Secretary of State of Maryland v. Joseph H. Munson Co.
Decided on June 26, 1984; 467 US 947


I. ISSUES II. CASE SUMMARY III. AMICI CURIAE IV. DECISION V. WIN OR LOSS?
I. ISSUES:

A. Issues Discussed: Free Speech

B. Legal Question Presented:

Can a state limit the percentage spent on charitable fundraising if it includes a waiver granted on the basis of demonstrated financial necessity?

II. CASE SUMMARY:

A. Background:

"Joseph H. Munson Co., Inc. (Munson), an Indiana corporation, instituted this action in the Circuit Court for Anne Arundel County, Md., seeking declaratory and injunctive relief against the Secretary of State of Maryland (Secretary). Munson is a professional for-profit fundraiser in the business of promoting fundraising events and giving advice to customers on how those events should be conducted. Its Maryland customers include various chapters of the Fraternal Order of Police (FOP).

Section 103A et seq... concern charitable organizations. Section 103D prohibits such an organization, in connection with any fundraising activity, from paying or agreeing to pay as expenses more than 25% of the amount raised. Munson in its complaint alleged that it regularly charges an FOP chapter an amount in excess of 25% of the gross raised for the event it promotes. Munson also alleged that the Secretary had informed it that it was subject to 103D and would be prosecuted if it failed to comply with the provisions of that statute.

In its initial complaint, filed March 7, 1978, Munson took the position that its contracts with the FOP should not be subject to 103A et seq. The Circuit Court dismissed that challenge for failure to exhaust administrative remedies. The court concluded, however, that Munson could attack the statutes as an improper delegation of legislative authority, in violation of the Maryland Constitution. Munson then amended its complaint to allege that the statutes effected an unconstitutional infringement on its right to free speech and assembly under the First and Fourteenth Amendments of the United States Constitution.

The Secretary questioned Munson's standing to assert its claims. He urged that 103D is directed to acts of charitable organizations and, therefore, that only an organization of that kind can challenge the statute's constitutionality. The Secretary also urged that Munson's claims presented no actual controversy, because Munson had failed to exhaust its administrative remedies and, consequently, there had been no binding determination that the statute would apply to Munson's contracts.

The Circuit Court did not address the standing argument, but upheld the statute on the merits. It concluded that because the statute included a provision authorizing a waiver of the percentage limitation 'in those instances where the 25% limitation would effectively prevent a charitable organization from raising contributions,' it was sufficiently flexible to accommodate legitimate First Amendment interests. The court also rejected Munson's state-law claim that the statute was an impermissible delegation of legislative authority.

Munson appealed to the Court of Special Appeals of Maryland. The Secretary did not take a cross-appeal. The Court of Special Appeals affirmed the judgment of the Circuit Court.

Both Munson and the Secretary then petitioned the Court of Appeals of Maryland for writs of certiorari. Munson challenged the validity of the statute and the Secretary challenged Munson's standing. The court granted both petitions and, by a unanimous vote, reversed the judgment of the Court of Special Appeals...

On the merits, the court concluded that Schaumburg required that the Maryland statute be ruled unconstitutional...

We granted certiorari to review both determinations of the Court of Appeals, namely, that Munson had standing to challenge the validity of 103D, and that the statute was unconstitutional on its face."

On certiorari the US Supreme Court affirmed the judgment of the Maryland Court of Appeals.

B. Counsel of Record:
ACLU Side
(Respondent/Appellee)
Opposing Side
(Petitioner/Appellant)
Unavailable Unavailable
C. The Arguments:
ACLU Side
(Respondent/Appellee)
Opposing Side
(Petitioner/Appellant)
Unavailable Unavailable
III. AMICI CURIAE:
ACLU Side
(Respondent/Appellee)
Opposing Side
(Petitioner/Appellant)
Brief of amici curiae urging affirmance were filed for the American Civil Liberties Union et al. by Robert B. Hummel, Thomas J. McGrew, Charles S. Sims, and Arthur B. Spitzer; for Independent Sector et al. by Adam Yarmolinsky, Stephen T. Owen, and Michael B. Jennison; and for Box Office, Inc., by Barry A. Fisher, Robert C. Moest, and David Grosz.

Yale L. Goldberg argued the cause for respondent. With him on the brief was Donald E. Sinrod.

A brief of amici curiae urging reversal was filed for the State of Connecticut et al. by Francis X. Bellotti, Attorney General of Massachusetts, and Catharine W. Hantzis, Leslie G. Espinoza, and Dana L. Mason, Assistant Attorneys General, Joseph I. Lieberman, Attorney General of Connecticut, Neil F. Hartigan, Attorney General of Illinois, Robert T. Stephan, Attorney General of Kansas, Irwin I. Kimmelman, Attorney General of New Jersey, Robert Abrams, Attorney General of New York, LeRoy S. Zimmerman, Attorney General of Pennsylvania, Mark Meierhenry, Attorney General of South Dakota, and William M. Leech, Jr., Attorney General of Tennessee. Diana G. Motz, Assistant Attorney General of Maryland, argued the cause for petitioner. With her on the briefs were Stephen H. Sachs, Attorney General, and James G. Klair and Robert A. Zarnoch, Assistant Attorneys General.
IV. THE SUPREME COURT'S DECISION:

"The Court in Schaumburg determined first that charitable solicitations are so intertwined with speech that they are entitled to the protections of the First Amendment: 'Prior authorities, therefore, clearly establish that charitable appeals for funds, on the street or door to door, involve a variety of speech interests - communication of information, the dissemination and propagation of views and ideas, and the advocacy of causes - that are within the protection of the First Amendment. Soliciting financial support is undoubtedly subject to reasonable regulation but the latter must be undertaken with due regard for the reality that solicitation is characteristically intertwined with informative and perhaps persuasive speech seeking support for particular causes or for particular views on economic, political, or social issues, and for the reality that without solicitation the flow of such information and advocacy would likely cease.'

Because the percentage limitation restricted the ways in which charities might engage in solicitation activity, the Court concluded that it was a 'direct and substantial limitation on protected activity that cannot be sustained unless it serves a sufficiently strong, subordinating interest that the Village is entitled to protect.' In addition, in order to be valid, the limitation would have to be a narrowly drawn regulatio[n] designed to serve [the] interes[t] without unnecessarily interfering with First Amendment freedoms.

Although the Court in Schaumburg recognized that the Village had legitimate interests in protecting the public from fraud, crime, and undue annoyance, it rejected the limitation because it was not a precisely tailored means of accommodating those interests. The Village's asserted interests were only peripherally promoted by the limitation and could be served by measures less intrusive than a direct prohibition on solicitation...

Schaumburg left open the primary question now before this Court - whether the constitutional deficiencies in a percentage limitation on funds expended in solicitation are remedied by the possibility of an administrative waiver of the limitation for a charity that can demonstrate financial necessity...

The Secretary urges that even though there may remain charities whose First Amendment activity is limited by the statute, we should not strike down the statute on its face because, with the waiver provision, it no longer is 'substantially overbroad.' We are not persuaded... While there no doubt are organizations that have high fundraising costs not due to protected First Amendment activity and that, therefore, should not be heard to complain that their activities are prohibited, this statute cannot distinguish those organizations from charities that have high costs due to protected First Amendment activities. The flaw in the statute is not simply that it includes within its sweep some impermissible applications, but that in all its applications it operates on a fundamentally mistaken premise that high solicitation costs are an accurate measure of fraud. That the statute in some of its applications actually prevents the misdirection of funds from the organization's purported charitable goal is little more than fortuitous. It is equally likely that the statute will restrict First Amendment activity that results in high costs but is itself a part of the charity's goal or that is simply attributable to the fact that the charity's cause proves to be unpopular. On the other hand, if an organization indulges in fraud, there is nothing in the percentage limitation that prevents it from misdirecting funds. In either event, the percentage limitation, though restricting solicitation costs, will have done nothing to prevent fraud.

The possibility of a waiver may decrease the number of impermissible applications of the statute, but it does nothing to remedy the statute's fundamental defect. We conclude that, regardless of the waiver provision, Schaumburg requires that the percentage limitation in the Maryland statute be rejected."

The US Supreme Court affirmed the judgment of the Maryland Court of Appeals.

Justice Vote: 5 Pro vs. 4 Con

  • Blackmun, H. Pro (Wrote majority opinion)
  • Brennan, W. Pro (Joined majority opinion)
  • White, B. Pro (Joined majority opinion)
  • Marshall, T. Pro (Joined majority opinion)
  • Stevens, J.P. Pro (Wrote concurring opinion)
  • Rehnquist, W. Con (Wrote dissenting opinion)
  • Burger, W. Con (Joined dissenting opinion)
  • Powell, L. Con (Joined dissenting opinion)
  • O'Connor, S.D. Con (Joined dissenting opinion)
V. A WIN OR LOSS FOR THE ACLU?

The ACLU, as amicus curiae, urged affirmance of the Maryland Court of Appeals judgment; the Supreme Court affirmed in a 5-4 vote, giving the ACLU an apparent win.