Posadas de Puerto Rico Associates, dba Condado Holiday Inn v. Tourism Company of Puerto Rico

PETITIONER:Posadas de Puerto Rico Associates, dba Condado Holiday Inn
RESPONDENT:Tourism Company of Puerto Rico
LOCATION:Pennsylvania Department of Public Welfare

DOCKET NO.: 84-1903
DECIDED BY: Burger Court (1981-1986)
LOWER COURT:

CITATION: 478 US 328 (1986)
ARGUED: Apr 28, 1986
DECIDED: Jul 01, 1986

ADVOCATES:
Lino J. Saldana – Argued the cause for the appellee
Maria Milagros Soto – Argued the cause for the appellant

Facts of the case

A Puerto Rican law restricted advertising by the island’s casino gambling establishments. Even though gambling was a legal activity in Puerto Rico, the law only allowed advertising that was targeted at tourists.

Question

Did the law violate the First Amendment?

Warren E. Burger:

The Court will hear arguments first this morning in Puerto Rico Associates against Tourism Company of Puerto Rico.

Ms. Soto, you may proceed whenever you are ready.

Maria Milagros Soto:

Mr. Chief Justice, may it please the Court:

This case presents a substantial question whether a statute of Puerto Rico violates the First, Fifth and Fourteenth Amendments of the United States Constitution because it completely bans a franchise holder, a casino franchise holder, from advertising or otherwise offering its casino facilities to the public of Puerto Rico.

Without abandoning our Fifth and Fourteenth Amendment attacks on Section 8 of the Games of Chance Act of Puerto Rico, we have chosen to limit our argument to the First Amendment protection extended to truthful information about legal activities, and rely on our briefs for the remaining valid grounds, although in our minds, after living through the over-extensive obligation that Puerto Rico has given to the statute, we cannot characterize this ban as strictly commercial speech.

The over-breadth and vagueness of the ban abridges, has abridged in the past, as the record shows, fully protected speech and public debate speech.

Neither can we accept as valid the classification, subclassification, of a casino speech ban versus the public forum availability open to other gaining activities in Puerto Rico, nor the resident versus nonresident classification that the judgment below added to the original controversy.

However, argument on the First Amendment content based classification of the Act should persuade the Court to hold that casino advertising is protected by the United States Constitution, and that all truthful information about this legal activity cannot be blocked by Puerto Rico in an effort to keep its people uninformed as an extensive means of controlling through speech the activity of gambling.

The best example of the dangers inherent in over-broad prohibitions of speech, containing no guidelines of enforcement for the government, are given by the facts of this case.

Section 8 of the statute reads:

“No gambling room shall be permitted to advertise or otherwise offer its facilities in any manner whatsoever to the public in Puerto Rico. “

In 30 years of enforcement, the government never defined what constituted advertising, nor who was the public.

Neither did it clarify whether in Puerto Rico, including the tourist ones, he or she landed in Puerto Rico.

William H. Rehnquist:

Ms. Soto, didn’t the Superior Court Judge substantially restrict the literal language of the statute when he interpreted it?

Maria Milagros Soto:

Yes, it did, Your Honor, but it did not cure the unconstitutionality of the statute as we would argue.

Sandra Day O’Connor:

Well, what’s left of the statute now?

Is it just the prohibition against advertising in the media within Puerto Rico itself?

Maria Milagros Soto:

The statute as construed still prohibits completely all information if it’s addressed to the residents of Puerto Rico.

And therefore, it is still a complete ban of truthful information about a legal business to the residents of Puerto Rico, and thus unconstitutional, in our view, as construed.

Sandra Day O’Connor:

Well, is it media advertising that it now covers, as the court below has construed it?

Maria Milagros Soto:

Well, Your Honor–

Sandra Day O’Connor:

What if a matchbook with the name of the casino came into the hands of a resident of Puerto Rico.

Is that somehow prohibited now?

Is that your understanding?

Maria Milagros Soto:

–According to what the Judge decided, if it was aimed at the tourists it would not be prohibited.

The problem is that the determination as to what the intent is would have to be based on content.

Each time that an advertisement or information about a casino is… comes across, and for instance, we brought to this Court’s attention a case whereby even under the Court’s construction now, as recently as after this Court had granted jurisdiction to hear this case, a supplement was published with information about the casino activities upon the opening of the second hotel, the El San Juan Hotel, that merely covered the facilities that were open to the public.

One page out of 52 that cover all the other facilities of the hotel was conceded by the government as casino advertising, and something that they had not done before.

They did not fine us this time, but they said that the case was being turned over for investigation for criminal prosecution.

Now, this statute is a criminal statute and this was a supplement by… an article by the newspaper was not an ad placed, as the Judge directed, and still it’s being considered as advertising to Puerto Rico.

Maria Milagros Soto:

So an example that we still have the same problem.

Byron R. White:

Isn’t your First Amendment argument the same, though, whether the statute distinguishes between ads aimed at tourists and ads aimed at Puerto Ricans?

I mean, if the… suppose the statute forbade all ads about the casinos.

Maria Milagros Soto:

That’s what it does.

We understand that–

Byron R. White:

Well, it doesn’t ban ads aimed at tourists?

Maria Milagros Soto:

–As the Court rewrote it, which we understand is what the Court did, and it is impermissible in our view.

It would establish a classification then that I think is also impermissible, of residents versus nonresidents, yes.

Byron R. White:

While I have you interrupted, your general submission is that the First Amendment requires… or forbids stopping any ads about any legal business?

Maria Milagros Soto:

If it’s an absolute ban and it leaves no channels open of communications to the residents of Puerto Rico in this case, and the activity is legal, we understand that unless there is a substantial interest by the government, which has not been proven in this case, it is unconstitutional, yes.

Byron R. White:

Well, what if… would you say it would be unconstitutional for Puerto Rico to say,

“Well, if you want to advertise casinos, be sure at the bottom say, this may be dangerous to your pocketbook? “

Maria Milagros Soto:

We have no quarrel whatsoever, Justice White, on having more speech on it if we have to, rather than silencing and keeping the people uninformed altogether as a means.

Byron R. White:

Under your argument would it be unconstitutional if Congress forbade all advertising of cigarettes?

Maria Milagros Soto:

In the case of cigarettes, I find a substantial distinction in that cigarettes–

Byron R. White:

It’s not illegal to smoke.

Maria Milagros Soto:

–It is not illegal to smoke.

Byron R. White:

It’s not illegal to manufacture cigarettes.

Maria Milagros Soto:

That is correct, Your Honor.

However–

Byron R. White:

Why would a… why, under your argument, would a complete ban on cigarette advertising be bad or good?

Maria Milagros Soto:

–I haven’t said that it’s good.

I think it probably would pass constitutional muster if–

Byron R. White:

Why?

Maria Milagros Soto:

–Well, first of all it is harmful to your health according to studies.

In the case of gaming, gaming is a social entertainment and there is no link whatsoever that it causes a deleterious effect in older people.

It may cause, if some people gamble excessively–

Sandra Day O’Connor:

Don’t you think that Puerto Rico could prohibit gambling altogether and make it illegal because Puerto Rico could determine that it’s bad for the citizens?

Maria Milagros Soto:

–Yes, I do, Your Honor, Justice O’Connor.

I think they can prohibit it together.

Maria Milagros Soto:

But having legalized it, and having other means available already in the Act that are affected, I don’t think they can–

Sandra Day O’Connor:

Well–

Maria Milagros Soto:

–Through speech, control it.

Sandra Day O’Connor:

–Well, suppose you have a state like Alaska that has legalized the use of marijuana, personal use of marijuana.

Do you think Alaska can prohibit all advertising of marijuana?

Maria Milagros Soto:

I think once having legalized it… I am not familiar with the case of the marijuana statute in Alaska, but once having legalized it, I think it can be restricted through a means and manners restriction.

I think it can be added more speech as to what effects… so as to keep the people educated, how they should not be using it.

But I don’t think they should be able to prohibit it altogether either, no.

Byron R. White:

So, it would be unconstitutional then to forbid ads about cigarettes, smoking, as long as smoking is legal?

Maria Milagros Soto:

As long as smoking is legal.

Or, my position is, since it is inherently dangerous to health, it might be possible to ban it.

Byron R. White:

What about marijuana?

Maria Milagros Soto:

That would be the same thing with marijuana in that case, then.

We can make that analogy.

But, it’s not the same thing with gambling.

And, that is our proposition.

Gambling has not been proven to be deleterious per se, because it’s not inherently dangerous.

It is simply a leisure entertainment activity for most of the people.

It’s social, fun, thing to do, and to some people it may be, if it’s excessive, cause some harm but that is not the general proposition here.

And if we extend now… I mean, so many other things could be harmful.

There are so many carcinogenic things now, that causes cancer.

Should they all be prohibited, then?

I think that in the absence of a substantial interest, ban on speech is not the narrowest means to obtain that end.

Lewis F. Powell, Jr.:

May I ask this question, publications in the United States magazines and newspapers do circulate in Puerto Rico, don’t they?

Maria Milagros Soto:

Yes, they do.

Lewis F. Powell, Jr.:

New York Times, Time, Newsweek and so forth?

Maria Milagros Soto:

Yes.

Lewis F. Powell, Jr.:

Does the statute ban… would the statute ban your casino from advertising in those publications?

Maria Milagros Soto:

The statute did ban all kinds of media.

The way it was construed by the Court, it would allow, if it’s published in the States and it comes through into Puerto Rico… as construed by the judicial branch.

Lewis F. Powell, Jr.:

Under the construction of the Superior Court, your, client could run items in publications in the United States if it’s circulated in Puerto Rico?

Maria Milagros Soto:

Yes, under the construction of the Court, yes.

Lewis F. Powell, Jr.:

In other words, if the ban is limited to local media?

Maria Milagros Soto:

Correct, under the construction.

Now, the facts of this case are clearly… I’m familiar with it, but to go briefly through them, Posadas was fined for the first time when a supplement was published in the San Juan Star, an article about annexing the Laguna Wing to its already facilities, and there was an ad placed by our union, our casino union, that contained no message about promoting the casino, but that included the word “casino” as its trade name and a little drawing about a roulette in the background.

Tourism understood that was casino advertising, and it warned… Tourism warned Posadas that it was violating the law.

Because it did not get a reply from Posadas, a fine was imposed on the company.

This interpretation was immediately challenged by Posadas, but while a ruling was pending the gaming director wrote a letter to the president, then, that was stationed in Missouri, informing about the violations in the operations in Puerto Rico.

The president was quick to answer, but used stationery that had the word “casino” on it, and since the government understood that the word “casino” on letterhead is also advertising, a second fine was imposed on Posadas.

The third fine was imposed after the ruling came out and the ruling was upholding an absolute ban on speech, and because one of the guests that was staying in the hotel had a brochure that was left in his room and was handing it at the lobby, which was a public facility, to the government inspector, and they thought that was casino advertising also, and there was a third fine that was imposed on Posadas.

And the fourth fine really was a public debate issue where the president was holding a press conference and photographic session to protest legislation that proposed to ban the slot machines from Puerto Rico.

William H. Rehnquist:

Ms. Soto, were all four of these instances after the Superior Court Judge issued his ruling?

Maria Milagros Soto:

Yes, Your Honor, they were all there.

William H. Rehnquist:

And are they all, in the views of your opponent, so far as you know, consistent with the Superior Court’s Judge’s ruling?

Maria Milagros Soto:

Yes.

As a result of these four fines, Posadas’ reputation was tainted to the extreme that our system operation in Atlantic City was recommended denial of a casino license because the new Gaming Enforcement Division of our jurisdiction understood that Posadas was an unsuitable operator.

At that point, declaratory judgment was sought, at that initial stage, on Paragraph 9 of the complaint, that three challenges to the First, Fourteenth Amendment, and due process were brought up at that initial level.

In the case of the due process we did not specify whether it was the Fifth or the Fourteenth Amendment because as we understand it, this Court has now decided which of the two due processes are applicable to Puerto Rico, as declined in the Calero-Toledo case.

Sandra Day O’Connor:

Ms. Soto, I thought the fines were imposed before the Superior Court made its final interpretation of the statute?

Maria Milagros Soto:

That is correct.

Before that–

Sandra Day O’Connor:

You just told Justice Rehnquist it was after.

Maria Milagros Soto:

–Oh, I’m sorry.

I misunderstood you, then.

No, no.

The fines were imposed before.

I thought he said–

Sandra Day O’Connor:

It was my understanding that the determination of the Superior Court when it in effect rewrote the statute, if that’s what it did, that the Judge did that after all these fines he did impose?

Maria Milagros Soto:

–Yes.

These four fines, and the fact that we were almost denied a hotel license, was before the final–

Sandra Day O’Connor:

Well, then, why shouldn’t we proceed with the argument over what’s left of the statute, rather than what happened before?

Maria Milagros Soto:

–These were the facts that brought the case up.

We continued then… we have to… as a basic proposition, we think that by the Court rewriting the statute it has invaded legislative functions, and our main recommendation is that this statute–

Sandra Day O’Connor:

Well, didn’t–

Maria Milagros Soto:

–as it was is the one that should be construed by this Court.

Sandra Day O’Connor:

–But, aren’t we bound by the interpretation of the statute by the courts in Puerto Rico?

Maria Milagros Soto:

I don’t think that has been decided, Justice O’Connor.

I think if this Court agrees to extend to Puerto Rico the protections as if it were a state, which I think it’s undecided up to this point–

Sandra Day O’Connor:

If the action came from a state, would we not consider as binding the interpretation of the statute by the court below?

Maria Milagros Soto:

–I think you would in matters of local law.

However, even–

Sandra Day O’Connor:

Would the state cross-appeal, or make a cross-filing here about the court’s interpretation?

Maria Milagros Soto:

–No.

Sandra Day O’Connor:

No, so don’t we… shouldn’t we just follow the ruling of the court below as a matter of local law?

Maria Milagros Soto:

I don’t think so, Your Honor, because the state deference will not preclude the Court… this Court’s role as the final arbiter of the Federal Constitution, when it means the invalidation of a statute.

William H. Rehnquist:

But all Justice O’Connor is asking about is the matter of how the statute is intended to read.

We have to take the word of the Superior Court.

Maria Milagros Soto:

Not if it clashes with the Constitution of the United States.

William H. Rehnquist:

No, no, but as to how broadly the statute sweeps.

There, we would defer to the Superior Court, would we not?

Maria Milagros Soto:

If this Court decides to defer, yes.

I just bring the proposition because I don’t think that has been decided yet, so the proposition was that in one case you would go and interpret it directly, yourselves, you do give it state… status, as is, it’s still unconstitutional.

John Paul Stevens:

May I ask you a question at this point.

Is it correct that even after the judge rewrote the statute, it still prohibits the use of the word “casino”?

The statute as reconstrued by the judge still prohibits the use of the word “casino”?

Maria Milagros Soto:

If it’s addressed to the residents of Puerto Rico, everything that has to do with a casino is still prohibited.

They have allowed the word of “casino” in a trade name of–

John Paul Stevens:

One of the incidents was being fined, as I understand it, for this press conference with the black ribbon across the slot machines and so forth, and the word “casino” appeared in the story.

Would that fine have been imposed under the statute as reconstrued, or–

Maria Milagros Soto:

–I think so, because that’s precisely why I brought the example of a recent case that happened just this December.

Maria Milagros Soto:

That was after the statute was construed, whereby under this interpretation and even after this Court had granted jurisdiction, or construed jurisdiction at least until the merits… they are still construing the statute that if it’s addressed to the public of Puerto Rico it’s prohibited, and here we are talking about a supplement that was in English.

Here we have a market that, although Puerto Rico is a secondary market, but we have only about a fifth of the tourists that come to Puerto Rico staying in hotels, and of those that stay in hotels only 60 to 70 percent stay in hotels with casinos.

So, our market out there in Puerto Rico, of the tourists, is large, and how are we going to be able to juggle, how to get to the tourists without getting to the residents?

And then, it’s going to be an intent of whether, is it intended to the residents?

Here is an English supplement, and we are being investigated for criminal prosecution this time, not only a fine.

On the jurisdictional question which this Court would have me address, a facial attack on Section 8 was properly raised at every level of the proceeding, initially in the complaint, Paragraph 9 as stated, and throughout in the Notice of Appeal, Motion for Rehearing, and the Court acknowledged that in his own opinion when he said that the First, Fifth and Fourteenth Amendments were applicable to the question at bar.

And, there are no independent state grounds for dismissal, expressed, at least on the merits… on the face of the judgment below, but rather that the Court dismissed the case for lack of a substantial question, which is a decision on the merits and therefore the decision is final and properly appealable to this Court.

Due to the time limitations we will rest on our briefs, on the rest of the jurisdictional questions, unless there is some concern of this Court, and we will move on to the substantiality of the question, which we think is very substantial as it abridges, first, commercial speech rights, it establishes a subclassification of casinos versus other legalized gaming.

The classification is more suspect because it is a content based classification on speech, and it has raised now that the opinion below has come out of a second classification of residents versus non-residents, in addition of intruding into core speech rights because of its overbreadth and vagueness, violated due process guarantees.

The judgment below did not put to rest the issues.

Therefore, we have to look into the merits of the ban itself and whether the government has met the burden that at least the Central Hudson test has imposed when abridgement of first commercial speech rights are involved.

The activity is constitutionally protected because gaming has been legal in Puerto Rico since 1948, and there is no suggestion on the record that the information given is false or misleading.

Whether the government has had a substantial interest is kind of vague, because the government has advanced five substantial interests up to this point, two in the original complaint which was that the tourists would be protected from the patronizing of the residents of the casino, which we fail to see how that could be, and also that the Puerto Rico residents would not promote tourism and do not contribute revenues to our economy, which is also not a serious argument, I don’t think.

Then, we would say that income tax from state residents are not income to the Treasury.

In its Motion to Affirm, it added that the government interest was to discourage the games of chance so that the Puerto Rican would earn his bread with the sweat of his brow, but that doesn’t seem to be a substantial interest on the face that the government itself runs the state lottery, advertises it, allows it, very permissive with horse tracks.

It’s very permissive with cockfights, all of which are highly patronized by the Puerto Ricans, while the casinos are not.

This Court’s level… for the first time, a tourism company brings, a casino information has no value in our free market society which is contrary to the Virginia holding and the progeny cases that follow, and that advertising will lead to excessive casino gambling with no factual basis at all on the record.

These changes in substantial government really brings out the fact that it seems that the government is really fishing for a substantial interest that will uphold its own dislike of speech about gaming.

But the true government goal, as read from Section 8, is a guard on a legal speaker and the election of public ignorance as a means of controlling legalized gambling.

While the government has in the Act means that directly advance, such as minimum and maximum limits, strict supervision on a daily basis, no on-premise alcohol consumption, no minors allowed, a slot foreman to avoid slot houses, criminal sanctions for violating the law, credit procedures and controls, surveillance, and now IRS reporting on the Bank Secrecy Act.

Other non-speech related controls and affirmative speech programs as suggested by Justice White may be adopted by Puerto Rico.

That would directly advance these roles which we are not challenging.

We do not mind the strict regulation of gaming.

We just don’t think that speech is the proper way of doing that, without unduly burdening the franchise holder entitled to conduct its business by the government inducing it for its own economic benefit.

What Puerto Rico cannot do is deter gaming by blocking information about gaming in any manner, if addressed to the resident, because it is not the least restrictive means tailored to that end.

The government has not met its burden, not a trial, not an argument which is really not evidence that would substitute trial evidence, for a departure from this Court’s precedent on commercial speech.

It merely relies on the word of Section 8, while we introduce at least the only study that has ever been made on gaming in Puerto Rico, it’s in your brief, and which proves that just the opposite, as soon as gaming was regulated in Puerto Rico the former patronizing of the people of Puerto Rico of illegal casinos, which was 100 percent doing that, lost to five percent, because of the highly regulated nature of the gaming activity itself which is what we advanced.

There is no substantial evidentiary ground for Tourism to request, or the government, that this activity be placed outside of the umbrella of the Constitution, together with illegal activities and together with child pornography and obscenity, because it’s none of that.

Gaming is legal in Puerto Rico, and there is no reason why this Court should backstep 11 years to the Bigelow versus Virginia era when truthful information about legal activity was totally suppressed, or was able to be totally possessed.

As a matter of principle, a prophylactic ban on protected speech must withstand at least the intermediate scrutiny of Central Hudson which we just went through, although we prefer the view of the construction that the Constitution has made the choice of keeping the people of the United States informed as long as we are a free enterprise democracy, and Section 8 does not meet this test.

Maria Milagros Soto:

We would like to keep the remaining time for rebuttal.

Thurgood Marshall:

–Ms. Soto, before you sit down, of no importance but is this the old Condado Beach Hotel or a new one?

Maria Milagros Soto:

No, it’s a different one, Your Honor.

It’s the old San Geronimo Hotel.

It’s not the Condado Beach.

Thurgood Marshall:

Thank you.

Warren E. Burger:

Mr. Saldana.

Lino J. Saldana:

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

The main issue here is the validity of a statute that restricts the advertising of casino gambling in Puerto Rico, and the first question that we must address is the scope of the restriction.

Now, appellant is attacking here before this Court the statute, the 23-word statute, not the statute as it was interpreted by the Superior Court.

And, of course, that is the wrong approach because what the statute means must be determined by what the Superior Court decided that it means, and that interpretation is binding upon this Court as it has been decided by many, many precedents applicable to states, which are perfectly applicable to the Puerto Rico Supreme Court… or the Commonwealth Court–

Sandra Day O’Connor:

Mr. Saldana, what do you say is left of the statute?

Exactly what conduct, in your view, does it now prohibit as interpreted by the Superior Court?

Lino J. Saldana:

–That is the question, precise question, that must be addressed in the first instance.

And what is left may be described as follows: the Superior Court said that no advertisements of casinos addressed to residents of Puerto Rico would be allowed in general, when published in the local media.

But then, it went on to make a series of exceptions, even to that general rule.

It excepted, for example, advertisements which were distributed to residents if residents are clients of the hotel, not even guests, but clients, just people who are in the hotel premises.

So, if residents are in the hotel premises, there is no restriction at all.

John Paul Stevens:

But may I ask you, just on that right now.

Lino J. Saldana:

Yes.

John Paul Stevens:

Supposing… could they advertise in a local newspaper?

Lino J. Saldana:

They could, yes, Your Honor.

John Paul Stevens:

They could?

Lino J. Saldana:

They could, provided the advertisement is not addressed to residents.

If the advertisement is addressed to–

John Paul Stevens:

But if the newspaper… supposing you have a newspaper of general circulation in San Juan.

I don’t really know… and 95 percent of the people who subscribe to it are local residents, if they put just a big ad in there, come to the casino at such and such hours, would that be permitted under the statute?

Ninety-five percent of the subscribers are local residents.

Lino J. Saldana:

–I would say that if in the advertisement, Your Honor, it is stated that this advertisement is addressed to tourists and not to residents, that that leaves it permissible.

John Paul Stevens:

Even though 99 percent of the people who buy the newspaper are really not tourists, it’s still all right as long as they put in the ad,

John Paul Stevens:

“Nobody but tourists should read this ad? “

Lino J. Saldana:

Well, nobody but tourists are invited to visit the casino.

Because, that is what the court is prohibiting.

The court is prohibiting a casino from advertising to entice residents to visit and gamble at its casino.

Thurgood Marshall:

But they don’t prohibit them?

The local residents can go if they want to?

Lino J. Saldana:

Oh, yes, sir.

There is no–

Thurgood Marshall:

Well, what does the advertisement say,

“You legally can go but we don’t want you? “

[Laughter]

Lino J. Saldana:

–No, they are saying, you legally can go but the demand for gambling among residents should not be stimulated artificially, should not be increased by advertisements from casinos.

Now, in other jurisdictions, in the Bahamas, in Aruba and Monaco, the laws prohibit residents from going to the casino, as Your Honor has suggested that Puerto Rico may have done.

In England, for example, it is not prohibited but advertising to local residents is prohibited.

Now, the advertisement… the prohibition of local residents, the prohibition to visit or to gamble at local casinos is perfectly unworkable, Your Honor.

That is why it is not prohibited in Puerto Rico, because there are no means of identifying who is a tourist once they come into the casino, and who is a resident.

Thurgood Marshall:

Well, in some places it is.

In some places you have to show a passport.

Lino J. Saldana:

Yes, but there is no tourist–

Thurgood Marshall:

You don’t need a passport?

Lino J. Saldana:

–Normally don’t need passports in Puerto Rico, and we don’t have any ID cards issued by the government.

Thurgood Marshall:

There’s no law that prohibits local persons from gambling in a casino in Puerto Rico?

Lino J. Saldana:

That is true.

Thurgood Marshall:

It’s just as legal as going to church?

Lino J. Saldana:

Yes.

Sandra Day O’Connor:

Mr. Saldana, what is this most recent criminal investigation that’s going on concerning the Posadas that has arisen since the Superior Court interpretation?

Lino J. Saldana:

It does not concern Posadas at all.

It concerns another casino that is owned by another company, which is related to Posadas.

Posadas–

Sandra Day O’Connor:

All right, and for what activity is it?

Lino J. Saldana:

–The advertising appeared in a newspaper when the New San Juan Hotel was opened, and the New San Juan Hotel has a casino and they published a 35-page supplement in a newspaper about the wonderful new casino and all of its facilities, and one of the pages was an advertisement describing in detail the gaming facilities, how many tables, gaming tables they were, what the roulettes were, what the card games available there were, and that it was the best casino in all the world.

And then, they published a picture–

Sandra Day O’Connor:

And would it have been all right if they had added in it that local residents shouldn’t read it?

Then it would have been all right, in your view?

Lino J. Saldana:

–In my view, if that advertisement had been addressed to tourists exclusively, there would be no prohibition.

But the point is that it was not so limited.

The advertisement was addressed to everybody.

Now, the Court in its interpretation not only permitted advertising to residents if they are within the hotel premises, but permitted advertising to residents by all sorts of souvenirs, match boxes, and other such devices, publicity devices, that freely circulate between residents or among residents.

The Court also permitted advertisements in local magazines which are for… mainly for distribution to tourists, but if… the Court said they reach the hands of residents, that doesn’t make them legal.

Then it excluded completely all advertising outside the jurisdiction of Puerto Rico.

That is… referring now to the question that was put by Mr. Justice Powell a while ago, advertising that is published in the New York Times which circulates in Puerto Rico every day, we buy it every day and we read it and a lot of persons read it.

Not only in that… that was just an example, but in any magazine like Time Magazine or Newsweek or any other magazine in the United States.

John Paul Stevens:

I suppose that would be rather expensive advertising for one community to have to advertise in a national publication in order to distribute locally, wouldn’t it?

Lino J. Saldana:

Well, it is a restriction, Your Honor.

There is no… but the advertising is not restricted, outside of the United States is not restricted to national advertising.

It may be a paper or a magazine, and there are many of them, that are published mainly for Puerto Ricans in New York or Puerto Ricans in the States, the Puerto Rican communities in the States, and these papers and magazines circulate in Puerto Rico.

They are even printed in Spanish, too.

Well, those advertisements are excluded, which–

Thurgood Marshall:

Would you say the average tourist in Puerto Rico knew there was gambling, before he went?

Lino J. Saldana:

–No, no, sir.

I don’t think so.

There are many tourists–

Thurgood Marshall:

Isn’t that the reason he went, for the average tourist?

Lino J. Saldana:

–There are many tourists that come to Puerto Rico who are not informed, other than maybe in a very general way–

Thurgood Marshall:

Two or three.

Lino J. Saldana:

–Yeah, but… no, I don’t think so.

Your Honor may be thinking that most tourists come to Puerto Rico to gamble, and I would seriously doubt that that is so.

The–

Thurgood Marshall:

How many tourists from the Virgin Islands go to Puerto Rico, other than to gamble?

Lino J. Saldana:

–I have no idea, Your Honor.

Thurgood Marshall:

Just guess.

Lino J. Saldana:

I know that the hotels in Puerto Rico, there are 13 gambling casinos, ten of them in the San Juan area, and three of them outside.

And they make quite a publicity among tourists and they make quite publicity in the Virgin Islands, so that they may be enticing them to come to San Juan.

I agree with Your Honor.

But, the point is that this is no absolute and complete ban.

It’s… if you take the Court’s… the Superior Court’s interpretation, how can you say that it is an absolute ban?

It’s very relative ban of advertising, is very limited.

It concerns only residents and only to residents, to local medias.

And, there is also a very general rule interpretation made by the Superior Court, it’s an important aspect, is that if there is any doubt as to whether an advertisement is addressed to a tourist or is addressed to a resident, then it is permissible because the court stated that the general rule would be that the advertising which is addressed to tourists is completely exempt from the prohibition.

And therefore, I submit that this is no absolute ban, and that’s what is before this Court.

John Paul Stevens:

Mr. Saldana, let me ask you a question about procedure in Puerto Rico.

As I understand it, the Supreme Court of Puerto Rico entered an order which did two things.

It said that the appeal did not present a substantial constitutional question, and therefore dismissed the appeal.

Lino J. Saldana:

Yes, sir.

John Paul Stevens:

And secondly, it said, considering the writ filed as a revision, it is denied.

Now, is the writ that was denied something like our certiorari practice where they have discretion to grant or deny the writ?

Lino J. Saldana:

Yes, Your Honor.

John Paul Stevens:

So, to what extent, then, have they… is there a precedent?

Have they adopted the reasoning of the trial court, or is it just… they just decided not to review the case?

Lino J. Saldana:

The rejection of the appeal for lack of a substantial constitutional question is equivalent to an affirmance of the Superior Court–

John Paul Stevens:

As to being no constitutional violation?

Lino J. Saldana:

–That is so.

John Paul Stevens:

But not necessarily an affirmance of its interpretation of the statute, I take it?

Lino J. Saldana:

It is an affirmance of the… it is like an affirmance by this Court of a judgment when the appeal is summarily dismissed.

John Paul Stevens:

Right.

And the judgment in this case granted no relief to the plaintiff, it just had a long opinion reconstruing the statute and ultimately dismissed the complaint, didn’t it?

Lino J. Saldana:

It ultimately dismissed the complaint, but in its interpretation it went a very long way.

John Paul Stevens:

Yes, but the judgment of the Supreme Court merely affirmed the judgment, which was dismissing the complaint, is that right or am I wrong?

Lino J. Saldana:

Well, it affirms the judgment and the reasoning, and the reasoning is–

John Paul Stevens:

The reasoning?

Lino J. Saldana:

–Yes.

The problem, Your Honor, with the jurisdictional matter here, which I should perhaps have addressed first, is that this is an appeal that comes from the Supreme Court of Puerto Rico and the validity… the record shows that the validity of the statute was not challenged at all stages of the proceedings.

It was not explicitly challenged, and certainly it wasn’t challenged on federal grounds, because the only mention of federal law is the one made before this period, for the appellant… plaintiff below referred to a claim of right regarding what he called his First Amendment rights.

It did not even mention free speech, just First Amendment rights, and he claimed that the administrative interpretation of the law infringed his First Amendment rights.

Now, he did mention that there was an equal protection right involved, the equal protection right protected by the United States Constitution.

It did not mention any specific clause of the Constitution whatsoever.

As to due process, there was no further claim at all in the Superior Court.

Then, when we come to the Supreme Court, at the Supreme Court level there was again no specific claim of invalidity of the statute involved, and as to appellant’s claims of right, there was no federal equal protection right claimed.

There was no federal due process right claimed.

And as to the other matter involved, other question tendered here for appeal, the only reference was to right of expression protected by the Bill of Rights.

William H. Rehnquist:

Mr. Saldana, in the Superior Court’s opinion, in its Conclusion of Law 13, the Superior Court said that the First, Fifth and Fourteenth Amendments of the Constitution of the United States are applicable to the controversy.

Now, if the Superior Court passes on it, the fact that it may not have been properly raised does not defeat maintaining the claim here, I don’t think.

Lino J. Saldana:

No, Your Honor.

But notice, Your Honor, that the Superior Court merely says that it was involved, that these clauses were involved.

The Superior Court did not even pass on these matters.

And the judgment issued by the Superior Court was merely, we issue now a declaratory judgment concerning the interpretation of this statute, where federal rights are involved.

But, the specific challenge to the validity of the statute, to the authority to enact the statute, was never made before the Superior Court and was never made before the Supreme Court either.

Now, the Supreme Court appeal, we have argued, was also untimely because it was filed too late, and the reply brief that appellant has filed is very significant, in my judgment.

It does not present any rebuttal of the defects that have been pointed out in the appellee’s brief.

It merely states, as a naked statement, that the appellees’ claim was properly presented, and then it goes on to beg the indulgence of this Court, that the appellant was pressed for time, that the appellant decided at the very last moment to file an appeal before the Supreme Court of Puerto Rico, and that that was why it didn’t make things… it didn’t do properly the appeal.

It didn’t raise the constitutional issues as it should have done.

But unfortunately for the appellant, as we all know, jurisdictional requirements cannot be dispensed with and cannot be waived.

He may have a perfect excuse otherwise for not doing the right things, but if he didn’t do it then there is no jurisdiction and that is what we claim.

Now, the… going to the merits, I would like to state in simple terms our position.

The main position of the appellees in this case is that First Amendment protection should not be extended under the commercial free speech doctrine to advertising of casino gambling.

And the reasons in support of that position are in brief, that gambling and casino gambling is an activity that is harmful to the community, that it is a vice-strewn activity, and that Puerto Rico should have the power to legalize casino gambling if it believes that, for example, it is unwise or impractical to prohibit it altogether because people will gamble anyway, or because it expects to derive some economic benefit from the legalization of casino gambling, but that there should be no requirement that then Puerto Rico should allow casinos, to promote and to actively advertise and market their services and their products so as to create new gamblers.

And the same would apply, I would suppose, to the marijuana case that was put by Justice O’Connor, because a state is allowed to legalize marijuana but it is prohibited from telling people, “Don’t advertise marijuana”, then new persons who consume marijuana will be encouraged to do it.

I mean, it’s not… the state will not be able to limit the legalization to what the existing demand for marijuana or gambling or casino gambling is at the time that it is legalized.

In our case, the situation is very, very difficult because there’s no doubt that casino gambling is a very dangerous activity, that it attracts and has attracted, in Nevada and Atlantic City, it has attracted the crime gamblers.

It has attracted organized crime, and provoked a host of other problems concerning law and order including among others the corruption of government officials, as the Abscam investigation showed in Atlantic City where the senior Senator, federal Senator was involved in taking bribes.

John Paul Stevens:

Mr. Saldana, may I ask you another question about the procedure in this case.

The judgment of the trial court ends with the statement,

“These guidelines may be amended in the future by the enforcing agency pursuant to the dictates of the changing needs and in accordance with the law and what is resolved herein. “

And, I would just like to get your views on, how firmly can we rely on what the trial judge has done here as a definite rule for the future, if he says… winds up by saying the enforcing agency can change the rules?

Lino J. Saldana:

Well, I interpret that, Your Honor, to mean that the enforcing agency can change… can adopt new rules as to things that are not decided in the opinion, but the Court was not telling the enforcing agency, “You can change my judgment”, because they it would be a nullity.

John Paul Stevens:

But he says,

“These guide regulations may be amended in the future. “

Lino J. Saldana:

Well, yes, I interpret that, that they may be amended to include new things, to make new provisions, but that the judgment it renders, the declaratory judgment, is of course valid and binding between appellant and the tourism company.

John Paul Stevens:

I see.

Lino J. Saldana:

Now, we… going back to the merits, the issue here is simple in a sense.

If Puerto Rico cannot prohibit the marketing and advertising of casino gambling, then it is faced with a tremendous problem because the experience in Nevada and Atlantic City shows that when you open up the floodgates of advertising and promotion, the casinos, the gambling casinos take over.

They take over as in Nevada where the principal industry is casino gambling.

They take over because they exercise such a tremendous influence.

Thurgood Marshall:

Why not get rid of casino gambling?

Lino J. Saldana:

I’m sorry, I–

Thurgood Marshall:

Why not get rid of casino gambling?

Lino J. Saldana:

–Yes, so that the only alternative would be to get rid of casino gambling, because I believe that Puerto Rico–

Thurgood Marshall:

You’d lose all the taxes, wouldn’t you?

Lino J. Saldana:

–We lose… we would lose, Your Honor, not only the taxes but the help that casino gambling tourists give to the tourism industry in Puerto Rico.

But I believe that it would be preferable, and I believe that Puerto Rico would find it preferable to ban completely casino gambling rather than let them advertise without limit, and let them advertise and market and create new gamblers and create new demand, and follow the pattern and the model of Nevada and Atlantic City where it’s an incessant cycle of growth for these people.

They grow, they promote an increased level of demand and then they expand and they grow, and then they again promote the demand, and finally what they do is they take over the state.

Well, Puerto Rico does not want to be another Nevada or another Atlantic City.

So that, if this Court decides that we cannot limit advertising, the only recourse will be to prohibit casino gambling altogether.

Warren E. Burger:

Do you have anything further, Ms. Soto?

Maria Milagros Soto:

Yes, Mr. Chief Justice.

I would just like to rely on two points made by brother counsel, one on the jurisdictional question.

It’s completely meritorious, the challenge that the question was not raised properly and that it was a last-minute thought to bring a facial attack.

It was brought properly.

There are specific references in your record that it was brought in the Complaint, in the Notice of Appeal, in the Motion of Rehearing, plus in the Declaratory Judgment.

It particularly reads:

Maria Milagros Soto:

“The Judgment itself will hereby declare that Section 8 of the law is not conlusive [inaudible] from its face, and is sustained. “

“There was a facial attack right from the very beginning and right on, and the constitutional… by number, First, Fifth and Fourteenth, recognized by the trial court as being properly raised, with regards to the merits. “

What is left of the judgment below opinion is unconstitutional, because as Justice Stevens very well brought out, and I have it on my notes, before I couldn’t cover it, this opinion is subject to change.

Ana not only is it subject to change, it was going to be changed this year.

This very year it was going to be changed by the Tourism Company to include only the paragraph A which is the proscription that Posadas or any other gambling casino would advertise to the public in Puerto Rico, without including all the other exceptions the Board had made, and it can be done at any minute because the Court contemplated the possibility, that if if was regulated, as it was… certain regulatory functions, they could not take them all together from the Agency and the Agency could change these regulations any time it saw fit.

So, therefore, all channels of communications to the residents are still closed, they are foreclosed, an the section in the paragraph… in the article that was published, which by the way it is the same company that manages both hotels, Posadas Hotels and the El San Juan Hotel, proves that the content of this article is not enticing the people to come and gamble in the casino, and it is not paid publicity, which is what the Judge held.

It is an article covering all sorts of things including job opportunities, and the people that we want to employ and where do we recruit them.

John Paul Stevens:

Yes, but that’s not in the record, is it, Ms. Soto?

That’s not in the record before us, is it?

Maria Milagros Soto:

Yes, it is, Your Honor.

John Paul Stevens:

Was that in the–

Maria Milagros Soto:

It is on the record.

It’s particularly… it’s Appendix D in our reply brief.

John Paul Stevens:

–It’s in your reply brief, but it was not in the record before the trial court because it didn’t happen before?

Maria Milagros Soto:

No, it didn’t happen before.

It happened after.

It was duly authenticated, the signature of the Secretary of Justice through the Department of State, and brought properly under Rule 201.

John Paul Stevens:

May I ask you just one more question that puzzles me about the… what is all this business about the use of jackets by men?

What was that?

Maria Milagros Soto:

That was a [inaudible] question that arose while the case was being tried by the judge, whereby they required a jacket to go into the casinos to the men, while they didn’t require proper attire for women, and the court found that it was unconstitutional.

And since, it has been changed.

Regulations have been adopted flexibilizing the dress code.

John Paul Stevens:

Was that a challenge that you and your client had made against–

Maria Milagros Soto:

We have made a claim but the court became aware of it, and thought it was unconstitutional and–

John Paul Stevens:

–And just sort of threw it in the… okay.

Maria Milagros Soto:

–The problem… the problem still exists with the statute as construed, in addition that it can’t be changed.

It subjects a casino franchise holder to self-censorship all the time, plus when it finally does advertise, that advertisement is going to be judged on content.

I think either one [inaudible] violates the Constitution and for such reason, we request that this Court strikes down under Section 1258(b) which is properly raised on appeal, this case, the decision below.

We feel that Yu Cong Eng rationale, although it is an old case, is still valid.

It has been recently and approvingly cited in Matthews versus Heckler whereby this Court entertained directly to evaluate the section challenged and the [inaudible] broken down as we think this one should be.

Maria Milagros Soto:

Thank you.

Warren E. Burger:

Thank you, Counsel.

The case is submitted.