National Federation of the Blind of Texas, Inc. v. Abbott

647 F.3d 202, 2011 U.S. App. LEXIS 14532, 2011 WL 2750704
CourtCourt of Appeals for the Fifth Circuit
DecidedJuly 15, 2011
Docket10-10236
StatusPublished
Cited by79 cases

This text of 647 F.3d 202 (National Federation of the Blind of Texas, Inc. v. Abbott) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
National Federation of the Blind of Texas, Inc. v. Abbott, 647 F.3d 202, 2011 U.S. App. LEXIS 14532, 2011 WL 2750704 (5th Cir. 2011).

Opinion

EDITH BROWN CLEMENT, Circuit Judge:

.The National Federation of the Blind of Texas, Inc., and the Institute for Disability Access, Inc., (“the Charities”) brought a constitutional challenge to a Texas statute regulating the practices of for-profit entities engaged in charitable solicitation. The district court held certain portions of the statutory scheme unconstitutional as violative of the First and Fourteenth Amendments. In his capacity as the Attorney General of the State of Texas, Greg *206 Abbott (“Texas”) appeals certain portions of that decision. For the following reasons, we AFFIRM in part, REVERSE in part, and VACATE in part the district court’s decision.

I. FACTS AND PROCEEDINGS

A. Texas Business and Commerce Code §§ 17.921-17.926

In response to a perceived problem of deceptive trade practices by for-profit entities engaged in charitable solicitation, in 2009 Texas enacted a statutory scheme (“the Act”) entitled “[a]n Act relating to regulating the collection or solicitation of donated goods subsequently sold by for-profit entities or individuals.” See Tex. Bus. & Com.Code Ann. §§ 17.921-17.926. The Act requires “for-profit entities” 1 to make certain disclosures when collecting donated clothing or household goods through “public donations receptacles” 2 (§ 17.922), when making telephone or door-to-door solicitations (§ 17.923), and when making mail solicitations (§ 17.924).

The required disclosures are dependent on the relationship between the for-profit entity and the affiliated charitable organization. The “(b) provisions” govern instances where “none of the proceeds from the sale of the donated items will be given to a charitable organization,” and the disclosure must state “DONATIONS ARE NOT FOR CHARITABLE ORGANIZATIONS AND WILL BE SOLD FOR PROFIT.” Id. at §§ 17.922(b), 17.923(b), 17.924(b). The “(c) provisions” apply when “any of the proceeds from the sale of the donated items will be given to a charitable organization,” and the disclosure must state “DONATIONS TO (NAME OF FOR-PROFIT ENTITY OR INDIVIDUAL) WILL BE SOLD FOR PROFIT AND _ PERCENT (INSERT PERCENTAGE) OF ALL PROCEEDS WILL BE DONATED TO (NAME OF CHARITABLE ORGANIZATION).” 3 Id. at §§ 17.922(c), 17.923(c), 17.924(c). Finally, the “(d) provisions” cover scenarios where “the for-profit entity or individual pays to a charitable organization a flat fee that is not contingent on the proceeds generated from the sale of the donated items and the for-profit entity or individual retains a percentage of the proceeds from the sale” and require the following disclosure: “SOLICITATIONS FOR DONATIONS ARE MADE BY (NAME OF FOR-PROFIT ENTITY OR INDIVIDUAL) ON BEHALF OF (NAME OF CHARITABLE ORGANIZATION). Donations will be sold for profit by (name of for-profit entity or individual) and a flat fee of (insert amount) is paid to (name of charitable organization).” 4 Id. at §§ 17.922(d), 17.923(d), 17.924(d). The (c) and (d) provisions each contain three components: (1) the “identification requirement,” which requires the disclosure of contact information; 5 (2) the “sold for profit” disclosure *207 requirement; and (3) the “fee arrangement” disclosure requirement. The Act provides for civil penalties for persons who violate its terms. Id. at § 17.926.

B. Procedural History and the Decision Below

The Charities are Texas nonprofit corporations that retain professional resellers to operate public receptacles intended for use as collection points for clothing and household goods donated by the public and to make solicitations of donations. The for-profit professional resellers pay a flat fee to the Charities based on the volume of donations collected. The Charities filed a complaint alleging that the Act violates the First and Fourteenth Amendments of the United States Constitution because it (1) is a content-based restriction of protected speech; (2) violates equal protection; (3) is underinclusive; (4) is overly broad; and (5) is a prior restraint of protected speech. They also alleged that the Act violated Article I, Section 8 of the Texas Constitution. The Charities also sought emergency injunctive relief against the application of the Act. The parties filed a joint stipulation of facts and filed cross-motions for summary judgment.

The district court granted in part and denied in part the dispositive motions and entered final judgment. It found that the plaintiffs lacked standing to challenge the (b) provisions because they “have not hired nor do they intend to hire professional resellers who would pay them nothing.” Nat'l Fed’n of the Blind of Tex., Inc. v. Abbott, 682 F.Supp.2d 700, 707 (N.D.Tex.2010). Because the Charities “do retain professional resellers who pay [them] a flat fee by volume,” the district court found that the Charities had standing to challenge the (d) provisions. Id. Finally, the court found that the Charities “have not hired nor do they intend to hire professional resellers who would ... pay them a percentage of the proceeds for the resell of the donated items.” Id. But the court also found that it “cannot sever the flat fee provision from the percentage disclosure requirement, as it would create a large hole in the regulatory structure,” id. at 708, and extended standing to the Charities to challenge the (c) provisions on that basis.

Turning to the disclosure requirements, the district court held that the identification requirement was constitutional. It held that the fee arrangement disclosure requirement was unconstitutional under the First Amendment because that requirement, although it “serves a compelling state interest, protecting charities and the public from fraud,” is “not a narrowly tailored requirement.” Id. at 711-13. The district court held that the sold-for-profit disclosure requirement survived constitutional scrutiny under the First Amendment, but was unconstitutional under the Equal Protection Clause, reasoning that the sold-for-profit disclosure requirement unconstitutionally “discriminate^] against charitable organizations who hire professional resellers to solicit and sell donations in favor of charitable organizations who conduct the solicitation and resale in-house.” Id. at 714-15. The court determined that although the Act did not contain a severability clause, Texas law allowed it to sever the language it found unconstitutional from the statutory scheme. Id. at 707 (“The Texas Government Code explains that statutes without severability clauses are still severable if *208 other portions of that statute are still able to be given effect.”) (citing Tex. Gov’t Code § 311.032(c)).

The district court granted in part and denied in part both Texas’s and the Charities’ motion for summary judgment. It also denied as moot the Charities’ motions for emergency injunctive relief.

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Bluebook (online)
647 F.3d 202, 2011 U.S. App. LEXIS 14532, 2011 WL 2750704, Counsel Stack Legal Research, https://law.counselstack.com/opinion/national-federation-of-the-blind-of-texas-inc-v-abbott-ca5-2011.