UNITED STATES v. EDGE BROADCASTING CO., T/A POWER 94
Legal provision: Communication Act of 1934
Argument of Paul J. Larkin, Jr.
Chief Justice Rehnquist: We'll hear argument next in No. 92-486, United States and Federal Communications Commission v. the Edge Broadcasting Company.
Spectators are reminded not to talk until you get out of the courtroom.
The Court remains in session.
Mr. Larkin: Thank you, Mr. Chief Justice, and may it please the Court:
This case involves a First Amendment challenge by a radio station to Congress' regulatory program for broadcast lottery advertising.
Sections 1304 and 1307 of title 18 create a simple bright line geographically based rule under which a station's right to broadcast lottery advertising hinges on the state to which that radio station is licensed.
A radio station licensed to a state like Virginia that runs a state lottery can broadcast lottery advertising about that state's lottery or any other state lottery.
By contrast, a radio station licensed to a state like North Carolina without a state lottery cannot broadcast lottery advertising about any state lottery.
It is the validity of that bright line rule that is at issue as applied to respondent in this case.
The district court in a divided panel of the Fourth Circuit held this regulatory program unconstitutional under the commercial speech standard this Court adopted in the Central Hudson case.
Those courts reasoned that Congress had legitimate and substantial interests involved in helping the states pursue their policies towards gambling.
Those courts also concluded that this regulatory program was narrowly tailored to achieve that end.
Nonetheless, those courts held these statutes unconstitutional as applied to respondent on the ground that in that circumstance it did not directly advance Congress' goals.
Unknown Speaker: Mr. Larkin, under a First Amendment analysis in commercial speech cases when we apply Central Hudson do we look case-by-case at an as-applied challenge or do we simply look to whether the Central Hudson test is met and it's a reasonable response to the overall problem?
Is there such a thing as an as-applied case-by-case look in the analysis?
Mr. Larkin: Your Honor, the as-applied type of challenge that I think the court contemplated under the commercial speech basis is a challenge that would go to show that a particular broadcast in this case should not properly be treated as commercial speech.
That type of as-applied challenge can always be brought.
We don't believe that these statutes should be construed to apply to editorials and news stories.
In fact the decree entered by the district court in this case so construed the statutes.
We did not challenge that aspect of the decree in the court of appeals.
Unknown Speaker: But as applied here insofar as it addresses the problem of a commercial advertisement, do we look at some case-by-case approach and say well, look, in this case it's so close to the border it's ridiculous as applied to Edge?
Mr. Larkin: No, Your Honor, you don't.
Both precedent from this Court and reason indicate to the contrary.
First the precedent.
In the case of--
Unknown Speaker: I'm not sure the precedent is all that clear, so I'm interested to hear your response.
Mr. Larkin: --In the case of Ward v. Rock Against Racism this Court addressed a similar argument.
In that case people were using the band shell in New York City Central Park.
The city had a regulation that was treated as a time, place, and manner regulation of the speech.
It required people using the band shell to use city equipment and have a city employee run it.
The city had this regulation in place to serve two competing goals, competing goals much like the competing goals at issue here.
It was to insure that the concerts were loud enough so that they could be heard by concert goers but not so loud that they would disrupt the surrounding communities.
The argument that was made on behalf of Rock Against Racism is that regulation doesn't serve its purposes as applied to us because we're loud enough so that everybody hears us.
There is no need to worry about whether or not that goal is served.
This Court rejected that argument.
The Court said that the validity of a time, place, and manner regulation serves on the general purposes that the Government seeks to serve through the regulation and not on how it's applied in an individual case.
One week later in the case of SUNY v. Fox this Court said that the analysis under a time, place, and manner regulation is substantially similar to the analysis that is applied in the commercial speech area.
We think the combination of those two cases as a matter of precedent indicates that you don't look at a station-by-station approach, you don't undertake that type of analysis to decide in this case whether Congress' regulation of the broadcast spectrum is permissible.
Unknown Speaker: So we just apply Central Hudson?
Mr. Larkin: Correct.
You look in this case to see whether the legislative judgment is reasonable.
That is what this Court said in Central Hudson.
Unknown Speaker: Well, do we have to ask for instance whether there is a substantial Government interest in, in what?
In protecting North Carolina citizens from knowing about what goes on in Virginia?
Mr. Larkin: I wouldn't say it's from knowing about what goes on in Virginia.
We're not seeking to suppress general information.
What Congress has sought to do here is accommodate the conflicting goals of Virginia and North Carolina.
Unknown Speaker: What is North Carolina's goal insofar as it deals with commercial speech about something going on lawfully in Virginia?
Mr. Larkin: --North Carolina's interest in not having its citizens participate in gambling.
North Carolina doesn't permit private lotteries on a large scale basis, it doesn't run a state lottery, because it's interest is in not having North Carolinians gamble.
That is the interest they have--
Unknown Speaker: Even in another state where it's lawful?
Mr. Larkin: --Even in another state where it's lawful because they bring the problems back home.
If someone goes to another state and impoverishes himself he comes back and then can become a burden on the citizens who don't gamble.
So North Carolina has an interest in protecting the citizenry of the State of North Carolina both against the harms that gambling can cause to participants as well as the harms that gambling can cause to third parties.
That is an entirely legitimate interest and we think Congress can reasonably attempt to accommodate the interests of Virginia and North Carolina and that the Central Hudson test is sufficiently flexible to allow--
Unknown Speaker: But certainly the people in North Carolina can hear ads in a Virginia licensed station, can't they?
Mr. Larkin: --If they are in a community that is close to the border and if the border state has a lottery, as it does here, and the broadcast airwaves cross state lines, as they do, that can happen.
But it is nonetheless reasonable for Congress to focus its statutes on the geographic lines separating lottery from non-lottery states.
After all, stations like respondent's stations are licensed to serve a community, and unless they serve that community they will not hold onto their license.
Unknown Speaker: Do we know how far these licenses typically allow, I mean how large a geographic area the broadcast reaches typically?
Mr. Larkin: Well, I'm told by the FCC that on average there is a 50-mile radius for broadcast lottery, for broadcasters.
So you have that situation which therefore can repeat itself along the border in various circumstances.
Unknown Speaker: Was it a condition of licensure that the transmitter be located in North Carolina?
Mr. Larkin: No, it was not a condition, and in fact you can have your transmitter located in a different state.
The license requires you to serve a community, in this case the community is the Elizabeth City community.
Unknown Speaker: Why do we know that this is a North Carolina station, because of where its principal office is located or where its transmitter is located?
Mr. Larkin: That's where it's licensed to.
As a matter of fact there is no dispute about that.
There's an argument made by one of the amici that you can treat this station as having been licensed to Virginia and North Carolina, and there is utterly no factual support for that at all.
The complaint filed by the respondent, the stipulation of facts, the district court decision, the court of appeals decision, and even their own brief in this Court all concede that they are licensed to North Carolina.
The reason is under the broadcast regulations that are in effect you are licensed to serve a community.
Here the community is Elizabeth City, North Carolina.
So that they are not licensed to serve Virginia.
And the way the FCC looks at it is this.
You are licensed to serve that community and it is your responsibility to do so.
If you do so you are satisfying the concerns that the FCC has when it licenses you.
If by chance your broadcasts go into another state, that is not a problem because that's just physically what happens, but it is not a bonus.
You are required to serve your community, and here the community is in a state that has a state policy against lotteries.
It has a state policy against lotteries because it wants to dissuade its citizens from gambling.
Unknown Speaker: Just one more question of a preliminary nature.
Does the FCC ever license for an inter-state community, say the Washington metropolitan area or something?
Mr. Larkin: You can be licensed to serve an area that includes more than one state.
Unknown Speaker: I'm a little puzzled by that, Mr. Larkin.
They are licensed to serve Elizabeth City, North Carolina, but isn't it something like 90 percent of their listening audience is outside of Elizabeth City?
Mr. Larkin: Well, they have set up their transmitter north of Elizabeth City so that it is close, it is about, you could say midway on a map between Norfolk, Virginia Beach and Elizabeth City.
What they are doing in essence is trying to serve Elizabeth City as they are required to do but also serve the interests of the State of Virginia so that they can hopefully sell lottery ads.
Unknown Speaker: But is it not true that... how much magic is there in the words licensed to Elizabeth City when, as I understand it, Elizabeth City represents only 4 or 5 percent of their total audience, of the total market?
Mr. Larkin: I think the actual number is 8 percent, but I'm not going to quibble about the numbers.
Unknown Speaker: 8 percent, whatever.
Mr. Larkin: If that--
Unknown Speaker: Are they unlicensed to serve the 92 other percent of their audience?
Mr. Larkin: --Well, if you want to put it that way it's fine because the way the scheme works is to focus on where you license the service.
The statute, for example, requires that licenses be allocated so that communities are served, and the FCC--
Unknown Speaker: In other words they are mandated to serve that Elizabeth City.
They have a duty, I guess, to serve that community.
But they also are permitted under their license, are they not, to broadcast to a much larger audience?
And is this larger audience totally irrelevant to the problem that we have to confront?
Mr. Larkin: --Yes.
Unknown Speaker: It is totally irrelevant?
Mr. Larkin: Yes.
Unknown Speaker: Even though they have, I guess they have a First Amendment right to transmit it as long as there's no statutory objection to an audience that, you could pose to a lot of people who want to buy lottery tickets in Virginia.
Mr. Larkin: Well, that's what we're here to decide.
Since they are in North Carolina, since Congress has adopted a bright line rule, and since it's an unavoidable law of physics that the broadcast waves will cross into Virginia, it is our position that while that happens--
Unknown Speaker: Well, that's not an unavoidable... I suppose the license restriction could say your signal shall be no stronger than is necessary to serve the area for which you're specifically licensed.
I guess they could limit them to the North Carolina area, and then this thing might make some sense.
But as I understand it they're authorized to broadcast, and if they conflicted with other stations there would be a problem, I gather, when you have scarce frequencies.
But they are authorized, as I understand it, not merely to license, to broadcast to the small community but to a larger audience that mostly includes Virginia residents.
Mr. Larkin: --Your Honor, the reason I disagree is you use the term authorized.
That's not the way the scheme works.
It's not as if they are given the authority to go ahead and broadcast into Virginia.
They are licensed and authorized to serve Elizabeth City.
Unknown Speaker: But is it not true that if their broadcasting into Virginia interfered with the signals of other, of Virginia stations in Virginia they would then be subject to some kind of restriction from the FCC?
Mr. Larkin: Yes.
If their broadcast--
Unknown Speaker: So they are, they are authorized in the sense that the license allows them to do that without any Federal objection.
Mr. Larkin: --Well, for different purposes.
In other words they are authorized in the sense that there is a different Federal law that governs licensing and it doesn't forbid them from conducting the broadcasts in the way they do here.
They are not authorized in the sense that the statutes that they have challenged here as applied to them permits them to engage in this type of activity.
Unknown Speaker: Is the licensee, is the license conditioned on obeying governing Federal statutes relating to, such as the one we've got before us?
Mr. Larkin: Absolutely.
Unknown Speaker: So this station clearly is not authorized to broadcast gambling information to, from where it is.
Mr. Larkin: --That's right.
And if they violate this law they can not only be criminally prosecuted under title 18, they can have, when their license comes up for renewal they can have their license taken away from them.
Unknown Speaker: Mr. Larkin, I didn't, I guess I knew but I had forgotten that you didn't have to have your transmitter located within the community that you're licensed to serve.
I suppose... and I had thought that one of the things that supported your position or the Government's position is that it, the Government certainly might think it unreasonable to permit the state law to be violated on the very ground of the state by transmitting from its own soil advertisements that are against its public policy.
But as I understand the way things can work, if you had a transmitter, if you had a station licensed to a community which permitted gambling you could have your transmitter located across the border in a state that bans gambling and you could broadcast from that state gambling announcements which would go to the community to which you're licensed since that community permits it, and would also go to the people within that state that you're broadcasting from, which is not the community you are licensed to serve.
Am I correct about that?
Mr. Larkin: Yes, that's my understanding, that you could have a situation in the way you posit it.
But the reason it's a reasonable scheme here is that different states have adopted their policies and you are licensed to serve a community within that state.
If you are violating the laws of that state by broadcasting the advertisements, regardless of physically where they actually happen to emanate from, you are disserving the policies of the state that you are licensed by the FCC to serve.
That is one of the key ingredients of the licensing scheme.
Unknown Speaker: Is it often true that you're licensed to a community that contains only 4 to 5 percent of your listening audience?
That seems very strange to me.
Mr. Larkin: Often?
I wouldn't say it's often, but what I would say is this.
If you are in a community that is rather sparsely populated it probably becomes easier to obtain a license to serve that community than it would be if you are trying to seek a new license in New York City, for example, where there are numerous stations.
If there aren't very many stations in the area, or perhaps if there are none, that you are trying to serve, it becomes that much easier to show that you will be able to meet a need in that community that is not now being met.
Now, what you can have in a situation then is somebody come in and try to serve the interests of that community and, if you will, also try to serve perhaps the surrounding community.
Unknown Speaker: Or vice versa.
I expect it happens all the time, Mr. Larkin, that in fact whoever got the license expected to make more money in the Norfolk area than in Elizabeth City.
Have you ever been to Elizabeth City?
It's very nice.
It's on the way to the outer banks, but there ain't much there.
Mr. Larkin: I think I have been through it but I haven't stopped off.
What we were talking about is the second point that I hope to make today, which is that what we have here is a reasonable scheme, and the Central Hudson test reasonably accommodates that.
I would also, however, like to say just a few words about the first point we have made in our brief which is that for purposes of the commercial speech doctrine lawful gambling should not be treated differently from illegal gambling.
And the reason is gambling is one of a small category of unique products or activities.
This Court in Posadas referred to these sorts of activities, such as the consumption of alcohol and gambling and the like.
What you have is a situation where they are activities that have traditionally been deemed harmful to participants and to third parties and for which there always seems to have been a black market available.
Because they are deemed harmful to individuals in society the society has always attempted to regulate them heavily and sometimes flatly to ban them altogether, as most states do in connection with casino gambling.
In some instances, however, society can rationally conclude that the costs of a flat prohibition are too injurious for society to bear, and as the result the appropriate approach to undertake is the one that Professor Epstein has called damage control, legalization and regulation where the regulation includes a ban on the advertising of that activity.
That is the sort of approach that has been undertaken for example with respect to gambling, with respect to alcohol, and other similar matters.
It's where you have that type of narrow activity, not the broad range of activities that can potentially be regulated by the Congress, by the state legislatures, and by the municipalities, that we think the rationale that was expressed in Posadas of greater includes the lesser is a reasonable rationale to apply.
Unknown Speaker: You don't even need to reach Central Hudson?
Mr. Larkin: Correct.
Under the first point we have made in our brief you would... well, you could read Central Hudson but wouldn't get very far.
You would stop at step 1.
Unknown Speaker: Yes.
Mr. Larkin: You would say that this activity should be treated in the same way as illegal activity, and we know from the Pittsburgh Press case and Central Hudson that that wouldn't be protected.
Unknown Speaker: So, even if we didn't disagree with you on that, even if we didn't agree with you on that you would say Central Hudson is satisfied?
Mr. Larkin: --Correct.
We would then go on and say that what the courts did in this case was misapply the Central Hudson test.
Unknown Speaker: May I ask you about this lesser includes the, or greater includes the lesser?
Can North Carolina prohibit its citizens from going over to Virginia and buying lottery tickets?
Mr. Larkin: No, I don't think they can prohibit interstate travel in this region.
They can prohibit--
Unknown Speaker: Just can they prohibit them from buying lottery tickets?
They are their own citizens, they have rights to tell them what they can do.
You don't think they could prohibit them from buying lottery tickets?
Mr. Larkin: --Well, it depends whether they brought them back to North Carolina.
I mean, for example, if a state decriminalized possession of marijuana, an adjacent state could certainly say you can't travel across the border and bring it back simply because it's legal in that state.
But a state, State A can't regulate what happens in State B.
Unknown Speaker: Even by its own citizens?
Mr. Larkin: By its own citizens.
Unknown Speaker: But then how does it get the authority to prevent its own citizens to hear about the lottery that's available in Virginia?
Mr. Larkin: Well, because they bring the harm back with them.
If State A--
Unknown Speaker: No.
Mr. Larkin: --If State A makes it a crime to drink alcohol and State B doesn't--
Unknown Speaker: But I'm just... let's talk about lotteries only.
Mr. Larkin: --Okay.
Unknown Speaker: What, how can North Carolina prevent its citizens from buying lottery tickets in Virginia?
Maybe they cash them in down there too.
And if it... first question is can they prevent their own citizens from buying lottery tickets in Virginia?
If the answer is no, how then do you justify a restriction on advertising directed at North Carolina citizens who might want to buy the Virginia lottery tickets?
Mr. Larkin: They can't prohibit them from travelling to North Carolina to purchase a ticket, excuse me, to Virginia to purchase a ticket--
Unknown Speaker: But then how can they prohibit advertising designed to encourage them to travel to Virginia and buy them?
Mr. Larkin: --Because North Carolina and Congress together can prohibit interstate transportation of lottery tickets and other items that would--
Unknown Speaker: No, no, I'm not... my example doesn't involve any interstate transportation of lottery tickets.
It only involves interstate transportation of North Carolina citizens who want to buy the lottery tickets in Virginia, and therefore would like to know about the lottery through the channels of communication that the First Amendment sometimes protects?
Mr. Larkin: --Well, but Congress can prohibit the Virginia lottery from operating if it believes that the interests of a state like North--
Unknown Speaker: But it hasn't.
Mr. Larkin: --But it can, and that's our argument.
Until the mid-seventies, 1974, there were no--
Unknown Speaker: But can Congress prohibit North Carolina citizens from patronizing the Virginia lottery or say only Virginia citizens may patronize the Virginia lottery?
Mr. Larkin: --Well, I don't think Congress can achieve the greater in that way, but they can achieve the greater by prohibiting Virginia from having a lottery.
And in that way they would satisfy the interests of North Carolina in making sure that North Carolinians can't participate in what is now an illegal lottery.
Unknown Speaker: And by the way, North Carolina doesn't purport to forbid its citizens from listening to lottery ads from Virginia stations.
Mr. Larkin: They couldn't.
Unknown Speaker: --No, they couldn't.
And so they--
Mr. Larkin: They don't have that power.
Unknown Speaker: --Its citizens can listen to lottery ads from Virginia stations all they want to.
Mr. Larkin: Well, that... North Carolina lacks that power.
Congress could do that.
Unknown Speaker: Well, I know, but North Carolina doesn't purport to keep its citizens from--
Mr. Larkin: That's right.
My greater includes the lesser point relies on the combined power of the State of North Carolina and Congress, and as we have tried to lay out in our brief, we think that narrowly can be applied to a case like this one.
Unknown Speaker: --And under your submission, I take it, the Congress of the United States could forbid a North Carolina newspaper from running a Virginia lottery ad?
Mr. Larkin: If it were sent through the mails.
Unknown Speaker: No, no.
My hypothetical is that just no newspaper that buys its newsprint in interstate commerce and that is located in a state which prohibits the lottery can advertise some other state's lottery.
Mr. Larkin: Well, I'm not sure that if you simply had a distribution that didn't affect interstate commerce in anyway--
Unknown Speaker: Just accept my hypo... I'm trying to explore whether or not your position is based on your powers over an FCC licensee as opposed to any other media of communication.
Mr. Larkin: --Well, what I'm... my argument from Congress' power is based on its combined powers to regulate interstate commerce dealing with the broadcast spectrum as well as the use of the mails.
Unknown Speaker: All right.
What about regulating the newspaper?
What's the difference from a First Amendment standpoint?
Because you don't license newspapers.
Mr. Larkin: Well, the newspaper would not be in a different position than someone who just printed up his own handbill, and Congress wouldn't have the authority simply to say that you can't print up a handbill at--
Unknown Speaker: This is an interstate paper that buys its paper in interstate commerce.
Mr. Larkin: --Well, I don't think that you could prohibit someone from running general stories about what is a legal activity in another state.
Unknown Speaker: My question was advertisements.
Mr. Larkin: Well, I'm not sure.
I'm not sure that you couldn't--
Unknown Speaker: You're not sure whether a state that prohibits prostitution, for example, can ban advertising of houses of prostitution across the border in another state?
Or a state that bans cocaine use can ban advertising of cocaine use available across the border?
Mr. Larkin: --Well, Congress certainly can.
I'm not sure that a state would be in the same position as Congress is.
Unknown Speaker: Oh, I see.
You're concerned about just Commerce Clause objections, not First Amendment objections.
Mr. Larkin: That's what I've been thinking about and trying to focus on.
Unknown Speaker: I see.
Mr. Larkin: But turning to the First Amendment part of it, we think that the Central Hudson test, as I said, is sufficiently flexible that it allows this sort of approach that we have here to be undertaken.
The essential objection raised--
Unknown Speaker: Mr. Larkin, may I just pursue Justice Kennedy's point one step further to get it sharp?
It seems to me the question should be whether the State of North Carolina, to follow up on Justice Scalia's notion, could prohibit gambling advertising of the lotteries in Virginia in its own newspapers in the state.
Mr. Larkin: --I think if it's illegal in North Carolina--
Unknown Speaker: It's illegal in North Carolina, but it's not illegal for the citizens, as I understand you, to go across the border and buy the tickets.
But can therefore the Virginia lottery people run ads, do they have a constitutional right to advertise their lotteries in North Carolina newspapers?
Mr. Larkin: --No.
North Carolina can prohibit that type of activity because it is illegal in that state.
Unknown Speaker: But it's advertising activity that's legal where it's performed.
Mr. Larkin: That's right.
Unknown Speaker: And you think they can--
Mr. Larkin: Yes.
There are certain counties in Nevada, for example, that have legalized prostitution.
I don't think Virginia or North Carolina has to say that its newspapers can advertise legalized prostitution in Nevada.
The First Amendment doesn't prohibit them from undertaking that type of activity.
It is sufficiently flexible that we think they can engage in the type of regulation that we have discussed, and that the Government can engage in this type of regulation here.
Unknown Speaker: --Why?
Because of clear and present danger?
What's the rationale for that?
Mr. Larkin: It's an activity that in a perfect world would not be conducted at all.
In a less perfect world Congress or the legislature could flatly prohibit it.
But in the type of world that we have the costs sometimes of prohibiting this activity are too great because of all the harms associated with the black market to allow this activity to be undertaken.
As the result, society has to regulate it rather than prohibit it.
That's the way we think that the types of instances that are discussed in Posadas can reasonably be tied together.
Let me say just a few brief words about the Central Hudson test.
We think that essentially the theory adopted by the lower courts and urged by respondents is one of under-inclusiveness, and we think that under inclusiveness theory is not materially different from the one that was rejected in the Metromedia case and that was rejected in Posadas itself.
What Congress has sought to do here is accommodate competing interests, the interests of Virginia and North Carolina.
The fact that the fit is not perfect is not fatal to this scheme.
It doesn't have to be, it only has to be reasonable.
And it does, the reasonableness of it doesn't have to be defended on a station-by-station basis.
Since this fit is reasonable as a general matter, we believe that it is reasonably--
Unknown Speaker: Mr. Larkin, how do we know it's reasonable as a general matter?
Is there any evidence in the record that shows that this is not a typical station?
I mean, I know of a lot of stations that broadcast across state lines.
Mr. Larkin: --It is reasonable because you are licensed to serve a community.
If you are serving that community you are broadcasting to them.
Unknown Speaker: So we may assume that this is a typical station, and you would still defend it?
Mr. Larkin: Well, if it were--
Unknown Speaker: Is that right?
Mr. Larkin: --Yes.
If it were a typical station we would still defend it.
Unknown Speaker: So this is characteristic of the program, and we can justify--
Mr. Larkin: No, no, that's not true.
It's not... it's not in the record--
Unknown Speaker: --Why, how... you have not proved that it's not characteristic of a program.
Mr. Larkin: --Nor have they.
I don't think that--
Unknown Speaker: And who... then the question comes who has the burden of showing this is or is not typical?
Mr. Larkin: --Well, that question I don't think arises under Central Hudson.
What arises under Central Hudson is whether it is reasonable, and we believe this is a reasonable scheme.
I'd like to reserve the--
Unknown Speaker: Well, all statutes are presumed to be constitutional.
The person challenging them has the burden of proof to show they're not.
Is that true when the only basis for regulation is the content of the speech that's being prohibited?
Is that true the burden is... how does the burden rest in that kind of case?
Mr. Larkin: --It is their burden to show that this is protected speech.
After that we have a burden of showing that this is reasonable.
We believe we satisfied that.
Unknown Speaker: Very well, Mr. Larkin.
Argument of Conrad Moss Shumadine
Mr. Shumadine: Mr. Chief Justice, and may it please the Court:
I'd like to start off by noting that the question presented in this case is whether a ban on commercial speech that is wholly ineffective in promoting any governmental interest when applied to a particular speaker violates the First Amendment to the United States Constitution, and we begin with the notion that in this record we believe we have established that as applied to this litigant this statute is wholly ineffective to promote, encourage, foster any governmental interest of any kind, any interest in federalism, or promote any purpose.
And the question for this Court is whether a statute that as applied accomplishes nothing can still restrict our liberties.
Unknown Speaker: Well, I take it that as applied to some other stations in North Carolina you wouldn't have any objection?
Mr. Shumadine: We have not, we have challenged this statute only as applied to Edge.
We have followed the well established--
Unknown Speaker: I suppose that there are probably people who listen most of the time to the Edge station.
Mr. Shumadine: --Your Honor, the record does not establish that.
Unknown Speaker: Well, I would suppose it wouldn't be in business if it didn't have an audience, and if that, if the audience that listens to Edge stations, the station, can't hear lottery ads on that station, why it certainly to that extent serves the interest that the statute has in mind.
Mr. Shumadine: I would respectfully differ and note that what we established in the brief was that the dominant medium was television.
We pointed out the amount of time that people listen to television, the saturation of advertisements through television.
We proved that people switch radio stations.
We proved the other radio stations that saturated this area--
Unknown Speaker: Yes, but as long as somebody is listening to Edge, and if Edge is forbidden from carrying lottery ads, as long as somebody is listening to Edge station it is not going to hear lottery ads, and that would go for all stations in North Carolina.
If the people who listen to North Carolina stations can't hear lottery ads on those stations it certainly serves the purpose of the statute.
Mr. Shumadine: --I would respectfully differ by saying that it doesn't serve the purpose of the statute if they're getting the same advertisements every day overwhelmingly through other dominant medium.
Unknown Speaker: Well, not if they don't listen to the Virginia stations, they won't get it.
Mr. Shumadine: Well, that would be indeed a factual question.
But what we proved in this record, and we went though... in a very fact-specific inquiry we proved they were listening to Virginia t.v. stations, they were getting Virginia newspapers, and that we were overlapped by the other Virginia radio stations that were running the lottery advertisements.
Unknown Speaker: Nevertheless, as long as they're listening to North Carolina stations they're not going to be listening to ads.
Mr. Shumadine: --Justice White, your point is well taken that as long as someone listens only to our station they would get no lottery--
Unknown Speaker: Or even while they're listening to those stations they are not listening to ads.
Mr. Shumadine: --Well, that would certainly be true.
But whether that marginal, and I respectfully submit the term marginal, furthering of any interest, I respectfully suggest that is not enough of a furthering of any governmental interest to justify a total regulation of speech.
Because what we proved was that every other medium that was carrying lottery advertisements was overlapping us, that the people in North Carolina were, in the words of the Fourth Circuit, saturated with lottery advertising, advertisements, and that it did not further any governmental purpose to say that one speaker, my client, could not say what every other single speaker that we were competing with was saying--
Unknown Speaker: Well, but by hypothesis, Mr. Shumadine, if lotteries are willing to advertise on the Edge station they must think they're going to get some added patronage from so advertising.
Mr. Shumadine: --Your Honor, I don't know that there is any, that that--
Unknown Speaker: Well, why would they want to advertise otherwise?
Mr. Shumadine: --Generally... they certainly would want to spread their advertising over as many media as possible with the view that that gives them possibly some type of larger audience.
But there is no demonstration in this record that there would be a greater quantity of advertisements, a greater effectiveness of advertisements, and the only--
Unknown Speaker: Almost by fourth grade addition, I would think, you could prove there would be a greater quantity of advertisements if one additional station is now permitted to carry advertisements that wasn't before.
Mr. Shumadine: --That I would respectfully submit is not correct, Your Honor, because advertising budgets are traditionally fixed.
What happened here and would almost always happen is that the Virginia lottery merely redistributed their budget.
They didn't buy additional advertisements.
Most people select advertising based on formulas as to effectiveness.
They don't increase advertising payments because there are more advertising mediums.
Unknown Speaker: So if they, if they decide to advertise on the Edge broadcast because of effectiveness, obviously they are reaching some people that they wouldn't otherwise.
Mr. Shumadine: Whether they're reaching people they would not--
Unknown Speaker: Well, you say that's what they set out to do.
The budget is based on--
Mr. Shumadine: --They would like to.
Unknown Speaker: --Wait a minute.
Please don't interrupt me while I'm asking.
Mr. Shumadine: Yes, sir.
Unknown Speaker: I think you said a moment ago that advertisers budget on the basis of effectiveness.
And what I put to you is if they do that, as you say they do, surely they must think they're getting something for their money if they were to advertise on the Edge station.
Mr. Shumadine: Your Honor, I think it's true they think they are getting something for their money.
They are getting something for their money.
Whether they are getting additional coverage of additional people is open to question and was certainly not established--
Unknown Speaker: Well why would they pay for it then?
Mr. Shumadine: --Well, the fact that they want to have as many stations as possible carry the message does not necessarily mean that more people are going to get the message in any real sense.
And certainly it is hypothetically possible that there are people in North Carolina who listen only to our station and do not view the dominant media, which is television, or read the newspapers.
Unknown Speaker: It's also not hard to imagine that there are a lot of law abiding citizens in North Carolina who don't believe in gambling.
And I don't know why Edge should have the right to carry lottery ads advertising something that's against the law in North Carolina.
I've been a big fan of the Edge station, but now I can't listen anymore, they're bombarding me with lottery ads.
I don't believe in lotteries.
What's wrong with that?
Mr. Shumadine: Well, Your Honor, what's wrong with it is the fact that every other station is carrying exactly the same message.
Unknown Speaker: But they are not licensed to that community.
Your station comes into the FCC and says we want to be licensed to this Elizabeth City community in North Carolina.
We want to meet their local community needs, one of which is that they say we don't want gambling.
We think gambling is bad for our society.
And you want to meet their needs by advertising into that community against the law.
Why is it unreasonable to say that's not right?
Mr. Shumadine: Well, it's unreasonable because it does not, it's not effective in promoting any governmental interest if you just shut one person up.
Furthermore, if you--
Unknown Speaker: It meets the interest of making a licensee who is licensed to serve the particular needs of that community, as others are not, serve those needs.
You stand in a different position from these other advertisers because you have been licensed to that community, to serve the particular needs of that community.
Doesn't that make any difference?
Mr. Shumadine: --Your Honor, I do not believe that simply by accepting an FCC license that we leave our First Amendment rights at the door or that we are prohibited from broadcasting that which everyone else is hearing and everyone else is carrying simply because we are licensed, especially where the economic effect is to deprive the station of the ability to really provide effective service.
Unknown Speaker: Well, Mr. Shumadine--
Mr. Shumadine: Yes, ma'am.
Unknown Speaker: --What test do we apply here?
Mr. Shumadine: Yes, ma'am.
Unknown Speaker: And if we apply Central Hudson why do we care whether this particular community may broadcast to a lot of folks in Virginia?
Why do we care?
Don't we look at the overall effect of the statute on the nation as a whole?
Do we really get into a case-by-case, as-applied look, or do we just apply Central Hudson and look at it overall?
Mr. Shumadine: Justice O'Connor, I believe that you look at it to directly advance... Central Hudson uses the term directly advance, which in my mind is an empirically-based test that does not relate to the nation.
Unknown Speaker: Well, I would think maybe it is.
I mean, what case of ours do you rely on in the commercial speech context to give it the kind of individual focus that you say is appropriate here?
Mr. Shumadine: There would be two.
In the Linmark case you specifically looked at the facts in that case distinguishing a Sixth Circuit case based upon a different fact.
In the SUNY case this Court specifically said, and I am quoting from pages 475 and 476 of that opinion, the court of appeals did not decide however whether the law directly advances these interests and whether the regulation it imposes is more extensive than is necessary for that purpose.
As noted earlier, it remanded to the district court for those determinations.
We think the remand was correct since further factual findings had to be made.
Now I would suggest to the Court that the only way you could make factual findings on a specific record is to deal with the individual case and not the nation as a whole.
Unknown Speaker: How do you distinguish the Government's citation of Ward v. Rock Against Racism and its argument that the validity of the statute depends on the relation it bears to the overall problem the Government seeks to correct?
Mr. Shumadine: That was dealing with the fourth prong of the Central Hudson test which does have, where the Ward v. Rock Against Racism analysis has some meaning.
Ward obviously was a time, place, and manner case.
In time, place, and manner cases they are almost always effective.
You really don't reach the third prong of the Central Hudson test.
In dealing with the fourth prong this Court can always examine to see whether there are many other easier alternatives.
If you see there are many other easier alternatives that more rationally meet any governmental interest you can then reject the statute.
You can also take evidence to see, as was done in the Discovery Network, whether in fact the statute is narrowly tailored.
But in regard to dealing with the third prong of the Central Hudson test, I don't think this Court has ever said we totally ignore the facts of the individual case, we don't care about the individual speaker, because this Court has wisely recognized that speakers do have First Amendment rights.
Unknown Speaker: Well, Mr. Shumadine, in SUNY wasn't that a dormitory regulation?
So we're not talking about any world scope of it.
We're talking just about factual findings that would look into the effect of the regulation throughout its scope, because it just wasn't a broad thing.
I don't see that as authority for the proposition when you're talking about an act of Congress you focus just on one particular incidence rather than the nationwide effect.
Mr. Shumadine: Well, Your Honor, it would seem to me plain that in reading SUNY, and that was what the district judge did because it came out immediately prior to our decision, he read it very carefully.
It would seem very difficult to say we're going to have factual findings in this context about the nation as a whole.
And I would note that it is the Government that bears the burden of justifying its restraint on speech.
And if that, even if that were the test it would be the Government's burden to come forward with some evidence that suggested that in the nation as a whole this was an effective program.
The Government really submitted no evidence in this record of any kind that I can find suggesting that this statutory scheme is really effective, and what the--
Unknown Speaker: You think the burden is on the Government to show that the scheme is effective?
Mr. Shumadine: --It seems to me if the, as this Court has said, the test is directly advanced.
This Court has placed, I believe in Zauderer, in Fox, and in other cases, the burden on the Government to show that the regulation does directly advance a governmental interest.
Now it seems to me that places a burden on the Government to show something, and that something I would suggest according to SUNY must be in the empirical real world--
Unknown Speaker: Then you're saying that the Government in every case where something is challenged on a First Amendment basis must offer empirical evidence that the statute is effective for its purpose?
Mr. Shumadine: --Yes, sir, I would believe that once you established that the speech is protected, that it is lawful, and that it--
Unknown Speaker: What case do you think supports the proposition that the Government must offer empirical evidence so that you have an actual factual determination?
Mr. Shumadine: --Well, Your Honor, I would believe that if SUNY was sent back for factual findings, and it would seem to me that that is plainly a direction to the trial court to take evidence and to make the type of record we have in this case.
Unknown Speaker: You would say SUNY then supports the proposition?
Mr. Shumadine: Yes, sir.
I would also say Linmark would support that proposition when you looked at the specific facts.
I submit to you that empiricism in constitutional analysis is very important.
Unknown Speaker: Mr. Shumadine, empiricism meaning if I'm doing no more harm than other people are doing you can't really discern my contribution to the harm being done, therefore you can't stop me?
Suppose Elizabeth City has a law against prostitution and it could be shown that in fact it's easy to obtain prostitutes in Elizabeth City if you're of a mind to, that there are a lot of other avenues for advertising the availability of houses of prostitution in Elizabeth City.
Would you then come up here and argue well, therefore you cannot stop my station from advertising of prostitution because it would have no significant effect?
You wouldn't be making that argument, would you?
Mr. Shumadine: Well, it... I would not, I do not think I would be making that argument under those circumstances.
Unknown Speaker: Why?
Mr. Shumadine: If you, let me just... the reason is, the difference is if you said everyone in Elizabeth City except one could advertise prostitution I would be here making the very same argument today, and especially if I demonstrated that by everybody but one advertising that the effect, that there was going to be no incremental effect to banning one speaker from saying that which every other speaker in the world was saying.
I regard that as an important constitutional principle, that the Government cannot say who is going to speak about things that when they, the speech and the carrancy of speech is already in the public domain.
I think it is--
Unknown Speaker: So you would say the same thing if this case involved prostitution or drug use or anything else, so long as there were stations outside of North Carolina that can get that same message to the individuals?
Your station is entitled to do that even though you're licensed to the community?
Mr. Shumadine: --I would say that if in the area where the message was being received we were overlapped by every other station carrying the same message that there would be no constitutional interest in suppressing our station's speech because the governmental interest would not be directly advanced by shutting up one speaker.
It simply has no direct advancement for any constitutional purpose.
It simply becomes, in my opinion, a naked and arbitrary abuse of power on the facts of that case.
Now I think those cases are very, very unlikely, but if, if the Government is going to license everyone else but one, then I think that raises an important and indeed significant constitutional issue.
And I think if it is established that by taking that one out of circulation as an advertiser that you do not accomplish anything in terms of preventing the transmission or dissemination of the message, then I think it is plainly unconstitutional--
Unknown Speaker: Why do you say everybody else except one?
Aren't there, are there not other North Carolina stations that reach Elizabeth City?
Is yours the only station licensed to North Carolina that reaches Elizabeth City?
Mr. Shumadine: --I'm not aware of any other station that would have the type of overlap that we do, Your Honor.
There may be such a station, but I'm not aware of any other station having such an overlap where--
Unknown Speaker: Elizabeth City gets no other North Carolina station?
Mr. Shumadine: --I'm sure they may... the other North Carolina stations may well cover areas that we do not cover--
Unknown Speaker: No, I understand that.
I'm saying don't you think that there are likely a number of other North Carolina stations that come into Elizabeth City, that can be received in Elizabeth City?
Mr. Shumadine: --I would think so, although my expectation is in thinking about the market as I know it is these markets generally run around the big metropolitan areas, so that the Norfolk-Portsmouth-Virginia Beach market, which includes Edge, covers that area of North Carolina.
There are other stations that are further away that also cover them, but they don't reach any part of Virginia.
Unknown Speaker: But you're not really saying that you are the only, the only broadcast station that is in operation reaching Elizabeth City that cannot advertise lotteries?
Mr. Shumadine: No, sir, I did not intend to say that.
Unknown Speaker: Mr. Shumadine, let me go back to Central Hudson if I may and make sure I understand your argument.
At one point earlier I thought you were suggesting that there was an effectiveness component under the fourth Central Hudson prong.
I take it that is not your argument?
Mr. Shumadine: We have not submitted based on the fourth prong, even though we have raised the fourth prong.
Our position has been essentially that the third prong is an empirical test, that it requires proof that it directly advances the governmental interest in an individual case, and that we assume the burden of proving it did not.
We respectfully suggest to the Court we met the burden of showing that as applied to Edge the statute--
Unknown Speaker: Yes, I think I understand you.
What is your argument to the effect that the fourth prong is not satisfied, the fourth prong being that the regulation must not be more extensive than necessary to serve the substantial purpose?
Why isn't that satisfied here?
Mr. Shumadine: --Well, Your Honor, if I were going to argue that my position would be that any bright line test has a great deal of difficulty with being narrowly tailored, and that if you really were going to do it in a narrow tailoring fashion--
Unknown Speaker: We'll resume there at 1 o'clock, Mr. Shumadine.
Chief Justice Rehnquist: Mr. Shumadine, you may resume.
Mr. Shumadine: Justice Souter, as I remember your question it was asking about the fourth prong of the Central Hudson test, and I was starting to reply to say that it would obviously be more rational and more effective to utilize the audience served as opposed to the station of license.
If you wanted to prevent North Carolinians from receiving advertisements the Government obviously could prohibit the advertisements being broadcast to stations with audiences in North Carolina.
As you are aware, the FCC license has a filing that demonstrates both the strength of the signal and the area covered, and you can determine the audience from that if you wanted to with some degree of precision.
Unknown Speaker: Well, that's true, but the fourth prong simply requires that the regulation not be more extensive.
This isn't more extensive, is it?
Mr. Shumadine: I think it is to the extent that it picks up stations like Edge where it has no effect or it doesn't accomplish any governmental purpose.
Unknown Speaker: Well, I think this gets back to Justice White's colloquy.
Whether there might be ways in which the Government could accomplish that purpose more effectively is a different question.
It accomplishes something.
Assuming that there are people listening to the station at all, those people are not going to be listening to advertising about the lottery.
And it seems to me that given the fact that there will be some effect it's difficult to argue under the fourth prong that the regulation in the Central Hudson words is more extensive than is necessary.
It may not pick up much, but I'm not sure that it's more extensive than is necessary.
It just is, it is not... your argument is that it's ineffective, which it seems to me is a different concept.
Mr. Shumadine: I have conceded that my primary argument is that it is ineffective, but if you were to, as I read the Discovery Network case that just came down 2 weeks ago, I believe even there that statute was effective as to about 100 out of the 3,000, or 169 out of the 3,000 new racks, and that still was a poor fit.
So the fact that it has some marginal effect, I don't know if that saves it.
Unknown Speaker: Yes, but it's only marginal because you're just talking about Edge, and if you talk about all the stations in North Carolina that are not permitted to carry these ads, why surely there's quite a direct service to the Government interest in protecting the interests of North Carolina.
Mr. Shumadine: Your Honor, we have not challenged the application of the statute as it applies in other areas where you do not have the particular type of overlap that we are talking about here.
We limited our challenge to an as-applied as opposed to a facial challenge.
Unknown Speaker: Well, that gets you back to Justice O'Connor's earlier question.
Is that the way you approach commercial speech cases?
Mr. Shumadine: I believe it is, Your Honor, and it's certainly the way that this Court has always approached constitutional questions.
There are any number of cases where this Court has said that you look at the statute as it is applied to a particular litigant to determine its constitutionality as to that litigant.
There are cases that say that's a wise and beneficent policy because it allows this Court not to overturn more of the statute than is necessary.
There are any number of cases we cited in the brief where this Court has overturned the application of a statute as applied to a particular litigant while it has allowed the statute to be applicable as to other litigants.
The fact that a statute may in general serve a governmental purpose does not mean that on specific facts and on a specific record the statute cannot have unconstitutional applications.
Unknown Speaker: But haven't we said, Mr. Shumadine, that when we're talking about commercial speech the legislature can enact a prophylactic rule which it couldn't in connection with straight First Amendment speech that may reach out a little more broadly than you could in First Amendment orthodox?
Mr. Shumadine: In a facial challenge this Court has said that it defers to a legislative judgment.
What I don't think this Court has ever said is that if a litigant proves that in a specific case the legislative judgment does not apply and the statute is really ineffective on a real record with real evidence that the statute can be applied to that case.
Unknown Speaker: Do you think in a commercial speech case that if a plaintiff can show that there is one in his particular example, the thing does not satisfy the four prongs, even though it does in 99 percent of the other cases, that litigant can have that statute struck down as to him?
Mr. Shumadine: That would be my belief, yes.
That is the teaching that I believe this Court has said when you struck down filing fees for indigents you did so not because filing fees are unconstitutional in 99.9 percent of the cases but because as applied to that individual class of litigants it was unconstitutional.
When you struck down the solicitation rules in NAACP v. Button you did not strike the lawyer solicitation rules down in general.
It is a well established, I suggest, rule of this Court that you can look at a specific record and look at the application of a statute to a specific litigant and protect that litigant's constitutional rights--
Unknown Speaker: So we can ban billboards on the grounds that we want to improve the looks of a city, but then a billboard company comes in and says look, we're in a very shabby part of the city, the place is a mess anyway, it doesn't really make that much difference.
They would be exempt?
Mr. Shumadine: --Your Honor, I don't know whether that type of test would work.
I would have to look at the specific facts.
Unknown Speaker: Well, I thought your submission was that if the statute does not serve the interest in the particular case, that that particular litigant can challenge it.
Mr. Shumadine: --I did make that submission, and the only reason I did not endorse that example is that I think you would have to look at all of the facts in a record to see whether it was effective.
If it was totally ineffective, if you said everyone can have billboards except one person, and if you were going to have 10,000 billboards anyway and you were banning 20 additional ones, then I think there would be a real problem.
I think it's very important in an as-applied challenge, and we tried very carefully to say this, to stick to the record as made.
Unknown Speaker: Mr. Shumadine, it seems to me although you emphasize in answering Justice Kennedy's question the particularity of the exception that you're arguing for, at least in the context of FCC licensing if we accepted your argument it would be a very broad exception because you in effect would be saying that only, that this particular regulation would be enforceable only with respect to broadcasters over a geographical area which do not receive, as it were, the forbidden broadcasts from outside and which do not in turn broadcast to a substantial audience outside the area in which the activity is forbidden.
So that I suppose on your theory there might be some kind of enclave in the center of large states in which the regulation would be enforceable, but I'm not sure that it would be enforceable anywhere else.
Mr. Shumadine: That is not our submission, Your Honor.
What we submitted and proved to the trial court was if we could assume the burden of proving complete ineffectiveness, that is we were totally overlapped by virtually every dominant information source, then--
Unknown Speaker: Well, let's assume you've got 92 percent effectiveness.
That's as far as you've gotten, haven't you?
You concede 8 percent, don't you?
Mr. Shumadine: --No, Your Honor, I don't concede 8 percent.
The fact that you reach some North Carolina people--
Unknown Speaker: I think you have answered the question, Mr. Shumadine.
Mr. Larkin, you have 3 minutes remaining.
Rebuttal of Paul J. Larkin, Jr.
Mr. Larkin: Your Honor, I have nothing further to add unless the Court has any further questions.
Unknown Speaker: Is part of your submission, Mr. Larkin, that there is a waiver, an estoppel aspect to this case, to speak in loose terms, that this licensee really submitted itself to the jurisdiction of North Carolina and is stuck by its license, or does that drop out of the case and this is simply a case in which you win under Central Hudson?
Mr. Larkin: We don't make an estoppel or a waiver type of argument.
We do think we win under Central Hudson, as well as the other arguments in our brief.
Chief Justice Rehnquist: Thank you, Mr. Larkin.
The case is submitted.