Edenfield v. Fane – Oral Argument – December 07, 1992

Media for Edenfield v. Fane

Audio Transcription for Opinion Announcement – April 26, 1993 in Edenfield v. Fane

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William H. Rehnquist:

We’ll hear argument next in Number 91-1594, Fred Edenfield v. Scott Fane.

Mr. Thomson, you may proceed whenever you’re ready.

Parker D. Thomson:

Mr. Chief Justice, and may it please the Court:

This case involves one specific narrow prohibition by Florida of the conduct of Florida licensed certified public accountants.

It is a prohibition imposed by the legislature by statute, and by the State Board of Accountancy which licenses CPA’s by rule.

The prohibition is of cold call solicitation of new clients… what the statute and the rule called direct, in-person, uninvited solicitation.

The conduct is one defined as solicitation which directly or implicitly requests an immediate oral response from the recipient.

We’re not her… involved, of course, with political speech or artistic speech, we are involved with the most blatant of commercial speech implemented through conduct of the most confrontational.

John Paul Stevens:

Mr. Thomson, may I just interrupt on this one question?

You… in your brief you do the same thing, you talk about it calls for an immediate response.

Would it also be prohibited… your rule also apply to a solicitation by an accountant who did not ask for an immediate response, if he just said I… went in and made the presentation and said, think it over and whenever you’re interested, let me know?

Parker D. Thomson:

The definition in the statute… I mean, in the rule, is of one that requests an immediate oral response.

I believe, nevertheless, that what you have proposed would be barred because the presentation would be direct, in person, and uninvited.

William H. Rehnquist:

Is there some empirical evidence that shows this sort of a request was made frequently?

The reason I ask, it seems to me, judging from my practice as a lawyer, not as an accountant, in trying to put it in present-day terms, it seems to me if I were trying to get a client and had a presentation to make I wouldn’t demand that the person make an immediate response.

You’re trying to kind of ingratiate yourself with the person, not imprison them verbally.

Parker D. Thomson:

The prohibition, Mr. Chief Justice, is of a circumstance, that is an event, a method of presentation.

It is not in any way to deter the message.

The message may be communicated in writing, on radio, on television, by direct mail, in print, in the yellow pages… in a whole variety of ways, but it may not be communicated in a way that–

William H. Rehnquist:

That’s not… that wasn’t my question.

Parker D. Thomson:

–Excuse me.

William H. Rehnquist:

My question was, did the State of Florida or agency have some sort of empirical evidence before it that this sort of request, with a request for an immediate answer, was common or prevalent among accountants?

Parker D. Thomson:

No, Your Honor.

There is no empirical evidence, any more than that there is empirical evidence that was dealt with by this Court in the Ohralik case with respect to lawyers which you mentioned and where also there is a broad-scale prohibition of direct, in… person, uninvited solicitation.

William H. Rehnquist:

Does the agency advance any particular reason why it selected this kind of conduct, if there were no empirical evidence why it picked out this demand for an immediate response?

Parker D. Thomson:

There are two basic reasons that go to the two basic purposes of the governance of certified public accountants in the State of Florida.

The statute with respect to certified public accountants says that the first purpose is to assure the accuracy of audit statements upon which the public relies, and the second is to protect the public from dishonest practitioners.

Taking the latter one first, the communication made in this fashion is inherently unregulatable.

You simply do not know what was said, the circumstances, the tone, what-have-you, and therefore it is beyond the subject of regulation with respect to the first, which is, after all, the board’s primary concern.

It is with the attest function, so-called, of CPA’s.

Parker D. Thomson:

That is, those activities that are associated with financial statements.

In performing that function, the CPA represents the public.

He has a public function, because the financial statements that he opines on will be used by the public, and the public assumes the accuracy of the financial statements because of the opinion and then relies on them.

That public could be clients themselves, it could be lenders, it could be the securities markets, it can be the persons who purchase and sell securities on the security markets, it can be Government regulatory agencies.

It is in effect to sanitize that particular relationship which demands the independence… the nonadvocacy, but the independence of the certified public accountant that this prohibition is placed, and it is not merely the actual independence of the certified public accountant, it is the apparent independence.

It is that the public has faith and trust in that independence, whether in fact there has been any actual impairment of it.

Sandra Day O’Connor:

Mr. Thomson, does Florida have the same prohibition on the books with regard to attorneys?

Parker D. Thomson:

Yes.

It is done through the Florida Bar, which is an integrated bar, and a representative of–

Sandra Day O’Connor:

How about any other profession in Florida?

Is it just these two, CPA’s and lawyers?

Parker D. Thomson:

–No… Your Honor, I cannot answer your question specifically, but I believe that there are other… there are other of the so-called learned professions in which there are such prohibitions.

I think there are ones in respect to engineers.

I cannot give it to you–

Sandra Day O’Connor:

And no evidence was offered that the in-person solicitation gave rise to overreaching or deception or anything of that kind.

Parker D. Thomson:

–No empirical evidence, Your Honor.

This prohibition, as the prohibition with respect to attorneys, antedates this Court’s decisions, starting with the Virginia Pharmacy decision and Bates, and so forth, by many, many years, and that is the case of… that is the case of attorneys, it’s the case of accountants, and it would be the case of all other professionals with which there were similar prohibitions.

Byron R. White:

Did the legislature command this sort of a regulation?

Parker D. Thomson:

Yes, Your Honor.

It is a specific provision of the Florida statute governing certified public accountants, chapter 473 of the Florida statute.

Byron R. White:

And the board–

Parker D. Thomson:

I might say, Your Honor, that the prohibition in the statute is of direct, in-person, uninvited solicitation.

The spin put on it of demanding an immediate response is by rule of the Board of Public Accountants.

Byron R. White:

–What was declared unconstitutional?

Parker D. Thomson:

The statute and–

The regulation.

Parker D. Thomson:

–The rules… everything.

They were both declared unconstitutional and the State board was enjoined from enforcing them.

We submit–

Antonin Scalia:

Do you want us to consider the statute as containing that additional qualification, or do you think that was sort of just added by the regulation?

Parker D. Thomson:

–I’m clear that it was added.

It was a construct of the State board as to how it interpreted direct, uninvited, in-person solicitation.

Antonin Scalia:

Is that an authoritative interpretation?

Parker D. Thomson:

Oh, yes, it is an authoritative interpretation in that the State board is authorized to adopt rules to carry forward the legislative mandate.

Antonin Scalia:

So we should regard the statute, then, as meaning that, as requiring an immediate response.

Parker D. Thomson:

That is correct, Your Honor.

Antonin Scalia:

That’s how you want us to interpret that statute for purposes of this case.

Parker D. Thomson:

Well, I believe, as I said, Your Honor, that the statute stands on its own, but it has been interpreted by an administrative agency that has the power to interpret it.

Byron R. White:

Well, the court of appeals didn’t make much of the immediate response business, did they?

Parker D. Thomson:

That is correct, Your Honor.

A majority of the court of appeals simply struck it all.

It elided the two.

John Paul Stevens:

Do you raise any question that… they held the entire statute unconstitutional, the entire rule unconstitutional, is that right?

Parker D. Thomson:

Correct, Your Honor.

John Paul Stevens:

Do you make any argument that they should have tried to save possible applications of the statute to extreme cases of overreaching or anything like that, or do you say the whole ball of wax is at issue?

Parker D. Thomson:

I believe the whole ball of wax clearly is at issue.

John Paul Stevens:

Even though it’s conceivable that some applications of the rule might be entirely legitimate even under the court of appeals reasoning, if the accountant went and engaged in the very extreme kind of behavior that was in Ohralik, for example.

Parker D. Thomson:

That is correct, Your Honor.

The statute has been stricken as to all of its applications with one… with one caveat, and that is that the end line of the decision of the Federal district court was that what should be in the business context.

Byron R. White:

But other than that let me… well, it’s the district court.

Parker D. Thomson:

That is the district court, and its determination was affirmed.

William H. Rehnquist:

Well, are you asking us to save as much of the statute as can be saved under the Constitution?

Parker D. Thomson:

Mr. Chief Justice, we are asking you to save the entire statute under the Constitution.

William H. Rehnquist:

Well, supposing we were to conclude that the entire statute couldn’t be saved under the Constitution.

Parker D. Thomson:

Then we would be asking you to save whatever could be saved.

In fact, the statute itself has a what you might call an unzipper clause.

It says that the… essentially it says that it’s to be interpreted in accordance with the First Amendment, and it is to be limited to the extent that there is a need for it.

Byron R. White:

Well, what about–

Parker D. Thomson:

It gives the board, in fact, the authority to do that.

Byron R. White:

–I suppose there are a lot of CPA’s in your State that don’t attest.

Parker D. Thomson:

The… factually, any CPA may attest.

Yes.

Parker D. Thomson:

Clearly, there are some CPA’s that do not attest.

How many–

Byron R. White:

But do you think… but the statute covers them as well, doesn’t it?

Parker D. Thomson:

–Of course, Your Honor.

The statute covers any person who performs accounting functions as a CPA, and I submit to Your Honor that to the layman the difference between attest and performing accounting functions as a CPA is a distinction without a difference.

Now, in terms of the ultimate… in terms of the ultimate use of financial statements, to be sure, attest has a very significant difference, and it is the ultimate protection of the attest function that is one of, or the most principal requirements and concerns of the statute.

But in fact a CPA is a person who performs accounting functions as a CPA… compilations, and so forth… and when you go to the small business that Mr. Fane says that he wishes to secure, corporate and commercial clients that have sufficiently complex accounting and taxation needs to justify the retention of a highly skilled accountant, the difference between an attest function and a compilation function or something else that is accounting services, I suggest is a distinction that the average layman is not likely to understand.

Antonin Scalia:

Mr. Thomson, can I come back to what you call the… what the unzipper feature of the stat… we do have an overbreadth doctrine in First Amendment cases which says that if the statute is valid in some applications but not invalid in others, it’s invalid in toto.

Can that doctrine be overruled by simply saying in the statute, by the way, to the extent that this statute is unconstitutional it’s no good?

Parker D. Thomson:

No–

Antonin Scalia:

Can a stroke of the pen do away with our overbreadth doctrine?

Parker D. Thomson:

–Well, it’s unlikely that any Florida statute can get rid of United States Supreme Court’s overbreadth doctrine, but historically the statute came about… it was actually part of the rewriting of the law in 1979, at a time when Bates had been decided, Ohralik had been decided, Primus had been decided.

My suspicion, although there is no clear legislative history, of the words, except to the extent that such solicitation constitutes the exercise of constitutionally protected speech as determined by the rules of the board, was designed to pick up issues like Primus in case there were some kind of semipolitical speech rather than the uncontrovertible commercial speech that is involved in this case.

Sandra Day O’Connor:

Mr. Thomson, do you think that the overbreadth doctrine applies to commercial speech regulations?

Parker D. Thomson:

Well, going back to Bates, it was said that it did not.

Sandra Day O’Connor:

And there are other cases that say the same thing.

Parker D. Thomson:

There are a series of cases–

Sandra Day O’Connor:

So you take it that the overbreadth doctrine is not applicable here.

Parker D. Thomson:

–That is my assumption, Your Honor, although this Court has in recent years utilized the term.

In some circumstances that might apply.

However, I do believe that the cases have said it does not.

We submit that solicitation is a form of advertising with two aspects, the message that is conveyed, and the medium in which that message is conveyed.

The message of the solicitation is the commercial speech.

It is a message that proposes a commercial transaction.

The medium in which the message is conveyed is not the message.

There are many media through which the commercial message here can be conveyed… as I said, print press, newspapers or magazines, electronic press, radio or TV, direct mailings, laser letters… but it cannot be done in one specific form, and that is, uninvited, in-person solicitation.

Each medium has its own unique features.

However, all print media permit review of the message except one… the cold call.

Parker D. Thomson:

By the very nature of the cold call, the message that is delivered by this form is not subject to regulation simply because it is not recorded for review.

We submit that States have a substantial interest in regulating their learned professions and in maintaining the highest professional standards.

We submit that State regulation of professionals and the advice professionals give is qualitatively different than the regulation of claims involving standardized products and services.

Sandra Day O’Connor:

Would you say that Florida could have the same kind of regulation for real estate brokers… no cold calls?

Parker D. Thomson:

Your Honor, it would pose a whole set of different circumstances.

You’d have to… there are various ways that you could define learned professions.

Sandra Day O’Connor:

Well, what’s your answer?

Parker D. Thomson:

Well, Florida recently has defined learned profession… or professions, I should say, in one… in one way that relates to professional malpractice that I think leads us in part towards that determination.

I think that there are other thoughts that are involved that also impact… what the Florida court referred to as licensing, specialized knowledge, and academic preparation of at least a 4-year degree.

You could incorporate into that academic preparation training, and impart continuing education training that is required of such professions as accounting.

You may also desire to include a code of ethics with a disciplinary system with respect to members who breach that code.

One criteria that has been offered at times is that a primary emphasis of the profession involved is on social responsibility over individual gains with respect to the accountants, their public function, and one definition, or one restriction that could clearly be looked at, is where the legislature has chosen to apply a privilege to the communications between the users of that service and the service itself, which would be true of accountants and attorneys.

We are not suggesting, however, that it would apply beyond the learned professions, and specifically, of course, we are suggesting that it should apply specifically to certified public accountants.

I would–

John Paul Stevens:

May I ask you one other question before you sit down, Mr. Thomson?

Am I correct in understanding that the statute says it’s… to the extent that such solicitation constitutes the exercise of constitutionally protected speech as determined by the rules of the board, and then the rules of the board define direct, in-person, uninvited solicitation as those that directly or implicitly request an immediate, oral response from the recipient.

Does that mean that, under your understanding of the rules construing the statute, that if the oral solicitation did not request an immediate response, it would not be prohibited by the statute because the rules have construed the statute to limit them in this fashion?

Parker D. Thomson:

–At this point of time, Your Honor, yes… that is, that the board has authoritatively determined the meaning of the prohibition.

Whether they did it for the reasons that they were attempting to constitute, or determine what constituted the exercise of constitutionally protected speech, is certainly not evident in anything that is clear from the adoption of the rule.

John Paul Stevens:

Is there any evidence in this case that your adversary ever engaged in the kind of solicitation as defined in the rule, where he demanded an immediate response?

Parker D. Thomson:

It is my understanding that Mr. Fane challenged the rule, and whether he violated the rule in the meantime is unknown to the board.

John Paul Stevens:

But he asserts an interest in engaging in solicitations that do demand an immediate response, that’s your–

Parker D. Thomson:

He doesn’t say one way or the other.

John Paul Stevens:

–I wonder if he has standing to bring this lawsuit, is what I’m asking.

Parker D. Thomson:

Your Honor, this Court… this case is posed, and it went on a summary judgment, as I believe Your Honor knows, and we know from that what Mr. Fane wants to do.

Mr. Fane wants to offer his services at rates below the prevailing market rate for CPA’s in the community, and he wants to develop a clientele of small to midsized businesses.

He wants to explain why he can offer superior service to clients as compared with other CPA’s or accountants, and gives some reasons.

John Paul Stevens:

All of which he’s permitted to do under the rule, as long as he doesn’t demand an immediate response.

Parker D. Thomson:

Your Honor, that is… that is how the rule is interpreted by the board, without question.

Sandra Day O’Connor:

But Mr. Thomson, in any event, this suit was brought as a facial attack against the entire Florida statute in question.

Parker D. Thomson:

Unquestionably, Your Honor, and it was submitted on the basis of three affidavits, two by Mr. Fane and one by Louis Dooner, who dealt with–

Byron R. White:

If the regulatory interpretation was authoritative, the courts should not have declared the statute unconstitutional on its face, and furthermore, I can’t imagine why the… I would… I can’t imagine why the board would purport to limit the statute to solicitations that demanded an immediate answer, unless they never wanted to enforce the statute at all, because I can’t imagine anybody trying to get a client would ever say… you’d never catch anybody doing that.

You wouldn’t even can’t imagine that anybody would do that.

So the statute as construed by the board is… they’re just… they just said, but we just don’t want to enforce it.

Parker D. Thomson:

–I don’t believe I could respond to the latter part of your–

[Laughter]

I can respond to the former part, that if Mr. Fane had wanted to know whether any specific conduct that he wished to engage in would or would not be permitted by the board, he could simply have asked the board.

John Paul Stevens:

Yes, but normally we don’t require people to say, can I have permission to make this speech, before they make a speech.

Parker D. Thomson:

Normally you may not.

Certainly you do not in the area of political or artistic speech, but it may be that this board has endorsed many times with respect to advertising regulatory requirements, or suggested that they might, whereby the advertising is required to be submitted, and of course most bar associations have exactly that, in which there is a prior submission for clearance, and the State Board of Accountancy permits that.

They have counsel.

Counsel can give informal opinions, and if counsel decides that it has not been determined under the rules of the board, it can submit it to the board for final determination.

William H. Rehnquist:

Did any of the affiants who joined Mr. Fane, or did Mr. Fane himself, say that they wanted to make solicitations and demand immediate responses from the solicitees?

Parker D. Thomson:

No, Your Honor, they didn’t say that.

Mr. Fane was the one, and he didn’t say what he wished to do with respect to that.

He said he wanted to make… he wanted to make direct, in-person solicitations, and he thought that that was the most effective way to sell his message.

William H. Rehnquist:

But one would think the board’s answer would be, go ahead, so long as you don’t demand an immediate response.

Parker D. Thomson:

The board wasn’t ever asked.

The board was sued.

Antonin Scalia:

Mr. Thomson, is it possible to have a facial attack on a statute which interprets the statute according to a regulation?

I mean, once you say you’re going to interpret it according to the regulation, it’s no longer a facial attack, is it?

Parker D. Thomson:

Well, it seems to me that it’s a facial attack on the statute as it’s been definitively interpreted.

Well, I guess I–

Parker D. Thomson:

You–

Antonin Scalia:

–Sure, I guess you can have a facial attack on the statute as it’s been applied as well, but I wouldn’t consider that a facial attack.

Parker D. Thomson:

–No, no.

It seems to me that those are two very different things.

As to whether it has been applied is a factual determination.

As to whether it has been construed, and therefore to that extent and to the extent permitted, amended, you would be looking still at the statute as it was on the books.

Antonin Scalia:

I thought the whole notion of a facial attack was that you have not given the State an opportunity to elaborate upon the statute through its judicial decisions or through its regulations, but maybe I’m wrong about that.

Antonin Scalia:

Thank you, Mr. Thomson.

Mr. Vladeck.

Am I pronouncing your name correctly?

David C. Vladeck:

Yes, Your Honor.

William H. Rehnquist:

You may proceed.

David C. Vladeck:

Mr. Chief Justice, and may it please the Court:

Let me start out by describing what this case really was about, and what the injunction that was added in this case provides.

No Federal court has declared this statute unconstitutional.

Rather, the district court entered a narrow injunction which appears on page 88 of the Joint Appendix, which enjoins the Board of Accountancy in the State of Florida from enforcing the regulation barring in-person solicitation, quote, as it is applied to CPA’s who seek clients through in-person, direct, uninvited solicitation in the business context.

The district court tried to enter a narrow injunction directed towards the regulation.

Byron R. White:

It banned something besides direct solicitations, something besides those that demanded an immediate response.

David C. Vladeck:

Right, that’s correct, Your Honor, though–

Well–

David C. Vladeck:

–If you look at the affidavit Mr. Fane submitted to the district court in which he explained precisely what he wanted to do, it is quite clear that he had no intention of demanding an immediate response.

Rather, if you look at the Joint Appendix–

Byron R. White:

–So the district court… neither Mr. Fane nor the district court accepted the regulation as a definitive construction of the statute, is that it?

David C. Vladeck:

–The word impliedly in the regulations, Your Honor, as we understand it, has always been read by the board to apply to the situation in which Mr. Fane wanted to engage in solicitation, just as the Chief Justice described earlier.

That is, what Mr. Fane wanted to do… and this is laid out in the Joint Appendix between pages 13 and 14… is call the chief financial officers of small to midsize businesses and say in essence, I’m new in town, do you have any interest in meeting me so we can discuss the services that I offer?

If the phone conversation ended with a no, Mr. Fane would have not pursued it.

If he was invited to make a presentation, Mr. Fane would go to the office, the business, and explain the services he can rendered his qualifications, his experience, discuss the business needs of the client and his ability to meet those needs.

At that point, he says on page 13 and 14 of his affidavit, the CPA also understands that most businesses will not hire a new CPA without checking his or her references extensively.

After all, the decision to hire a new CPA is not made lightly.

CPA’s are privy to all of the business’ financial records, and as a result, know a great deal about the business’ strengths and weaknesses.

Truly, what Mr. Fane is saying is that he cannot conceivably demand an immediate response.

William H. Rehnquist:

Well then, what’s this lawsuit about?

The board says it wants to impose this requirement only on people who demand an immediate response.

You say that’s the last thing your client would have done.

David C. Vladeck:

Because until this morning, Your Honor, the board has consistently taken the position that the word implicitly in its regulations applies to the situation that Mr. Fane has described.

That is, Mr. Fane describes the service he can offer and somehow, under the board’s reading of the regulation, that is an implicit request for an immediate response.

William H. Rehnquist:

What’s your authority for that view of the board?

David C. Vladeck:

Well, Your Honor, we laid this affidavit out and we’ve made our concerns known throughout the course of this litigation, and the board has always said that that conduct would be proscribed.

That’s the theory under which this case has been litigated throughout.

We even–

William H. Rehnquist:

How has the board manifested to you its view that this conduct would be proscribed?

David C. Vladeck:

–The board has said that any contact between a CPA and someone who is not yet a client poses the fear that there will be an abuse in the solicitation process, or that it will impair the public’s perception as to the integrity of financial statements, and therefore the board has taken the position throughout this litigation that any direct face-to-face or telephone encounter between a CPA and someone who is not already a client is proscribed by its regulation.

William H. Rehnquist:

Can you document your statement that the board has taken this position that you describe throughout this litigation?

David C. Vladeck:

Well, I can document it only in the sense that when we put in Mr. Fane’s affidavit, which describes in detail what conduct he intends to engage in, the board offered no response.

The board didn’t say, we agree with you that that conduct would be permissible.

To the contrary, they said that conduct and any conduct like it would be impermissible.

William H. Rehnquist:

They said that in a pleading somewhere.

David C. Vladeck:

In all of their pleadings throughout this case, Your Honor.

The first mention of Mr. Thomson’s theory came 10 minutes ago.

We’ve not heard a word about it prior to–

Then–

David C. Vladeck:

–This point.

William H. Rehnquist:

–Then you don’t think the board ever qualified the statute the way Mr. Thomson says it did.

David C. Vladeck:

That’s correct, Your Honor, and Your Honor, I think as one of the other justices points out, if that were the board’s reading of its regulations in the statute, then it would apply to virtually no CPA solicitation.

CPA’s are not like lawyers in the sense that they’re seeking one–

William H. Rehnquist:

One shot.

David C. Vladeck:

–A one time, one shot arrangement with the client.

What Mr. Fane wants, and what he said in his complaint, what he said in both of his affidavits, he wants to establish a long-term professional relationship with a client that has some need for reasonably sophisticated CPA services.

And as I think Justice O’Connor asked Mr. Thomson before, abusive solicitation practices are not likely to be favorably received, and for that reason the State has been unable to point to any evidence from Florida or from any of the jurisdictions that have long permitted solicitation by CPA’s that there’s a problem with abusive solicitation.

Byron R. White:

In any event, the court of appeals declared the statute unconstitutional, broadly.

David C. Vladeck:

Well, I don’t read the court of appeals opinion–

Byron R. White:

Well, what did it do?

David C. Vladeck:

–The court of appeals, Your Honor, opinion ends on page 103 of the Joint Appendix–

Byron R. White:

But at least it didn’t… it didn’t stop to fool around with notions about demanding an immediate response.

David C. Vladeck:

–Your Honor, until this morning that issue–

All right.

David C. Vladeck:

–has not been raised in this case.

William H. Rehnquist:

Now, Mr. Vladeck, in the petitioner’s brief they refer to the affidavit of Louis W. Dooner, CPA, in his response to Fane’s motion for summary judgment on page 7 of the petitioner’s brief–

David C. Vladeck:

That’s correct, Your Honor.

William H. Rehnquist:

–And they quote from Dooner’s affidavit.

It says, the only type of solicitation that a CPA may not engage in is that that places the potential client in the position of having to make an immediate oral response.

If that’s a fair statement, I don’t think your earlier statement is fair that it had never been suggested before that this was the interpretation.

David C. Vladeck:

Your Honor, this case has been litigated now for 4 years.

We made quite clear at the outset of this litigation, before Mr. Dooner’s affidavit was submitted, precisely the conduct Mr. Fane sought to engage in.

There has been never any suggestion that that conduct would be permissible under the regulations that the board in fact–

William H. Rehnquist:

According to them, the Dooner affidavit was filed in opposition–

David C. Vladeck:

–Yes.

William H. Rehnquist:

–To your motion for summary… at least you knew then that this was a position that the board was taking, and I’m not sure that is consistent with what you said moment ago.

David C. Vladeck:

Your Honor, we’ve always understood the board’s position to be that any unsupervised conduct, nonpublic conduct, or the contact between a CPA and someone who is not yet a client of that CPA, to implicitly call for an immediate response.

That is, we’ve always understood the position, and indeed, I think that’s the only–

John Paul Stevens:

Let me give you a little further help.

That’s certainly the way the court of appeals understood it.

David C. Vladeck:

–It’s certainly the way–

John Paul Stevens:

They said that in Florida, in-person solicitation by CPA’s is forbidden, period.

That’s the way they construed it.

David C. Vladeck:

–And that has always been the position of the board until this morning.

I’d like to get to responding to the first justification the board has offered in defense of this all-out ban, which is that a ban on solicitation is needed to preserve the sanctity of the attest function.

There are several points I’d like to make.

First is, there is no evidence to support the ban furthers or substantially furthers the State interest in preserving the attest function.

While Florida has had a statutory ban on in-person solicitation since 1969, many other States have no ban on in-person solicitation by CPA’s, and there is no evidence from any of those jurisdictions that it presents a problem.

Many Federal regulatory agencies, most notably the Securities and Exchange Commission, depend very heavily on audited financial statements from publicly held corporations.

Sandra Day O’Connor:

Well now, you brought what appears to be a broad sort of facial attack on the statute.

David C. Vladeck:

Justice O’Connor–

Sandra Day O’Connor:

It had not been applied to Mr. Fane, right?

David C. Vladeck:

–That’s correct, Your Honor.

Sandra Day O’Connor:

He had not engaged in conduct and been disciplined for it.

He brought this in advance, this attack, against the whole statute.

David C. Vladeck:

Well, Your Honor, he is… we didn’t–

Right?

David C. Vladeck:

–Well, yes–

Okay.

David C. Vladeck:

–But not against the whole statute.

Sandra Day O’Connor:

Do you think the overbreadth doctrine applies to commercial speech?

David C. Vladeck:

No, Your Honor, I do not believe that’s the case.

Sandra Day O’Connor:

Do you think there are any possible, legitimate applications of this statute?

David C. Vladeck:

There may be, Your Honor, and–

Sandra Day O’Connor:

Then how can the court just strike the whole thing down?

David C. Vladeck:

–Well, in the first place, we don’t believe the court has.

The injunction that has been entered applies only in the business context.

Secondly, Your Honor, we don’t believe we–

Only to what?

David C. Vladeck:

–Only to solicitation in the business context.

It doesn’t apply to CPA’s who want to solicit individuals for their personal accounting needs.

In further response, Justice O’Connor–

Antonin Scalia:

Will you explain that again?

I don’t understand.

What is, in the business context?

David C. Vladeck:

–Well, we assume that what the district court judge meant, and defendants have not sought clarification of it, was that Mr. Fane would be allowed to solicit the business entities that he wants to solicit… corporations or other commercial entities… in distinction to what the board claimed was one of its fears, which was that CPA’s would solicit unsophisticated individuals, and so the district court’s injunction is limited to the business context.

Which, if I may, Your Honor, gets me back to my answer to Justice O’Connor’s question.

We didn’t label this as a facial, or as an as-applied challenge.

I think if you look at our complaint, it is more clearly an as-applied challenge, because in our complaint, we specify precisely the conduct in which Mr. Fane seeks to engage, and we certainly pushed the district court towards issuing an order that was limited towards solicitation in the business context, or business clients.

And in that respect I think the complaint is very much like the kind of challenge that was described by this Court in Fox, which is a narrow tailoring challenge.

That is, the kind of challenge that doesn’t apply… doesn’t seek to have the statute struck down as facially overbroad, but challenges one particular application to that statute, and here, it’s for the kind of business solicitation that Mr. Fane seeks to engage in.

We didn’t label the complaint that way, Justice O’Connor, but I think that’s the only fair reading of the complaint, and certainly that’s the way it was treated by the district court judge.

Byron R. White:

What is the present position of the organization representing CPA’s, the American Institute of CPA’s?

David C. Vladeck:

That’s correct, Your Honor.

Byron R. White:

Well, what is the present position of that institute?

Byron R. White:

Do they have a rule against in-person solicitation now, or did they ever, or what?

David C. Vladeck:

Let me trace the history of the AICPA’s regulations.

Byron R. White:

Well, you don’t need to go through the whole thing.

[Laughter]

David C. Vladeck:

Well, it’s very brief, Your Honor.

At present, there is no prohibition enforced by the AICPA with respect to in-person solicitation.

This rule has its genesis in the first code of ethics issued by the AICPA in 1917.

That code prohibited encroachment, not solicitation.

Essentially, the prohibition was for one CPA soliciting the clients of another CPA who happened to be a member of the organization.

It did not forbid general solicitation.

William H. Rehnquist:

That was called encroachment.

David C. Vladeck:

Encroachment, or referred to otherwise as poaching, Your Honor.

Byron R. White:

Also called unfriendly.

David C. Vladeck:

Yes, also called unfriendly.

Antonin Scalia:

Unfair and destructive business practices.

David C. Vladeck:

That’s correct, Your Honor.

That prohibition remained in force until 1948, when the AICPA sweepingly amended its rules to prohibit all kinds of promotional activity… advertising, solicitation and everything of the sort.

In 1973, the Justice Department Antitrust Division first contacted the AICPA to explain that it thought the rules were anticompetitive and violative of the antitrust laws.

Finally, in 1979, threatened with imminent litigation by the Justice Department, the AICPA withdrew its solicitation ban and issued a report called the Report on Solicitation, which is contained in the Joint Appendix, which takes the position that there is no evidence whatsoever that in-person solicitation by CPA’s leads to either of the concerns the State claims to fear.

That is, abuse of the attest function, or overreaching by CPA’s who engage in solicitation, and the AICPA Report on Solicitation is really the only comprehensive or authoritative study on this issue uncovered by either party.

In fact, it was submitted by the defendants in the district court.

Let me just take one last attempt to respond to the Chief Justice’s concerns about the reading of the regulation.

We alleged in our complaint precisely the conduct we wanted to engage in, and in paragraph 13 of our complaint, which appears at Joint Appendix page number 4, we say that Mr. Fane, quote… I’m quoting now… Mr. Fane brings this action because Florida’s prohibition on in-person, direct, uninvited solicitation, including initial telephone calls, denies him the opportunity to communicate this and similar information, so on.

In the answer, the defendant denied that allegation–

Well–

David C. Vladeck:

–And it seems to me the denial is inconsistent with the narrower reading that–

William H. Rehnquist:

–But I would have… but if you place the way things develop in a trial in the time sequence, I take it first you get the complaint, then the answer, then you get motions for summary judgment, and I think the affidavit I was quoting from in the petitioner’s brief was at the summary judgment stage–

David C. Vladeck:

–That’s correct.

William H. Rehnquist:

–Where you accept the positions to be refined over the complaint and answer.

David C. Vladeck:

Yes, Your Honor, but the position that Mr. Thomson has espoused was not put forward in any of the other submissions, particularly the brief of the defendant, which–

William H. Rehnquist:

Well, but it certainly was put forward in that affidavit–

David C. Vladeck:

–Yes, sir.

–Don’t you agree?

David C. Vladeck:

Yes, sir, I would agree.

Let me return, though, to the State’s justifications here.

The other point I’d make is, not only is there no evidence, but there is experience before other jurisdictions that shows that there have not been problems with solicitation activities by CPA’s, nor has there been any evidence from Florida during the 2 years that this injunction has been in effect that there have been any problems with abusive solicitation.

The defendants never sought a stay of the district court’s order.

Solicitation at least in the business context has therefore been permissible in Florida for the last 2 years.

There has been no suggestion at all that that has given rise to any problems or any difficulties.

I’d like to say briefly a word about the time-place-manner doctrine argument that the defendants have made as well.

We have explained in our brief why we do not believe the time-place-manner argument applies, and let me just highlight two of our most fundamental concerns.

The first is, there’s no question in our view that this is a content-based ban.

Like all restraints on commercial speech, the solicitation ban picks out the particular form of communication and regulates it, and this Court’s jurisprudence has made clear that content-based regulations are not subject to review under the time-place-manner doctrine.

In the commercial speech area, we submit they are reviewable under the Central Hudson test which we believes govern, and indeed, all of this Court’s prior cases involving lawyer advertising, professional advertising regulation, had been decided under the Central Hudson test, not under the time-place-manner doctrine.

The second point that we think is pertinent is that the defendant’s argument really seems to make a fortress out of the dictionary by equating the word manner with mode.

Here, this regulation seeks to suppress an entire mode of communication, and this Court’s opinions by and large have said that where the regulation completely prohibits a particular mode of expressive activity, it ought not to be judged under the time-place-manner standard.

William H. Rehnquist:

Mr. Vladeck, supposing that you were in complete agreement with Mr. Thomson that the only way the board sought to… and the only kind of conversation the board sought to prohibit was those demanding an immediate answer, would you still say that that was not a time, place, and manner regulation, if he could communicate everything he wanted to but couldn’t demand an immediate answer?

David C. Vladeck:

No, Your Honor, I would still say that that was a content-based restraint in that he could say, I’d like you to consider hiring me, I’m extremely well qualified, here are the services I render and the fees I charge, but he couldn’t say, and please let me know soon.

William H. Rehnquist:

Well, he couldn’t say, let me know right now.

David C. Vladeck:

He couldn’t say, let me… all right, that’s fine.

I accept your amendment… and that seems to me to be a content-based restriction.

That is, you can say everything but those four magic words.

And it seems to me that that restriction would have to be judged under the commercial speech test, and it would either rise or fall on whether it passed muster under Central Hudson.

It seems to me that that restraint would have far more appeal than the restraint that the board throughout this litigation says it intends to impose.

Byron R. White:

Why shouldn’t we at least prefer to wait until the board goes after somebody so we know what… know for sure what the Florida prohibition is?

David C. Vladeck:

Well, Your Honor, there are two reasons.

One is–

William H. Rehnquist:

Well–

David C. Vladeck:

–There is–

Byron R. White:

–Is it all right for us to prefer that?

David C. Vladeck:

–There’s an interrorum effect.

The uncertainty would chill Mr. Fane’s speech.

If Mr. Fane couldn’t go to the court to get a resolution of whether his conduct was permissible or not, Mr. Fane and probably many other CPA’s would sit on the sidelines.

And let me point out, Your Honor, this isn’t the only case that was brought to challenge this restraint.

There is another case that is now pending in the Florida State courts that preceded Mr. Fane’s case, during which the board has taken what we thought was the board’s unequivocal position in this case, which is that any unsupervised contact either on the phone or face-to-face between a CPA and someone who is not that person’s client is forbidden under the Florida rules, and so this is not a case, at least in our minds, as to which there is any uncertainty at all as to the board’s position.

Byron R. White:

They didn’t… when… this has already been remarked upon.

When you filed your complaint and said what he wanted to do, the board didn’t say go ahead and do it.

David C. Vladeck:

No.

In fact, they have vigorously, vigorously litigated this case at every turn, even though we have… we put it in our complaint, we put it in our affidavits, we have always clearly explained precisely the kind of conduct in which Mr. Fane seeks to engage.

Unless there are further questions–

John Paul Stevens:

Does the record say anything at all about the rates he proposed to charge as compared with the prevailing rates?

David C. Vladeck:

–No.

There is an allegation in the complaint that he would charge rates below the prevailing rate in the community, but that was never a central feature in our–

John Paul Stevens:

And they never defended on the ground that they have an interest in preventing that.

David C. Vladeck:

–Oh, no, Your Honor, they did not.

[Laughter]

Thank you–

David C. Vladeck:

Unless there are any further questions–

William H. Rehnquist:

–Thank you, Mr. Vladeck.

Mr. Thomson, you have 4 minutes remaining.

Parker D. Thomson:

Mr. Chief Justice, may it please the Court:

I simply wanted to say that the rule says a communication which directly or implicitly requests an immediate oral response from the recipient–

William H. Rehnquist:

Now, where are you reading from?

Parker D. Thomson:

–I am reading… it is… it is an appendix to our brief–

John Paul Stevens:

A-15 of the blue brief.

Parker D. Thomson:

–On A-15.

William H. Rehnquist:

A-15 to the blue brief?

Parker D. Thomson:

A-15… A-15, Mr. Chief Justice.

William H. Rehnquist:

And whereabouts on A-15?

Parker D. Thomson:

At the very top of the page: for purposes of this rule, the term direct, in-person, uninvited solicitation shall be deemed and construed to mean any communication which directly or implicitly requests an immediate oral response from the recipient.

Parker D. Thomson:

The Dooner–

William H. Rehnquist:

And you’re telling us that this regulation was duly enacted by the board.

Parker D. Thomson:

–That is correct, Your Honor, and what I started to say is, I do not want to suggest to this Court that the board is going to look… would look favorably on a request because it is their assumption that it would implicitly respond.

They did not intend, I believe, to rewrite the statute as was… to gut the statute, which is what was the suggestion, perhaps, by some of the questions that were previously asked.

John Paul Stevens:

In fact, the next sentence in the regulation makes that rather clear.

Parker D. Thomson:

Correct.

John Paul Stevens:

Uninvited, in-person visits, and so forth, are prohibited.

Parker D. Thomson:

Correct, Your Honor, and I did not want in any way to be… to suggest that the Court is going to look favorably on a request with respect to this matter.

It is the assumption that normally when that type of solicitation is made that a response is at least implicitly called for, and I do not want to suggest to the contrary.

Mr. Dooner’s affidavit was before the Court, Mr. Dooner said what he did, and that is in fact the way it went forward for determination by the Federal district judge and by the court of appeals.

William H. Rehnquist:

But the second sentence that Justice Stevens just referred to does say uninvited, in-person visits or conversations or telephone calls to a specific potential client are prohibited.

Now, does that mean ones that demand immediate oral response, or just across-the-board they’re prohibited?

Parker D. Thomson:

Your Honor, I believe, reading the two sentences together, that there is an assumption that when such a call is made that it implicitly… at least implicitly requests a response.

William H. Rehnquist:

Even though no such response is requested by the caller.

Parker D. Thomson:

Absolutely if no response… the question was asked to me before, what if I don’t want your response?

That was the question to which I responded, in which it was specifically negated, but I do say… believe if the person makes a cold call and says nothing, he expects a response.

Antonin Scalia:

It seems to me, Mr. Thomson, that the whole purpose of that which directly or implicitly requests an immediate oral response is simply to distinguish the situation described in the last sentence, indirect forms of… such as giving speeches.

When you give a speech, you don’t expect somebody in the audience to get up and say, oh, that sounds pretty good to me, can you give me a little more–

[Laughter]

Isn’t that the only purpose of it, really, and that they’re really saying you cannot make person-to-person oral contact?

Parker D. Thomson:

Well, certainly, as the words of the statute… as I said before, I do not believe that the board attempted to gut the statute with this rule.

Byron R. White:

What do you say the State’s interest is in doing that?

Parker D. Thomson:

The State’s interest is dual.

With respect to the attest function, it is to assure the independence, and the apparent independence of the certified public accountant which the board submits is contrary to the advocacy function that would be involved in this kind of… this kind of solicitation.

The second is to prevent, because of the unregulatability of this, to establish a prophylactic rule that would protect against overreaching and other misconduct.

William H. Rehnquist:

Thank you, Mr. Thomson.

The case is submitted.