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Matched Legal Cases: ['Art. 41', '§ 103', '§ 103', '§ 103', '§ 103', '§ 103', '§ 103', '§ 103', '§ 103', '§ 103', '§ 103', '§ 103', '§ 103', '§ 103', '§ 103']

Sec'y of State of Md. v. Munson Co. (full text) :: 467 U.S. 947 (1984) :: Justia US Supreme Court Center Log In
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Sec'y of State of Md. v. Munson Co. 467 U.S. 947 (1984)
U.S. Supreme CourtSec'y of State of Md. v. Munson Co., 467 U.S. 947 (1984)Secretary of State of Maryland v. Joseph H. Munson Co., Inc.No. 82-766Argued October 31, 1983Decided June 26, 1984467 U.S. 947CERTIORARI TO THE COURT OF APPEALS OF MARYLAND
1. Respondent has standing to challenge the statute. Not only does respondent satisfy the "case" or "controversy" requirement of Art. III, because it has suffered both threatened and actual injury as a result of the statute, but there also is no prudential reason against allowing respondent to challenge the statute. Where the claim is that the statute is overly broad in violation of the First Amendment, the Court has allowed a party to assert the rights of another without regard to the ability of the other to assert his own claim. T he activity sought to be protected is at the heart of the business relationship between respondent and its customers, and respondent's interests in challenging the statute are completely consistent with the First Amendment interests of the charities it represents. Petitioner's concern that respondent should not have standing to challenge the statute as overbroad because it has not demonstrated that the statute's overbreadth is "substantial," is more properly Page 467 U. S. 948 reserved for the determination of respondent's challenge on the merits. Pp. 467 U. S. 954-959.
294 Md. 160, 448 A.2d 935, affirmed. Page 467 U. S. 949
In Schaumburg v. Citizens for a Better Environment, 444 U. S. 620 (1980), this Court, with one dissenting vote, concluded that a municipal ordinance prohibiting the solicitation of contributions by a charitable organization that did not use at least 75% of its receipts for "charitable purposes" was unconstitutionally overbroad in violation of the First and Fourteenth Amendments. The issue in the present case is whether a Maryland statute with a like percentage limitation, but with provisions that render it more "flexible" than the Page 467 U. S. 950 Schaumburg ordinance, can withstand constitutional attack. The Court of Appeals of Maryland concluded that, even with this increased flexibility, the percentage restriction on charitable solicitation was an unconstitutional limitation on protected First Amendment solicitation activity. We agree with that conclusion, and affirm the judgment of the Court of Appeals.
Section 103A et seq., Art. 41, Md.Ann.Code (1982), [Footnote 1] concern charitable organizations. Section 103D prohibits such an organization, in connection with any fundraising activity, from paying or agreeing to pay as expenses more than 25% of the amount raised. [Footnote 2] Munson in its complaint alleged that it Page 467 U. S. 951 regularly charges an FOP chapter an amount in excess of 25% of the gross raised for the event it promotes. App. 4. Munson also alleged that the Secretary had informed it that it was subject to § 103D and would be prosecuted if it failed to comply with the provisions of that statute. App. 5.
In its initial complaint, filed March 7, 1978, Munson took the position that its contracts with the FOP should not be subject to § 103A et seq. The Circuit Court dismissed that challenge for failure to exhaust administrative remedies. The court concluded, however, that Munson could attack the statutes as an improper delegation of legislative authority, in Page 467 U. S. 952 violation of the Maryland Constitution. App. 13. Munson then amended its complaint to allege that the statutes effected an unconstitutional infringement on its right to free speech and assembly under the First and Fourteenth Amendments of the United States Constitution. Id. at 26.
Both Munson and the Secretary then petitioned the Court of Appeals of Maryland for writs of certiorari. Munson challenged the validity of the statute and the Secretary challenged Munson's standing. The court granted both petitions and, by a unanimous vote, reversed the judgment of the Court of Special Appeals. 294 Md. 160, 448 A.2d 935 (1982). It expressed doubt about the Secretary's ability to challenge Munson's standing when the Secretary had not taken an appeal from the Circuit Court's judgment, but, assuming that Page 467 U. S. 953 the issue was properly before the court, nonetheless concluded that Munson did have standing to challenge the facial validity of § 103D. The court found that, based on the allegations of its complaint and under the facts as stipulated in the trial court, see App. to Pet. for Cert. 39a, Munson clearly had suffered injury as a result of § 103D. [Footnote 3] The court rejected the contention that Munson may not assert the First Amendment rights of the FOP chapters, noting that, where a statute is directed at persons with whom the plaintiff has a business or professional relationship, and impairs the plaintiff in that relationship, it normally is accorded standing to challenge the validity of the statute. 294 Md. at 171, 448 A.2d at 941. In addition, as this Court in Schaumburg held, 444 U.S. at 444 U. S. 634,
On the merits, the court concluded that Schaumburg required that the Maryland statute be ruled unconstitutional. It rejected the Secretary's argument that the statute was valid because it did not require a permit prior to solicitation, and imposed criminal penalties only for solicitation in violation of the statute. 294 Md. at 176-179, 448 A.2d at 944-945. The court also concluded that the flaws in the statute were not remedied by the provision authorizing a waiver of the 25% limitation whenever it would effectively prevent the charitable organization from raising contributions. Id. at 179-181, 448 A.2d at 945-946. The court found that the statutory authorization for an exemption from the percentage limitation is "extremely narrow." It did not remedy the flaw Page 467 U. S. 954 inherent in a percentage limitation on solicitation costs -- that charities that make a policy decision to use more than 25% of the proceeds raised for purposes other than "charitable" are denied their constitutional right to do so, and are lumped together with those engaging in fraud. Id. at 180-181, 448 A.2d at 946. In sum, in the view of the Court of Appeals, the 25% limitation, like that in the ordinance addressed in Schaumburg, is not a "narrowly drawn regulatio[n] designed to serve [the State's legitimate] interests without unnecessarily interfering with First Amendment freedoms." 444 U.S. at 444 U. S. 637.
Standing. The first element of the standing inquiry that Munson must satisfy in this Court is the "case" or "controversy" requirement of Art. III of the United States Constitution. Singleton v. Wulff, 428 U. S. 106, 428 U. S. 112 (1976). [Footnote 4] Munson is a professional fundraising company. Because its contracts call for payment in excess of 25% of the funds raised for a given event, it is subject, under § 103L, to civil restraint and criminal liability. Prior to initiation of the present lawsuit, the Secretary informed Munson that, if it refused to comply with § 103D, it would be prosecuted. The parties stipulated before trial that the Montgomery County Chapter of the FOP was reluctant to enter into a contract with Munson because of the limitation imposed by § 103D. Munson has Page 467 U. S. 955 suffered both threatened and actual injury as a result of the statute. See Singleton v. Wulff, supra; Simon v. Eastern Kentucky Welfare Rights Organization, 426 U. S. 26 (1976); Linda R. S. v. Richard D., 410 U. S. 614, 410 U. S. 617 (1973).
United States v. Raines, 362 U.S. at 362 U. S. 22, and it assures the court that the issues before it will be concrete and sharply presented. [Footnote 5] See Baker v. Carr, 369 U. S. 186, 369 U. S. 204 (1962). Munson is not a charity, and does not claim that its own First Amendment rights have been or will be infringed by the challenged statute. [Footnote 6] Accordingly, the Secretary insists that Page 467 U. S. 956 Munson should not be heard to complain that the State's charitable solicitation rule violates the First Amendment.
"Litigants, therefore, are permitted to challenge a statute not because their own rights of free expression are violated, but because of a judicial prediction or assumption Page 467 U. S. 957 that the statute's very existence may cause others not before the court to refrain from constitutionally protected speech or expression."
Broadrick v. Oklahoma, 413 U.S. at 413 U. S. 612, quoting Dombrowski v. Pfister, 380 U. S. 479, 380 U. S. 486 (1965). See also Schaumburg, 444 U.S. at 444 U. S. 634 ("Given a case or controversy, a litigant whose own activities are unprotected may nevertheless challenge a statute by showing that it substantially Page 467 U. S. 958 abridges the First Amendment rights of other parties not before the court").
Besides challenging Munson's standing as a "noncharity" to bring its claim, the Secretary urges that Munson should not have standing to challenge the statute as overbroad because it has not demonstrated that the statute's overbreadth is "substantial." See Broadrick v. Oklahoma, 413 U.S. at 413 U. S. 615. The Secretary raises a point of valid concern. The Court has indicated that application of the overbreadth doctrine is "strong medicine" that should be invoked only "as a last resort." Id. at 413 U. S. 613. The Secretary's concern, however, is one that is more properly reserved for the determination Page 467 U. S. 959 of Munson's First Amendment challenge on the merits. The requirement that a statute be "substantially overbroad" before it will be struck down on its face is a "standing" question only to the extent that, if the plaintiff does not prevail on the merits of its facial challenge and cannot demonstrate that, as applied to it, the statute is unconstitutional, it has no "standing" to allege that, as applied to others, the statute might be unconstitutional. See Parker v. Levy, 417 U. S. 733, 417 U. S. 760 (1974); United States v. Raines, 362 U.S. at 362 U. S. 21. See generally Monaghan, Overbreadth, 1981 S.Ct.Rev. 1. We therefore move on to the merits of Munson's First Amendment claim.
"Prior authorities, therefore, clearly establish that charitable appeals for funds, on the street or door to door, involve a variety of speech interests -- communication of information, the dissemination and propagation of views and ideas, and the advocacy of causes -- that are within the protection of the First Amendment. Soliciting Page 467 U. S. 960 financial support is undoubtedly subject to reasonable regulation, but the latter must be undertaken with due regard for the reality that solicitation is characteristically intertwined with informative and perhaps persuasive speech seeking support for particular causes or for particular views on economic, political, or social issues, and for the reality that, without solicitation, the flow of such information and advocacy would likely cease."
"direct and substantial limitation on protected activity that cannot be sustained unless it Page 467 U. S. 961 serves a sufficiently strong, subordinating interest that the Village is entitled to protect."
The flaw in the Village's assumption, as the Court recognized, was that there is no necessary connection between fraud and high solicitation and administrative costs. A number of other factors may result in high costs; the most important of these is that charities often are combining solicitation with dissemination of information, discussion, and advocacy of public issues, an activity clearly protected by the First Amendment and as to which the Village had asserted no legitimate interest in prohibiting. In light of the fact that the interest in protecting against fraud can be accommodated by measures less intrusive than a direct prohibition on solicitation, [Footnote 9] the Court concluded that the limitation was Page 467 U. S. 962 insufficiently related to the governmental interests asserted to justify its interference with protected speech. [Footnote 10]
The Court of Appeals concluded that the exception in § 103D was "extremely narrow," being confined to instances "where the 25% limitation would effectively prevent the charitable Page 467 U. S. 963 organization from raising contributions," 294 Md. at 180, 448 A.2d at 946, and of no avail to an organization whose high fundraising costs were attributable to legitimate policy decisions about how to use its funds, rather than to inability to raise funds. Under the Court of Appeals' interpretation, the Secretary has no discretion to determine that reasons other than financial necessity warrant a waiver. The statute does not help the charity whose solicitation costs are high because it chooses, as was stipulated here, see App. to Pet. for Cert. 39a, to disseminate information as a part of its fundraising. Thus, the organizations that were of primary concern to the Court in Schaumburg, those whose high costs were due to "information dissemination, discussion, and advocacy of public issues,'" [Footnote 11] 444 U.S. at 444 U. S. 635, quoting from Page 467 U. S. 964 Citizens for a Better Environment v. Schaumburg, 590 F.2d 220, 225 (CA7 1978), remain barred by the statute from carrying on those protected First Amendment activities. [Footnote 12]
"'remainder of Page 467 U. S. 965 the statute . . . covers a whole range of easily identifiable and constitutionally proscribable . . . conduct. . . .' CSC v. Letter Carriers, 413 U. S. 548, 413 U. S. 580-581 (1973)."
This is not such a case. [Footnote 13] Here there is no core of easily identifiable and constitutionally proscribable conduct that the Page 467 U. S. 966 statute prohibits. While there no doubt are organizations that have high fundraising costs not due to protected First Amendment activity and that, therefore, should not be heard to complain that their activities are prohibited, this statute cannot distinguish those organizations from charities that have high costs due to protected First Amendment activities. The flaw in the statute is not simply that it includes within its sweep some impermissible applications, but that, in all its applications, it operates on a fundamentally mistaken premise that high solicitation costs are an accurate measure of fraud. [Footnote 14] That the statute in some of its applications actually prevents the misdirection of funds from the organization's purported charitable goal is little more than fortuitous. [Footnote 15] Page 467 U. S. 967 It is equally likely that the statute will restrict First Amendment activity that results in high costs but is itself a part of the charity's goal or that is simply attributable to the fact that the charity's cause proves to be unpopular. On the other hand, if an organization indulges in fraud, there is nothing in the percentage limitation that prevents it from misdirecting funds. In either event, the percentage limitation, though restricting solicitation costs, will have done nothing to prevent fraud.
Where, as here, a statute imposes a direct restriction on protected First Amendment activity, [Footnote 16] and where the defect Page 467 U. S. 968 in the statute is that the means chosen to accomplish the State's objectives are too imprecise, so that, in all its applications, the statute creates an unnecessary risk of chilling free speech, the statute is properly subject to facial attack. Schaumburg, 444 U.S. at 444 U. S. 637; First National Bank of Boston v. Bellotti, 435 U. S. 765, 435 U. S. 786 (1978). See also Central Hudson Gas & Electric Corp. v. Public Service Comm'n of N.Y., 447 U. S. 557, 447 U. S. 565, n. 8 (1980); City Council of Los Angeles v. Taxpayers for Vincent, 466 U. S. 789, 466 U. S. 800, n.19 (1984) ("[W]here the statute unquestionably attaches sanctions to protected conduct, the likelihood that the statute will deter that conduct is ordinarily sufficiently great to justify an overbreadth attack," citing Erznoznik v. City of Jacksonville, 422 U. S. 205, 422 U. S. 217 (1975)).
The Secretary points out, for example, that § 103D does not impose a prior restraint on protected activities. An organization may register as a charity and solicit funds without first demonstrating that it satisfies § 103D. The statute, it is said, regulates only after the fact. We are unmoved by the claimed distinction. As the Court of Appeals noted, several elements of the regulatory scheme suggest the possibility Page 467 U. S. 969 of a "before-the-fact" prohibition on solicitation. Section § 103D requires that every contract or agreement between a professional fundraiser and a charitable organization shall be filed with the Secretary of State prior to any solicitation. Under § 103F, no solicitation may begin until the Secretary "shall approve the registration" of a professional fundraiser counsel or professional solicitor. And the Secretary is to approve the professional fundraiser's registration only if she finds that the application is in conformity with the requirements of the subtitle as well as the rules and regulations of the Secretary.
Finally, the fact that the statute regulates all charitable fundraising, and not just door-to-door solicitation, does not remedy the fact that the statute promotes the State's interest only peripherally. The distinction made in Schaumburg was between regulation aimed at fraud and regulation aimed at something else in the hope that it would sweep fraud in Page 467 U. S. 970 during the process. The statute's aim is not improved by the fact that it fires at a number of targets.
Respondent unquestionably has "standing" in a jurisdictional sense. The Court appears to be unanimous on the "case" or "controversy" issue. [Footnote 2/1] The case-or-controversy requirement, of course, relates only to the jurisdiction of this Page 467 U. S. 971 Court and has no bearing on the jurisdiction of the Maryland courts. Nothing in Art. III of the Federal Constitution prevents the Maryland Court of Appeals from rendering an advisory opinion concerning the constitutionality of Maryland legislation if it considers it appropriate to do so. [Footnote 2/2] Thus, the decision of the Maryland Court of Appeals that it had jurisdiction to decide this case is one we have no power to review.
If we were persuaded that there is no Art. III "standing" in this case, we would have a duty to dismiss the writ of certiorari and allow the judgment of the Maryland Court of Appeals to remain in effect. No Member of the Court, however, argues that we must follow that course. Since every Member of the Court has expressed an opinion concerning the constitutionality of the Maryland law, it is difficult to perceive the relevance of the fact that the Framers of Art. III of the Federal Constitution elected not to give the federal judiciary a "roving commission" to render advisory opinions. Post at 467 U. S. 976. [Footnote 2/3] In all events, there is little real dispute concerning standing in the jurisdictional sense. Page 467 U. S. 972
In this case, even if we might deny a fundraiser prudential standing to attack a statute on the basis of its impact on a charity in a case arising in a declaratory judgment action in federal court, the state court was perfectly willing to hear such a challenge to the Maryland statute. If we should conclude in this case that we are unwilling to listen to Munson's arguments about the impact of the Maryland statute on the rights of its clients, it surely does not follow that we can deny the Maryland Court of Appeals the power to decide that it will listen to those arguments. Thus, it seems quite clear to me that our analysis of the prudential standing issue should serve only the function of determining whether this case is Page 467 U. S. 973 one that is appropriate for the exercise of our discretionary certiorari jurisdiction. [Footnote 2/4]
Munson has been threatened with criminal sanctions under the statute, but Munson does not contend that its own First Amendment rights are violated by that threat. The fact of that threat is relevant, however, to assessing whether Munson is a proper party to litigate the constitutional question Page 467 U. S. 974 for prudential purposes. The fact that Munson has been actually, but indirectly, injured in fact by the effect of the statute on its potential clients is not enough, standing alone, to permit it to litigate the constitutionality of the statute in this Court. The Court properly recognizes that more is required, and pinpoints the crucial facts that the
Once it is determined that Munson may assert the First Amendment rights of its clients, it follows that Munson may challenge the statute on any ground that they might assert. Munson does not argue that the statute would be unconstitutional as applied to the Fraternal Order of Police, even though on this record a successful challenge on that ground would appear to redress Munson's injury. Instead, it attacks the statute on overbreadth grounds. The fact that this case comes to us from a state court is relevant to our consideration of the merits of the overbreadth challenge to some extent as well. We need not construe the statute for ourselves, compare post at 467 U. S. 984, and n. 5; the state court has authoritatively done so. That construction greatly aids an informed analysis of the merits of the First Amendment overbreadth question. The state court's judgment that the illegitimate sweep of the state statute is substantial in relationship to its legitimate applications surely merits serious Page 467 U. S. 975 consideration by this Court to the extent that issue turns on a quantitative assessment of future applications of the statute.
New York v. Ferber, 458 U. S. 747, Page 467 U. S. 976 767 (1982). [Footnote 3/1] This commitment is in keeping with the fact that the courts in our federal system do not have a roving commission "to survey the statute books and pass judgment on laws before the courts are called upon to enforce them." Younger v. Harris, 401 U. S. 37, 401 U. S. 52 (1971). The Constitutional Convention specifically rejected a proposal to have Members of the Supreme Court render advice concerning pending legislation. See 1 M. Farrand, Records of the Federal Convention of 1787, p. 21 (1911). And through the "case or controversy" requirement of Art. III, all federal courts are restricted to the resolution of concrete disputes between the parties before them. Musings as to possible applications of a statute to third parties in hypothetical situations may be fitting for the classroom and the statehouse, but they are neither wise nor permissible in the courtroom.
The crucial corollary of this justification for judicial review is the principle that constitutional rights are personal and Page 467 U. S. 977 may not be asserted vicariously. McGowan v. Maryland, 366 U. S. 420, 366 U. S. 429-430 (1961). When a litigant challenges the constitutionality of a statute, he challenges the statute's application to him. He claims, for example, that his activities, which the statute seeks to regulate, are protected by the First Amendment. If he prevails, the Court invalidates the statute, not in toto, but only as applied to those activities. The law is refined by preventing improper applications on a case-by-case basis. In the meantime, the interests underlying the law can still be served by its enforcement within constitutional bounds.
One might as a matter of original inquiry question whether an overbreadth challenge should ever be allowed, given that the Declaratory Judgment Act and the availability of preliminary injunctive relief will usually permit a litigant to discover Page 467 U. S. 978 the scope of constitutional protection afforded his activity without subjecting himself to criminal prosecution. Be that as it may, however, our cases at least indicate that the doctrine is to be used sparingly.
"organizations that are primarily engaged in research, advocacy, Page 467 U. S. 979 or public education and that use their own paid staff to carry out those functions as well as to solicit financial support."
As to Munson and other professional fundraisers who are not themselves engaged in speech activities, § 103D, read in conjunction with § 103F, is merely an economic regulation controlling the fees the firm is permitted to charge. A similar regulation governing, for example, the fees charged by an employment agency would be judged and approved under the minimum rationality standard traditionally applied to economic regulations. See, e.g., Ohralik v. Ohio State Bar Assn., 436 U. S. 447, 436 U. S. 460 (1978); Williamson v. Lee Optical Co., 348 U. S. 483 (1955). Of course, a ceiling on the fees charged by professional fundraisers may have an incidental and indirect impact on protected expression -- as would, for example, a ceiling placed on the fees charged by literary agents -- in that marginal producers could be forced out of the market. In other words, price controls might tend to make these services less available, much as rent control is thought to make rental housing less available. But such an indirect Page 467 U. S. 980 and incidental impact on expression is not sufficient to subject such regulation to strict First Amendment scrutiny. Otherwise, national forest legislation would be equally suspect as tending to raise the price and limit the quantity of paper.
Even if limitations on the fees charged by professional fundraisers were subjected to heightened scrutiny, however, those limitations serve a number of legitimate and substantial governmental interests. They insure that funds solicited from the public for a charitable purpose will not be excessively diverted to private pecuniary gain. In the process, they encourage the public to give by allowing the public to give with confidence that money designed for a charity will be spent on charitable purposes. The legislature could conclude that fees charged by professional fundraisers must be kept within moderate limits to coincide with the contributors' expectations that their contributions will go primarily to the charitable purpose. There is an element of "fraud" in soliciting money "for" a charity when in reality that charity will see only a small fraction of the funds collected. [Footnote 3/2] But even if a fundraiser were to fully disclose to every donor that half of the money collected would be used for "expenses," so that there could be no question of "fraud" in the common law sense of that word, the State's interest is not at an end. The statute, as the Court concedes, is also directed against the incurring of excessive costs in charitable solicitation even where the costs are fully disclosed to both potential donors and the charity. Such a law protects the charities themselves from being overcharged by unscrupulous professional fundraisers. Page 467 U. S. 981
The Court today echoes the concern of Schaumburg that some charities will incur fundraising costs higher than the 25% limitation not because the costs are essential to fundraising, but because the charity seeks to raise funds in a manner that serves other educational and advocacy goals. See ante at 467 U. S. 963-964. Unlike Schaumburg, however, it is not at all clear that the Court's concern is well founded in this case. In baldly claiming that advocacy organizations "remain barred by the statute from carrying on those protected First Amendment activities," ante at 467 U. S. 964, the Court simply ignores or slights some crucial differences between this statute and the ordinance at issue in Schaumburg. Page 467 U. S. 982
Thus, unlike the ordinance in Schaumburg, the costs of receptions, picnics and other social events at which advocacy organizations seek converts are not included in the fundraising calculus. Nor are costs associated with printing and mailing advocacy literature. Again, the statute is more Page 467 U. S. 983 carefully designed to accommodate the protected expression of such organizations. Sections 103D(a) and (b) together largely eliminate the concerns of Schaumburg.
"The Secretary of State shall, by rule or regulation in accordance with the 'standard of accounting and fiscal reporting for voluntary health and welfare organizations' provide for the reporting of actual cost, and of allocation of expenses, of a charitable organization into those which Page 467 U. S. 984 are in connection with a fundraising activity and those which are not."
It would be foolish to claim that these four statutory safeguards will ensure that the statute will never be applied in such a way as to improperly inhibit the protected expression of any advocacy organization. No statute bears an absolute guarantee that it will always be applied within constitutional bounds; consequently, no such guarantee can be demanded. The question before the Court, we must remember, is whether the likely overbreadth of the statute is substantial in relation to its legitimate sweep. Page 467 U. S. 985