03 February 2011

Dex v. Seattle

Dex, a distributor of phone books is challenging a Seattle ordinance allowing people to put themselves on a "no phone book" list, as a violation of its First Amendment rights in a suit filed November 15.

I have about eight phone books in a cabinet in my house that almost never get used for anything. My children show no interest in learning how to use one, my wife doesn't like the small print. I use one half a dozen times a year, and don't use three-quarters of the phone books I receive at all. I'm a phone book advertiser myself, but increasingly even they are pitching the Internet component of their business, rather than the paper copy element.

Opt-out laws, in general, have been upheld against constitutional challenge in multiple cases cited in the link above to a post by Venkat Balasubramani at Eric Goldman's blog including Rowan v. United States Post Office, 39 U.S. 728 (1970)(indecent junk mail); State of Mo. v. American Blast Fax, Inc., 323 F.3d 649 (8th Cir. 2003)(junk faxes); FTC v. Mainstream Marketing Services, 345 F. 3d 850 (10th Cir. 2003) (no call list).

The main constitutional objections raised by the Yellow Book companies to the statute are that:

- the statute singles out yellow pages from all other types of unsolicited pamphlets, without reference to the harms sought to be remedied;
- the City made exceptions to satisfy local business interests, such as business associations;
- the ordinance also contains a licensing scheme which is at best highly suspect;
- the statute compels the yellow pages publishers to publish an unwanted message (in the form of opt-out notices and messaging on the cover)
- the statute charges the yellow pages companies to dispose of the books even though the unwanted or discarded books are recycled or disposed of by the recipients;
- yellow pages companies already employ opt-out mechanisms and have no interest in delivering yellow pages to recipients who do not want them (there's no indication that the opt-out system set up by the City will be more effective).

The objection to a statute that involves yellow pages being a content based restriction that favors local interests isn't particularly strong, because the content basis ties into the resident choice to be on the opt-out list, and any flaws in it could probably be easily remedied with an improved definition (e.g. printed material of 150 pages or more with commercial content not expressly requested by the resident, not distributed by an organization of which the resident is a member, and not delivered by the U.S.P.S.).

Any problem with the requirement of a $100 license fee, the reporting requirement (to list the number of yellow pages distributed), or the unwanted message also seems doubtful, particularly to the extent that any defect in the definition of yellow pages is cured. All sorts of businesses are required to make disclosures about laws that have an impact on them, the reporting requirement is no more onerous than constitutional requirements applied to every periodical distributor, and the license fee is not out of line with business privilege licenses that apply to all businesses (and could be made a part of a general business privilege license by requiring the fee and disclosure of yellow book distributions to all business license holders). Allowing licenses of regulated businesses that don't comply to have their licenses yanked also seems constitutional.

No of the prior law on opt out has ever suggested that a private opt-out option makes it constitutionally impermissible to have a legally required opt-out option, and there is good reason to think that a government administered one would work beter.

The most interesting challenged provision is that one that provides for "a 'recovery fee' designed to recoup recycling costs ($0.14 per book and $148.00 per ton of yellow pages)." Similar costs are imposed on tire companies and oil change companies, and it is hard to see how this fee is materially different from a constitutional perspective. Arguably, this makes the content discrimination claim stronger, but one alternative would be to apply the fee of $148.00 per ton to all unsolicited paper (something on the order of 40,000 to 200,000 pages) distributed (for profit or in excess of a certain number of pages or both) outside the U.S. Postal System (where federal pre-emption probably applies). While this fee would be a notable burden on yellow page companies, it would still be a modest part of their total production costs, would be very modest when applied to other door to door flier distributors.

On the whole, the Seattle law seems either constitutional or easily remedied, sensible, and worth considering duplicated in Denver once constitutional concerns are resolved in Seattle's case.

1 comment:

Venkat said...

It will be interesting to see what the court does.

I agree that the govt. should be able to ban or regulate yellow pages, given how much of a pain they are (and the fact that no one ever uses them). As to this statute, we'll see.