R.R., 878 F.2d 1020, 1022 (7th Cir. 1989)), though the court is
not bound to accept defendant's legal characterization of the
facts (Scott v. O'Grady, 975 F.2d 366, 368 (7th Cir. 1992)).
Hence this opinion's factual recital is drawn from Native
American's Amended Complaint (cited “Count-- q--"), and it omits
“Native American alleges” or any like usage (without of course
making or implying any factual findings.2
Background

Native American is an Indian arts and crafts organization
within the meaning of the Act.? It is wholly Indian-owned, and
it distributes authentic Indian arts and crafts (Count I q3).
Bear Tracks is a corporation operating retail establishments in
the Northern District of Illinois that sell arts, crafts and
jewelry (Count I 4). 9-Mile Creek Traders is a wholesaler and

manufacturer of Indian art and jewelry (Count I 411).

Bear Tracks and 9-Mile Creek Traders violated the Act by
offering, displaying for sale and selling art, crafts and jewelry

in a manner that falsely suggests the goods were Indian-made

2 This opinion cites to Movants' supporting Memorandum as

“M. Mem. --” and to Native American's response memorandum as “N.
Mem. --.”%

* Section 305e(d) (4) defines an “Indian arts and crafts
organization” as “any legally established arts and crafts
marketing organization composed of members of Indian tribes.”

2


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

NATIVE AMERICAN ARTS, INC.,
Plaintiff,

v. No. 01 ¢C 1618

DOCKETED

BUNDY-HOWARD, INC., etc., et al.,

Defendants. OCT 46 2001
MEMORANDUM OPINION AND QRDER
Native American Arts, Inc. (“Native American”) has filed a

six-count Complaint against numerous defendants, alleging
violations of the Indian Arts and Crafts Act (the “Act,” 25
U.S.C. 305e"). Defendants Bundy-Howard, Inc. a/b/a Bear Tracks
(“Bear Tracks”) and 9-Mile Creek Traders (collectively ‘“Movants”)
now move for judgment on the pleadings pursuant to Fed. R. Civ.
P. (“Rule”) 12(c), arguing that the Act is unconstitutional. For
the reasons set forth in this opinion, the motion is denied.
Judgment on the pleadings in favor of a defendant is
appropriate when defendant clearly establishes that plaintiff
cannot prove any set of facts that would support the claim for
relief and that there are no material issues of fact to be

resolved (Northern Ind. Gun & Outdoor Shows, Inc. v. City of

South Bend, 163 F.3d 449, 452 (7th Cir. 1998)). In considering

such a motion the court must accept as true all facts alleged by

+ Citations to the Act and other related statutes will take

the form “Section--,” omitting references to Title 25.

10”


product offered for sale or sold, it would surely have specified

such extraordinary exposure explicitly--and it did not.

On the flip side of that coin, Movants' speculation that
perhaps $1,000 per day may be assessed only once no matter how
many types of products violate the Act (M. Mem. 3-4) cannot
withstand scrutiny either (D. Mem. 3-4). Section 305e(a) uses
the words “good” and “product” in singular form. It could
scarcely be more evident that Movants can expect damages to be
assessed for each separate “good” or “product,” rather than
suffering a single assessment for all goods or products
collectively. This common sense view comports with the manner in
which other statutes have been read (see, e.g., United States v.

H.B. Gregory Co., 502 F.2d 700, 706-07 (7th Cir. 1974)).

In sum, the damages provision provides adequate notice as to
the extent of Native American's potential liability. Movants!

challenge fails.

(ad) Punitive Damages and Attorney’s Fees Provisions

Next Movants contend that the lack of standards in the
provisions for punitive damages and attorney’s fees renders the
Act unconstitutionally vague, although once again they fail to
cite even a single case. On that score Section 305e(b) provides
simply that in addition to the other relief provided for, “the
court may award punitive damages and the costs of suit anda

reasonable attorney’s fee.”

To be sure, the statute itself provides no yardstick, but

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[Tlhere is no effective way to measure the loss of
sales or potential growth--to ascertain the people who
don’t knock on the door or to identify the specific
persons who do not reorder because of the existence of
the infringer.

In such a situation, where the infringer's own conduct has made
the precise calculation of damages more difficult (see, e.g.,

Bigelow v. RKO Radio Pictures, 327 U.S. 251, 264-65 (1946)), it

is surely competent for the legislature to state its view of the

minimum damages to be awarded.

And even if that view were considered to contain some
punitive element in terms of the compensation of private injury
alone, in this instance Congress also intended to address and
deter the overall harm to the public caused by counterfeit Indian
products: Here the Act's legislative history confirms its
purposes of (1) protecting Indian artists from unfair competition
from counterfeiters and (2) protecting consumers from unknowingly
purchasing imitation products (H.R. Rep. No. 101-400(I) and 101-
400(II), 101st Cong., 2a Sess. (1990), reprinted in 1990
U.S.C.C.A.N. 6382, 6382-84 and 6391, 6391-94). Relatedly, the

Act was also intended to protect and preserve an important aspect
of Native American culture (see 136 Cong. Rec. H8291-01, H8293

(1990)).

Where a statutory damage provision is so designed to address
such “public wrongs,” it need not be “confined or proportioned to
factual] loss or damages; for, as it is imposed as a punishment

for the violation of a public law, the Legislature may adjust its

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