Friedman et al. v. Rogers et al – Oral Argument – November 08, 1978

Media for Friedman et al. v. Rogers et al

Audio Transcription for Opinion Announcement – February 21, 1979 in Friedman et al. v. Rogers et al

del

Warren E. Burger:

We will hear arguments first this morning in 1163 on the consolidated cases Friedman and others against Rogers and others.

Mr. Niemann, you may proceed whenever you are ready.

Larry Niemann:

Mr. Chief Justice, and May it please the Court.

This case involves the constitutionality of two provisions of the Texas Optometry Act; one dealing with the statutory requirements for a Board membership, the other dealing with statutory prohibitions of the practice of optometry under an assumed name.

I as Attorney for the Texas Optometric Association will be presenting the facts relevant to the Board membership statute and arguing that, that statute is constitutional.

Ms. Dorothy Prengler, who is an Assistant Attorney General for the State representing the Board, will be presenting the facts concerning the assumed name statute and she will be arguing that, that statute is also constitutional.

Now,if I may briefly present the procedural posture of this case.

The first statute as I mentioned, which is an issue is the Board membership statute.

It requires that four of the six members of the Texas Optometry Board shall be members of the Texas Optometric Association.

The second statute is the assumed name statute.

It provides that optometrists in Texas shall practice optometry under their own personal names and may not practice optometry under assumed names or trade names.

The lawsuit was originally filed by Dr. Rogers, who was one the six members of the State Board.

He challenged the Board membership statute, as an arbitrary classification in violation of his equal protection rights, his due process rights, and most recently his associational rights.

He also challenged the assumed name statute as a violation of his rights of commercial free speech.

The lower court, which was a three judge court, held that the assumed name statute was unconstitutional and was in violation of commercial free speech, concluding that their decision was mandated by this Court’s opinion in Bates.

Warren E. Burger:

What do the Texas Statute is provide about group practice of Medicine, the general practice of Medicine?

Larry Niemann:

Your Honor, the Texas Statutes are silent regarding the group practice of medicine.

I would point out that it’s very important that there has been no history of abuse, and there is distinction between the group practice of Medicine and the assumed name practice of optometry and I will expand on that later in my argument.

At the same time, the Court held that the assumed name statute was unconstitutional.

The Court upheld the Board membership statute, reasoning that it was an Economic Regulation Law that the rational relationship test applied and that the State Legislature did have ample reason, ample justification for the statute.

The Court listed three specific rationales for this statute.

The bottom line of each being that there was a greater likelihood of law enforcement.

The four of the six members of the optometry Board were from TOA.

Now to the facts which are specifically relevant to the Board membership statute.

Harry A. Blackmun:

I take it Mr. Niemann, a commercial optometrists may not join the TOA or may he?

Larry Niemann:

That’s correct Your Honor.

The unique history of optometry in Texas is what the lower court pointed to as the justification for the Board membership statute.

That history deals with commercial optometrists, historical track record of hostility toward enforcement of the Texas Optometry Law.

William H. Rehnquist:

Counsel, Mr. Justice Blackmun I understood asked you kind of an either or question and you said, ‘that’s correct’.

Can a commercial Optometrist join the TOA or can he not?

Larry Niemann:

He cannot.

It also deals not only with the track record of non-law enforcement by the commercial optometrists, but also a track record prior to the passage of the Act for deception and consumer abuse.

Now in understanding these facts, it is important for the Court to appreciate that in Texas, there are two separate classifications of optometrists; professional optometrists and commercial optometrists.

Traditionally —

Harry A. Blackmun:

In your view, The Texas Law prohibit commercial optometry altogether constitutionally?

Larry Niemann:

Yes Your Honor, I think they could.

Traditionally, professional optometrists have been characterized by an economic independence from opticians.

They have been characterized by their practice by appointment rather than a waiting line method.

They have emphasized quality and longer and more thorough examinations of the patients and a close doctor patient relationship, but most importantly professional optometrists have been characterized by a long history of strong law enforcement of the Texas Optometry Laws.

And as I indicated earlier, professional optometrists or rather the Texas optometric Association is composed exclusively of professional optometrists.

Potter Stewart:

Well, that’s kind of secular, isn’t it?

They have been interested in enforcing the law, because the law benefits them and probably the law was enacted under their support.

Larry Niemann:

The law was enacted by the legislature.

We happen to agree with the legislature and we hold a philosophy of strongly enforcing the mandates of the legislature Your Honor.

Potter Stewart:

Because it’s to your benefit.

Larry Niemann:

That’s correct.

There is no doubt about that.

In contrast, all the commercial optometrists and the commercial optometrists have been characterized by high volume, high speed assumed name practices.

Traditionally, they have been employed with or associated with the retail optician chain stores.

They have been subjected to highly restrictive employment contracts, economic tie-in.

There is some dispute in the record over that Your Honor.

Dr. Roger, says witness is to say that there are lower prices.

We have a former commercialist himself, then owner of a chain who had stated that the chain store operations actually under some circumstances cause an increase in prices, and there is a California study that I think is in the record that discounts, the long standing argument that a commercial adverting, assumed name type practice actually reduces prices.

As I was saying, the commercial optometrists were characterized historically by these economic tie-ins and controlled by opticians.

Most importantly, commercial optometrists have been characterized in Texas by repeated history of hostility toward the enforcement of the Texas Optometry Laws on the books.Now

in the record, the most blatant episode of optometry, commercial optometry’s hostility toward law enforcement, is an incident which occurred in 1967, the year immediately preceding the legislature’s adoption of the Board membership statute.

During that year, the commercial optometrists held the majority of the board.

They immediately proceeded to repeal a rule called the professional Responsibility Rule.

Now that rule contains some very important provisions.

It prevented fee splitting between optometrists and opticians.

Larry Niemann:

It prevented tie-ins and kickbacks.

It minimized the economic control by opticians over optometrists.

It required optometrists to use their own personal names and prevented them from using assumed names or names at offices where they did not actually practice.

That professional responsibility rule was the corner stone of the public’s protection against deception and abuse in optometry, and it had been adopted as a rule by the Board to correct and cure some long standing abuses by commercial optometry.

Now as soon as the commercialist on the Board attempted to repeal this rule, the legislature reacted very strongly.

The legislature refused to confirm the appointments of the commercialists that had done the damage.

The legislature abolished the old Board, created a new Board and mandated that four of the six members be from TOA.

And the legislature went even further.

They withdrew all rule making authority from the Board, they incorporated the professional responsibility rule into the statute and assigned the task of enforcing the statute to the Board.

In effect, what the legislature did was to codify into statutory form, very high standards of professional conduct; standards which coincided with those of TOA.

The legislature did not want to put enforcement of these very high standards in the hands of the commercial optometrists who were the mortal enemies of those standards.

In other words Your Honor, the legislature did not want to put the fox in charge of the hyenas.

And that is the historical background of the Board membership statute.

Ms. Prengler will as I have stated, present the facts relevant to the assumed name statute.

Now to the legal arguments regarding the Board membership statute; I would like to rebut in sequence each of the four separate grounds of the unconstitutionality presented by Dr. Rogers.

These are arbitrary classification, irrebuttable presumption, procedural due process and associational rights.

Turing first to the arbitrary classification argument; Dr. Rogers has argued that the Board membership statute is an arbitrary classification of optometrists which violates his Equal Protection Rights.

Potter Stewart:

Let me perhaps you have told us this but I want to get clear in my mind, what is the total membership of the board?

Larry Niemann:

Six.

Potter Stewart:

And their member serve for how longer term?

Larry Niemann:

Four I believe.

Potter Stewart:

Staggered or?

Larry Niemann:

Staggered.

Potter Stewart:

How do they become members?

Larry Niemann:

By appointment of the Governor Your Honor.

Potter Stewart:

Appointment of the Governor.

Totally six and the law requires at least four —

Larry Niemann:

Let me add another step; there is a unitary appointment, which must be confirmed by the Senate which meets every two years, and they serve until they are either confirmed or unconfirmed by the Senate.

Now regarding the arbitrary —

John Paul Stevens:

I need a classification on this point, supposing is there provision in the statute for what happens if a member of TOA is appointed and confirmed and starts to serve and then resigns from the association?

Larry Niemann:

Under those circumstances, it would be a vacancy and the Governor —

John Paul Stevens:

No, resigns from TOA, not from that, from the Board.

Is that an automatic vacancy or is the test his status at the time of appointment or must he continue a member throughout his term?

Larry Niemann:

Your Honor, the question is never risen, and I would think that the statutory construction of that law would require his continuing membership in TOA, but I don’t know.

Warren E. Burger:

Do you mean by that that he would be removed, he would be removed if he resigned.

He would forfeit the office.

Larry Niemann:

Your Honor, I really don’t know.

The statute requires that the Board consists of four members of TOA, and I would think conclusively that would require their membership at the time of appointment.

I would presume that it requires continuing membership, and resignation or ouster from TOA would vacate his position.

Now regarding arbitrary classification, Dr. Rogers argues that the statute is arbitrary, because it has no rational basis.

We disagree and the lower court disagreed.

The lower court concluded conclusions very similar to the facts I have just recited.

The court stated that the three rationales where the TOA members are more likely to be economically independent than non-TOA members.

The TOA members have a greater likelihood of emphasizing the highest quality of eye care as compared to non-TOA members.

And thirdly, the TOA members are more profound to enforce the Texas Optometry Act than non-TOA members.

I believe that is fair reading of the opinion that these were findings of fact.

It is our position that the bottom line of all these regions is a greater likelihood of enforcement of the Optometry Laws.

We do submit then that there are rational basis and therefore the arbitrary classification argument follows.

Dr. Roger’s next theory is that the Board membership statute violates substantive due process because of an irrebuttable presumption.

He argues that the legislative classification creates or triggers an irrebuttable presumption that a non-TOA member is unfit to serve on the Board.

Now the lower court we believe correctly rejected this argument, noting that an irrebuttable presumption does not exist in this case, since no commercial optometrist is conclusively denied membership on the Board.

Commercial optometry is not prevented from sitting on the Board in those two spaces, as it’s evidenced by the fact that Dr. Rogers himself a commercialist over 20 years has been a continuing member of the Board during that period of time.

Additionally, we would submit that there is another reason why the irrebuttable presumption analysis should not be used.

We believe that the irrebuttable presumption test appears to demand legislative perfection, yet nearly all legislative classifications on economic regulation contained some degree of imperfection and inaccuracy.

Indeed very few acts of the legislature could ever survive the bottom line requirement of the irrebuttable presumption test, i e that the requirement of the legislative classification be an accurate yardstick, to implement the legislative goals 100% of the time.

Dr. Roger’s next theory is that the Board membership statute violates procedural due process.

The thrust of his claim here is that the present and the future TOA Board members will as a matter of law always be prejudiced against commercial optometrists in all future proceedings in all situations.

He argues that if the Board majority consists of TOA members, the board is unconstitutional per se for all purposes, including examination, license renewal, and disciplinary actions.

We submit that if his argument were to be correct, the present Texas Board consisting of four TOA members would be unconstitutional even if there never had been a Board membership statute.

In other words, the constitutionality of the Board would vary from year-to-year depending on how many TOA members were appointed to the Board by the Governor, and we don’t think that makes sense.

Larry Niemann:

The lower court rejected this inherent bias analysis, and noted that bias must be proven on a case-by-case basis.

It cannot be legally presumed as a matter of law as an inference from Association membership.

And we submit that bias must be actually proved in the context of specific parties in specific hearings that are pending or which are about to commence.

In other words, proof of bias in a hypothetical future adjudicatory hearing simply does not allow the illegal presumption of bias in all conceivable future Board functions.

John Paul Stevens:

Mr. Niemann, isn’t there perhaps some inconsistency between that argument and your rejection of the first argument your opponent makes.

Your justification, the reasoning for having majorities is that there is a substance of bias in favor of enforcement.

Larry Niemann:

Apparently there it might be construed as an inconsistency Your Honor, but it is not.

The first argument is that the legislature is justified in concluding the TOA members would be more likely to enforce the law.

The second argument here is that the judiciary cannot presume as a matter of law, that there will be prejudice throughout the future.

One deals with the legislative right to declare a reasonable classification, one deals with the prohibition against the judiciary’s assumption of prejudice in the future.

Thurgood Marshall:

Do you say that legislative group agreed a group of prejudice but the court can’t.

Larry Niemann:

In the future Your Honor, that’s correct.

The legislature can — I am sorry.

John Paul Stevens:

Well, is that the judiciary deciding their prejudice or the judiciary saying that we accept the presumption that the legislature adopted to justify its statute and given that presumption, must the legislature not out of — I mean must not the judiciary out of difference to the legislature say yes, we will accept the proposition, these people are biased.

Larry Niemann:

Your Honor, biased toward law enforcement is what the legislature had in mind.

The bias being complained about by Dr. Rogers is pecuniary bias, not bias regarding law enforcement.

And those are two completely different animals.

I think the legislature can presume that certain persons should not categorize or classifications of persons will be biased toward law enforcement and others may not.

Particularly, Your Honor, when there is a track record of strong hostility, strong bias against law enforcement which has been exemplified by the track record of commercial optometry in Texas.

Dr. Rogers’ final theory is that his amendment associational rights are infringed.

I would comment that the issue is not raised below and is being considered for the first time by this Court on appeal.

The thrust of Dr. Rogers’ argument here is that he has been precluded from being on the majority of the Board, if he chooses not to associate with TOA.

It’s important to note here that Dr. Rogers is not arguing that commercial optometry is deprived of any representation on the Board, but only that as the commercial optometrist, he is deprived of being on the voting majority of that Board.

Potter Stewart:

It is not a matter of his choosing not to associate with TOA, he is ineligible, isn’t he?

Larry Niemann:

That’s correct Your Honor.

It’s another distinction, which was —

Potter Stewart:

So it is not quite accurate to say that if he chooses not to associate with TOA, he is ineligible to be on the majority.

He is ineligible to be in TOA and therefore ineligible to be a member of the majority of the Board, isn’t that fair to say?

Larry Niemann:

That’s correct.

We submit the Dr. Rogers’ associational rights if any are incidental and insignificant here.

Larry Niemann:

Dr. Rogers complaint is that he has being deprived of being on the voting majority of the Board and it is our position that there is no constitutional provision, which guarantees the right of anybody to be on the majority side of any vote, be it in a political election, a legislative vote or an optometry board vote.

Warren E. Burger:

What is this rights?

Thurgood Marshall:

Isn’t there a general rule that you can be excluded.

As I understand, there is no way for Dr. Rogers to win.

Is that correct?

Larry Niemann:

I am not quite sure that I understand the question Your Honor.

Thurgood Marshall:

That when a vote is taken on a Board, there is the no way for Dr. Rogers to win.

Larry Niemann:

Your Honor, I might point out that —

Thurgood Marshall:

Is that true or not?

Larry Niemann:

It is a vote deals with enforcing the law and the four members of the TOA on the board vote to enforce the law and Dr. Rogers votes against enforcing the law, then there is no way he is going to win.

Thurgood Marshall:

That was not my question.

My question was can you show a time that Dr. Rogers won the vote?

Larry Niemann:

There have been many occasions Your Honor, when Dr. Rogers has been on the majority.

I might point out that the majority here is not a —

Thurgood Marshall:

I thought you said earlier that these people just don’t get along at all.

Larry Niemann:

They don’t get along, but they still agree on some things Your Honor, and in the way of license, your license renewal, and enforcement of some of the laws, they have common interests.

Dr. Rogers feels very strongly about enforcing some of the laws, but not all of the laws.

So where they happen to agree on some of the laws then they will be voting together as a majority.

Thurgood Marshall:

My point is I don’t see any difference between being a minority of two or one, or being a minority of 89.

If you are in the minority, you are “ in the minority”.

Larry Niemann:

Your Honor, I might ask.

Thurgood Marshall:

Am I right?

Larry Niemann:

Yes, you are, but I would point out that there is no constitutional right that a minority always has the right to be in the majority.

Consider for a moment, a Board of Health consisting of various members from different professions and businesses, a physician, an optometrist, a dentist, a hospital administrator, or a nursing home administrator.

None of these — no one person on the Board would have his specialty interest view point represented by the majority of the Board, but the fact that they are in a minority so to speak from their specialty interest view point, does not make that Board unconstitutional.

If it were, we would need to consider the unconstitutionality of thousands of boards across the country.

Thurgood Marshall:

Now how many coordinates you say that he has all the rights and everything, but he just gets out of voting.

Larry Niemann:

He gets out of voting Your Honor because of his philosophy of non-enforcement and his opposition to the anti-commercial optometry Provisions of The Act.

For these reasons —

Thurgood Marshall:

Is there any allocation (Inaudible) nowhere?

Larry Niemann:

No, Your Honor, this is a case to first impression.

Thurgood Marshall:

Where you used to take a (Inaudible) and put in the statute.

Larry Niemann:

No there are no other federal cases Your Honor.

There is a host of other cases, state court cases, in which Board memberships have been tied to associational qualifications, they have been invariably upheld by the states throughout the country, but no federal cases Your Honor.

For those reasons —

Harry A. Blackmun:

Mr. Niemann, excuse me.

Congress constitutionally require that the Chairman of the EEOC be a member of the NAACP?

Larry Niemann:

No Your Honor.

I think there is a Federal Constitutional Provision that impliedly prevents the delegation of congressional powers to an association.

I would point out however that there is no constitutional provision that prevents the states from delegating such a power to private associations and that is a very distinctive difference.

John Paul Stevens:

One other question if I may.

The reason for a favor in for having four commercial or non-commercial optometrists is the interest in forcing of the prohibitions against commercial optometry.

What other than the trade prohibition against practicing the trade name, what are some of those provisions that remain on the books in our constitution?

Larry Niemann:

Your Honor, if I may summarize them by referring back to my statement of fact.

They are generally reflected in the professional Responsibility Rule and that rule prevents fee splitting between optometrists, it prevents the economic control, the economic tie-ins, the kickbacks.

John Paul Stevens:

Are those statutory provisions or they are ethical rules?

Larry Niemann:

Those are statutory provisions.

If I might refresh our memory, they were at one time a regulation adopted by the Board, then when the commercialists got in control, they were repealed and then they were enacted by statute and the legislature wanted them stick.

Warren E. Burger:

Ms. Prengler?

Dorothy Prengler:

Mr. Chief Justice, and May I please the Court.

I represent the State of Texas and the members of Texas Optometry Board.

I will address the issue of a constitutionality of Section 513(d) of the Texas Optometry Act, which provides that no optometrists may practice under or use in a connection with his practice of optometry any trade name, corporate name, assumed name or any name other than the name under which he has license to practice optometry in Texas.

The court below held that this section is unconstitutional under the First Amendment and relied extensively on the holding in Bates versus the State Bar of Arizona, and Virginia Pharmacy Board versus Virginia Consumer Counsel, instead of properly analyzing the state’s interest and the First Amendment interest involved in this section, the Court deferred to the advertising cases as being determinative of the outcome in this case and thus struck down the statute.

If the balancing test in Bates and Virginia Pharmacy is properly applied to this section, it becomes evident that the statute validly promotes important to state interest and inflicts a minimal restriction on First Amendment rights.

Before a discussion of the balancing test and the state interest advanced by section 513(d), I would like to point out to the Court certain elements that are not an issue in this case.

This is not an advertising case.

Optometrists in Texas are free to advertise, praise the availability of goods and services or even the quality of goods and services as long as it is not deceptive or misleading.

Therefore the consumer is not denied the right to receive the information as was true in Bates and Virginia Pharmacy.

They can also advertise in any media that they wish to advertise in.

The prohibition against advertising price was struck down by the court below and we have not appealed that issue.

Dorothy Prengler:

We would also like to point out to the Court that opticians who merely dispense eyewear and are not licensed in Texas, might freely operate and advertise under assumed names, trade names or corporate name.

The Texas Optometry Act fully allows —

Potter Stewart:

Opticians are just manufacture the licensed appliances, don’t they?

Dorothy Prengler:

That’s right.

Potter Stewart:

Fill a prescription?

Dorothy Prengler:

That’s right and they are not licensed in Texas.

Potter Stewart:

In Texas, can a patient come directly to an optician?

Dorothy Prengler:

Yes, patient can come directly to an optician to get glasses if they have a prescription from a doctor.

Potter Stewart:

Well, that’s what I mean.

They have to first go to a optometrist or an oculist, correct?

Dorothy Prengler:

That’s correct.

Potter Stewart:

An optician cannot deal directly with the patients as far as diagnosing them.

Dorothy Prengler:

That’s correct.

They can only fill a prescription.

Potter Stewart:

Right.

Dorothy Prengler:

Right.

Dr. Rogers is free under the Texas Optometry Act to use the name Texas State Optical in his opticianaries and in fact he does so use it in over 100 opticianaries in Texas.

Thus his ability to use a trade name in the merchandising business of selling frames and filling eye glasses prescription is in no way impaired by the statute.

I would briefly like to give the Court some additional facts to show why the legislature was reasonable in enacting Section 513(d), the assumed name statute.

This particular section was passed two years after the opinion of the Texas Supreme Court in Texas State Board of Examiners in Optometry versus Carp.

The Court specifically discussed that some of the abuses and the evils that existed in the practice of optometry under an assumed name in Texas.

Thus the legislature when they passed the statute was specifically aware of past abuses that had occurred in the Texas in the practice of optometry under a trade name, and had been specifically found by the Texas Supreme Court to be misleading to the public.

It was in response to those abuses that the statute was passed and we contend that the legislature had compelling reasons to enact the statute in light of this particular case and the abuses that were actually —

Byron R. White:

Is there any explanation or any reason for not borrowing the group practice of optometry?

Texas permits that, doesn’t it?

It’s just that you can do it under a trade name.

Dorothy Prengler:

That’s right, you can practice in association with other optometrists, but you have to practice under the names of all the optometrists.

The statute does allow optometrists to practice under a partnership name.

As long as the names of the partners, those partners actually practice there at the office and statute requires that, they have to at least practice at the office 50% of the time.

Byron R. White:

So the statute just bars how you hold yourself out to the public, or just what kind of words you use in representing yourself to the public?

Dorothy Prengler:

It requires that the individual optometrist hold himself out in his own name.

Byron R. White:

But any other aspect of group practice is not forbidden?

Dorothy Prengler:

No.

William H. Rehnquist:

It’s not too different from a full disclosure requirement of the Securities Act, resembling that in that case of court.

Dorothy Prengler:

That’s what we would contain, that’s correct, that it – and in fact it requires that the optometrists give more information to the public.

Byron R. White:

In billing, in any communications or in advertising the — all of the names must be given?

Dorothy Prengler:

That’s correct.

Byron R. White:

You cannot send a bill out under just a trade name?

Dorothy Prengler:

That’s correct.

If the individual, he must practice under that name and he cannot use a trade name in connection with this practice, that’s correct.

Potter Stewart:

As I understand it — your state does permit to practice under a partnership name so long as the partners devote at least 50% of their professional time to —

Dorothy Prengler:

Yes that’s correct.

Yes, there had been an abuse in Texas where partnership — where names of owners of a practice were used on the door and this was found to be deceptive since they were not actually there.

That’s why —

Potter Stewart:

Well, so Smith and Jones Optometrists can practice such a partnership so long as Dr. Smith and Dr. Jones devote at least half their time to the partnership work.

Dorothy Prengler:

That’s correct Your Owner.

Potter Stewart:

But now, can they practice as Smith and Jones Optometrists and also have as partners, Brown, Black and Green.

Dorothy Prengler:

Yes they can, that is specifically —

Potter Stewart:

Even though they are not mentioned in the partnership name?

Dorothy Prengler:

That’s correct.

Warren E. Burger:

But if they have name like Cromwell and Selevan there must be a Cromwell and a Selevan who spend half their time.

Dorothy Prengler:

That’s correct and the statute also —

Warren E. Burger:

There might be 100 others who are not named, is that so?

Dorothy Prengler:

That’s right.

At one time, optometrists in Texas were permitted to practice under a trade name.

Then in 1959, the Optometry Board as part of their rule making powers at that time adopted the professional responsibility rule which prohibited the practice under a trade name.

The rule was then challenged by several optometrists including Dr. Rogers and it was in this context that the case came before the Texas courts.

Byron R. White:

Do your cases explain or is there any reason for distinguishing between unincorporated groups that use a trade name and partnerships that use just two names and maybe 100 partners?

Dorothy Prengler:

The court did not speak to that particular issue.

However the abuses were not present in a situation where — they did not find the abuses to exist, they found the abuses to be directly associated to the use of a name other than the partnership name.

Dorothy Prengler:

And there were no abuses that were documented that existed in the use of a partnership name.

We would contend that at least in a situation where you have a partnership name, there is personal accountability there in the name of the partner and there is a partner whose name is part of the practice and it weighs more accountability.

Byron R. White:

Could there be under the Texas Law, be two named partners doing business and spending 100% of their time on the job, and they have as employees 50 others who aren’t partners?

Dorothy Prengler:

Yes.

Specifically some of the abuses that were found by the Texas Supreme Court were that the assumed name practice disrupted the doctor-patient relationship by concealing the identity of the individual optometrist and bearing the responsibility of the licensed optometrist in the trade name.

The Court cited situations where optometrists would add, drop, or change their trade name at a particular location even though the licensed optometrist will remain the same.

The Court further cited instances of optometrists being shifted from one location to another within the trade name practice and not maintaining a stable practice in any one particular location.

The Court found —

John Paul Stevens:

Couldn’t that still happen if you had a — I just want to be – if you had a Smith and Jones partnership, with 45 other partners who are not named and that partnership operated offices all over the state.

Dorothy Prengler:

They could not operate offices all over the state under the statute because that particular name could not be used all over the state unless they could somehow spend 50% of their time there or the time that the particular practice was open for business.

Warren E. Burger:

There can be only two branches at most wouldn’t it?

Dorothy Prengler:

Yes Your Honor.

That’s right.

Byron R. White:

But two other partners of the 100 men partnership could open the offices in some other place and being named partners and all the other unnamed partners could shift around and all the employees could move in and out of these various branches I take it.

Potter Stewart:

But each of the named partners has to spend at least 50% of his time on the partnership business in an office.

Dorothy Prengler:

That’s correct.

Byron R. White:

But if there are 100 partners or 50 partners, two can be the name partners in one place and two in another place, right or not?

Dorothy Prengler:

They could not be the namedpartners because under the statute, it would be prohibited.

They could not spend the requisite amount of time.

You would have to have different optometrists at different locations with different names.

Yes, that would be possible.

Byron R. White:

So if I have four partners and two members, the four can practice as a partnership in Dallas by — Smith and Jones can use their name, and Brown and Jackson can be the two named partners in Fort Worth.

Dorothy Prengler:

That’s true.

The Court further found that it was common for one trade name owner to have different trade name practices under different names within a small geographical location.

This gave the impression to the public that each of the offices were independently owned and operated.

The Court specifically found that the practices of optometry under a trade name was misleading and confusing to the public and it was against this background that the Texas Legislature enacted the prohibition in 1969.

Dr. Rogers urges that the assumed name statute is unconstitutional as a violation of commercial free speech.

It is our contention that the assumed name statute does not easily fit into the commercial free speech category.

It is a concept that is admittedly difficult to characterize but we would contend that it should be properly characterized as a regulation of conduct rather than speech.

The statute is designed to regulate the mode of practice and it is designed to cure the abuses that have existed in Texas in relatively recent times.

Dorothy Prengler:

The primary purpose of the statute is to ensure that optometrists do not obscure their license identity by merging their identity with other licensed optometrists under one trade name.

The assumed name statue is primarily directed towards preserving the individual optometrist identity, rather than regulating his speech.

If the assumed name statute is viewed as a regulation of conduct as we contend that it should be, a rational basis test is used to analyze the statute and if the facts indicate there is clearly a rational basis for the statute.

However if the assumed name is characterized primarily as a regulation of commercial free speech, the properties for announces would be the balancing test as set out in Bates.

Even under the balancing test, the assumed name statute withstands constitutional muster.

In applying the balancing tests, the various interests a state has in enacting the statute are weighed against the conflicting First Amendment interest to determine whether there have been significant abridgment of those First Amendment interest.

In this case, any encroachment on the First Amendment rights are minimal.

On balance, we contend that the interest promoted by the statute in protecting the health and well being of the citizens of Texas rises to an acceptable reason for prohibiting the practice of optometry under a trade name.

We first would consider the sellers’ interest.

When the sellers’ interest in disseminating information is considered under Section 513(d), we contend that there is no significant impairment.

A seller is allowed to get his message across to the public through his own name and through any form of advertising that he wishes.

The requirement that he practiced under his own name does not prevent him from using any media to convey this message to the public as long as the message is not fraudulent.

At the very most, the section imposes a minimal restriction on the wording of a message.

It in effect provides more meaningful information to the public by providing the name of the individual practitioner.

Dr. Rogers’ real complaint is about the effectiveness of a merchandising method and the value to him of using his merchandising method to attract clients, not than any messages of press.

Dr. Rogers is not proposing a commercial transaction but just by the use of his trade name as was the case in Bates and Virginia Pharmacy, but rather he is identifying the source of the provider of services, we contend that the identity of the individual is more meaningful identification of the source.

Lewis F. Powell, Jr.:

May I ask you a question about Texas Law generally with respect to trade names and trade marks.

I suppose you have a statute comparable to that in many if not all states providing for the registration of trade names and trade marks.

Do you?

Dorothy Prengler:

I believe so Your Honor.

Lewis F. Powell, Jr.:

Now I realize under your current law, you couldn’t write just the trade name, you are talking of that.

But let’s assume you have a registered trade name or trade mark in Texas, may it be sold, transferred or signed, is it regarded as an item of property?

Dorothy Prengler:

I would think that it would be Your Honor, I don’t know but I would say —

Lewis F. Powell, Jr.:

It usually is.

Dorothy Prengler:

Yes your honor.

Lewis F. Powell, Jr.:

Are there any cases in Texas that deal with this so for as you know?

Dorothy Prengler:

As far as I know, no sir.

I am sure that there are though I have not researched that particular area.

Lewis F. Powell, Jr.:

I wonder why you don’t argue that a trade name is property and not speech.

If a trade name acquires a secondary meaning, no one else can take it away from you.

Lewis F. Powell, Jr.:

Well, you have answered my question.

Dorothy Prengler:

Okay.

Next in considering the consumers’ interest in receiving valuable information, Section 513(d) does not restrict the information that is received by the consumer.

John Paul Stevens:

May I ask you Justice Powell prompted a question for me.

Does your argument that this is not a violation of the First Amendment, would it applied to another statute prohibiting the use of trade names and other service industries, forget the product, but say in the cleaning business, you couldn’t use the name ‘quality cleaner’ or just something like that, would the State of Texas have the constitutional power to say, ‘we think cleaners ought to identify the owner and location’, so would be the same issue?

Dorothy Prengler:

Only if the state could find the type of abuses that are present in this particular case.

John Paul Stevens:

Are the abuses essential to your argument, I guess what I am asking.

Dorothy Prengler:

Yes, the abuses that were —

John Paul Stevens:

If they are essential and if the other side would have persuaded, so those abuses could be prohibited by specific prohibitions but also prohibiting the trade name, does you case then collapse?

Dorothy Prengler:

No, we would contend that the state would have a right to restrict the use of a trade name assuming that there has to be some reason.

Warren E. Burger:

Are you making a distinction between a chain of cleaning establishments, the quality cleaners on the one hand and other establishments that are dealing in services relating to health.

Dorothy Prengler:

That’s correct.

Warren E. Burger:

I think that’s the distinction that you make from Mr. Justice Powell’s statements.

Dorothy Prengler:

Yes sir, that would be certainly be a distinction in the use of a trade name to just sell products but certainly not have the same potential harms and consequences as it would in the health related field.

Thurgood Marshall:

What worries me is how much more information does an individual in a large city like Big D like Dallas get from the name NJ Rogers or the Rogers Optometric Corporation?

Dorothy Prengler:

We think that he does get significantly more information.

Thurgood Marshall:

Where it is I mean they don’t know Mr. Rogers from far back, do they?

Dorothy Prengler:

No, but at least when the name is part of the practice, they can have an opportunity to check out the particular reputation of that optometrist.

Thurgood Marshall:

Where?

Dorothy Prengler:

Through their friends, through acquaintances, they can; it’s more —

Thurgood Marshall:

Well, they can checkout the company too with friends and acquaintances?

Dorothy Prengler:

They can checkout the company but there may be 100 optometrists at their company and that wouldn’t give them the information as to the reputation of the individual practitioner.

Thurgood Marshall:

Well, you don’t know how many people NJ Rogers are perceiving to doing it?

Dorothy Prengler:

There are — in this particular case, there are a great many.

Thurgood Marshall:

I mean normally these people are practiced as individuals.

In this day and age, they least have a nurse, you don’t know who a nurse is?

Dorothy Prengler:

That’s true but —

Thurgood Marshall:

— or you don’t know the technician is?

Dorothy Prengler:

But the —

Thurgood Marshall:

You just don’t know?

Thurgood Marshall:

So I guess it’s the numbers, the more if you don’t know, the worse off you are.

Dorothy Prengler:

I think that the State of Texas has right in trying to do encourage the situation that you would know to encourage the doctor-patient relationship and encourage the possibilities.

Thurgood Marshall:

Suppose, you put out on your door everybody that worked in there.

On the name, everybody; Joe Docks toilet cleaner, Sam Brown floor sweeper, would that be alright?

Suppose you that put in your advertisement.

You are putting everybody that worked in that firm’s name.

Dorothy Prengler:

The important relationship the state is trying to promote is the doctor-patient relationship.

Thurgood Marshall:

Well, with this I am true at this.

This company optometrist where you would not call it optometric country says that we have the following people practicing in this office; A, B, C, D four names in the advertisement, would not that be sufficient information?

Dorothy Prengler:

That would certainly provide more information than just the practice underneath —

Thurgood Marshall:

They will be qualified under your law?

Dorothy Prengler:

That’s correct because the legislature felt that the abuses were so potentially harmful to the public that they outlawed the trade name practice completely.

The consumer in this particular situation is not deprived of valuable information as were the consumers in Virginia Pharmacy and Bates.

The consumer is not denied information necessary to the making of an intelligent decision.

Byron R. White:

I take it if the single practitioner can practice under his own name and with 20 employees, all of them were doing same thing here.

Dorothy Prengler:

That’s correct.

Byron R. White:

And that patients will come and visit anyone of those of employees and perhaps never see them in whose name is on the door?

Dorothy Prengler:

That’s possible.

Byron R. White:

And none of these other — none of the names of the employees have to be on the door or on any stationary or anything?

Dorothy Prengler:

They have to be in the office.

Their license has to be prominently displayed.

Byron R. White:

Their licenses?

Dorothy Prengler:

Yes.

Byron R. White:

But they don’t have their names, not have to be listed?

Dorothy Prengler:

No.

Byron R. White:

They just have to have the license on the wall.

Dorothy Prengler:

That’s correct.

William J. Brennan, Jr.:

But if the practitioner, whose name is there, is he subject to this 50% work at the office?

Dorothy Prengler:

Yes.

Warren E. Burger:

Mr. Keith?

Robert Q. Keith:

Mr. Chief Justice, May it please the court.

The trade name in fact communicates a bundle of valuable information to the consumer and respectfully the suppression of the trade name is the suppression of speech, not the regulation of conduct.

This was the holding of the district court in this particular case and they relied very heavily and applied Virginia Pharmacy and Bates to the facts of our case.

And the court will bear in mind that there were two issues that are related to this discussion.

Warren E. Burger:

When you say a package of information, do you mean that its quality and reliability and that its continuity of the organization, that sort of thing you mean by the package?

Robert Q. Keith:

That is correct.

There is integrity.

There is this bundle of services that are available that through the years and in this instance, Dr. Rogers has lived Mabank, Texas.

He has operated with his brother and with others for 39 years.

He has practiced under the trade name Texas State Optical.

He has developed a reputation, a goodwill, there is communicated between him and members of the public a substantial body of information, much as you would say with respect to the Mayo clinic.

You might take out an ad in the New York Times and describe all of the accomplishments of this professional members associated with the Mayo Clinic, and you would not even then convey to me or to the ordinary member of the public the quality of medical care, the integrity, the attention, and devotion to that service.

William H. Rehnquist:

Well, Mr. Keith, supposing that Dr. Rogers instead of being the optometrist business, was in the business of a murder for a hire, could he take out an ad in the paper, not withstanding a prohibition in Texas Law, saying, I have been a successful murderer for hire for 30 years?

Robert Q. Keith:

No Your Honor and the court spoke specifically to that court in the Pittsburgh Press case.

The underlying activity that here is murder for hire is illegal.

Thus the state may suppress the advertising of that illegal activity.

William H. Rehnquist:

Well, that’s what the state argues here too, isn’t that, that the underlying activity, this particular type of practice is illegal and therefore he may not advertise it as such.

Robert Q. Keith:

That’s the argument, yes sir.

Potter Stewart:

Then again gets a little circular, do they?

It’s illegal because the states made it illegal.

Robert Q. Keith:

That’s correct but the underlying activity that here is the practice of optometry is legal.

What is made legal is the mere advertisement of the name in association with the practice.

So the only illegal activity under State Law is the communication of the name, it’s not the underlying practice itself.

Mr. Justice Rehnquist, you had asked the question if I may respond to, isn’t this much likely full disclosure requirements of the Securities Exchange Commission?

May I answer that question?

William H. Rehnquist:

By all means.

Robert Q. Keith:

In this way, Dr. Rogers practices under the trade name Texas State Optical.

He communicates to the public this bundle of information that is of value and interest to the consumer.

Furthermore, the evidence shows that in each of his offices; let us say there is a Dr. Fahey who is the optometrist present.

Dr. Fahey’s name is on the door; Dr. Richard Fahey, optometrist.

Robert Q. Keith:

That’s factual.

The statute further requires that if Dr. Fahey is present, his license must be conspicuously displayed in his office, so that if you or any other member of the public goes to the office, we find that there is in fact Dr. Fahey and what his license number and registration is.

His license must be registered in the county of his residence.

Finally, when he completes a state statute prescribed examination and the statute in this instance even prescribes a test that must be performed for visual examination.

Once he has completed the examination and writes a prescription, he must sign that prescription with his own name.

Thus you see that there is three in this office; there are three classic instances; there is a name on the door, the license on the wall, and the signatory on the prescription, all of which are disclosed to the patient and in addition, they are to – that is disclosed to the patient, the fact that he is in association with these others in the practice of optometry and that he provides this bundle of services that this name has come to convey.

William H. Rehnquist:

So I am sure many securities registrants have taken the position with the SEC that they have disclosed everything that needs to be disclosed and that nonetheless the SEC has taken the position that, ‘no, you have not, you have either not disclosed a fact that ought to be disclosed or one of the statements you are making is misleading’.

Is not that what Texas is saying here that this particular type of commercial practice tends to mislead the public?

Robert Q. Keith:

Well sir, we have made full disclosure and let’s put that to rest.

Now, as you get to the subject of quote misleading, there are at least three responses to that.

To begin with, as a matter of fact, the district court and this was a three-judge district court, the district court found as a matter of fact and it appears at Footnote 4 of the court’s opinion that the use of the trade name Texas State Optical was not misleading.

Secondly, — and if this takes a little explanation.

Secondly, the Carp case and that is the case relied upon by —

William H. Rehnquist:

The Supreme Court of Texas?

Robert Q. Keith:

Yes sir.

The court will realize that that case was tried in Dallas in the Fall of 1963, some 15 years ago.

The particular Act in question here was not adopted and did not become effective until September 1, 1969.

The new Act and it is a comprehensive close regulation of optometry and I can go through it if the court finds necessary.

The new Act prescribed a variety of ways of eliminating and precluding fraud, misrepresentation, for optometric practices and the like.

The Act specifically speaks to misrepresentation.

Now, when the Act was adopted, it suppressed a blanket suppression of the use of the trade name.

However, it provided an exemption or a grandfather clause that extends in part until January 1, 1979.

So, Dr. Rogers in some offices has been exempt from the trade name provision of the statute, not in all offices but in some instances.

He has operated under the new Act which prevents and effectively prevents any type of misrepresentation.

He has operated under the new act for eight years.

He has operated 65 offices in Texas under the new Act.

At the time of this judgment, it was rendered by the district court.

There is not one line of testimony.

There is not one witness.

There is not even one affidavit.

Robert Q. Keith:

There is not one suggestion of fact of any deception, fraud, misrepresentation, dissimilation, confusion, or the alike.

William H. Rehnquist:

But this is a regulation of business and it is my understanding of the constitution that states are entitled to adopt prophylactic rules, that perhaps may sweep more broadly than is necessary if they are intended to prevent deception, that very likely some people who would have no intend to deceive will be required to seize certain practices or perhaps disclose more than would be required if you were to judge each case on an individual basis, but that is what a statute is all about it; it avoids the necessity of judging each case on an individual basis.

Robert Q. Keith:

Yes, this is respectfully your Honor, a regulation of speech and not of conduct.

The State of Texas as Mr. Justice White pointed out in the example to counsel.

The State of Texas did not say, it could have said, you can only own one optometric office, or you can only own three optometric offices.

The state could have said, ‘you cannot employ another optometrist.

The state did not choose to do so.

Instead, the state specifically said, you may employ other optometrists.

The state could have said, you may perform only x number of examinations per day.

It did not choose to do so.

The state could say, you may not practice for all deceit or misrepresentation in the practice.

The state said that and the evidence shows that there is a complete absence of evidence of any fraud, misrepresentation, or deception although they have been operated by a Plaintiff in this case, 65 offices for 8 years.

William H. Rehnquist:

But the state also said, you may not practice under a trade name and if the state’s substantive provision in that regard is permissible, certainly it can prohibit the advertising of a trade name.

Robert Q. Keith:

The substantive provision would be business conduct, and the state could otherwise regulate business conduct without stamping out all element of speech and that is what the state has chosen to do.

William H. Rehnquist:

Well, are you saying that when the state regulates business conduct, it must follow some sort of a least restrictive alternative tests that has previously been reserved for the First Amendment cases?

Robert Q. Keith:

Yes sir.

When it reaches the First Amendment question, then the state must choose the least restrictive alternative and in this instance, as the evidence shows there are available to the state a number of other alternatives that do not suppress truthful, legitimate use of the trade name.

Lewis F. Powell, Jr.:

Mr. Keith, you mention a Carp case.

In that case, the fact that I recalled in, Dr. Carp operated 71 offices around the state and used ten different trade names.

Under the new statute, may one operate under a different trade name in each community if he wishes to?

Robert Q. Keith:

Your honor –

Lewis F. Powell, Jr.:

Is Dr. Carp still in business?

Robert Q. Keith:

No sir, he is not.

Lewis F. Powell, Jr.:

Does Dr. Rogers operated under the same name all over the state?

Robert Q. Keith:

Yes sir.

Lewis F. Powell, Jr.:

Could he operate under ten different names?

Robert Q. Keith:

Yes sir, unless such practice and I think this is the key; unless such practice constituting some type of fraud, deception or misrepresentation.

Lewis F. Powell, Jr.:

In the Carp case, Dr. Carp operated three offices in one city within two blocks of each other, each under a different name, with the same man supervising them.

Is that still possible under Texas law, assuming you win this case?

Robert Q. Keith:

It would be possible unless Your Honor there were some type of fraud or deception, then the statute speaks, and if that becomes deceptive, then he cannot.

Lewis F. Powell, Jr.:

Question might be whether or not it’s inherently deceptive?

Robert Q. Keith:

Yes sir.

And if it is inherently deceptive, then the Optometry Act specifically prevents it and Texas also has another general and very strong consumer protection and deceptive trade practice —

Lewis F. Powell, Jr.:

In the Carp case, the optometrist as I understood it, can circulate among the 71 offices, so that the one who served you today might be in an entirely different city next month.

Is that — do you see any opportunity in that sort of a situation for deceiving or misleading the public as to who will be available to serve them.

Robert Q. Keith:

Respectfully sir, that is still possible today, under Justice White’s example, where one man employed 20 optometrists.

Under Texas Law, one man was – excuse me, let me go back an example.

Lewis F. Powell, Jr.:

Certainly.

Robert Q. Keith:

Answering the Court’s question with respect to Carp.

Carp would not only — Carp would go in and buy an optometrist out and then he would –

Lewis F. Powell, Jr.:

Quite buy the trade name?

Robert Q. Keith:

He would buy up Mr. Johns and then he would claim to use the name John’s Optical, then he would buy up Dr. Smith and he would claim to use the name Dr. Smith and these two offices would be two blocks apart.

Under Texas Law, this is not permissible.

However —

Lewis F. Powell, Jr.:

You mean you can’t buy a trade name in Texas.

Robert Q. Keith:

Yes sir, you can buy an optometric practice, but you can operate in office but you cannot operate it under someone else’s name.

Lewis F. Powell, Jr.:

Yes, but most of Dr. Carp’s names didn’t have the name of any individual, I recall one, maybe I am wrong.

Robert Q. Keith:

Luck Optical.

Lewis F. Powell, Jr.:

Luck Cutraid Optical or with that effect, Luck, one price optical, could you sell that trade name in Texas together with the business associated with it?

Robert Q. Keith:

Yes sir, under the general law of Texas, the trade name is an item of property that can be conveyed.

Lewis F. Powell, Jr.:

That’s the general law around the country, as I have understood it.

Robert Q. Keith:

Yes sir.

Now you had asked a question a moment ago that since the trade name is property, why doesn’t the state argue that it is property rather than speech.

May I respond to that in this way.

A book or a newspaper is property but it is also the highest form of speech.

While the trade name itself, while I might own or develop a property interest in the trade name.

What the statute prohibits is not there, not the property interest, the statute prohibits the use of the trade name, the exhibition.

Lewis F. Powell, Jr.:

But the book is supposed to convey information forthwith.

Robert Q. Keith:

Yes sir.

Lewis F. Powell, Jr.:

The trade name conveys information, meaningful information if its merely a trade name rather than the name of a doctor only after it acquires a secondary meaning.

Robert Q. Keith:

Yes sir.

Lewis F. Powell, Jr.:

And that may be years.

Robert Q. Keith:

That is true but in this instance of the Plaintiff, in this case, he has acquired that secondary meaning after 39 years of the highest form of quality service and integrity.

Lewis F. Powell, Jr.:

I am sure that is right, I was not thinking about Dr. Rogers, I was just generalizing about the defect of that statute.

Robert Q. Keith:

Yes sir I appreciate that, but the trade name and the court has recognized it does convey valuable information and the facts Dr. Benham’s testimony in this case reflects the same example.

If I may turn —

Byron R. White:

What you wouldn’t – – would you say Texas could not require that optometry be practiced only by individual practitioners?

Robert Q. Keith:

If there were illegitimate —

Byron R. White:

This is a general rule that if you want to practice optometry you do so by yourself.

Robert Q. Keith:

Yes sir, I believe the state could adopt that rule.

Byron R. White:

And what about not only you must practice by yourself but you must practice under your own name.

Robert Q. Keith:

No sir, that’s where the ruler runs afoul of the First Amendment.

Now —

Byron R. White:

You say that the Texas could not require that people who individual practitioners to use their own name in the practice.

Robert Q. Keith:

That is correct sir because the trade name and the use of the trade name conveys valuable information.

Now, I do not have a constitutional right as this court has said to practice law or to practice optometry but the state cannot impose an absolute ban on my expression under the guise of professional regulation.

Byron R. White:

What information does this — this is in the commercial area, I take it is in that.

Robert Q. Keith:

Yes sir, it is.

Byron R. White:

What information does the trade name convey to somebody?

Robert Q. Keith:

It conveys information with respect to integrity, quality of service, price, convenience, availability, hours of service, length of service to the community, your grandmother and my aunt and our next door neighbor.

Byron R. White:

Something that is — just take my example now.

The individuals’ name, say there is a lot that says that practice individually and use your own name.

Now is there some information that a trade name would convey that the individuals’ own name would not convey?

Robert Q. Keith:

Yes sir.

Byron R. White:

What is it?

Robert Q. Keith:

As Justice Powell indicated, the trade name would convey this information after the public had become — had come to associate with it.

In the first day —

Byron R. White:

Well, only if that happened and the same thing that happened with the individuals’ name.

Robert Q. Keith:

Yes sir, in the course of time but the trial court here found as a matter of fact that this trade name had developed the association.

Byron R. White:

But wouldn’t the only reason that trade name acquire any secondary meaning or convey some information is because of the kind of service that the people behind the trade name gave.

Robert Q. Keith:

Yes sir and that would be true whether that service was good or bad, it would convey in a word quickly —

Byron R. White:

But if suddenly tomorrow, the same people are not behind the trade name, is there any reality to this meaning of the trade name?

In one day, there is — the people who are responsible for it acquiring some value are suddenly gone.

Robert Q. Keith:

Let us say for example —

Byron R. White:

It happens all the time, doesn’t it?

Robert Q. Keith:

If the Court Mafia were to come in and take over and you are just another —

Byron R. White:

No, just some lousy optometrist came in and took over it.

That’s all, that’s what we are talking about.

Robert Q. Keith:

Then immediately that trade name would begin to connote lousy service, poor integrity, poor quality.

Byron R. White:

Not for a while and that Texas says, if you are going to change the people, they just don’t want the people behind the trade name to change without it being noted.

Robert Q. Keith:

Mr. Justice, while the State of Texas could simply say that in the practice of optometry, you cannot change ownership of a trade name period, that would be a permissible —

Byron R. White:

But it is just said if the people who have given the value to this trade name are suddenly they are no longer and have been replaced by somebody else, please put it on the letterhead, put it on the door or something.

Robert Q. Keith:

Or that it is not subject to being conveyed.

That is exactly right.

Warren E. Burger:

Weren’t we told a little while ago that unless the person whose name appears, spends 50% of his time there, you can’t use that name?

Robert Q. Keith:

That is the present provision and that is the provision — that is a part of the prohibition, the blanket suppression of the use of the trade name and that’s what the Texas Court struck down.

William H. Rehnquist:

But that is itself a substitutive prohibition, not a prohibition of speaking about something that is lawfully permitted, I think as White said, what Texas is saying is that if you are practicing optometry, you may not do so under a trade name because of the potential for deceptiveness.

Now if Texas is permitted to do that, certainly it’s permitted to prohibit advertisement under trade names.

You have to argue that it isn’t permitted to do to enact the substantive regulation.

Robert Q. Keith:

No, respectively sir, it is not a substantive regulation, it is a suppression of speech because the very use of a trade name.

And that’s what the statute says, the optometrists may not use the trade name and the use of the trade name is what communicates the valuable information to the consumer.

So the state has said, you may not communicate to the consumer this information.

William H. Rehnquist:

Well, supposing in a securities case, the perspective corporation is named the (Inaudible) States and the Securities and Exchange Commission decides that, that has a potential for deceptiveness.

Now do you say that under the free speech decisions on the commercial area of this court, the SEC cannot prohibit the communication of that information?

Robert Q. Keith:

No sir.

If it has a tendency to deceive, the SEC can restrict it, the Texas statute restricts it and we accept that and do not challenge it.

William H. Rehnquist:

But you said the state cannot legislate a prophylactic rule that it is got to deal with a case by case basis.

Robert Q. Keith:

Well, not necessarily on a case by case basis.

The state can deal with the subject of deception without prophylactically abolishing all speech.

William H. Rehnquist:

What about the subject of trade names?

William H. Rehnquist:

Can it prohibit a particular optometrist whom it is found to have used deceptive practices by the trade names from using a trade name?

Robert Q. Keith:

No sir, only the state could prevent him from using any type of deceptive name.

William H. Rehnquist:

Including a trade name?

Robert Q. Keith:

If they were deceptive and in this instance, the trail court found as a matter of fact that this is not a misleading or a deceptive name.

William H. Rehnquist:

And you feel that three judge district court has right to substitute its judgment for the legislature on that?

Robert Q. Keith:

No sir, but it is required to make a finding of fact just to whether or not this question, this use is or is not misleading.

William H. Rehnquist:

The three judge district court in dealing with a constitutional challenge to a statute is required to make a finding of fact as to whether a trade name is misleading?

Robert Q. Keith:

Yes sir because if it were misleading, then there would be no impermissible infringement on speech because the court has held that the state can suppress misleading speech.

So the district court must determine, is this truthful or is it misleading.

If it is misleading, then you do not have the same free speech right that you have if it is truthful and that’s the reason to finding a fact is required to be made by the court yesterday.

The state speaks and I would like to speak briefly to the purported justifications for this absolute suppression and weigh them respectfully against the consequences or the harm that falls —

Byron R. White:

Could Texas require that if you want to do business under a trade name, you must go up to the state house or down to the county clerk’s office and file a statement of the names of the people who are behind the trade name.

Robert Q. Keith:

Yes sir.

Byron R. White:

And keep it constantly current?

Robert Q. Keith:

Yes sir and prohibit as you suggest respectively sir, and prohibit the transfer of that name in the practice of a profession.

Byron R. White:

But you don’t think they can make them put the names on the door.

Robert Q. Keith:

Yes sir, I think they can make them put the name on the door as well.

Byron R. White:

Can they make them put the names of everybody in the group on their stationary and in their advertisements?

Apparently not, that is what you say.

Robert Q. Keith:

No sir, if that becomes necessary, they can, but that is not what they have done Mr. Justice White.

What they have done, they said you cannot rather than you must and there is a substantial difference in the area of speech.

Byron R. White:

Is it doing a business under a trade name, if you use a trade name and then give all the names.

Robert Q. Keith:

Yes sir, it would be.

For example, my client could not with his brother and three others, list their names and say associated in the —

Byron R. White:

If you really would not care very much, if you had to put down all the names, would you really want to use the trade names?

Robert Q. Keith:

Yes indeed because the trade name is valuable, it has a substantial communicative value and thus is of substantial value to my client.

Byron R. White:

You want to value that past activity as given to it even though the people are different.

Robert Q. Keith:

No sir.

If the people are different and if the stock operator as you described, this optometrist has come in, the state could require that before he adopt that name, he must meet certain standards or tests or not even at all purchase the name, but that is not what the state has done here, they just made an absolute suppression.

Thurgood Marshall:

I did not get a direct answer.

Thurgood Marshall:

You say they can be required to list all of the names?

Robert Q. Keith:

No sir, they are not presently required to do so.

Thurgood Marshall:

Alright, if they could be, you say it would be alright?

Robert Q. Keith:

That is my belief, yes sir.

Thurgood Marshall:

Well, does that mean all other names of all of the offices on all of the office doors?

Robert Q. Keith:

If there were some interest of the state to be served by such and this did not become an oppressive burden to speech, I would think so, yes sir.

Thurgood Marshall:

But is it oppressive burden of speech?

Robert Q. Keith:

If I am required to list 200 names on a letterhead, that would become oppressive because it could not write anything else on the paper and thus it would constitute I think an impingement of speech, but the state has not done that.

Thurgood Marshall:

So, what is your answer to my question.

Could the state require it or not?

You just slip right over, this wouldn’t be alright.

I did not think you meant it then, and I know you do not mean it now.

Robert Q. Keith:

Yes sir, I believe the state can require until it becomes an oppressive burden and effectively deny a speech, and that is my intellectually honest belief that it is not unreasonable until it constitutes a denial of speech.

Warren E. Burger:

Do you see any analogy between the situation you are discussing and the rule of this court that required you to sign your own name to this brief, not your firm’s name?

Your firm name is on and you are guessing what your relationship is but you personally had signed this brief, didn’t you?

Robert Q. Keith:

Yes sir and I made the identical disclosure to this court that Dr. Rogers makes to his patient.

I have my firm name on the brief.

Dr. Rogers has his firm name Texas State Optical on his door or on his stationary.

Likewise, I have personally signed the brief, the optometrist personally signs the prescription.

Warren E. Burger:

So, not the advertising to extent there is any advertising material.

Is that in the name of that — in what name would that be done?

Robert Q. Keith:

That would be done in the name of Texas State Optical, yes sir and in his trade name.

Thurgood Marshall:

Which he can put on the prescription?

Robert Q. Keith:

Yes sir, he can put that on the prescription and it is —

Thurgood Marshall:

I thought he had to put his own name on.

Robert Q. Keith:

He can put his own name on there as well.

Thurgood Marshall:

I thought he had to put his own name.

Robert Q. Keith:

He must put his own name on the prescription.

Thurgood Marshall:

That was my question.

He can just put Texas Optical but he is got to put the name of the person who did it.

Robert Q. Keith:

That is correct, yes sir.

He has got to sign his own name, just as I sign my own name to the briefs in this court, but legitimately under the First Amendment —

Thurgood Marshall:

Not Dr. Rogers didn’t — Dr. Rogers did not sign all of those prescriptions?

Robert Q. Keith:

No sir, no sir, the man who perform the examination —

Thurgood Marshall:

Now when he made that advertisement, then the people get idea that he will.

Robert Q. Keith:

No sir, because he does not hold out to the public that he is present and he is performing the examination.

He merely list the name Texas State Optical.

John Paul Stevens:

In fact, Mr. Keith, is it not true that he may not, not only does not, but may not disclose his ownership of 64 of the 65 offices he owns.

Isn’t there a statutory prohibition against the use of his name in the offices in which he does not practice, even though he owns and dominates those offices.

Robert Q. Keith:

Yes sir, he may not hold himself out as practicing in that office and that may be different.

John Paul Stevens:

Well therefore is it not true that even though he is the Managing Director in a sense of all of those offices, nothing in those offices would so reveal.

Robert Q. Keith:

That is correct.

John Paul Stevens:

Now do you challenge the statutory provision that requires that non-disclosure?

Robert Q. Keith:

No sir.

John Paul Stevens:

You don’t?

Robert Q. Keith:

No sir, because in the case of Dr. Carp, there was a suggestion that some type of misrepresentation arose.

Potter Stewart:

Who was that, Wichita Falls?

Robert Q. Keith:

Yes sir, yes sir.

We do not challenge any effort by the state to restrict or circumscribe deceit or fraud or misrepresentation at all.

It is the absolute ban against truthful speech that we appeal to this court.

John Paul Stevens:

Do you think there is a higher value and Dr. Rogers being able to tell the public that TOA, the trade name whatever it is operates the office else where, than his ability to tell them that he operates, he does not assert to write it to disclose his own connection with these other offices.

Robert Q. Keith:

Yes sir, there is a higher right, because he is in association with others and they have developed as Justice Powell suggested a secondary meaning of goodwill and reputation attended to a high quality of service through many, many years.

John Paul Stevens:

But couldn’t he get the same secondary meaning attached to his own name if it was made clear that he is the dominant figure in all these offices.

Robert Q. Keith:

It might but he has been at this for 39 years and it would be very difficult to start over and acquire the same reputational interest and goodwill in any reasonable period of time and it is this interest which is not only —

John Paul Stevens:

Because that is a property interest?

Robert Q. Keith:

Yes sir, it is a property interest, the reputation and goodwill.

The consequences of this ban, not to mention the purely theoretical First Amendment consequences, but the immediate and direct consequences of this ban are testified to by Dr. Benham in this court and in the Federal Trade Commission have both cited as authority.

One is that since there is less information and that is Dr. Benham’s testimony, this results in higher cost and consequently less use.

As this court said in Virginia Pharmacy and as Dr. Benham testified, the moment the price goes up, the consequences fall heaviest on those who need glasses the most; that is the ill, the aged, and the economically depressed.

As a result, fewer people are able to obtain the services or goods that they need.

Robert Q. Keith:

As a consequence then in the aggregate throughout the country or throughout a large state of Texas, you have a lower degree or quality of care.

Society and the free enterprise system under the decisions of this court suffer substantially because our free enterprise system depends on an intelligent private economic decision.

Once you constrain information as this court and as Dr. Benham has testified, once you constrain this information, this results in what the court has called a misallocation of resources, which then weakens in turn our free enterprise system, which is based on full disclosure respectfully rather than less information.

Lewis F. Powell, Jr.:

Mr. Keith, you mentioned the Federal Trade Commission Regulation, do you think that has any bearing on this case?

Robert Q. Keith:

Respectfully I do not sir.

Neither party has suggested that it is mooted by the Federal Trade Commission order and I do not believe that it is.

John Paul Stevens:

Mr. Keith, you talk of constraining information.

The specific information that’s constrained is as I understand your argument, that all these offices follow the same high standards or open the same hours, charge the same fees, provide the same prompt services and all the like, is that basically what you are saying?

Robert Q. Keith:

Yes sir.

John Paul Stevens:

What if 64 of the offices do and sit and the 65th has a different opening and closing hours and has a very crabby receptionist, and has different things, wouldn’t that 65th office get the benefit of the information as the other 64 which would not be true?

Robert Q. Keith:

And if those facts occurred and there is no evidence in this record —

John Paul Stevens:

Certainly we cannot assume that in fact all 65 offices are precisely identical in all respects, can we?

Robert Q. Keith:

I think that is correct Your Honor, but the trade name does not guarantee human inviolability.

John Paul Stevens:

But it does not really guarantee any specific item of information will be true in the 65th office, does it?

Robert Q. Keith:

That is correct, but it does —

Byron R. White:

Then what information is constrained?

Robert Q. Keith:

It does represent that this bundle of services is available and if this constitutes a misrepresentation, then the state has another statute, it does not need to rely on the trade name ban, it has another statute to preclude and suppress that misrepresentation.

John Paul Stevens:

I understand but you have not identified for me any specific item of information that is constrained by the enforcement of the statute.

Robert Q. Keith:

It is the entire bundle of information.

John Paul Stevens:

Which may or may not be true in particular cases.

Robert Q. Keith:

Which factually Your Honor under this record is true except with respect may be to the enthusiasm which one or another professional may apply to his work in any given day.

Thurgood Marshall:

This record shows that all 65 are equally graded?

Robert Q. Keith:

Rather Your Honor, the record is absolutely silent, the record says that these offices all operate in this manner and there is no suggestion to the contrary.

Thurgood Marshall:

But you can say that two doctors are equal.

Robert Q. Keith:

No sir and the record does not suggest such.

I am saying if the offices are all operated — I would think —

Thurgood Marshall:

How many optometrists.

Robert Q. Keith:

I would think substantially 100.

Thurgood Marshall:

But is there anyway in the world that those 100 could be the same?

Robert Q. Keith:

No sir.

Thurgood Marshall:

There are 100 different reasons with 100 different offices operating in 65 different places under 65 different circumstances.

Robert Q. Keith:

But at the same time Your Honor neither could every associate or every lawyer at Covington & Burling, be the same but the use of the name Cromball & Solomon (ph) or Covington & Burling does convey to the listener a reputation for integrity, ability, industry, service to the client.

Thurgood Marshall:

Not in all 64 of these offices?

Robert Q. Keith:

That’s correct.

Thurgood Marshall:

Do they have 64?

Robert Q. Keith:

And not in any one of the offices are both lawyers of the same industry ability and integrity but as a whole the trade name conveys valuable information with respect to that firm.

Potter Stewart:

It is quite sort of like McDonald’s hamburger, you know generally what to expect wherever you find it, isn’t that the idea, even though there is a variation among cooks and among stores?

Thurgood Marshall:

There is a lot of difference between having Dyspepsia and going blind.

Robert Q. Keith:

Yes sir but and that is true and the state has very carefully and very closely regulated the optometrist in his professional functions to make certain that he does provide a minimum standard of care.

John Paul Stevens:

Mr. Keith, if Covington & Burling decided they wanted to practice under the name “Big Judgments”, would they have a constitutional right to do so?

Robert Q. Keith:

Your Honor, could I state it differently, if my firm wanted to practice under the name “Big Judgments” —

John Paul Stevens:

I will say ‘Quality Practice’ then. Say what you said, would they have a constitutional right?

Robert Q. Keith:

No sir because I think that represents some type of puffing that and some type of deceit associated with puffing.

Byron R. White:

They are defense counsel, so they practice under the name Small Ones.

Robert Q. Keith:

That would be more appropriate, yes sir.

I think that likewise would tend to mislead.

John Paul Stevens:

What about the name “Prompt Service” something like, so it is something that they could demonstrate was not deceitful at all with respect to their own operation, could they have a constitutional right to use a name, you know some non-personal name just the trade like TOA.

Robert Q. Keith:

Yes sir.

John Paul Stevens:

You think they have a constitutional right.

Robert Q. Keith:

Yes sir because that involves the essential element of communication of speech and so long as it is non-deceptive, then it is protected by the First Amendment guarantee.

Thurgood Marshall:

I couldn’t protect myself in private practice from being called a Freebie Lawyer, but that is alright.

Robert Q. Keith:

May I turn Your Honor respectfully for a moment to the question of equal protection raised in the matter of board appointment.

The reason that Dr. Rogers is not eligible for membership in the TOA is because Dr. Rogers exercises and claims the right to exercise his first amendment rights.

That is why he is not eligible and that is exactly what the code of ethics of the Texas Optometric Association prescribed.

It precluded membership to anyone who advertises price, it precluded membership to anyone who used a trade name and it precluded membership to anyone who operated more than three offices.

He applied, he was not eligible and he was disqualified from the membership.

He was disqualified because of the expression of his fundamental First Amendment right, whether you call that the ‘right of speech or the right of association’.

The case becomes much like that of Turner v. Fouche, decided by this court in 1970.

There the Georgia statute required that to be appointed to a school board, a person had to be a free holder.

The court recognized that none of us and certainly Dr. Rogers recognizes that none of us have a right to be considered for public service.

Robert Q. Keith:

However none of us have a constitutional right to be appointed, but we do have a right to be considered for public service without an invidious discriminatory disqualification.

And the state may not deny to some the privilege of holding office that extends to others on a basis that violates constitutional guarantee and that’s exactly what the state has done in this instance.

They have said that because you exercise your First Amendment right, there are four of six seats on that board that you are not eligible to be appointed to and that is plainly and simply the argument made.

There is respectfully no rational or legitimate reason for this regulation as colloquy with Mr. Neman(ph) suggested.

If you presume bias against law enforcement by Dr. Rogers and certainly there is no evidence of such in this case, that would be just like presuming bias to the Solicitor General to say that he could not fairly sit and serve as a judge.

William H. Rehnquist:

What if the incoming Governor of Texas, whomever that may be, were to announce as part of his platform that he was going to make sure that four out of the six members of the Texas Optometry — Texas Board or members of the TOA during his administration.

Could you challenge his appointments, if they conform to that promise?

Robert Q. Keith:

If that became a pattern or practice that became state policy, I think so.

If it were a single instance where the incoming Governor says, I am going to pay political debt to this organization and I am going to appoint four members of that organization to the board, I think not.

William H. Rehnquist:

What if say a Governor appointing judges says, I think we need more representation of certain groups, do you think someone who isn’t appointed could challenge that?

Robert Q. Keith:

No sir, I do not until it became a policy that was discriminatory because of the exercise of a fundamental interest such as free speech.

Potter Stewart:

Until it became the equivalent of State Law.

Robert Q. Keith:

Yes sir or —

Potter Stewart:

The equivalent.

Robert Q. Keith:

The equivalent of State Law, thank you.

Thurgood Marshall:

How about the state statutes that says that three members of the commission must be appointed from the opposite party?

Robert Q. Keith:

That is the Federal Power Commission Regulation under Federal Law and —

Thurgood Marshall:

No, I am talking about the Texas.

Texas pays a law and says that and I think this is done in most states, it is done in Federal Government, is it not?M

Robert Q. Keith:

Yes sir but —

Thurgood Marshall:

That on this commission, there have been so many members of the opposite party.

Robert Q. Keith:

And the purpose there is to achieve a legitimate balance.

Thurgood Marshall:

I assume so, they don’t say what.

Robert Q. Keith:

Yes sir and I do not know those cases frankly.

Thurgood Marshall:

Well, may you know it is a fact then?

Robert Q. Keith:

Yes sir, I do know what is the fact.

Thurgood Marshall:

And nobody is objected to design level

Robert Q. Keith:

I am not aware of the basis of the decision in that respect.

William H. Rehnquist:

There are statutes that provide that and so far as I know they have never been challenged, how do you distinguish them from this statute that you are challenging?

Robert Q. Keith:

Because in this instance, I am excluded from consideration because I have exercised this fundamental right.

Robert Q. Keith:

I am placed in a separate distinct category.

William H. Rehnquist:

Well, if they are sort of published in the agency and Federal Trade commission or a democratic vacancy on the Federal Trade Commission, presumably all people of the opposite party are excluded because they have exercised their First Amendment right of free association to belong to the party which vacancy doesn’t belong to.

Robert Q. Keith:

Yes sir, but in the course of — we are not speaking about just one appointment, we are now speaking about the course or let us say three appointments or four appointments.

I would then have equal opportunity to belong or be appointed to that body.

In this instance, that is not true.

I do not have the same equal opportunity as the other optometrists who do not exercise First Amendment right of speech or association.

Now Mr. Justice Marshal asked the question about this perpetual minority on the board and the evidence in this case, it is not in the appendix but it is before the court in the form of board minutes, shows that since the composition of this board under this act, there have been some 60 instances where the board has voted four to two.

Now indeed Dr. Rogers can —

Warren E. Burger:

60 out of how many?

60 does not tell us anything.

60 out of 600 or 60 out of 100?

Robert Q. Keith:

I cannot answer that question in fact.

Warren E. Burger:

Then it does not mean very much, does it?

Robert Q. Keith:

Except that it represents, Your Honor, the fact that not only is your bias in the appointment but this has a substantial impact in the service upon the Board.

Warren E. Burger:

Not unless you tell us the rest of the story.

Robert Q. Keith:

May I ask —

Warren E. Burger:

6 out of 600, is it in the record?

Robert Q. Keith:

It is in the record yes sir but you would have to be —

Warren E. Burger:

From the record, you can tell us, but if it isn’t, you cannot.

Robert Q. Keith:

By post-submission memorandum.

Warren E. Burger:

If it is in the record, point out to where in the record that appears.

Robert Q. Keith:

Thank you, sir.

Warren E. Burger:

Thank you gentlemen.

The case is submitted.