Fane v. Edenfield

945 F.2d 1514, 1991 WL 205244

• Court: Court of Appeals for the Eleventh Circuit
• Decided: October 30, 1991
• Docket: No. 90-3943
• Status: Published

Opinions

DUBINA, Circuit Judge:

The appellants, all of whom are members of the Florida Board of Accountancy (“the Board”), appeal the district court’s grant of summary judgment in favor of the appel-lee, Scott Fane (“Fane”). For the reasons which follow, we affirm the district court’s grant of summary judgment.

I. FACTUAL BACKGROUND

Fane is a certified public accountant (“CPA”) who is certified in New Jersey and Florida. In the mid-1980’s, he moved to Florida to set up an accounting practice, and sought to solicit business via in-person contacts with businesses he felt would be interested in his services. Fane was not able to implement his planned solicitation, however, because in-person solicitation by CPAs is forbidden in Florida.¹ The ban only applies to CPAs. Other financial professionals, such as non-certified accountants, bookkeepers, and tax preparers, are not prohibited from utilizing personal contacts to solicit new clients.

Only three other states, i.e., Georgia,² Texas,³ and Louisiana,⁴ prohibit in-person solicitation by CPAs. In addition, the accounting boards of twelve other- states prohibit in-person solicitation, although the validity of such a prohibition by competing accountants without legislative authorization has been questioned under the antitrust laws. Rl-18-1, Exh. D (letter from Anthony Low Joseph, Bureau of Competition, Federal Trade Commission, to Eleanor Weinstock, Florida State Senator (Apr. 28, 1987), comparing Florida’s statutory regulation of CPAs’ solicitation to its regulation of other professions and the regulation of accountants in other states). See also Rhode Island Board of Accountancy, 107 F.T.C. 293 (1986).

Fane instituted this lawsuit in an effort to have Florida’s prohibition of in-person solicitation by CPAs declared unconstitutional. The Board disputed any constitutional violation created by the proscription. The district court granted Fane’s motion for summary judgment and enjoined the Board from enforcing the ban on in-person solicitation by CPAs in Florida. The Board then perfected its .appeal to this court.

II. DISCUSSION

The only issue raised by the Board that we need to address is whether the district court correctly determined that Florida’s prohibition on in-person solicitation by CPAs is unconstitutional.⁵ We review the district court’s order granting summary judgment de novo. Akins v. Snow, 922 F.2d 1558, 1560 (11th Cir.), cert. denied, — U.S. -, 111 S.Ct. 2915, 115 L.Ed.2d 1079 (1991). Conclusions of law rendered upon summary judgment are subject to the same standard of appellate review as any question of law brought on appeal. Morrison v. Washington County, Alabama, 700 F.2d 678, 682 (11th Cir.), cert. denied, 464 U.S. 864, 104 S.Ct. 195, 78 L.Ed.2d 171 (1983), holding mod. on other grounds, Helicopter Support Systems, Inc. v. Hughes Helicopter, Inc., 818 F.2d 1530 (11th Cir.1987) (citations omitted).

Fane contends that Florida’s prohibition against in-person solicitation by CPAs is an unconstitutional restriction of commercial speech because the restraint does not further the state’s interest in regulating the accounting profession, nor is it narrowly tailored to that end. Fane also maintains that the imposition of the ban upon CPAs, but not on other accounting professionals who perform the same tasks, is a violation of equal protection. The Board argues that the ban is necessary to protect a CPA’s integrity, independence, and objectivity while performing the attest function.⁶ The Board also argues that the ban is a permissible time, place, and manner restriction that is content neutral.

Commercial speech, i.e., expression that is related exclusively to the economic interests of the speaker and audience, is undeniably entitled to substantial protection under the First and Fourteenth Amendments of the United States Constitution.⁷ Peel v. Attorney Registration and Disciplinary Comm’n, — U.S. -, 110 S.Ct. 2281, 110 L.Ed.2d 83 (1990); Board of Trustees of State University of New York v. Fox, 492 U.S. 469, 109 S.Ct. 3028, 106 L.Ed.2d 388 (1989); Shapero v. Kentucky Bar Ass’n, 486 U.S. 466, 108 S.Ct. 1916, 100 L.Ed.2d 475 (1988); Zauderer v. Office of Disciplinary Counsel of Supreme Court of Ohio, 471 U.S. 626, 105 S.Ct. 2265, 85 L.Ed.2d 652 (1985); Central Hudson Gas & Elec. Corp. v. Public Serv. Comm’n, 447 U.S. 557, 100 S.Ct. 2343, 65 L.Ed.2d 341 (1980); Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748, 96 S.Ct. 1817, 48 L.Ed.2d 346 (1976). The informational function of advertising forms the basis for the First Amendment’s concern for commercial speech. First Nat’l Bank of Boston v. Bellotti, 435 U.S. 765, 783, 98 S.Ct. 1407, 1419, 55 L.Ed.2d 707 (1978). Commercial speech furthers the economic interests of the speaker while also assisting the consumer audience. Central Hudson, 447 U.S. at 561-62, 100 5.Ct. at 2348-49. The importance of the dissemination of commercial information is its benefit to consumers and society. Virginia State Board of Pharmacy, 425 U.S. at 764-65, 96 S.Ct. at 1827.

Blanket prohibitions on commercial speech are disfavored. Shapero, 486 U.S. at 476, 108 S.Ct. at 1923. The mere possibility that isolated abuses or mistakes may occur does not justify a total ban on a certain mode of protected commercial speech. Id. Any restriction of commercial speech requires “the government goal to be substantial, and the cost to be carefully calculated.” Fox, 492 U.S. at 480,109 S.Ct. at 3035. For example, the government may ban commercial speech that is more likely to deceive the public than to inform it, Ohralik v. Ohio State Bar Ass’n, 436 U.S. 447, 464-65, 98 S.Ct. 1912, 1922-23, 56 L.Ed.2d 444 (1978), or commercial speech that is related to illegal activity, Pittsburgh Press Co. v. Pittsburgh Comm’n on Human Relations, 413 U.S. 376, 388, 93 S.Ct. 2553, 2560, 37 L.Ed.2d 669 (1973). In most other contexts, the First Amendment prohibits regulation based on the content of the speech. Consolidated Edison Co. of New York, Inc. v. Public Service Comm’n, 447 U.S. 530, 537-38, 100 S.Ct. 2326, 2333-34, 65 L.Ed.2d 319 (1980).

In Central Hudson, the Supreme Court articulated the following four-part test for assessing the constitutionality of a restriction on commercial speech:

At the outset, we must determine whether the expression is protected by the First Amendment. For commercial speech to come within that provision, it at least must concern lawful activity and not be misleading. Next, we ask whether the asserted governmental interest is substantial. If both inquiries yield positive answers, we must determine whether the regulation directly advances the governmental interest asserted, and whether it is not more extensive than is necessary to serve that interest.

447 U.S. at 566, 100 S.Ct. at 2351. In applying the Central Hudson analysis to Florida’s restriction of Fane’s commercial speech, the district court found that Florida’s prohibition of in-person solicitation by CPAs failed to advance the governmental interest asserted and was more extensive than was necessary to serve that interest.⁸

In reviewing the validity of Florida’s restriction on in-person solicitation by CPAs, we must determine whether there exists a “ ‘fit’ between the legislature’s ends and the means chosen to accomplish those ends_” Fox, 492 U.S. at 480, 109 S.Ct. at 3035 (quoting Posadas de Puerto Rico Assocs. v. Tourism Co. of Puerto Rico, 478 U.S. 328, 341, 106 S.Ct. 2968, 2977, 92 L.Ed.2d 266 (1986)). The relationship between the legislature’s means and ends must be reasonable, but does not require perfection; furthermore, its scope must be “in proportion to the interest served.” Fox, 492 U.S. at 480, 109 S.Ct. at 3035 (quoting In re R.M.J., 455 U.S. 191, 203, 102 S.Ct. 929, 937, 71 L.Ed.2d 64 (1982)). Florida is not required to employ the least restrictive means to accomplish its ends, but it must utilize “a means narrowly tailored to achieve the desired objective.” Fox, 492 U.S. at 480, 109 S.Ct. at 3035. Florida bears the burden of justifying its restrictions. Zauderer, 471 U.S. at 647, 105 S.Ct. at 2279.

The Board attempts to justify Florida’s proscription of in-person solicitation by CPAs on the basis of the need to preserve and protect the public’s ability to rely on the independence and objectivity of CPAs who are performing the attest function. The Board also contends that because there is no acceptable method of regulating in-person solicitation, a prophylactic rule against its utilization by CPAs is necessary to protect the public. Nowhere in the record, however, do we find that the Board has produced any evidence of any link between in-person solicitation and the likelihood that a CPA will be more likely, or even willing, to engage in dishonest or oppressive conduct during such solicitation. Prophylactic restraints on commercial speech based on unsupported assertions or unsubstantiated fears are not acceptable. Zauderer, 471 U.S. at 647-48, 105 S.Ct. at 2279-80. “[T]he States may not place an absolute prohibition on certain types of potentially misleading information ... if the information also may be presented in a way that is not deceptive.” In re R.M.J., 455 U.S. at 203, 102 S.Ct. at 937. The availability to the general public of commercial information such as that Fane seeks to communicate is valuable enough to justify imposing the burden upon Florida of distinguishing “the truthful from the false, the helpful from the misleading, and the harmless from the harmful.” Zauderer, 471 U.S. at 646, 105 S.Ct. at 2279. Broad prophylactic rules simply cannot be justified if the protections afforded commercial speech are to remain viable. Id. at 649, 105 S.Ct. at 2280-81.

Even if there were evidence before us to indicate that allowing CPAs who perform audit and review engagements to solicit in-person would undermine the integrity of financial statements, that still would not justify the total prohibition of in-person solicitation by all CPAs. CPAs who specialize in many aspects of the accounting profession have no occasion to attest to the accuracy of audits or financial statements. If allowed at all, Florida’s statute must be narrowly tailored to achieve its anticipated objective.

A statute is narrowly tailored if it targets and eliminates no more than the exact source of the “evil” it seeks to remedy. A complete ban can be narrowly tailored, but only if each activity within the proscription’s scope is an appropriately targeted evil.

Frisby v. Schultz, 487 U.S. 474, 485, 108 S.Ct. 2495, 2502-03, 101 L.Ed.2d 420 (1988) (citation omitted). Florida’s restriction bans far more speech than is necessary in light of the justification offered for its restraint.

If a state can combat wrongdoing by direct means, it cannot use its interest in foreclosing harm to justify broad-scale restraints on speech. Shapero, 486 U.S, at 476, 108 S.Ct. at 1923. Regulatory requirements exist in Florida that can be utilized to preserve the independence of CPAs who perform the attest function. The Board does not offer any explanation as to why those requirements do not adequately afford the protection which it seeks. First and foremost, Fla.Stat.Ann. § 473.315(1) (West 1991) prohibits a CPA from expressing “an opinion on the financial statements of an enterprise unless he and his firm are independent with respect to such enterprise.” Second, CPAs are forbidden from engaging in any kind of fraudulent or deceptive conduct. See Fla.Stat.Ann. § 473.-323(l)(f), (k) (West 1991).⁹ Third, negligent certification of financial statements could give rise to tort liability. The Florida Supreme Court recently held that in certain circumstances, a CPA can be held liable to those persons whom he “knows” will rely on his opinion, regardless of whether the CPA is in privity with them. First Florida Bank v. Max Mitchell & Co., 558 So.2d 9, 15 (Fla.1990). The Board has the duty to at least explore less intrusive alternatives than a blanket ban on in-person solicitation imposed on all CPAs. Shapero, 486 U.S. at 477-78, 108 S.Ct. at 1923-24. Furthermore, the utilization of an advertising ban to protect the ethical or performance standards of a profession is impermissible. Central Hudson, 447 U.S. at 564, 100 S.Ct. at 2350. See also Virginia State Board of Pharmacy, 425 U.S. at 769, 96 S.Ct. at 1829.¹⁰

The Board asserts that speech protected by the First Amendment, whether commercial or ideological, may still be subjected to legitimate time, place, and manner restrictions, so long as those regulations are based on criteria that is content neutral. Perry Educ. Ass’n v. Perry Local Educators’ Ass’n, 460 U.S. 37, 45, 103 S.Ct. 948, 954-55, 74 L.Ed.2d 794 (1983). A time, place, and manner restriction seeks merely to regulate when, where, and how the protected activity may take place. City of Renton v. Playtime Theatres, Inc., 475 U.S. 41, 46, 106 S.Ct. 925, 928, 89 L.Ed.2d 29 (1986). The regulation challenged by Fane does more, however, for it acts as an unqualified ban on in-person solicitation rather than regulating the details of when, where, and how a CPA may engage in such solicitation. Furthermore, a constitutionally permissible time, place, and manner restriction must not be based upon the content of the speech. Consolidated Edison, 447 U.S. at 536, 100 S.Ct. at 2332-33. Florida’s regulation of in-person solicitation by CPAs is not content neutral. It is a speaker-specific, unqualified ban on a category of expressive activity. Only CPAs who wish to speak directly to potential clients are restrained. The appropriate bounds of time, place, and manner restrictions on commercial speech are clearly exceeded by Florida’s statute.¹¹

The Board also argues that its position is supported by Ohralik, 436 U.S. at 447, 98 S.Ct. at 1913 (upholding a ban on in-person solicitation by attorneys) and National Funeral Servs., Inc. v. Rockefeller, 870 F.2d 136 (4th Cir.), cert. denied, 493 U.S. 966, 110 S.Ct. 409, 107 L.Ed.2d 374 (1989) (upholding a ban on in-person solicitation by funeral directors selling preneed burial services). The district court concluded that Ohralik and National Funeral Services do not apply to this case because the nature of the accounting profession and its soliciting targets differs in material respects from the legal and funeral services professions and their soliciting targets, making the imposition of such a ban on CPAs unnecessary.

As the majority opinion in Ohralik indicates, and as Justice Marshall’s concurrence makes clear, the holding of Ohralik is limited. “[T]he solicitation of business, under circumstances — such as those found in this record — presenting substantial dangers of harm to society or the client independent of the solicitation itself, may constitutionally be prohibited by the State.” 436 U.S. at 470, 98 S.Ct. at 1926 (Marshall, J., concurring in part and concurring in the judgment). The majority opinion rests on whether an Ohio attorney disciplinary rule had been constitutionally applied to Ohralik. Id. at 467-68, 98 S.Ct. at 1924-25. Indeed, Ohralik did not challenge the rule on its face, and conceded its constitutionality in some contexts. Id. at 461-62, 466 n. 27, 98 S.Ct. at 1921-22, 1924 n. 27. Ohra-lik deals with an outrageous situation in the area of attorney solicitation.¹² Many cases will fall between the extremes of Ohralik and cases such as NAACP v. Button, 371 U.S. 415, 83 S.Ct. 328, 9 L.Ed.2d 405 (1963) and In re Primus, 436 U.S. 412, 98 S.Ct. 1893, 56 L.Ed.2d 417 (1978), where solicitation by attorneys is clearly permitted because of its policital expression and association value. Ohralik, 436 U.S. at 471-72, 98 S.Ct. at 1926-27 (Marshall, J.).

We are presented here with such an intermediate case in the context of another class of professionals — CPAs.¹³ The possibilities for overreaching, invasion of privacy, exercising undue influence, and outright fraud that the Supreme Court found were cause for concern if lawyers were allowed to solicit in-person are remote in the accounting profession. See Ohralik, 436 U.S. at 464-66, 98 S.Ct. at 1922-24. Solicitation by a CPA does not entail the “coercive force of the personal presence of a trained advocate.” Zauderer, 471 U.S. at 642, 105 S.Ct. at 2277. Likewise, the solicitation of a business person by an accountant is in no way comparable to the intrusive solicitation of a family member by a salesperson of funeral services at a time of emotional vulnerability. See National Funeral Services, 870 F.2d at 142-45. We agree with the district court that the ban on in-person solicitation endorsed in Ohra-lik and National Funeral Services is not necessary to protect the general public from solicitation by a CPA.

III. CONCLUSION

We do not lightly interfere with a state’s power to regulate the professions which practice within it. Nevertheless, the state’s regulatory power cannot be used to insulate restrictions of constitutionally protected speech from our review for constitutional infirmity. See Peel, — U.S. at -, 110 S.Ct. at 2291-92. In this case, Florida’s restriction of in-person solicitation by CPAs does not directly advance the state’s asserted interest. The justification offered for the ban could be served equally well by existing regulations imposed on the accounting profession or by a more limited restriction of the protected speech. We therefore affirm the district court’s order granting summary judgment in favor of Fane and enjoining the State of Florida from enforcing its ban on in-person solicitation by CPAs.

AFFIRMED.

1 . Pursuant to Fla.Stat.Ann. § 473.323(1)(1) (West 1991), a CPA's engaging in "direct, in person, uninvited solicitation of a specific potential client” constitutes grounds for disciplinary action. Fla.Admin.Code Ann. r. 21A-24.-002(3) (1991) defines a prohibited solicitation as "any communication which directly or implicitly requests an immediate oral response from the recipient.” The regulation specifically states that "[ujninvited in-person visits or conversations or telephone calls to a specific potential client are prohibited."

2 . O.C.G.A. § 43-3-35(i) (1988).

3 . Tex.Rev.Civ.Stat.Ann. art. 41a-l, § 6(a)(2) (West 1991).

4 . See United States v. State Board of Certified Public Accountants of Louisiana, Civ. No. 83-1947, 1987 WL 7905 (E.D.La. Mar. 11, 1987) (complaint alleging that restraints on advertising and solicitation violated antitrust laws dismissed on ground that legislature had authorized restraints).

5 . The Board also argues that the district court erred by granting summary judgment in this case. Since we do not find any material factual disputes which would require resolution at trial, we see no merit to that argument. We will, therefore, address only the question of law decided by the district court.

6 . The attest function is the issuance of an independent opinion regarding a client’s financial stability based on an audit or review of a client’s financial statements. Only CPAs perform the attest function.

7 . The First Amendment, as applied to the states by the Fourteenth Amendment, protects commercial speech from unjustified governmental regulation. Central Hudson Gas & Elec. Corp. v. Public Serv. Comm’n, 447 U.S. 557, 561, 100 S.Ct. 2343, 2348, 65 L.Ed.2d 341 (1980).

8 . The first two prongs of the Central Hudson test are met. The speech in which Fane wishes to engage concerns a lawful activity and is not misleading; Florida’s interest in regulating the accountancy profession is substantial.

9 . CPAs who violate Florida statutes regulating the practice of public accounting can be punished by penalties ranging from fines to license revocation. See Fla.Stat.Ann. § 473.323(3)(b), (c) (West 1991).

10 . Because we find that Florida’s ban is an impermissible restriction of commercial speech in violation of the First Amendment, we need not address Fane’s equal protection argument.

11 . Fane objects to our consideration of the Board’s time, place, and manner argument because the Board did not present it to the district court. Although we generally decline to consider a legal theory that was not raised at the district court level, we have the discretion to consider an argument first made on appeal. Roofing & Sheet Metal Servs., Inc. v. La Quinta Motor Inns, Inc., 689 F.2d 982, 989 (11th Cir.1982). We may exercise that discretion if the omitted issue involves a pure question of law and if refusal to consider it would result in a miscarriage of justice. Id. at 989-90. Consideration of legal arguments not presented to the district court is especially appropriate on appeal from summary judgment. Id. at 990. Consequently, we have considered the Board’s argument, but find that it has no merit.

12 . Ohralik solicited business from two young accident victims, approaching one while she lay in traction in a hospital bed. He employed a concealed tape recorder to assist him in his solicitation efforts and emphasized the contingent nature of his fee to make his offer appear cost-free and irresistible. In addition, he refused to withdraw even when requested to do so by his client and misrepresented himself to her insurance company. Ohralik v. Ohio State Bar Ass’n, 436 U.S. 447, 450-52, 98 S.Ct. 1912, 1915-17, 56 L.Ed.2d 444 (1978).

13 . The state interests in Ohralik were found by the Court to be particularly strong because "lawyers are essential to the primary governmental function of administering justice, and have historically been ‘officers of the courts.' ” 436 U.S. at 460, 98 S.Ct. at 1920. Patently, this added concern is not present in this case.