William H. Rehnquist: We'll hear argument first this morning in No. 90-1059, Simon & Schuster, Inc. v. the Members of the New York State Crime Victims Board. Mr. Rauchberg.
Ronald S. Rauchberg: Mr. Chief Justice, and may it please the Court: The Petitioner, Simon & Schuster, is here today challenging the constitutionality of section 632(a) of New York's Executive Law, commonly known as "the Son of Sam" law. The challenge is both to the facial validity of the statute and to its application to Simon & Schuster on the facts of this case. Section 632(a) was enacted in 1977 and applies to works of expression and only to works of expression. It applies to books, movies, magazine articles, and the other expressive works that are specified in the statute. Whenever a publisher--
Sandra Day O'Connor: Mr. Rauchberg, are there other laws in New York that apply to other assets of someone who has committed a crime; not this statute, but other statutes that would make other assets subject to reach under a scheme like this?
Ronald S. Rauchberg: --There are two sets of statutes that might be responsive to your question. First, there is the statutes that provide tort remedies for all victims of tort, which of course apply to crime victims as well, and second, it bears mentioning that New York has a law, as I would guess, most jurisdictions do that have laws like this, New York has a law providing for the forfeiture of the proceeds of crime. Of course, there has never been any contention that the forfeiture provision would pertain to the proceeds of a book or other expressive work or to royalties for the authorship of a book. But other than that, no. Other than that there is only this statute selecting speech-related assets for special treatment.
Antonin Scalia: Of course, the forfeiture statute does not turn over the forfeited proceeds to any particular victim.
Ronald S. Rauchberg: That's correct. The forfeiture statute provides for forfeiture to the State, but the point I wanted to make is that it never occurred to the legislators in New York that the forfeiture statute would pertain to the proceeds of a book contract, and therefore, any suggestion that these are somehow crime proceeds I think is simply not correct.
William H. Rehnquist: Mr. Rauchberg, does the forfeiture statute, is its reach limited to items that were used in the commission of the crime?
Ronald S. Rauchberg: It applies to both instrumentalities of the crime and the proceeds of the crime.
William H. Rehnquist: And proceeds too?
Ronald S. Rauchberg: Yes, absolutely.
David H. Souter: So that in the example given in one of the briefs, under the forfeiture statute New York could have proceeded against any profits derived by Mr. Milken from his illegal trading?
Ronald S. Rauchberg: No, I don't think it could because... oh, I am sorry, I misunderstood the question. Profits from illegal trading, assuming that they violated State laws as well as Federal laws, would be presumably within the forfeiture provisions of the New York statute, yes. The statute has an extremely broad definition of the phrase criminal. In fact, it uses the term person accused or convicted of a crime, and in addition to applying to persons who are accused of crime, it applies to persons convicted, whether of State crimes or of Federal crimes, but it goes beyond that to include in its application persons who are acquitted of crimes by reason of insanity, and it also applies to persons who are never charged with crime at all, but who are deemed by the Crime Victims Board to have admitted crimes. All of these various types of authors are treated as persons--
Sandra Day O'Connor: Is it your understanding that under this particular statute that an author who admitted in the course of a book that 20 years before he had stolen a pack of cigarettes, that that would bring him under this statute?
Ronald S. Rauchberg: --Absolutely. It absolutely would. The law has been interpreted by the State courts in New York to contain a special statute of limitations provision that starts the limitations period running anew for any crime victim who wishes to begin a proceeding, collect a judgment, and obtain access to the proceeds of the book, first of all, so the 20-year period would not be a barrier. And second of all, the statute does apply not only to those who are convicted, but to those who are found to have admitted crimes in their book. And in this case, in this case, Henry Hill, the criminal whose activities triggered the application by the Crime Board of the statute to Simon & Schuster is somebody who was cooperating with Federal and State prosecutors, was in the witness protection program, and had been immunized rather than being charged with the various activities described in his book. And he was found to be within the description of a convicted person because his book was deemed to contain admissions of crime.
Anthony M. Kennedy: If there had been an earlier judgment in favor of the victim that had been satisfied, a judgment for damages caused by the crime, I take it, no new cause of action would arise by reason of the publication?
Ronald S. Rauchberg: The State courts haven't treated that question, and so I suppose there is possibly some room for argument. But I think that is a likely interpretation of the statute. The New York Court of Appeals has interpreted the statute as not being applicable to victimless crimes. And so it would seem not a great step for the statute to be interpreted as not applying to those crimes with victims where the victims have been fully compensated as well, but I really don't know.
Anthony M. Kennedy: In your view, could a State court, through the exercise of their common law jurisdiction, make it an independent tort for a perpetrator of a crime to recount the crime for profit?
Ronald S. Rauchberg: I think not. I think that such a statute, making a tort out of speech, would be so inconsistent with the concepts of the First Amendment that it would absolutely have to be--
Anthony M. Kennedy: Well, suppose in a rape case where the victim is suing for damages there has been a book recounting the lurid details of the crime. Could the jury be instructed, ladies and gentlemen of the jury, not only has the victim suffered anguish, but there was a book about this and you are entitled to take that into account in giving your damages?
Ronald S. Rauchberg: --I think not. I think not. I think this Court has held that truthful speech, nondefamatory speech may be outrageous, may be offensive, and is nonetheless protected by the First Amendment. For example, in the Hustler case.
Anthony M. Kennedy: But in the Hustler case there was no antecedent criminal act.
Ronald S. Rauchberg: I don't think the antecedent criminal act is relevant to the question of whether the speech ought to be protected or not.
Anthony M. Kennedy: So in your view, a rapist could break into the victim's apartment, rape the victim, and then write a lurid account of it. In the act of writing or the collection of proceeds from the writing, that could not be independently actionable?
Ronald S. Rauchberg: I say that is right. I say that is correct.
Anthony M. Kennedy: Because that is a far cry from Falwell, because here there is an antecedent crime.
Ronald S. Rauchberg: There is an antecedent crime, but the crime is a separate act from the authorship of a book. The authorship of a book is an act to be encouraged, not an act to be suppressed.
Anthony M. Kennedy: Your position is that we should encourage books of the kind I just described?
Ronald S. Rauchberg: My position is that the First Amendment encourages the writing of all books, and it is not for this Court to distinguish between which books should be encouraged and which books should not. And more to the point, it is not for the State of New York to decide that books on a specified subject, namely crime, by a specified class of authors, namely criminals as defined, are books to be discouraged as opposed to encouraged.
Antonin Scalia: Well, the First Amendment doesn't encourage the writing of libelous books, certainly, does it?
Ronald S. Rauchberg: It does not.
Antonin Scalia: Well, why isn't this maybe another category of books that the First Amendment doesn't encourage?
Ronald S. Rauchberg: There isn't any issue of false statements raised here. The concern that I have about the content-based discriminations that this law creates is that it brings about exactly the kind of distortion in the marketplace of ideas that content-based laws are capable of doing, and for that reason are abhorrent. There are abortion protesters in Wichita, Kansas who are committing crimes based on their view of human life. There are animal rights activists in Connecticut who disrupt medical experimentation at U.S. Surgical through sabotage and other criminal acts. There are terminally ill patients whose doctors and whose family members assist them in suicide or sometimes even take action themselves and face criminal charges. There are battered women who respond to violence with violence in return who find themselves indicted, and this law says to Simon & Schuster that if it wants to publish books on the issues of abortion or euthanasia or animal rights or women's issues, it can't commission books by these authors.
Antonin Scalia: By these authors.
Ronald S. Rauchberg: It can't commission these authors to tell their stories, which can be an important part of the public debate on those four issues, and that is four examples. New York State says no to Simon & Schuster. Commission books from the victims, from the prosecutors, from the police officers, but not from the victims, who have--
William H. Rehnquist: It can commission books from the victims, Simon & Schuster just has to put the money in escrow, doesn't it, and pay it ultimately not to the criminal defendant, but to the victim.
Ronald S. Rauchberg: --What we have in this case is a garden-variety publishing contract. We have the activities of the press carried on in the way the press has carried on its activities for decades, in which a contract is made to provide for payment in order to get the work. Now it is the rare author who is able to work without the assurance of timely compensation. This author, the record shows, expected timely compensation and got it because the statute was not complied with. The record shows that most authors require timely compensation. If you can't compensate an author, you will get less authorship.
Sandra Day O'Connor: Well, Mr. Rauchberg, could a State pass a law making all income of a convicted criminal subject to escrow to pay victims of his crimes?
Ronald S. Rauchberg: I think the answer to that is yes, because then we wouldn't have a content-based selection of speech for special treatment that results in a distortion of the flow of ideas.
Sandra Day O'Connor: This is kind of a curious case because all the payment restriction cases that we have had, I think, stand for the proposition that the State can't limit payments by the speaker to a messenger. And yet in this case, we have payments to the speaker by the publisher. So we have not had that situation, have we?
Ronald S. Rauchberg: I think it is correct to think of Henry Hill as a speaker. But it is also correct to think of Simon & Schuster as a speaker. Simon & Schuster resolved to put out a book that would have a particular kind of anti-crime message that would be an antidote to romanticized versions of crime like The Godfather. Simon & Schuster resolved to utter that speech. Simon & Schuster is a member of the press. Simon & Schuster is a speaker. And in order for Simon & Schuster to have engaged in the speech of publishing this book, which it wished to do, it had to make the payment. You can't say to a publisher, you are free to publish, but you're not free to pay for manuscripts. There won't be any manuscripts, or there will be precious few, if they cannot pay for them. So we have two speakers here, Hill and Simon & Schuster.
Anthony M. Kennedy: Suppose in Justice O'Connor's situation where there is a statute that affects oral income, it is shown that 90 percent of the recovery is from people who author books after committing crimes, or produce movies?
Ronald S. Rauchberg: I suppose it is possible that at some point an apparently general statute could be shown to be, in fact, aimed at speech. But I don't think that is what would happen here. The instances of criminals profiting from crimes through the authorship of books are nil. It is not the kind of thing that happens. This law has been in effect since 1977. And in its 14 years, the State of New York has established exactly six escrow accounts, one of which was returned to the criminal because no victims came forward, four of which are still there waiting to see, and only one of which has produced any payments to a victim. So there has been the victims of precisely one criminal who have been advantaged by the statute. So a general statute, if there were a general statute enacted that would help victims obtain compensation through enhancing their ability to get at all the assets of the criminals, we see there would be precious few examples of books, but all of the assets that criminals have, the millions of a Michael Milken or an Ivan Boesky, and whatever assets criminals have, would all be better reached by victims under such a statute. So I don't think we would find that 90 percent figure suggested by Your Honor's hypothetical.
William H. Rehnquist: But would not such a law also discourage the writing of books, although it would do lots of other things, too?
Ronald S. Rauchberg: Well, it wouldn't specifically discourage the authorship of books, just as tax laws generally applied don't discourage the authorship of books. The general tax laws don't encourage people to engage in renumerative activities other than authorship. They make the playing field equal. And a statute like this... let me say it this way. The New York statute says to any criminal in need of funds, don't try to support yourself by writing a book, support yourself by getting a job. If you had... if you had a statute of general applicability, you would not have that impact. I gave before examples of criminals whose voices should be heard in the debate on public issues concerning abortion and other subjects. Not all of those people have independent means that permit them to write books without compensation. Most of them, presumably, need to earn a living. And a statute of general applicability wouldn't encourage them one way or another. The New York statute says to those people, you have to go to work and you can't spend your efforts writing a book. The New York statute says to Simon & Schuster that you cannot compensate those people for books that you want to publish that you deem valuable and results in our not having those books.
John Paul Stevens: Counsel, can I ask you a question that maybe is covered in the briefs, but I forget it if it is. It is generated by Justice O'Connor's earlier question. Has section 10(b) of the act been construed, the part that refers to any person who has voluntarily and intelligently admitted the commission of a crime, for such... which such person is not prosecuted? Has that been construed by the State court?
Ronald S. Rauchberg: It was applied in this case. It was that definition that was invoked by the Crime Board to apply the statute to this book, but without any particular discussion elaborating on the meaning. So we don't have any learning beyond what is on the face of the--
John Paul Stevens: Do you understand that provision to require that the author admit that what he did was in fact against the law or merely must admit facts which this commission may determine violated the law?
Ronald S. Rauchberg: --I would understand it to be the latter.
John Paul Stevens: So if a businessman described a lot of business activities that were arguably violations of the antitrust laws, the commission would decide whether in fact that was a violation of law or not, even though he thought he was innocent?
Ronald S. Rauchberg: That is right. I would understand the... I would understand the definition to mean that one who admits to having committed acts that--
John Paul Stevens: Which the Board determines to be criminal.
Ronald S. Rauchberg: --That is right. Because Henry Hill in his book does not say that I engaged in acts A, B, C, and D, and thereby violated section so-and-so of the New York penal law. He says what he did. It may not have presented very difficult questions about whether or not it was a crime; but nonetheless, he says what he did, he describes his behavior. And his behavior as described in his words was held to be the trigger that led to the application of the statute. Now, the interests that New York advances in an effort to justify this content-based law that, in fact, inhibits speech are, first, the interest in victim's compensation. But I think it is clear that that interest can't save this statute. If the existing remedies available to plaintiffs in civil actions in New York are inadequate to meet the needs of crime victims, it is incumbent upon New York to enhance them generally so that crime victims generally can do better in reaching the assets of criminals. And not just enhance them for this one asset that is speech-related. I think the State recognizes that. And so it goes on into what is a more sophisticated effort to justify the statute. It says it is wrong for a criminal to be able to profit from a description of his crime in a book while the victim of the same crime remains uncompensated. Now I think that that is an interest that at bottom rests on the same concerns about victim's compensation. Yes, it is wrong for the victim to go uncompensated while the criminal has the assets from a book. But it is also wrong for the victim to go uncompensated while the criminal has his wages not subject to a wage garnishment or while the criminal enjoys any other assets that he may own. The victim's claim for damages is a claim that enables him to seize any and all assets of a criminal except to whatever extent a State passes exemptions for homestead or the like. But with those exceptions, the victim's claim on the criminal's assets extends to all of his assets. And it is offensive when the victim fails to have that claim satisfied in all of its instances. It is not offensive only when criminals get to keep the proceeds of speech and no other proceeds.
John Paul Stevens: What if the State... I mean, maybe their problem is making the law too narrow. What if they just took out the requirement, until the victim is totally compensated? What if they just said, we don't think people should profit from crimes, and nobody should make money from the commission of a crime by getting a big royalty for describing it, describing his emotions, the emotion of the victim, and all of that. Would that law be better in your estimation? It wouldn't have the problem you just described.
Ronald S. Rauchberg: It wouldn't have the problem I just described, but it would have different problems. That would be a law that would declare all of these payments, these royalties, to be crime proceeds.
Speaker: Right.
Ronald S. Rauchberg: And I don't think the legislature can turn them into crime proceeds just by declaration. There has to be an independent consideration because of the First Amendment interests of whether they really are crime proceeds.
Antonin Scalia: Well, they're certainly proceeds in the but for sense. But for his commission of the crime, he wouldn't have this knowledge that he's making money on it.
Ronald S. Rauchberg: That's correct, but they're not proceeds of crime in the sense of any proximate cause sense. The... the... let me give you an example. The one book that this law would have applied to had it been enacted earlier is the autobiography of Malcolm X. Now, that is a book that recounts Malcolm X's early life of crime as a... as a stick-up artist, as a dope peddler, as a burglar, and then proceeds to describe how he overcame that to become an important leader of the black community, and it is a book that earned royalties because Malcolm X put in the effort to create a compelling account of his life because of his position and fame as a political leader and because of the ideas that he stood for that were of great interest to people at the time. Now, I... I would suggest that the royalties paid by the publisher to Malcolm X are not crime proceeds. They are instead the earnings of an author in the typical way that authors earn money, through being who they are and through the sweat of their brow. This law says that those are all crime proceeds, and I suggest that that's... that that's not correct. They're not crime proceeds, and the law that Your Honor is hypothesizing would also treat them as crime proceeds when in fact they're not crime proceeds. If New York seriously thought they were crime proceeds, it might have tried to proceed against them under a forfeiture statute. I might add that the New York Court--
Antonin Scalia: Would it be possible, in your mind, to narrow the law somehow to cover only those cases that are crime... I mean, can you envision no case in which... in which those royalties are crime proceeds?
Ronald S. Rauchberg: --Well--
Antonin Scalia: Somebody recounting a gory rape just for the sensationalism of it?
Ronald S. Rauchberg: --I have difficulty ever considering the proceeds to be proceeds of crime because of the intervening act of authorship, but even if... even if such... even if such a... such a work could be imagined, there is the question of whether, in order to protect all of the works, we need... we need to tolerate that work as well in the service of the First Amendment. I... I don't know how a statute could be written without vagueness problems that would single out that kind of a book, assuming it were right to do so. In any event, that's not before us, because this law in its breadth takes in every mention of crime. Violent crime, nonviolent crime, State, Federal... they're all in there... felonies and misdemeanors, and so it is so far beyond what we're talking about.
Antonin Scalia: There... there used to be a hypothetical in law school, as I recall, about the person who steals... indeed, it's in the... the... the autobiography of Benvenuto Cellini. He steals gold or bronze or something and then crafts a beautiful statue out of it, and does the statue belong to the person from whom the bronze was stolen? I forget what the answer was. [Laughter] Do you know what the answer was?
Ronald S. Rauchberg: I brought some books with me today. [Laughter] I have Malcolm X's autobiography, but not Benvenuto Cellini's.
Antonin Scalia: But I think that's the same problem we're talking about here, as far as, you know, someone who embellishes by his artistry the account of the crime.
Ronald S. Rauchberg: Well, the... one does more than embellish by artistry the account of a crime in a book like the autobiography of Malcolm X. Or another example would be Jean Harris' book about prison conditions in Bedford Hills, where the point of the book is to discuss the effect of prison on the relationships between women and their... and their... prisoner women and their children, and they're... because... because in 2 chapters of the 14 chapters in the book there's mention of the crime for which she was convicted, the whole book gets treated as though it's crime proceeds. What... what... what I also wanted to say about the subject of crime proceeds is that the State of New York... excuse me, the New York Court of Appeals dealt with the other ways in which persons who are criminals arguably can capitalize on their expertise. There are criminals who gain notoriety and as a result of their notoriety are able to appear on talk shows to sell books, to sell magazine articles, and if they don't mention their crime New York permits them to have earnings as a result of the notoriety that they gain through crime, and doesn't make any effort to get at those earnings. There are also criminals who develop expertise through their criminal activities, like the bank robber Willie Sutton who was in fact retained as a consultant to banks on bank security. New York has no interest in that, either. If New York were interested in a very broad novel expansive definition of crime proceeds it should do it comprehensively and not single out speech. What the New York Court of Appeals said in dealing with that issue is that it recognized that criminals in fact can profit in that way, but it... it... it said that that's not the point of the law. The point of the law is to seize the proceeds of speech, and it doesn't really explain why, and in effect what the New York Court of Appeals is saying is that the law is narrowly tailored to seize precisely the proceeds of this speech. I don't think that's a defense of the law, I think that's an admission that the law is targeted at speech, and since laws targeted at speech inevitably will deter some of the speech at which they're targeted, it's what condemns the law under the First Amendment.
Byron R. White: Did Hill, in this book, write about anything except his crimes?
Ronald S. Rauchberg: Well, yes, he did. He wrote about many things. He wrote about how the mob... and when I say the mob, I mean to talk about activities of organized crime figures other than himself, crime figures that he observed or heard about in his years of leading a life of crime. But he... he wrote about how crime figures... figures corrupt politicians. He wrote about a specific judge in the New York State court system who handed out ludicrously low sentences to organized crime figures. He wrote about how crime figures in prison are able to continue to conduct their prison activities... excuse me, their criminal activities, and lead a quality of life that--
Byron R. White: So I... I suppose that if the... who helped him write the book?
Ronald S. Rauchberg: --Nicholas Pileggi.
Byron R. White: I suppose if... if that writer had just been the sole author, that Hill had been perfectly willing to sit down for him, with him for 100 hours just to be interviewed, there wouldn't... the author could have said the same thing in these books... in this book without any problem with the law?
Ronald S. Rauchberg: That's right. This book... this book depended on hundreds of hours of interviews by Pileggi of Hill, and had Hill been willing to spend those hundreds of hours without any compensation whatever, this law wouldn't have applied. There wouldn't have been any payment to Hill that triggered the application of the law. But Hill was not... Hill was not willing to do that. The record shows that Hill wanted to be paid. Hill wanted a publishing contract, and so in this case, this book, which is a valuable book, which is being called the best crime... book about crime written in America could only have been written as a result of making payments to the person whose information was essential to its creation. The book doesn't exist without payments to Hill, and the book is a valuable book. I'd like to save the few minutes I have remaining for rebuttal.
William H. Rehnquist: Very well, Mr. Rauchberg. Mr. Zwickel, we'll hear now from you.
Howard L. Zwickel: Mr. Chief Justice, and may it please the Court: This case and this statute is about criminals profiting directly from their crime. Mr. Hill, who is a convicted criminal as well as an admitted criminal, his book is not simply a book about discussion of admissions of crime, but it is a book about his convictions as well. And the statute applies in his case for both reasons. Mr. Hill and the other people to whom this statute has been applied have committed crimes and have created, by that crime directly, an asset. An asset which for some of these people is profitable in the retelling. This statute is directed against that asset because that asset is directly attributable to their wrongful conduct. The statute has a compelling purpose because the story here is a story which flows from the wrongful conduct.
Byron R. White: What... this book told about crimes other than crimes committed by Hill, I suppose?
Howard L. Zwickel: Yes, it did, Your Honor.
Byron R. White: And what is the justification for, what if he had not written about any crimes by himself, just about crimes of his colleagues? He says, I was a member of the Mafia but I never committed a single crime and I know about all these others?
Howard L. Zwickel: The purpose of this statute is--
Byron R. White: This statute would not have covered it?
Howard L. Zwickel: --No, it would not. The purpose of this statute is New York's conclusion that when the criminal discusses his crime and is paid money for that discussion--
Byron R. White: You mean a crime that he committed?
Howard L. Zwickel: --That he committed, that's correct, that the criminal is then profiting directly from his victimization. What the statute does at that point is it doesn't look at the criminal's speech. It turns its attention to the victims of that crime, the people who have been harmed and the people who have been injured. And it says--
Anthony M. Kennedy: The underlying premise is that this speech ought to be discouraged.
Howard L. Zwickel: --The underlying premise of this statute, Your Honor, no, is that... in fact, if that were the case--
Anthony M. Kennedy: Well, isn't the underlying premise that the speech is wrong?
Howard L. Zwickel: --No, it is not. In fact, the only premise is that--
Anthony M. Kennedy: The underlying premise is that this speech is right?
Howard L. Zwickel: --The statute... The statute is neutral with respect to the speech. What the statute says is that if the criminal wants to discuss his story and say anything he wants, but doesn't make a dollar on that discussion, this statute does not apply. But the second--
Byron R. White: I thought the whole justification for this statute is that the public is outraged by the spectacle of someone profiting by recounting a crime. It is simply unjust. It is outrageous. Isn't that the whole premise of the act?
Howard L. Zwickel: --Part of what you said is true, I think.
Byron R. White: But if that's true, then you are discouraging the speech, are you not?
Howard L. Zwickel: No, you are not, because there certainly may be outrage. That may exist. But that was not the purpose of the statute. The text of the statute and the legislative history shows that the only thing that the legislature focused upon was the unfairness, the inequity. In fact, the statute contains provisions which one might say could encourage criminals to speak. There are incentives in this statute.
Sandra Day O'Connor: Well, Mr. Zwickel, the State has certainly singled out speech for a financial burden in this statute. Is that not true?
Howard L. Zwickel: It has singled out the story of the speech.
Sandra Day O'Connor: And it has imposed the burden only on speech of a particular content.
Howard L. Zwickel: That is true, Your Honor.
Sandra Day O'Connor: And so how do you distinguish this case, then, from taxes, such as in Minneapolis Star or Arkansas Writers Project?
Howard L. Zwickel: In those cases, Your Honor, first of all, there was a tax directed against the press' means of publication, which because of the history of taxation in this country is presumptively a burden. But here, what--
Sandra Day O'Connor: You're saying this isn't a financial burden?
Howard L. Zwickel: --Well, it is an incidental burden. It is a burden because some people will chose not to speak because they are not getting the profits. But that is not the same sort of burden on the means of communicating your message. This statute, you have to understand, is directed at a financial incentive. It is directed at one of the reasons why people chose to speak. We all know--
Sandra Day O'Connor: Why does it not... why should it not have to extend to other ways of profiting from criminal behavior, then? Why just publishing a book?
Howard L. Zwickel: --I think the reason it extends there is because the legislature felt that the story of a crime with victims is a direct victimization. And that other profits which may be dealt with in other ways did not create the same sort of inequity. When the criminal... when Berkowitz sits down for an interview and talks about why he killed these five people, and then is paid $ 100, 000 for that, it seems to me that New York and the other States can say, well, we can't stop his speech. In fact, he has a right to speak. But he does not have a right to profit before his victims.
William H. Rehnquist: Mr. Zwickel, you speak as though the law very nicely cuts out the profits that he is making because of his recount of the crime. But in fact, it does not. It says whatever amount he gets from the whole book. So, you know, there is Confessions of St. Augustine, he recounts how he stole an apple. I assume that, you know, whatever St. Augustine got for that book, the whole-- [Laughter] --the whole amount, right, the whole thing would be considered proceeds of the apple-stealing?
Howard L. Zwickel: Your Honor, that's absolutely correct. This statute--
Antonin Scalia: But that's ridiculous.
Howard L. Zwickel: --What this statute does, of course, is it doesn't ask the Board to sit down and look at the work and evaluate how much speech is in the work attributable to the crime or what the reasons were.
Antonin Scalia: The whole thing is presumed to be the product of the crime.
Howard L. Zwickel: For purposes of attachment, that is correct. What the statute does is it applies neutral and objective criteria. It simply says that if you are profiting from this asset, your victims have a right to do what we would like victims in this country to do more often, to go to court and bring a civil action. And if they recover a judgment, you now have this asset placed in escrow, you have an identifiable asset. The victim now has a reason to sue the criminal because he knows that the State is holding the money. All the victim is doing under this statute, Your Honor, is that he is filing a civil action for his damages and injury. If he recovers for that action based on his harm that the criminal has caused him, it shouldn't matter what part of the book is based on the actual crime. The critical component here is that we are not dealing with speech. This is not a statute which is aimed at publishers to try and stop the publishers from publishing the book. The record in this case shows that many criminals will speak and will continue to speak with these statutes. The publishers keep their profit. The publishers are not compelled to edit material out of the book. But yes, there is a financial aspect to this. We don't deny that. And we don't deny the fact that some criminals will say, if you can't guarantee me my profits, I'm not going to tell my story. But the critical issue for this case and for this Court is whether or not New York has appropriately balanced the competing interests and arrived at a statute which is narrowly tailored and targeted to this compelling purpose.
William H. Rehnquist: The purpose is, again, Mr. Zwickel?
Howard L. Zwickel: The purpose, Your Honor, is to ensure that people who commit wrongful acts do not profit directly from their victimization.
William H. Rehnquist: And I take it, in New York, supposing Billy the Kid had lived in New York when this statute was in effect. If he had written about the 21 men that he killed, he would be subject to this statute. If he wrote about travels in the Southwest and said nothing about these 21 men, he would not be subject to this statute. Yet, ordinarily a victim should be able to get of hold of either of those proceeds.
Howard L. Zwickel: Your Honor, you are absolutely right. And we certainly are not saying that victims should not have opportunities to get at notoriety. But this statute focuses... notoriety is--
William H. Rehnquist: Why does New York distinguish between those two kinds of books written by a criminal?
Howard L. Zwickel: --I believe that the essential reason is because New York saw the story, the asset from the story as a direct relationship to the victimization.
William H. Rehnquist: Kind of inflicting injury on the victims all over again, so to speak?
Howard L. Zwickel: Well, we talk about injury on the victims, but the injury this statute addresses... and there is obviously a temptation to say, the statute is based upon the offensiveness of what the criminal is saying. But that's not what this statute was talking about. The statute was targeted at--
Byron R. White: If Billy the Kid wasn't writing about his crimes, but about travels in the West, and he made a lot of money out of it, I suppose if he had hurt some victims, the victims could sue him, but they very likely would have to prove their case before they could attach the money.
Howard L. Zwickel: --That's correct.
Byron R. White: Well, the State of New York here takes it in advance.
Howard L. Zwickel: Well, it certainly does, but the key factor here, you also have to recognize, is the plight of victims, Your Honor. We have a situation where there are two critical components of this statute. First of all, it preserves the asset at the time that the money is paid. In many of these cases, the money is paid to the criminal years before the story is produced. That money might very likely be dissipated. This statute ensures that it is held in escrow. The second thing that is critical about this statute is that this statute extends the statute of limitations. So that we all know about the story that comes years after the criminal is released and after the statute of limitations has expired. The victims in that situation have no remedy. Under this statute, they do have a remedy, but the remedy is limited to the in rem proceeding against the proceeds. The third critical component as to why this statute serves New York's purpose so well is that it gives victims' judgments a priority over the judgments of other creditors.
David H. Souter: Do you agree that it is fair to say that the object is not to preclude the criminal from directly profiting, the object is simply to preclude him from profiting before the victims get paid? It is a victim compensation justification, not a nonprofit justification.
Howard L. Zwickel: That is absolutely right.
David H. Souter: So everything you said really about directly profiting is essentially beside your point?
Howard L. Zwickel: Well, it is a combined interest. It is directly profiting before your victims, Your Honor. If the victim's judgments are less than the money in the account, the criminal gets what remains in the account, which is another reason--
John Paul Stevens: May I interrupt you with a slightly different question. I would like to focus a little more precisely on the State's interest involved here. One, of course, is to compensate victims and you have talked about that mostly today. But in your brief you start out with the principal argument that a wrongdoer should not profit from his or her wrong. If that were a sufficient justification, the statute should be applied to victimless crimes as well as those that have victims, should it not?
Howard L. Zwickel: --That is correct, Your Honor, and it does not.
John Paul Stevens: Do you think it could? Do you think it could constitutionally be applied to victimless crimes?
Howard L. Zwickel: Yes, I do. I think that--
John Paul Stevens: Why didn't the State do it, do you suppose?
Howard L. Zwickel: --Because I think the interest that the State focused upon which is the critical interest here is the unfairness of the criminal profiting before his victims. This is not a statute designed simply to tell criminals, you can't profit at all. In fact--
John Paul Stevens: If you think the interest in preventing the criminal from profiting from his wrong would be sufficient, which would mean, as I understand it, that no matter how trivial the wrong, no matter how great the reward from writing the book, you could still appropriate the entire reward?
Howard L. Zwickel: --I do. I think States and the Federal Government have valid interests in stopping criminals from profiting from crime, but this statute is a more narrowly tailored statute in that respect. This statute allows the criminal to obtain any money that is left in the account. What this statute does, as Justice Souter pointed out--
Byron R. White: It just isn't victims, though, that have access to the escrow. It is judgment creditors, any judgment creditor.
Howard L. Zwickel: --That's true, but there is a critical reason for that. What the statute does--
Byron R. White: But also the State can get unpaid taxes out of the escrow.
Howard L. Zwickel: --Your Honor, that's true. But what this statute does... first of all, with respect to other judgment creditors, it doesn't extend the statute of limitations. But more importantly, the unsatisfied judgment creditor who normally stands in line before the victim, under this statute stands in line after the victim. The reason why the statute discusses judgment creditors is to make sure that the judgment creditor comes after the victims' judgment. That is the only reason why the statute discusses it. It establishes a priority.
Byron R. White: Well, it certainly reduces the chance that the writer is going to have anything left over.
Howard L. Zwickel: That is possible, but there are two aspects of that--
Byron R. White: It is possible, if there is a judgment creditor, he is going to get paid.
Howard L. Zwickel: --He might not, but we are talking in some of these cases about substantial sums of money. We hear reports of criminals making $ 500, 000 or $ 1, 000, 000 million or more, but what this statute addresses is that the money is held in escrow and the criminal brings his civil tort action for his injury and suffering. It is very hard for us to see that the victims who have been injured by the crime, who have suffered from this crime, should not have the right to pursue a tort remedy and know that there is an asset which flows directly from their victimization, which the Board is holding. That is why this statute is such a meaningful statute, and frankly--
Antonin Scalia: Excuse me, you keep saying an accent... an asset that flows directly from their victimization.
Howard L. Zwickel: --That's correct.
Antonin Scalia: But you acknowledged before that the entire amount of that asset doesn't flow directly from their victimization. The entire advance is covered, even though there is only one minor incident addressed in the book, isn't that right?
Howard L. Zwickel: Your Honor, that's right.
Antonin Scalia: Indeed, even if some of the advance covers expenditures for paper, pencils, for expenditures for production of the book, that would still be swept up into the escrow, right?
Howard L. Zwickel: Well, yes--
Antonin Scalia: So it is not just the direct product of the crime that is covered at all.
Howard L. Zwickel: --Well, Your Honor, it is because the crime is in the story. But you are right, the statute does apply an objective neutral criterion. It does not seek to look at the work and say how much of this work is related to the crime. The reason again for that, let me try to emphasize, is that the statute simply attaches the asset. If the victim sues and recovers a very limited judgment, then there will be a substantial sum of money available for this person.
Antonin Scalia: But it seems to me that a better way to describe it, instead of constantly referring to it as the product of the crime, is to say that it is an asset tainted by the crime. Isn't that quite a bit more accurate?
Howard L. Zwickel: Well, I don't think New York looks at this asset in terms of what taint might suggest. I think it really does look at it in a very neutral way, and I do want to emphasize again that this statute is not simply limited to one type of book or one type of speech. It is a broad-based statute which applies in any context where a criminal is profiting from the story of his crime. It applies to magazine publishers. It applies to interviews. It applies to any situation, and all the statute says is that if you have victimized someone and if someone is paying you for that victimization, whether or not it is a small part or a large part, then your victims come first. They have a right to go against this asset. We will preserve this asset for your victims and we will take steps so that the victims can go ahead and sue the criminal. That is why this statute, we believe, meets Strick scrutiny as well as O'Brien scrutiny. The statute is targeted precisely to its purpose and its purpose is both a legitimate purpose and a compelling one. For these reasons, Your Honors, we ask that the judgment of the 2nd Circuit Court of Appeals be affirmed for the reasons set forth in our brief. There will be no further questions. Thank you very much.
William H. Rehnquist: Very well, Mr. Zwickel. Mr. Rauchberg, do you have rebuttal? You have 2 minutes remaining.
Ronald S. Rauchberg: Thank you. I wanted to say a word about the statement that Hill had been convicted of crimes. The book makes a reference to conviction for attempted larceny, and since it's an attempt by definition I suppose it was unsuccessful and there was no victim. It makes a reference to a gambling conviction which the Board also might hold to be victimless crimes. The Board placed its judgment below only on the admission of crimes. There wasn't a word about any convictions, and if it addressed convictions it might well hold them irrelevant.
Byron R. White: I take it that your argument would be... would be the same or almost the same even if in this book only crimes that Hill committed were described?
Ronald S. Rauchberg: Yes, it would be about the same, and if Hill... if Hill had in fact been convicted of crimes and that were the basis for the law being applied here, then one of the interests that the Court of Appeals of New York has identified, namely punishment, might be triggered. I did want to emphasize the fact that the New York State Court of Appeals says that this statute is designed to punish. I don't think it's well-tailored to do that, as our brief states, but in any event New York cannot determine to punish the mentally ill, those who are never charged, like Hill, who were not convicted. He--
Byron R. White: You... I take... earlier I think you said that if... if a person has committed a very brutal crime, perfectly sane, and he just makes some money out of... out of writing about it while he's in prison, you say the First Amendment forbids the application of this law to him?
Ronald S. Rauchberg: --Yes. Yes, I do say that, and I say we have to tolerate whatever offense we take in that circumstance in order... in order to have the valuable speech that we have when other criminals like Henry David Thoreau, Malcolm X, Martin Luther King, and many others named in our briefs, have written books that make reference to their crimes.
William H. Rehnquist: Thank you, Mr. Rauchberg. The case is submitted.


Warren E. Burger: We will hear argument next in Central Hudson Gas & Electric v. Public Service Commission of New York. Mr. Taylor, I think you may proceed whenever you are ready now.
Telford Taylor: Mr. Chief Justice, and may it please the Court. This case also involves an order of the Public Service Commission, it is in our brief on page 3, and is mercifully short "All electric corporations are hereby prohibited from promoting the use of electricity through the use of advertising. I think the Court will readily see that the constitutional questions raised here are distinct from those in the case that has just been heard. The bill insert ban closes a particular channel to speech on public issues this is a complete ban on speech described as promotional advertising. That, of course, falls within the general category of speech. That in the decisions of this Court has been called commercial speech, but I think it will appear in the course of the discussion that the line here between commercial speech and other speech is not as clear as it has been in some of the other cases in this Court. Now, I think I should say a word about the genesis of this order because it is different from the chronology of the bill insert case. The ban there in the same language as on page 3 was enunciated by the commission in a summary emergency fashion in December of 1973 at the time of the Arab oil boycott following the Arab-Israeli war, at a time when there was a genuine and acknowledge belief of a shortage of oil which might not enable the utilities to continue service, and it was put in on that basis at that time, together with an order for voltage reduction. Months passed, the shortage eased and the voltage restriction was restored, but the promotional ban was retained in effect. In 1976, the commission inaugurated a proceeding to review whether the promotional ban should be continued. Central Hudson and other companies urged that it should be lifted. We urged that unsuccessfully, and after losing before the commission and rehearing denied, this litigation was commenced in the New York state courts and, of course, therefore is here on appeal on federal constitutional grounds. I might also just mention to the Court that a brief has been filed here in amicus on behalf of the Long Island Lighting Company. That was a litigation started in the federal courts, in the Eastern District of New York, in which Judge Pratt ruled that this promotional ban was indeed unconstitutional under the First Amendment but upheld the bill insert ban. That case is pending and has been argued in the Second Circuit but has not been decided. Now, before I come to the two matters that I think are very basic here, I would like to mention three things which either are or should be uncontroverted and which I think may clear up a couple of things and avoid the necessity for colloquy. In the first place, in this case there is no question about who pays for promotional advertising. There is federal legislation declaring federal standards which require that promotional advertising be paid for by the shareholders and not the rate payers. The commission's own view is to the same effect and therefore we do not have here any question about the source of funds for promotional advertising. The owners of the company bear it.
Warren E. Burger: Would this bar, Mr. Taylor, ads in the form of essays, as is sometimes done, promoting the more efficient use of electrical energy?
Telford Taylor: Yes. The ban is phrased in terms not of consumption of oil or energy resource but the amount of electricity and therefore if we urge by the use of an appliance or in any other way something which will increase the use of electricity, even though it might be a net saving of energy, it comes within the ban. I will be coming in more detail to that point in a few moments.
Potter Stewart: But it wouldn't ban advertising in promoting the non-use of electricity --
Telford Taylor: No.
Potter Stewart: -- if the advertising said turn out your lights when there is nobody in the room.
Telford Taylor: You're quite right. If the use reduces the amount of electricity used, it is not within the ban. The promotional ban is defined as anything which might be expected to increase the use of electricity. In the second place, neither the commission nor any other authority, state or federal, has done anything which prohibits the underlying activity here, that is there is no restriction on the distribution, sale and use of electricity. It is perfectly lawful, and the commission's brief said that they haven't even tried to discourage the use of electricity for heating and therefore it is beyond argument I think that the effect of this ban is to with-hold from the public information about an activity which is perfectly lawful. In the third place, although this ban in its origin in December of 1973 was based on an actual shortage of oil, that is not the case with the commission's decision in 1977 which continues the ban. There is nothing in the record, there is nothing in my opponent's brief, there is nothing which indicates any present or approximate shortage of oil. The conservation theory which has been invoked in support of the order is rather that there is a continued dependence on foreign oil. That is the conservation factor which is primarily relied on in the commission's decision in the Court of Appeals and therefore, of course, I will be addressing that value which is invoked to support the ban I hope before I sit down.
William H. Rehnquist: Mr. Taylor, supposing that a drug manufacturer sent out a letter saying ask your doctor to prescribe morphine for your pain you have, now the prescription of morphine is perfectly legal in most states, but you do have to get it by prescription. Would you say that that was a violation of the first Amendment?
Telford Taylor: Well, if it was encouraging him to get it without a prescription, it would, of course, be advocating unlawful conduct and I suppose it would fall within the traditional category of speech which can be limited. But the point of my making my so-called point two there was precisely that there is nothing unlawful about the use of the electricity the sale or the distribution and indeed --
William H. Rehnquist: But my hypothesis simply says the drug company sends to the occupant of every house "ask your doctor to prescribe morphine" --
Telford Taylor: Well, that --
William H. Rehnquist: -- so it would be in compliance with the state law --
Telford Taylor: That is encouraging the use of what are called controlled substances, well known to be dangerous. It is very much like, Mr. Justice Rehnquist, I take it the tobacco ban on advertising tobacco which is lawful to smoke, which Your Honors did uphold in the tobacco case. Of course, the nature of using morphine and the nature of using electric heating is different as night from day in terms of general opinion about whether this is good or bad. May I come to the two points which seem to me of the greatest importance here and which I think go further than anything else to show why the court below and the commission have fallen into constitutional error here. In the Court of Appeals, these two things I am about to mention led the court to say that General Hudson's First Amendment rights are in this case at the "nadir" and having them put them in that low a state, of course, it was unnecessary to scrutinize very carefully the value factor invoked to support the ban because so low a category is placed on the speech itself. Now, the most important point here I believe is in our brief on page 15. We have quoted the governing paragraph in the Court of Appeals decision which, as Your Honors would see, treats this case as simply one where, since we have a monopoly in the distribution of electric energy and since the price is controlled by the -- the rates are controlled by the commission, that there can be no value in discussion about the use of electricity. Consumers have no choice regarding the source of their electric power, the price of electricity simply may not be reduced by competitive shopping. Well, Your Honors, we say that that demonstrates a very fundamental misconception about what the speech involved in this case is. Of course, it is true that the price of electric energy to the rate payer is regulated. Of course, it is true that, as a substantial matter, our company is the only source of it. But it wholly overlooks the fact that people don't take electric energy for its own sake because it can be turned into heat and light and power and to goods of that kind, and that in terms especially of temperature control, of heating and cooling, the company's share of this is not only not a monopoly, it is very much a minority share. There is --
Byron R. White: I suppose if he state said we want to cut down the use of energy in this state so we are going to somehow say you can't sell to any one customer more than a certain amount or you can't sell any more that you sold him last month or something like that. I suppose you would accept that as a --
Telford Taylor: Well, that question can't be answered fully without taking account both of statutory matters which I don't think are relevant here and constitutional matters. There would be statutory problems about the commission's authority to do that. What you suggest has been specifically authorized by statute in the case of gas, but not in the case of electricity. Now, if that --
Byron R. White: Let's get past the statutory question.
Telford Taylor: Yes, I was going to go past it right away. If the statutory question is resolved, why, then, of course, there would be no First Amendment problem. There would still be --
Byron R. White: Or any other problem?
William H. Rehnquist: Well, there would be a matter of showing if there was a reasonable basis for the restriction and, of course, ordinarily the standards of review on that are very relaxed. If this were a prohibition which began to impinge on existing service to customers and reduced them o a bad circumstance in terms of heat why, then you might well have a stricter standard of review to show the necessity.
Byron R. White: But there wouldn't be any constitutional problem, would there, assuming that the state statute clearly authorized it, if the utilities commission could say no electric utility in this state shall take on any new customers for the next twelve months.
Telford Taylor: If a satisfactory substance showing could be made in support of that regulation, the answer of course is they could do that, assuming the statutory questions were cleared up, there would be no First Amendment problem.
Byron R. White: Or no constitutional problem of any kind, would there?
Telford Taylor: If a satisfactory factual basis, there are none.
Byron R. White: Right.
Telford Taylor: That's right.
Warren E. Burger: Well, let's narrow that a little bit, Mr. Taylor. Suppose the notice was no utility shall here-after take on any new customers for heating, space heating by electricity, any problem about that?
Telford Taylor: No different problem, Your Honor, no.
Warren E. Burger: You think it is no different from the other?
Telford Taylor: No, this would still be a restriction on the activity itself it would not raise a First Amendment Problem.
Byron R. White: But you nevertheless say that the state may not achieve an equivalent or roughly the same end by telling the company not to advertise the use of electricity.
Telford Taylor: Yes indeed because the situation we have now is that the public or the consumer is entirely free to use electric energy, the company is entirely free to make it available, there are many alternative ways of using it, some of which are more effective than others, and --
Byron R. White: Yes, but the state has decided that they have a very good reason for limiting th use of electricity. They considered very heavily putting a quota on or limit or a ban of new customers, but they just thought they would limit the promotional activities of the company if for no other reason to save the new customers money, the company money and it would have an equivalent effect. But you think --
Telford Taylor: I don't believe they can do that, Mr. Justice White, it seems to me because that rests on achieving this consequence by keeping the public in ignorance to matters they are entitled to know. The option of electric energy is not an offensive one or an unlawful one, it is one which the commission has deliberately left open, it has not found a basis for doing the rationing restriction that you suppose and under those circumstances I think they can't say to speak put a slow brake on it by the device of holding this information from the public. In all the other commercial speech cases of recent vintage, there have been arguments made to show that a policy might be furthered but in those cases the balances had to be weighed and the policy has been found insufficient, and it seems to me that is the case here, too.
William H. Rehnquist: Are you going to get to Ohralik?
Telford Taylor: Yes, I will. Yes, Mr, Justice Rehnquist. Well, to complete my point there, since the commission -- the court, in other words, in this passage on page 15, wholly mistook the nature of the market which is involved here. The monopoly and the supply of electric energy does not mean at all that the company is not in sharp competition with other energy sources. Now, the facts and circumstances about the relative merits of these energy sources are matters of public interest. It is precisely for that reason that I said that in this case the line between the commercial speech and the so-called controversial speech is a thin one because advertising which would tell the consumer what the benefit of heat pumps are, what the benefits and detriments of electric space heating are is information or public interest and of great interest to the consumer, and therefore the whole approach to the advertising taken by the Court of Appeals was mistaken. Now, the other --
Warren E. Burger: Do you see any analogy, Mr. Taylor, in a rationing program, rationing gasoline, for example, with coupons? Is this not an effort to equalize on the part of the commission, to hold down consumption so there will be enough to reach everybody? Is there any analogy there?
Telford Taylor: It would seem to me not, Mr. Chief Justice. In the first place, this would bring me to the fourth point in my brief, that if this were regarded as an equalizing measure, it is a strange one indeed because 75 percent or more of the heating is by home oil furnaces and there is no restriction on the advertising and promotion of heat derived from that source. It is limited to the distribution of electric energy and therefore far from it being an equalizing thing, it is a discriminatory thing because only this one relatively small side of the energy picture is covered. The other matter on which it seems to us the Court of Appeals and the commission have been led astray is because, in addition to the point I have just discussed, they have relied here heavily on the thought that because Central Hudson is a regulated public utility, that by that fact in and of itself our First Amendment rights are less. I would have thought that the Belotti case had laid at rest that point of view. Of course, I am aware that that case was decided by a closely decided Court, but I don't think that the area of disagreement in the Belotti case has much to do with what is before the Court now. In the Belotti case, the state value invoked to limit the corporate speech was itself in the nature of a First Amendment value, the idea of a prophylactic rule that would prevent public discussion from being dominated by corporate resources, and the Court had to strike a balance between those and they disagreed on how to strike the balance. But we don't have that situation here. What is being invoked on the other side here is not of the same character or stripe at all and therefore the considerations in the Belotti case that led to the division in the Court don't seem to be of bearing here. Certainly I think it is clear in the Belotti case that both the majority and minority thought that corporate entities do have the rights of commercial speech and in the majority opinion the standard to be used was exacting scrutiny, both of the dissents recognized the same thing, and indeed Mr. Justice White's dissent strongly suggested that corporate rights in the commercial area might well be greater than the political area because of the closer nexus with the corporation's own business. In that connection, can I remark in conclusion here on this aspect of the case that we have here none of the factors which the Court has referred to in some of these cases, the common sense differences between commercial speech and other speech. We have none of the factors which the Court has mentioned as reasons for giving commercial speech a lesser degree of protection. This order has nothing to do with whether speech is deceptive or misleading or anything of that kind. It has nothing to do with overreaching solicitation, as in Ohralik. There are several cases, including Friedman v. Rogers, in which the Court has tabulated these distinctive features of commercial speech and none of them are present here and therefore for all those reasons that I have now covered, we strongly urge that the speech in this case is highly akin to public issue discussion, that there is no reason in this case why the same standard should not be applied to speech that was applied in the Belotti case.
Byron R. White: Do you agree, Mr. Taylor, that if you thought the state was giving a compelling interest, was using a compelling interest to justify this restriction, that it would be all right? Or do you just say that you just can't do it?
Telford Taylor: Of course not, Your Honor -- excuse me for putting it that way. But I would suppose that in any case if you come forward with a sufficiently compelling reason, that the amendment gives way.
Byron R. White: Then suppose the state just out and out says, well, we offer you a compelling interest, we don't know of any more compelling interest than to save energy and we think this is an effective way of saving energy, is that -- of course, you disagree that that would be a compelling interest, I suppose, or would you?
Telford Taylor: We do not at all dispute the idea that the conservation of energy is a great value. Whether the means you used here display a means calculated to serve the compelling interest is another matter. The point I have been endeavoring to make so far, Mr. Justice White, is --
Byron R. White: Well, if you didn't think your advertising was effective, you wouldn't really be worrying very much, would you?
Telford Taylor: Of course, the advertising must be effective --
Byron R. White: You would it is effective or you wouldn't be spending your money on it.
Telford Taylor: Right. The advertising which, as our brief indicates, we desire to do, the advertising of heat pumps, is not the kind of advertising which will increase the net consumption of energy. And of course, one of our complaints against the order is that in that sense it is over-broad and it is indeed the over-broad portion which most directly affects us because there are electrical devices, including the heat pump, now available which very greatly diminishes the use of electrical energy and would not increase the use of foreign oil.
Byron R. White: I take it you would be unsatisfied if just the over-broad portions were clipped off of the order?
Telford Taylor: We would be dissatisfied.
Byron R. White: Dissatisfied.
Telford Taylor: We would be dissatisfied, yes.
Byron R. White: Although over-breadth you think -- do you think over-breadth applies right across the board in --
Telford Taylor: Well, we believe the over-breadth doctrine is available in this case because it is not a situation where we would come within the legitimate scope of the statute in a complaint that it might apply to someone else. Indeed, here the over-breadth part is the part that specially and immediately affects us. But frankly, in answer to your question, no, we would not be satisfied because we believe that the order is invalid insofar as it applies to resistance heating or other uses and for the same --
Byron R. White: Well, what would be our rationale if we said, well, we think the state's justification is saving energy, we think that is a compelling interest, then what do we say? We say, well even so, this is invalid because is isn't effective? The state thinks it is.
Telford Taylor: No other state does, and nether does the federal government. This is not based on shortage of --
Byron R. White: But this state does, though.
Telford Taylor: Yes, but I take it that --
Byron R. White: Must we disagree with them to side with you?
Telford Taylor: I think you must find that assertion that this would measurably further conservation is not so here. This is not --
Byron R. White: If we disagree with you on that, you lose?
Telford Taylor: No.
William H. Rehnquist: No?
Telford Taylor: Because we still have the over-breadth argument and we still have another argument which in point three of our brief, which we think is equally compelling. The statute here is the orthodox kind of public utility statute with only the standard of public interest, public welfare in it. It can be not seriously contended that the legislature has ever intended to convey on the commission the powers to regulate speech. Of course, the construction of the statute is not under review here, but the fact the Court has given that construction that the commission is vested with powers to limit speech does inevitably raise the question of whether the standard for it is adequate, and we suggest that it is not, that the standard for regulating speech must be a good deal more precise than that and that there is nothing in the context or general application of the statute which gives any guide here sufficient for First Amendment purposes. so that is another reason why on which basis you would not have --
Byron R. White: Even though within that broad authorization the commission perhaps comes up with a much narrower justification and says what we are really talking about is saving energy?
Telford Taylor: Under the question of the standard though, what they have done here is only one thing that they might do for lack of the standard, and also the conservation is not the only point the commission is making, of course. They are also asserting the right to control promotional advertising because of its effect on the rate structure, an area in which they have full powers under their right powers to deal with it in other ways. So that the assertion of power here by the commission is pretty open-ended, Mr. Justice White, and it seems to us that the lack of the standard is fatal. May I come back, if I may, in conclusion, to the matter of conservation because I think this is crucial. Since the matter is not one of shortage of oil but of continued dependence on foreign oil, we have a problem which is primarily a national problem. The federal decision is a considered one, the matter of prohibiting promotional advertising was raised, the committee report quite specifically says it is not intended to accomplish that. No other state except Oklahoma has attempted this, and there the state court immediately held it unconstitutional. So we think that that is highly relevant in determining the substantially of invoking conservation. Of course, conservation itself is a compelling interest but I don't think it all follows from that -- and look at the Linmark case, where the state objective was desegregated housing, admittedly an important one --
Byron R. White: Has the state suggested any other reason for doing this?
Telford Taylor: Yes, they have, even more inadequate than the first, Mr. Justice White. If I may, I will save my remaining time for reply.
Warren E. Burger: Mr. Schiff.
Peter H. Schiff: Mr. Chief Justice, and may it please the Court. As mentioned before, this case arises from the same order as the previous one, although with a somewhat different history. Certainly Mr. Taylor has explained one of the reasons why we imposed the ban on the promotion of electricity by utilities. I want to say that our ban has been on all promotion of electricity by the electric utilities. Our order did consider in some detail the requests by some of the utilities that they should be allowed to promote off-peak uses for particularly space heating which is in the form of -- in two forms, one is electric resistance heating and the other is in terms of the heat pumps. Now, the primary reason for this ban is that New York is terribly oil dependent and any time an additional kilowatt hour of electricity is generated in New York, at just about any time, day or night, winter or summer, additional oil is burned. Oil is what burned at the margin in New York state. Ninety percent --
Potter Stewart: Do you suppose the state legislature of New York would pass a law saying that no company engaged in the oil business shall engage in promotional advertising that would tend to increase the consumption of oil or of any kind of petroleum product?
Peter H. Schiff: I will tell you, we have not -- that is a more difficult question, in light of this Court's First Amendment cases.
Potter Stewart: What is really involved in that question I think is how much does your argument depend upon the fact that these are regulated monopolies.
Peter H. Schiff: It depends very substantially on the fact that these are regulated monopolies.
Potter Stewart: The case posited by my brother Stevens would be the same if --
Peter H. Schiff: Well, let me, if I may, say why I think this is different and --
Potter Stewart: I will tell you why it is different, because the difference is rather obvious. I would be interested in your answer to the question.
Peter H. Schiff: Well, in this case the basic information in commercial speech cases that the Court has protected is really saying that there is a need to provide price information to customers. That was true in the prescription drug case, it was true in the routine legal services case. In terms of the oil jobbers advertising as to what the costs are for the individual jobbers, you will have again price information of that type being provided. Actually the oil jobbers in this case told the commission they would be glad to have their speech restricted, but in that sense, Mr. Justice Stevens, it is different and I am not --
John Paul Stevens: I understand that it is different. I am just curious about your answer to my question.
Peter H. Schiff: Well, I don't have to -- I guess I have to argue this case and I think there are compelling reasons here. I don't think I have to know what this Court would decide on that case in order for you to affirm us here, so I am not --
John Paul Stevens: So you don't want to answer the question.
Peter H. Schiff: Yes, I think it is too iffy because I don't think you have to reach it here. I think the interests -- the Court has looked at what --
John Paul Stevens: Is there competition for items such as heat pumps?
Peter H. Schiff: Yes, there is competition --
John Paul Stevens: And are their suppliers of those competing items that are not regulated by your commission?
Peter H. Schiff: Absolutely, there are suppliers who are free to advertise, the appliance dealers, there are the manufacturers --
John Paul Stevens: People can advertise oil furnaces?
Peter H. Schiff: Yes. I mean --
John Paul Stevens: They can advertise the relative advantages over electric heating?
Peter H. Schiff: They can advertise their relative advantages --
John Paul Stevens: And that advertising may promote the consumption of oil, I assume?
Peter H. Schiff: Yes, and there are appliance dealers who can promote and say why electric heat is better than oil heat. The reason for banning the promotion by the electric utilities --
John Paul Stevens: Let me just be sure. I take it the reason you decline to answer my question is you rest exclusively on the regulated monopoly character of this industry?
Peter H. Schiff: That fact -- well, primarily. I mean I think the facts of this case have to be judged in the context that this is a regulated monopoly, that even though there is competition on a small portion of the regulated company's business, and my understanding is that Central Hudson, perhaps 8 percent of its sales are involved in electric heating, although that figure is not too easy to come by, a much smaller amount involves how much is added at any one time since these are not thing that are added very quickly.
William H. Rehnquist: Well, there is nothing in the Constitution that prevents New York from making every single enterprise conducted in the state a regulated monopoly, is there?
Peter H. Schiff: Well, we can't very well make something a regulated monopoly if the business is not essentially monopolistic. Electric utilities --
William H. Rehnquist: Now, wait a minute.
Peter H. Schiff: Oh, we could regulate them but not as monopolies.
William H. Rehnquist: Well, couldn't New York simply have a system of state socialism where the state owns all the means of production and so forth? There is nothing in the Constitution that prevents that.
Peter H. Schiff: Well, if you are talking about state ownership, I suppose we could have that. I think, yes, I suppose we could have that but that is not what is involved here. In the case of the utilities, as I indicated before, the state has imposed an obligation --
William H. Rehnquist: Utilities is just a descriptive term for those types of businesses that the state has chosen to heavily regulate and franchise, isn't it, and there is no magic boundary between a utility and a kind of semi-free enterprise type of business.
Peter H. Schiff: I think there is, Your Honor. Historically, the electric utilities became regulated because it is a matter of economics and as a matter of esthetics, it made sense only to have one company serving one area. And there was no competition for most of its services and there is no competition for most people getting electric service. If you want electric service, you have one place to go. That is not --
William H. Rehnquist: That is because of the state.
Peter H. Schiff: No, no, it is not because of the state. It is -- well, it may be because of the state, but as a practical matter you can't really function, you can't have two sets of distribution lines, two sets of --
Warren E. Burger: You mean you can't economically? You can't economically, but you could constitutionally, couldn't you?
Peter H. Schiff: Oh, constitutionally, sure. But what I am saying is that utilities, monopoly utilities, the reason the state has regulated them is a matter of historically because utilities really requested the regulation in order to be protected from having public power, which is true in so many other countries, but they are different in terms of how they operate and the competition that we have here is very limited. The Court of Appeals was perfectly correct in at least recognizing that the dominant aspect of electric utilities was serving as a monopoly. Now, in terms of the conservation here, the reason that this is important, we think that having utilities promote -- now, by promoting it is not giving price information, it is essentially saying to the public, go out and use electricity and at the same time they are supposed to be telling the public to save electricity. And the more oil that we use, the more expensive it gets. The oil in New York is the most expensive in the country, I suppose because it is the lowest sulfur oil. Ninety percent or more than 90 percent of our oils comes from foreign sources because that is the kind of oil, residual oil that is burned in our generators. In addition to that, we have a rate problem, at least in New York, where the rates unfortunately are probably the highest in the country. I looked this up. I say with regret that the average price used at the time of highest consumption, which is basically in the summer time in the areas served by Central Hudson as well as LILCO, is priced below what the real cost to the society is or what the consumer is, but we have not yet been able to develop the marginal costs. We haven't had all the information or the equipment that is necessary to do that. In the meantime, to have people add these services on the basis of the prices that are now being charged, encouraging to do that, promoting it, which is not just plain advertising, it is asking them to add that service, is really inherently misleading as we explain in our brief. Now, we realize, of course, that in banning we are intruding on the commercial speech rights, the First Amendment considerations that were considered by the commission, but this case is different from the other case in that there was the problem that consumers could only get the price information of prescription drugs practically through advertising. Here the price information, there is one price for electricity, it is public knowledge. Anybody can get it. You can call the utility or the appliance dealers who can advertise this electricity, can provide it --
Potter Stewart: Well, the point is you don't have any choice.
Peter H. Schiff: You don't have any choice, there is one price.
Potter Stewart: And that is all there is to know about it.
Peter H. Schiff: This isn't the routine legal services that we are involved with, this is talking qualitative kind of --
Byron R. White: Why do you say this is just in the terms of commercial speech? It seems to me that your ban would prevent the company from communicating about anything that is controversial, whether it has anything to do with their business or not -- please vote for George Jones for governor.
Peter H. Schiff: No, this is on the promotion of electricity, this isn't on whether they are promoting -- this ban, the only thing that is involved here is the promotion by advertising of electric usage. That is all that is involved here. It doesn't have anything to do with political advertising, which apparently George Jones perhaps can't be promoted in any event, but --
William H. Rehnquist: If he is an oil man or an electricity man, it might be?
Peter H. Schiff: Well, this particular order goes to the question of whether you can promote the usage --
Potter Stewart: Of electricity.
Peter H. Schiff: -- of electricity, right.
John Paul Stevens: On your point that the information is generally available about priced and the like and there is no choice, as Mr. Justice Stewart points out, as contrasted with other commercial speech cases, suppose a big company was concerned about the relative advantages and disadvantages of using heat pumps and using electric space heating rather than other kinds of space heating, isn't that information equally inaccessible except from the company itself --
Peter H. Schiff: No, because that was my next point, that the utilities are really not uniquely qualified to speak on that. They don't sell this equipment, they are just selling the electricity. The entities that are uniquely qualified, the ones that are comparable to the pharmacies are the appliance dealers or the manufacturers. It is not the utilities.
Byron R. White: I take it that by refusing to answer earlier, you would agree that you could not prohibit them from advertising the advantages of using their equipment?
Peter H. Schiff: Well, we certainly couldn't. Your question relates to --
Byron R. White: No, but my question of could the legislature put some kind of an oil conservation board into effect that would censor advertising generally that tended to promote the usage of oil.
Peter H. Schiff: I think that would be -- I would really doubt that we could do it except in cases of extreme emergency, but we certainly haven't attempted to do that. The problem here -- one of the things the commission did point out is that there were other alternatives --
Byron R. White: But it seems to me that you might have two different cases, one in which you say you can't advertise where the consumer has no alternative choice such as providing electricity for burning lighting or something like that, but why do you have to extend the ban all the way into areas in which there is a legitimate difference of opinion as to whether electricity is the most efficient energy source?
Peter H. Schiff: Your Honor, the reason that the monopoly aspect of this is very important is that, for example, it might be beneficial for a customer, an individual customer to take on an electric heat pump, the electric heat pump is normally -- Central Hudson says there are some without air conditioning, but at least they have never advised us of that -- normally carry with it air conditioning in the summer, and the commission found that this would result in air conditioning that would not otherwise happen. The commission found that the consequence of this would be to increase the rates of all the other customers. What we have is a problem that perhaps the individual customer who can get information elsewhere might be benefited by taking a particular appliance, but the rest of the customers are hurt and this is very different, as we point out in our brief, from the area of free competition of the pharmacist or others who aren't going to engage in the promotion unless they think it is going to be overall good for them. The company may think it is overall good for them, but you have to remember that most of the cost of this, the tab will be picked up through their monopoly rates. There is no way of really separating the consequences of the kind of promotion they do. This is why the fact that this is a monopoly makes this case very different from any other case that you have previously considered in this free speech area.
John Paul Stevens: Well, I understand heat pumps, of course, but I don't know why the competition for, say, a new subdivision is being developed by a huge builder or a new 100-story office building, they have a choice as to what kind of heating, space heating it shall employ, electric, coal, and so forth. Isn't that just old-fashioned competition in that area?
Peter H. Schiff: Well, you see, the resistance heating problem is that it uses substantially more oil and there really is not much argument and the situation in New York may be different --
John Paul Stevens: It clearly is not a monopoly then.
Peter H. Schiff: -- when we have conversions to coal, but we don't have that now. It is competition at that level, Mr. Justice Stevens, but in this case the utility --
John Paul Stevens: Isn't that the place they need the advertising the most, is where there is competition? They wouldn't spend a lot of money to tell people about rates they have to pay anyway.
Peter H. Schiff: The problem is when the utility does this advertising, the extra costs from using additional oil and from the rate structure problems which the utilities can equally work on with the commission, that problem is one that is going to be to the detriment of the rest of the consumers, so you really have to say, well, we can let them advertise to a fare-thee-well and the other consumers be damned, we can't control that even if you can't control it by putting in a -- suppose we said, well, you can promote but put in a label that this is dangerous to the general rates, that wouldn't help the other consumers because it is encouraging that use which in itself --
John Paul Stevens: Why don't you justify it on grounds of protecting other consumers rather than saving oil?
Peter H. Schiff: Well, that is part of it because -- no, we want to save oil. We are also troubled that any promotion, the commission found that any promotion that is done, including for heat pumps -- and this is mass media advertising that we are talking about, because we are not talking about one-to-one promotion, this sort of doesn't go to that -- is going to give them mixed signals that electric heating is going to be advertised primarily in the summertime when it would be installed or frequently in the summertime, and the consumers say how do the utilities tell us it is okay, how can we accept the fact that we shouldn't be using electricity for other purposes. This is one ball of wax. The utility is one entity and it is very difficult to disaggregate that and I -- now, there is an argument here on over-breadth --
Thurgood Marshall: Shouldn't we assume that the consumer is intelligent? Here you don't assume --
Peter H. Schiff: I think that the consumer is intelligent and we think that an intelligent consumer is going to accept the fact that if a utility is promoting generally, that it doesn't really mean what it says about conservation. I mean I think that is what I would think an intelligent consumer would be doing.
William H. Rehnquist: You reject then Mr. P. T. Barnum's oft-quoted maxim that no one ever lost a dime underestimating the intelligence of the American public?
Peter H. Schiff: I think the consumer is reasonably intelligent. I think that we point out that it is very difficult to really compartmentalize this, but that is why the fact that the ban is being -- it does not apply to other dealers, to appliance dealers where you do not have mixed signals. We think that it does provide consumers with a great deal of information and that they are not really being deprived of essential information. I would like to get to an important point I think and that is the position that Central Hudson has taken that, regardless of how good the reasons are that we have for banning it, we can't ban promotional advertising because we haven't banned the use of electricity and we haven't banned electric heat pumps or resistance heating. I think that the First Amendment does not require that kind of a conclusion. This Court in the Virginia Pharmacy case said we are confident that people will not -- that doctors will not over-prescribe, but you did also say in the Texan Optometry case that the fact that the state wanted to limit the commercial optometrist or had not cut out commercial optometrists did not mean that you couldn't put reasonable restrictions on that in terms of the trade name. And I think there is a vast difference in discouraging or not encouraging the use of electricity. It may be one way of permitting people to use that electricity without excessively pushing up the rates or without putting an undue pressure on the oil requirements, and that you don't have to go to the draconian means of saying, well, some people can't be attached. Now, I would be terribly troubled with saying that new customers couldn't attach or new people couldn't move, and I think it is just plain absurd to say that you can't put some limits on promotion simply because you have not banned the use of electricity or restricted the use of electricity. I think this Court has certainly used a common sense approach in these cases of commercial speech and frankly I am appalled to say that we have to be so draconian that the utilities can't be prevented from encouraging their usage.
Byron R. White: Well, are you arguing that because you could be so draconian you can have this much narrower but effective ban?
Peter H. Schiff: Well, I think certainly -- I don't think the facts would warrant trying to be that draconian at this time.
Potter Stewart: No, but you could, you might say, and therefore we can certainly do this.
Peter H. Schiff: Well, we certainly did that back in '73, when the oil was practically running out in the Con Ed territory and some other places, we recognized that there were alternative means of doing it and that restricting promotion was a better means of doing that than saying you simply couldn't -- that you close down the electric system alternately throughout the system. There are common sense differences in the commercial speech area and -- well, regardless of commercial speech, I think -- but especially in the commercial area, where you may have to take other alternative means, if this is a sensible means, more sensible than saying absolute ban, I would think that this makes very good sense in First Amendment terms, but especially because of the minimal --
Potter Stewart: This shift by its terms applies to "all electric corporations."
Peter H. Schiff: Yes.
Potter Stewart: How many of those are there in the state of New York?
Peter H. Schiff: Well, there are seven -- there are basically seven privately owned utilities and -- well, this applies to the seven electric privately owned utility companies in the state.
Potter Stewart: Well, this applies by its terms to all electric corporation --
Peter H. Schiff: They are all the ones that we regulate.
Potter Stewart: -- and my question was how many are there.
Peter H. Schiff: Well, there are some municipally owned which provide a very small service in New York state. There are seven that serve virtually the whole state, Your Honor.
Potter Stewart: There are only seven over which the commission has jurisdiction?
Peter H. Schiff: Well, there may be a couple of very small ones, but basically this applies to the seven. There are seven basic companies that serve New York state.
Potter Stewart: Throughout the state.
Peter H. Schiff: Throughout the state, yes.
Warren E. Burger: How many municipal or public owned, roughly? Two or three or twenty?
Peter H. Schiff: Well, I think there are probably more in the nature of twenty. It is a peculiar setup. They are not subject to our jurisdiction because they get their power from the power authority of the state of New York and by statute we do not regulate them. But unlike some other places, there is very little electric power sold by the municipals in New York. I do want to say that in the past we had restrictions on the promotion of telephone, we still have some restriction on the promotion of gas service. We imposed restrictions on telephone promotion in the early seventies when service in down-state New York was just incredibly poor. As that service improved, the restrictions got lifted and the commission has been flexible and has adjusted to the exigencies of the situation. And if a showing can be made that promotion in fact is going to conserve energy, which it has never been made to us, the commission's order says we are ready to relax our ban, we're not interested in banning for the sake of banning it. We think that is basically a bad idea, if we can avoid it. In gas, we have been relaxing it as more gas has become available. And I think in viewing the commission's experience in this, I think that is something also to keep in mind. But what the utilities say, let us go ahead and do what we ever want to do, and it doesn't really make any difference what effect it has on the rate payers, the mere fact that there is competition on a small part of this business does not protect the consumers generally, it is an important reason to approve the ban on promotion here. The utility status is vital.
Warren E. Burger: We will resume there at 1:00 o'clock. You yielded your time, Mr. Schiff?M
Peter H. Schiff: I am finished unless there are further questions, Your Honor.
Warren E. Burger: Mr. Taylor.
Telford Taylor: Mr. Chief Justice, and may it please the Court. I would just like to make an additional comment with respect to the question that Mr. Justice Stevens addressed to Mr. Schiff, suggesting a newly developed housing area, should it be resistance heating or some other form, and Mr. Schiff's reply was that resistance heating would take more oil. That of course may be true if the energy is electrically fired, but may I call your attention to Mr. Schiff's brief which says on page 18 that the commission has never taken the position that electric space heating should be discouraged, and also says that there is no sufficient basis for any action banning electric heating. That is certainly true, there is no shortage of oil, there is no shortage of electric capacity, there is no need for rationing. These circumstances which might call those powers into play are not here. There are advantages in electric space heating --
Warren E. Burger: Are you saying that is the commission's position, Mr. Taylor, that the commission has not found any of these things? Is that it?
Telford Taylor: That is what it says, yes, sir. The advantages, of course, of electric heating are that it is clear, its use in the home is pollution free, you don't have gas trucks running over the place and polluting and burning up gas, and we say that under these circumstances that --
Byron R. White: Are you urging that the justification they submit or they tender is insufficient?
Telford Taylor: It is concededly so. It is concededly so, Mr. Justice White.
Byron R. White: Well, I didn't hear him concede.
Telford Taylor: Well, I read it though at page 18 of his brief that there is no basis for the restrictions on electric heating, and we say if that is so that you cannot put a sort of slow brake on it by forbidding the public to be informed about the advantages that are there. Now, one other thing which I would like to mention, the notion that if we promote electric energy we are giving the public misleading signals about conservation. You will find in our reply brief an example of what has been done here. We have save energy programs in which various ways of saving energy are indicated to the public and by display, and so forth, accompanied however by information about the heat pump. The commission has questioned our doing that under this ban. There is in fact a vagueness problem with this ban, too, though I have not stressed it because I think there are more fundamental arguments, but there is that vagueness argument and the fact is that, despite his adverse comments on the heat pump, the New York Legislature has recently required us to finance their installation under some circumstances and have specified the heat pump as an energy saving device. So I think the gist of my very brief reply is that with all respect, Mr. Justice White, I think it is over-simplified to say that any promotion is going to be energy costly. It is not. Some of it is going to be energy economical and the order ignores that.
Byron R. White: I know, but your point is that even if it is costly, this restriction is invalid.
Telford Taylor: My point is that the additional costliness is very incorrect and difficult to quantify and neither federal nor state-wise has any other authority found any necessity for this sort of limitation.
Byron R. White: So we are to disagree with the commission then.
Telford Taylor: We urge you to find the invocation of the value in sufficient because it will not accomplish measurably its purpose.
Warren E. Burger: Or, alternatively, the commission is without authority, even assuming the accuracy of those claims --
Telford Taylor: Yes, Mr. Chief Justice, for the other arguments I have advanced.
Warren E. Burger: Thank you, gentlemen. The case is submitted.