Court Opinion

ID: 8927768
Source: CourtListenerOpinion
Date Created: 2022-11-27 06:49:47.839266+00
Date Added: 2024-06-11T17:09:26.665172
License: Public Domain

SAROKIN, District Judge,
concurring:
I have one disagreement with the majority’s excellent opinion, with which I join. However, I write separately because, in my view, this case could be and should be decided on much narrower grounds. Commercial speech is entitled to first amendment protection only if it is neither misleading nor related to unlawful activity. Appellee’s activities do not meet this test.
The majority states that “AFS product demonstrations easily get over the hurdle posed by the first prong of the Central Hudson test. The demonstrations clearly concern lawful activity, and the university does not contend that they are misleading.” Majority op. at 863. I respectfully disagree with both of these conclusions. First, the university, ■ in fact, asserts its interest in regulating AFS product demonstrations because “[g]roup solicitations and sales have the potential for deception, fraud and overreaching.” Majority op. at 13, 20 n. 27. Moreover, in its initial brief, the university stated
There is no question that Penn State is concerend with the deceptive sales tactics of AFS. The record establishes that AFS provides a written “script” for its sales representatives, and that the script was deceptive and misleading in three respects. First, it misrepresented the nature of the two-year “peace of mind” guarantee by failing to disclose that a purchaser could not exchange merchandise if it was used even once. Second, it misrepresented the AFS credit policy by failing to disclose that the policy differed for blacks and Hispanics. Third, the script failed to provide for oral notification to the purchaser at the time of consummation of the sale of the right to cancel within three days, as required by federal and state law.
Appellant’s Brief at '44 (citations omitted). At that time, the university argued that such representations, among other factors discussed in the majority opinion, rendered its regulation reasonable. After oral argument, and in a Supplemental Brief requested by the court, the university refined its position:
Penn State, both in AFS I and the present case, introduced evidence showing that AFS credit policies were discriminatory and that certain AFS sales techniques were deceptive and misleading. The purpose of such evidence, however, was to demonstrate that such speech is not in the first instance proctected by the First Amendment, the initial element of any First Amendment analysis.
Appellant’s Supplemental Brief at 28 (emphasis added). The question was thus squarely presented for review by this court.
At trial, ample evidence was presented of the fraudulent practices documented by the university. Thus, the failure fully to disclose either AFS’s exchange policy, see App. 1136 (Defendant’s Exhibits D-22.1-22.3), or a buyer’s right to cancel the contract within three days, see App. 1140-41 (Defendant’s Exhibit D-40), are fully borne out by the evidence.1 Furthermore, as the majority recognizes, AFS’s offer of a free vacation for its on-campus host or hostess *873is itself deceptive. Majority op. at 4 n. 5. More important, this court has recently concluded that AFS’s policies “discriminated on prohibited bases such as race, sex and marital status which were not related to the social need those [policies] sought to address,” United States v. American Future Systems, Inc., 743 F.2d 169, 182 (3d Cir.1984), in violation of the Equal Credit Opportunity Act, 15 U.S.C. § 1691 et seq., The court wrote:
Despite all of the disadvantages that women have had, historically and at present, the significant disadvantages suffered by white women have been far less than those disadvantages black women, Native American women (Indians), Hispanic and other minority American women have had to endure for centuries. Yet the paradox of AFS’s plan is that it perpetuates the past disparities between white and minority women and rather than helping all women it aids only white women and slams the door of equal credit opportunity in the faces of minority women. •
743 F.2d at 181.
Taken together, these facts paint a picture of appellee AFS seeking first amendment protection for fraudulent or misleading speech, in the pursuit of policies which are discriminatory on the basis of race and sex.2 The Supreme Court had, as the majority states, made clear that such speech, which is either unlawful, misleading or both is not entitled to first amendment protection. Majority op. at 19, citing Central Hudson, 447 U.S. at 566, 100 S.Ct. at 2351. See also Bolger, 103 S.Ct. at 2881; Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748, 771, 96 S.Ct. 1817, 1830, 48 L.Ed.2d 346 (1976). Of course, protecting the public from being misled, a goal which, the district court found motivated the university, may justify state regulation infringing speech.3 Moreover, the illegality of AFS’s credit policies as found by this court just a few months ago, ought alone bar AFS from seeking to clothe such activities in first amendment protective garb. See, e.g., Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 496, 102 S.Ct. 1186, 1192, 71 L.Ed.2d 362 (1982); Pittsburgh Press Co. v. Pittsburgh Commission on Human Relations, 413 U.S. 376, 388, 93 S.Ct. 2553, 2560, 37 L.Ed.2d 669 (1973) (first amendment does not protect advertisements deemed discriminatory). As the Supreme Court has stated, with respect to advertising, only “[t]ruthful advertising related to lawful activities is entitled to the protections of the First Amendment.” In re R.M.J., 455 U.S. 191, 203, 102 S.Ct. 929, 937, 71 L.Ed.2d 64 (1982).
Therefore, although I can find no fault with the reasoning or principles enunciated in the majority opinion, it begins the analysis where it could have ended it. Before AFS can mount a constitutional attack upon the regulation imposed by Penn State, it must establish its entitlement to do so. *874By decision of this very court, however, AFS is engaged in activities which unlawfully discriminate; the record below demonstrates a pattern of fraud and misrepresentation as well. Under such circumstances, AFS is not entitled to the learned analyses that it here receives at the hands of this court, but rather a rejection of its claim because its conduct does not entitle it to first amendment protection. In the commercial arena, no company or person has a constitutional right to speak words which are intentionally misleading, particularly when such speech furthers a commercial venture which discriminates on the basis of race and sex.

. The university alleges that the latter practice violates federal and state law, both of which require written notification of the right to cancel within three days. See 16 C.F.R. § 429.1(b); 74 P.S. § 201-7(b). Although the district court originally found otherwise, see AFS, 466 F.Supp. at 39, the contract introduced into evidence here did not contain the required provision. There was, however, oral notification of such right. App. 1136.

. Clearly, this picture concerned the university; indeed, once having viewed it, the university was apparently motivated by it to take the actions here at issue. Compare AFS, 553 F.Supp. at 1275 ("The real concern of Defendants has to do with monitoring the ‘high pressure salesmanship’ of employees of AFS.”) with AFS, 464 F.Supp. at 1257 (“In the fall of 1977 Penn State officials did not know of American Future Systems’ credit policy or its policy with respect to the ‘Florida holiday' drawings ... American Future Systems was prohibited from conducting sales demonstrations at Penn State because of Penn State’s policy against such commercial activity occurring within the residence halls rather than because of any view held by Penn State officials as to the propriety or impropriety of American Future Systems' credit plans or its policy with respect to the ‘Florida holiday’ drawing.”).

. Compare, e.g., Friedman v. Rogers, 440 U.S. 1, 13-16, 99 S.Ct. 887, 895-897, 59 L.Ed.2d 100 (1979) (state regulation justified); Ohralik v. Ohio State Bar Association, 436 U.S. 447, 461-62, 98 S.Ct. 1912, 1921-22, 56 L.Ed.2d 444 (1978) (same); United States v. Reader’s Digest Association, Inc., 662 F.2d 955, 964-65 (3d Cir.1981), cert. denied, 455 U.S. 908, 102 S.Ct. 1253, 71 L.Ed.2d 446 (1982) (F.T.C. order designed to prevent false or misleading statement justifies regulation of speech) with Bates v. State Bar of Arizona, 433 U.S. 350, 372-73, 97 S.Ct. 2691, 2703-04, 53 L.Ed.2d 810 (1977) (state regulation not justified on grounds of potential deception of the public).