Opinion ID: 6316805
Heading Depth: 3
Heading Rank: 3

Heading: R.C. Maxwell v. Borough of New Hope

Text: About two decades after the Supreme Court’s decision in Bantam Books, the Third Circuit applied that case to a situation in which the government had exerted deliberate pressure on a private party to terminate a private business relationship. In R.C. Maxwell Co. v. Borough of New Hope, a case on which Defendants rely, the plaintiff leased commercial billboards from Citibank in the Borough of New Hope, Pennsylvania. 735 F.2d 85, 86 (3d Cir. 1984). The billboards advertised alcoholic products as well as businesses located outside of the Borough. Id. at 86–87. Because 15 Appellate Case: 20-1162 Document: 010110565027 Date Filed: 08/23/2021 Page: 16 the Borough viewed itself as a historic town with a “quaint atmosphere,” the Borough’s Council grew frustrated by the billboards’ content and size and sent several letters to Citibank. Id. at 86. The letters advised Citibank that the Borough sought its “personal assistance” in removing the billboards at the end of their leases and that it hoped Citibank would do so by a professional agreement rather than through more expensive “legal procedures.” Id. at 86 n.2. The letters also mentioned that though this was a “courteous request,” the town was near enacting a zoning ordinance prohibiting such advertising and that a federal agency might also soon require the billboards’ removal. Id. Unlike in Bantam Books, the letters contained no threats of criminal prosecution and expressed a clear desire to avoid legal proceedings. See id. And though the letters didn’t say that the Council could proscribe the billboards’ contents, their size, or Citibank’s right to own them, they expressed the Council’s strong desire for the billboards to be removed because of their “offensive” size and their “unsightly” content. See id. at 86–87. After receiving the letters, Citibank agreed to remove the billboards, explaining that it was “concerned as to how it [was] seen” by the community in which it own[ed] land.” Id. at 87 (citation omitted). Further, Citibank admitted that it wanted to stay in the “good graces” of the Council in case Citibank might later choose to develop land or engage in other business endeavors in the Borough. Id. (citation omitted). Citibank then repeatedly ordered the plaintiff to remove the billboards by the end of the plaintiff’s year-to-year tenancy, but when the time came 16 Appellate Case: 20-1162 Document: 010110565027 Date Filed: 08/23/2021 Page: 17 to do so, the plaintiff refused. Id. So Citibank successfully sued the plaintiff in Pennsylvania state court to remove the billboards. Id. After that, the plaintiff sued the Borough in federal court, arguing under Bantam Books that the Borough had “coerced” Citibank into removing the billboards, which violated plaintiff’s First Amendment rights. Id. Ultimately, the two cases were consolidated in federal court, and the court ruled against the plaintiff-lessee in both actions. Id. On appeal, the Third Circuit affirmed the order granting summary judgment to the Borough for the alleged First Amendment violation. Id. In so doing, the court commented that, unlike in Bantam Books, the Borough’s two letters were “devoid” of “any enforceable threats,” and thus “amounted to nothing more than a collective expression of the local community’s distaste for the billboards.” Id. at 88–89. It further concluded that “[t]he [F]irst [A]mendment is not ordinarily implicated when private actors [impose] restrictions on expression; indeed, in many instances the [F]irst [A]mendment has been held to guarantee private actors the right to make such restrictions.” Id. at 87 (listing cases). Put simply, the Third Circuit acknowledged that private businesses may restrict private expression. See id. And it further noted that because businesses care about their public image, they may be influenced by public sentiment without being coerced by the government. See id. at 89 (“Businesses are naturally sensitive to their images in the community. If we were to apply constitutional standards to every private action intended to conform to civic sentiment, we would erode the ambit of private action greatly.”). With this case juxtaposed to Bantam Books, we now assess 17 Appellate Case: 20-1162 Document: 010110565027 Date Filed: 08/23/2021 Page: 18 VDARE’s argument that the City’s Statement provided such significant encouragement as could satisfy the nexus test. 4. Application of the Nexus Test to the Resort’s Cancellation VDARE argues that its situation is akin to that described in Bantam Books. Based on the cases above, we disagree. Unlike in Bantam Books, nothing in the City’s Statement plausibly threatens the Resort with legal sanctions. Indeed, the first line of the Statement states the opposite: “The City of Colorado Springs does not have the authority to restrict freedom of speech, nor to direct private businesses like the Cheyenne Mountain Resort as to which events they may host.” Appellant’s App. at 8 (emphasis added). We find that this sentence is more comparable to the communications in R.C. Maxwell and another case, Penthouse International, Ltd. v. Meese, 939 F.2d 1011 (D.C. Cir. 1991), rather than to those in Bantam Books. In Penthouse, several public officials serving as members of the United States Attorney General’s Commission on Pornography accused multiple major American companies of selling pornographic material. Id. at 1012–13. Pursuing their mission “to determine the nature, extent, and impact on society of pornography in the United States,” the Commission sent letters to corporations such as Time Inc. and Southland Corporation (owner of the 7–Eleven chain) on Justice Department stationary. Id. The letters stated that “the Commission received testimony alleging that your company is involved in the sale or distribution of pornography. The Commission has determined that it would be appropriate to allow your company an opportunity to respond to the allegations prior to drafting its 18 Appellate Case: 20-1162 Document: 010110565027 Date Filed: 08/23/2021 Page: 19 final report section on identified distributors.” Id. at 1013. In response, Southland advised the Commission that it had “decided to stop selling adult magazines in light of the public concern about the effects of pornography,” and it “urge[d] that any references to Southland or 7–Eleven be deleted from [the Commission’s] final report.” Id. (alternations in original). In arriving at this decision, Southland noted a telephone call to its Vice President from a member of the Commission, who stated that the content of Playboy and similar magazines was “linked to child abuse” and that the Commission intended to comment about this link in its published report. Id. Playboy Enterprises, Inc. and Penthouse International Ltd. then filed lawsuits (later consolidated) seeking to (1) permanently enjoin the Commission from disseminating what they termed a “blacklist” to censor or suppress their magazines, and (2) obtain money damages for a deprivation of their First Amendment rights. See Playboy Enters., Inc. v. Meese, 746 F. Supp. 154, 155 (D.D.C. 1990), aff’d sub nom. Penthouse, 939 F.2d 1011. After the district court granted the defendants’ summary judgment motions on both claims, Penthouse appealed, and the D.C. Circuit assessed the Commissions’ letters under the holding of Bantam Books. See Penthouse, 939 F.2d at 1014–15. The court concluded that, unlike in Bantam Books, the letters “contained no threat to prosecute, nor intimation of intent to proscribe the distribution of the publications.” Id. at 1015 (“It may well be that the Commission came close to implying more authority than it either had or explicitly claimed. Nevertheless . . . we do not believe that the Commission ever threatened to use the 19 Appellate Case: 20-1162 Document: 010110565027 Date Filed: 08/23/2021 Page: 20 coercive power of the state against recipients of the letter.” (citation omitted)). So too here. The City’s first sentence acknowledges its lack of authority to restrict freedom of speech or to direct private businesses about which events they may host. See Appellant’s App. at 8 (“The City of Colorado Springs does not have the authority to restrict freedom of speech, nor to direct private businesses like the Cheyenne Mountain Resort as to which events they may host.”). Next, VDARE points to the second sentence in the City’s Statement to argue that the first sentence was a “covert veneer.” Appellant’s Opening Br. at 13. The second sentence states: “That said, I would encourage local businesses to be attentive to the types of events they accept and the groups that they invite to our great city.” Appellant’s App. at 8. We agree with the district court that this sentence contains no threat and only expresses the City’s views on the need for private businesses to pay attention to the types of events they accept and groups they invite. See id. at 88. Notably, this sentence doesn’t name VDARE or express any “distaste” for VDARE’s speech, as did the Council’s letters to Citibank in R.C. Maxwell, stating that the billboards were “unsightly” and ill-suited to the Borough’s aesthetic. 735 F.2d at 86. VDARE next turns to the third sentence in the Statement: “The City remains steadfast in its commitment to the enforcement of Colorado law, which protects all individuals regardless of race, religion, color, ancestry, national origin, physical or mental disability, or sexual orientation to be secure and protected from fear, intimidation, harassment and physical harm.” Appellant’s App. at 8. VDARE contends that this too was a “thinly-veiled threat to prosecute VDARE and those who 20 Appellate Case: 20-1162 Document: 010110565027 Date Filed: 08/23/2021 Page: 21 cooperated with it” and that “Mayor Suthers’ statement not only ‘encourage[d]’ pariah treatment for VDARE but exercised ‘coercive power’ to that end.” Appellant’s Opening Br. at 18–19. We disagree. As with the first two sentences in the Statement, this sentence contains no plausible threat—let alone a threat of prosecution. It’s a statement of Colorado law. As the district court concluded, it isn’t analogous to the direct warnings and threats contained in the notices in Bantam Books. See supra, Discussion, Part I.A.2; cf. Wolford v. Lasater, 78 F.3d 484, 488 (10th Cir. 1996) (“In the context of a government prosecution, a decision to prosecute which is motivated by a desire to discourage protected speech or expression violates the First Amendment and is actionable under § 1983.” (emphasis added) (citation omitted)). Another case, X-Men Security, v. Pataki, 196 F.3d 56 (2d Cir. 1999) serves as a helpful comparator. There, a subsidized housing complex located in a crime-ridden part of New York City employed plaintiffs, X-Men Security, Inc., a private security company. Id. at 60. A majority of X-Men’s employees were of “Black African American descent” and “followers of the Islamic Religion.” Id. (citation omitted). Questioning the propriety of employing X-Men under a government contract, two New York politicians campaigned to prevent the housing complex from renewing its contract with X-Men. Id. at 61–62. In a letter they wrote to the housing commissioner, they “accused [X-Men] . . . of hating Jews, women, Catholics and others.” Id. at 61. They added that awarding X-Men a contract would “subsidize[] the 21 Appellate Case: 20-1162 Document: 010110565027 Date Filed: 08/23/2021 Page: 22 activities of a hate group and help[] fund the racist and anti-Semitic goals of Louis Farrakhan and the Nation of Islam.” Id. Facing this pressure, the housing complex terminated X-Men’s month-tomonth contract, awarding it instead to a company that hadn’t even submitted a bid. Id. at 62 (citation omitted). X-Men then sued a host of defendants, including New York State officials, asserting claims based on freedom of religion and association, due process, and equal protection. Id. Though the district court partially dismissed the complaint, it kept alive the First Amendment retaliation claim against the officials. Id. at 63. The Second Circuit unanimously reversed the district court’s First Amendment retaliation ruling. Id. at 72. Assessing whether the language in the letter could color a First Amendment claim, the court concluded that “the legislators were not the decisionmakers” and had “no power to control the award of contracts.” Id. at 68. So even though the letter accused X-Men of being part of a “hate group” and practicing racism, the court concluded that it wasn’t threatening. Id. at 71 (“We see neither in this letter nor in any of the other allegations of the complaint any semblance of threat, coercion, or intimidation by the legislators.”). The same is true here. The City made clear that it lacked any power to control the Resort’s events. Finally, VDARE points to the fourth sentence in the Statement, which states that the City “will not provide any support or resources to this event, and does not condone hate speech in any fashion.” Appellant’s App. at 8. This, VDARE argues, 22 Appellate Case: 20-1162 Document: 010110565027 Date Filed: 08/23/2021 Page: 23 encouraged “a heckler’s veto.” Id. at 20. 2 Moreover, VDARE argues that the surrounding circumstances—including the “natural import” of the Statement, its timing, and basic fairness—show that the Resort cancelled the Conference because of the Statement and its lack of “reassurance that the City would protect [its] properties and keep the peace.” Id. at 20–23. We disagree with VDARE that this is a plausible interpretation of the last line of the City’s Statement. First, the “surrounding circumstances” included the violent protests that occurred in Charlottesville only three days before the Resort’s cancellation. See supra, Background, Part I. VDARE’s allegations don’t acknowledge that the Resort may have cancelled its contract after observing news coverage of that event. This likelihood matters because under Iqbal, we can’t infer that the Resort’s cancellation is attributable to the City based on just the possibility of its being so. Iqbal provides that it isn’t sufficient for a plaintiff to plead facts that are “merely consistent with” a defendant’s liability and that such facts “stop[] short of the line between possibility and probability.” 556 U.S at 678 (quoting Twombly, 550 U.S. at 557). Indeed, the circumstances in this case are reminiscent of a case in which a New York City public official sent letters to department stores critiquing a satirical boardgame at a time that coincided with public controversy over the subject of the game. See Hammerhead Enters., Inc. v. Brezenoff, 707 F.2d 33 (2d Cir. 1983). In 2 A “heckler’s veto” is “[t]he government’s restriction or curtailment of a speaker’s right to freedom of speech when necessary to prevent possibly violent reactions from listeners.” Heckler’s Veto, Black’s Law Dictionary (11th ed. 2019). 23 Appellate Case: 20-1162 Document: 010110565027 Date Filed: 08/23/2021 Page: 24 Hammerhead, the Human Resources Administrator of New York City had urged several department stores to refrain from carrying a board game named “Public Assistance—Why Bother Working for a Living.” Id. at 34–37. The Administrator sent at least thirteen national department stores a letter on official stationery urging them not to carry the game. Id. at 36–37. The letters stated that “[b]y perpetuating outdated myths, . . . [the] game does a grave injustice to taxpayers and welfare clients alike.” Id. at 36 n.2. It concluded: “Your cooperation in keeping this game off the shelves of your stores would be a genuine public service.” Id. After several department stores stopped carrying the game, the game’s creators sued the Administrator, the Mayor, and several New York City entities, alleging that the letter violated their First Amendment rights and was libelous, defamatory, and tortiously interfered with contractual relations. Id. at 38. The Southern District of New York disagreed and ruled that “the letter was not censorship; it was an appeal to conscience and decency.” Hammerhead Enters., Inc. v. Brezenoff, 551 F. Supp. 1360, 1370 (S.D.N.Y. 1982), aff’d, 707 F.2d 33. The Second Circuit affirmed, reasoning that the letter was “nothing more than a well-reasoned and sincere entreaty in support of [the public official’s] own political perspective.” Hammerhead, 707 F.2d at 38. And it concluded that despite the letters and other similar pressure tactics aimed at specific stores, the subsequent “decision to cancel [selling the game] . . . may have been spurred by the continuing controversy in the press or by business reasons wholly unrelated to the . . . letter.” Id. at 37. 24 Appellate Case: 20-1162 Document: 010110565027 Date Filed: 08/23/2021 Page: 25 Here too, VDARE’s Conference subjects overlapped with worrisome events to a business owner. So absent factual allegations that the Resort cancelled the Conference because the Resort felt that the City had directed it to do so, VDARE hasn’t plausibly alleged that the Resort’s conduct was state action. Second, VDARE speculates that regardless of what future circumstances would have unfolded, the City would have allowed the “breakdown of law and order.” Appellant’s Opening Br. at 20. But VDARE hasn’t plausibly alleged that the City was declaring that it would not intercede with police or fire personnel if faced by the mayhem that VDARE envisions. That’s just its subjective interpretation, and an implausible one too. What VDARE wanted, it had no right to demand—municipal resources to monitor a private entity’s private event. Third, VDARE doesn’t plausibly allege that the Statement was significantly encouraging or coercive. VDARE doesn’t allege that the City followed up on its Statement with any actions. This too contrasts with Bantam Books, in which the Commission followed up on its threatening notices with visits from police officers so that distributors “reasonably understood” that they had to comply with the notices. 372 U.S. at 68; see also Hammerhead, 707 F.2d at 37 (finding no coercion or censorship present where the Administrator “took no further steps to trace the consequences of his correspondence,” “did not investigate whether any merchants were in fact carrying the game,” and did not “contact any government agency which might have regulatory power over [the] department stores.” (footnote omitted)). Indeed, the threat of imposing criminal sanctions, and how it was continually 25 Appellate Case: 20-1162 Document: 010110565027 Date Filed: 08/23/2021 Page: 26 reinforced, is what led the Supreme Court in Bantam Books to conclude that the Commission’s tactics amounted to a state-sponsored system of prior restraints. See 372 U.S. at 68–69. And fourth, as noted, nothing in the Amended Complaint plausibly alleges that the City used its power to control the Resort’s independent decision-making process. See X-Men, 196 F.3d at 68, 71 (explaining that the public officials who sent letters criticizing X-Men didn’t violate the First Amendment when they had “no power to control the award of contracts” and only exerted “pressure” in the form of speech). In sum, the allegations don’t show that the City ever threatened or ordered the Resort to take any action akin to what the Commission did to distributors in Bantam Books. Nor does it allege that the City sent police officers to intimidate anyone as in Bantam Books. 3 Likewise, VDARE hasn’t pleaded that the Resort and the City were intertwined through regulatory, administrative, financial, or contractual regimes, such as those discussed in Blum and its progeny or in Gallagher, which could have given the City direct influence over the Resort. As well, VDARE’s allegations don’t compare to the facts in R.C. Maxwell, Hammerhead, X-Men, or Penthouse, cases in which a government official directly communicated with a private third party in an effort to pressure that party to take a specific action. 3 Similarly, VDARE’s reliance on Marcus v. McCollum, 394 F.3d 813 (10th Cir. 2004), is misplaced. That case also involved the physical presence of police officers, who told plaintiffs that they would “go to jail” if they didn’t keep their “mouth[s] shut.” Id. at 817 (citation omitted). 26 Appellate Case: 20-1162 Document: 010110565027 Date Filed: 08/23/2021 Page: 27 In sum, we agree with the district court that “for unconstitutional state action to exist, state law must direct and/or state agencies and officials must commit conduct that directly violates a party’s [F]irst [A]mendment rights.” Appellant’s App. at 92. The City didn’t engage in such conduct here. Thus, we conclude that VDARE hasn’t plausibly alleged that the Resort’s cancellation of the Conference was state action. 4