Court Opinion

ID: 9629874
Source: CourtListenerOpinion
Date Created: 2023-08-22 09:51:29.604626+00
Date Added: 2024-06-11T18:07:25.823984
License: Public Domain

MARTHA CRAIG DAUGHTREY, Circuit Judge,
concurring in part and dissenting in part.
Section 136.616 of the Kentucky Revised Statutes imposes a 1.3% tax on the gross revenues of providers of communications services within the Commonwealth. See K.R.S. §§ 136.616(1) and (2). The validity of that tax is not at issue in this litigation. Subsection (3) of the legislation mandates, however, that “[t]he provider shall not collect the tax directly from the purchaser or separately state the tax on the bill to the purchaser.” It is this prohibition on the communication of certain information that has engendered this legal dispute between BellSouth and the Kentucky officials charged with the administration of the statute.
The majority adroitly resolves many of the thorny subissues involved in this appeal, and I concur in much of that exposition. Specifically, I agree that this litigation is not circumscribed by the Tax Injunction Act, 28 U.S.C. § 1341. Furthermore, I concur in the conclusion of the majority that the provision of the Kentucky statute that bars the actual collection of the tax at issue from consumers regulates conduct, not speech, and thus withstands constitutional scrutiny. Because, however, I would conclude that the speech that is restricted by the statute is both commercial in nature and inherently misleading, I respectfully dissent from the majority’s invalidation of the legislative directive that a regulated industry not include the gross receipts tax as a line item on customers’ bills.

Commercial Nature of the Speech

Although the United States Supreme Court has recognized a “eommonsense” distinction between commercial speech “and other varieties of speech,” see Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n of NY, 447 U.S. 557, 562, 100 S.Ct. 2343, 65 L.Ed.2d 341 (1980) (quoting Ohralik v. OH State Bar Ass’n, 436 U.S. 447, 455-56, 98 S.Ct. 1912, 56 L.Ed.2d 444 (1978)), this case exemplifies the lack of clarity in such a distinction. Even in Central Hudson, the Court first equated commercial speech with “expression related solely to the economic interests of the speaker and its audience.” Id. at 561, 100 S.Ct. 2343. Immediately after that seemingly straightforward description, however, the Court continued by explaining that “[cjommercial expression not only serves the economic interest of the speaker, but *512also assists consumers and furthers the societal interest in the fullest possible dissemination of information.” Id. at 561-62, 100 S.Ct. 2343. Thus, according to the Court’s own words, commercial speech does not involve solely the economic interests of the speaker; certain societal benefits also spring from the sharing of ideas and information that necessarily accompanies any such communication.
Prior to its decision in Central Hudson, the Supreme Court embraced an even more restrictive view of commercial speech, equating it simply with “speech proposing a commercial transaction.” Ohralik, 436 U.S. at 455-56, 98 S.Ct. 1912; see also Bolger v. Youngs Drug Prods. Corp., 463 U.S. 60, 64, 103 S.Ct. 2875, 77 L.Ed.2d 469 (1983). It is this line of cases upon which BellSouth now appears to rely, arguing that placement of the tax line-item on a consumer’s bill cannot be considered commercial speech because the communication also serves the additional purpose of informing the consumer exactly who is responsible for the increase in costs passed on to the end-user.
I find BellSouth’s argument in this regard unhelpful in light of Central Hudson’s refinement of the Court’s earlier commercial speech analyses. Indeed, even in instances involving what is typically considered classic commercial speech, a potentially broader underlying concern could be uncovered such that the speech might otherwise merit the stricter protections now reserved for non-commercial communication. For example, a newspaper advertisement of a sale on gas-guzzling Hummers could be construed not as a strategy to sell motor vehicles, but as a political statement that the country need not concern itself with the two-headed monster of environmental degradation and destructive self-aggrandizement. Likewise, a circular announcing drastic pre-fall price cuts on camouflage outerwear might not be seen as simply an effort to boost lagging clothing sales in a crippled economy, but rather as the outward expression of support for the sport of hunting or even a subtle method of demonstrating contempt for the role of government in the regulation of firearms.
Despite the political accouterments that might thus be attached to the plaintiffs proposed communications, at its core Bell-South’s desire to include a line-item on its invoices indicating the existence of a required 1.3% tax on the corporation’s gross receipts is simply a commercially-sawy gambit to deflect from itself ultimate responsibility for a price increase that could encourage consumers to seek telecommunications service from another company. The speech thus has a predominant commercial value, with any political or other protected aspect being not only speculative but tangential and de minimis. I thus conclude that the speech at issue in this case is commercial in nature and that any restrictions on it must satisfy only the less-stringent analytical test of Central Hudson set forth in the majority opinion.

Misleading Nature of the Speech

As explained by the majority, the threshold inquiry under the Central Hudson analysis seeks simply to ensure that “the communication is neither misleading nor related to unlawful activity.” Cent. Hudson, 447 U.S. at 564, 100 S.Ct. 2343. Indeed, “there can be no constitutional objection to the suppression of commercial messages that do not accurately inform the public about lawful activity.” Id. at 563, 100 S.Ct. 2343. Consequently, “[t]he government may ban forms of communication more likely to deceive the public than to inform it.” Id. (citing Friedman v. Rogers, 440 U.S. 1, 13, 15-16, 99 S.Ct. 887, 59 L.Ed.2d 100 (1979), and Ohralik, 436 U.S. at 464-65, 98 S.Ct. 1912).
*513By including a line-item tax on a consumer’s invoice, BellSouth clearly gives the impression that the consumer is responsible for the additional tax imposed by the government through legislation. In fact, however, K.R.S. § 136.616(3) explicitly provides that the gross revenue tax imposed by the legislation is not the responsibility of the consumer but, rather, must be handled by the telecommunications company as an additional cost of doing business within the Commonwealth. I find it difficult to imagine more misleading “speech” than a list of charges referencing a monthly fee and various taxes, when one of the listed taxes is not to be assessed against the customer at all but is more akin to the fixed costs of a corporate entity, like building rental charges, satellite purchases, or other business overhead costs.
Clearly, line-item charges on a customers bill are not inherently misleading; to the contrary, such itemizations most often serve to explain the various components of a consumer’s cost or, traditionally, are assessed “on the transaction between the operator and the subscriber.” See, e.g., 47 U.S.C. § 542(c)(3). Nevertheless, to insinuate that a certain charge is somehow dependent upon the consumer’s usage of a particular telecommunication service when it is, in fact, an assessment only upon the gross revenues of the company providing the service is nothing if not misleading. Were BellSouth willing to place line items on customers’ invoices listing the consumers’ shares of payments for executive salaries, golden parachutes, lobbying expenses, business travel, corporate parties, advertising, and every other component of the corporation’s costs of doing business, the line item defining the portion of the bill necessary to recoup payment of a gross receipts tax would not appear as deceptive. Its failure to do so, however, merely highlights the misleading nature of emphasizing that single fixed business-operations expense.
By banning the inclusion of a line item on consumers’ invoices listing that portion of each individual bill that represents a portion of a gross-receipts tax imposed upon BellSouth, the Kentucky legislature has acted to protect Commonwealth citizens from misleading, deceptive information. Because cherished First Amendment principles do not protect false or misleading commercial speech, I dissent from the majority’s analysis of this issue and would reverse the district court’s invalidation of the challenged ban that seeks to prevent just such deception.