ANTHONY M. FRANK, POSTMASTER GENERAL OF THE UNITED STATES, ET AL., APPELLANTS V. MINNESOTA NEWSPAPER ASSOCIATION, INC. No. 87-1956 In the Supreme Court of the United States October Term, 1987 On Appeal from the United States District Court for the District of Minnesota Jurisdictional Statement PARTIES TO THE PROCEEDINGS In addition to the parties named in the caption, the United States Postal Service and the United States of America were named as defendants in the court below. TABLE OF CONTENTS Question Presented Parties to the Proceedings Opinions below Jurisdiction Constitutional and statutory provisions involved Statement: A. Historical and statutory background B. Proceedings below The question is substantial Conclusion OPINION BELOW The opinion of the district court (App., infra, 1a-20a) is reported at 677 F. Supp. 1400. JURISDICTION The judgment of the district court (App., infra, 21a-22a) was entered on January 6, 1988. A notice of appeal (App., infra, 23a-24a) was filed on January 28, 1988. On March 17, 1988, Justice Blackmun entered an order extending the time within which to docket this appeal to and including May 27, 1988. The jurisdiction of this Court is invoked under 28 U.S.C. 1252. CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED The relevant constitutional and statutory provisions are reprinted at App., infra, 25a-33a. QUESTION PRESENTED Section 1302 para. 5 of Title 18 makes it a crime knowingly to mail "any newspaper, circular, pamphlet, or publication of any kind" containing "any advertisement of any lottery, gift enterprise, or scheme of any kind offering prizes dependent in whole or in part upon lot or chance," or "any list of prizes drawn or awarded" by means of any such lottery or similar enterprise. The question presented is whether the prize list clause in Section 1302 is facially invalid under the First Amendment. STATEMENT This is an action brought by an association of Minnesota newspapers challenging, under the First Amendment and the Due Process Clause, the congressional regulation of the use of the mails in connection with the promotion of lotteries, 18 U.S.C. 1302 and 1307; 39 U.S.C. 3001 and 3005. On cross-motions for summary judgment, the district court held that the statutory ban on mailing lottery advertisements was a valid regulation of commercial speech. By contrast, the court held that an associated prohibition on the mailing of prize lists was invalid, on the ground that the clause could be used to ban the mailing of newspapers containing news reports about lotteries. A. Historical And Statutory Background 1. Lotteries have an ancient pedigree. In England and in colonial times in this country, lotteries were a popular and respectable activity. Beginning in the Jacksonian period, however, the states began to restrict or prohibit both privately-operated and state-run lotteries for a variety of reasons, such as "animosity toward legislatively-created privilege, concern for efficiency in government, distaste for fraud and corruption, and sympathy for the poor upon whom the burden of the lottery system was thought to fall." /2/ A major obstacle to that reform effort was the states' inability to regulate lotteries that operated across state lines. The states lacked authority to prosecute lottery operators who conducted business in another jurisdiction, or to regulate a lottery operator's use of the mails to distribute tickets and advertisements. The states were forced to attack lotteries within their borders "at the consumer level -- a difficult, expensive, and unpopular task." /3/ The states therefore turned to the Post Office and to Congress for assistance. 2. Congressional restrictions on the use of the postal service in connection with lotteries date from 1827. In that year, Congress prohibited postmasters from serving as lottery agents and from receiving "lottery schemes, circulars or tickets" free of postage. Act of Mar. 2, 1827, ch. 61, Section 6, 4 Stat. 238. Forty-one years later, Congress made it a crime to deposit in the mails "any letters or circulars concerning lotteries, so-called gift concerts, or other similar enterprises offering prizes of any kind on any pretext whatever." Act of July 27, 1868, ch. 246, Section 13, 15 Stat. 196. In 1982, Congress passed legislation prohibiting the mailing of letters or circulars concerning "illegal" lotteries. Act of June 8, 1872, ch. 335, Section 149, 17 Stat. 302. That term, however, was stricken four years later in order to exclude from the mails materials from all lotteries, including ones chartered by state legislatures. Act of July 12, 1876 (1876 Act), ch. 186, Section 2, 19 Stat. 90 (codified at Rev. Stat. Section 3894 (2d ed. 1878)). /4/ This Court upheld the constitutionality of the 1876 Act in Ex parte Jackson, 96 U.S. 727 (1878), over the objection that it violated the First Amendment. Still, the Act was widely viewed as an ineffective weapon against lotteries. Among other inadequacies, /5/ the Attorney General concluded that the 1876 Act did not apply to newspapers, even if they contained lottery advertisements. /6/ Yet newspaper advertisements were often used to promote lottery sales, since newspapers enjoyed second-class mailing privileges and therefore were less expensive to distribute than letters containing lottery circulars. /7/ That shortcoming made the Act particularly ineffective against the powerful "Louisiana Lottery," the only legal lottery still operating in 1890 when the predecessor to the statute at issue in this case was passed. /8/ The Louisiana Lottery operated nationwide and used the mails as its principal means of obtaining revenues from the public in other states, /9/ deriving more than 90% of its revenue from out-of-state bettors. /10/ Because the Attorney General had concluded that the 1876 Act did not apply to newspapers, however, that Act did not hamper the Louisiana Lottery from soliciting customers through newspaper advertising. After several years of debate, /11/ Congress remedied that shortcoming by adopting the Anti-Lottery Act of 1890, ch. 908, 26 Stat. 465 (1890 Act), the direct predecessor to the statute at issue in this case. In order to deny lotteries the use of the mails to attract customers, the Act outlawed the mailing of "any newspaper, circular, pamphlet, or publication of any kind containing any advertisement of any lottery or gift enterprise of any kind offering prizes dependent upon lot or chance, or containing any list of prizes awarded at the drawings of any such lottery or gift enterprise, whether said list is of any part or all of the drawing." The constitutionality of the new Act was challenged in In re Rapier, 143 U.S. 110 (1892), and this Court again upheld the statute over a First Amendment objection. Although the Louisiana Lottery closed up its business in that state in 1893, /12/ the lottery set up a new headquarters in Honduras and used a Florida address for communications. /13/ When Congress realized that the Louisiana Lottery had not yet been finally shut down, it passed the Act of Mar. 2, 1895, ch. 191, 28 Stat. 963, which made it a crime to import or transport lottery tickets in foreign or interstate commerce. /14/ The constitutionality of that Act was also challenged, and this Court once again upheld it in Champion v. Ames (Lottery Case), 188 U.S. 321 (1903) this time over the claim that the Act exceeded Congress's power under the Commerce Clause, Art. I, Section 8, Cl. 3. 3. The prohibition on the mailing of publications containing lottery advertisements or prize lists enacted as the Anti-Lottery Act of 1890 survives, with minor amendments not relevant here, /15/ as 18 U.S.C. 1302 para. 5. In relevant part, that provision makes it a crime knowingly to mail "(a)ny newspaper, circular, pamphlet, or publication of any kind" containing "any advertisement of any lottery, gift enterprise, or scheme of any kind offering prizes dependent in whole or in part upon lot or chance," or "any list of the prizes drawn or awarded" by means of any such lottery or similar enterprise. Section 1302 does not apply, however, in advertisements for a state-conducted lottery contained in a newspaper published in that state, or in an adjacent state that also has a state-conducted lottery. 18 U.S.C. 1307. /16/ Under complementary provisions of the Postal Code, any material that is excluded from the mail under 18 U.S.C. 1302 is deemed to be "nonmailable" and subject to seizure. 39 U.S.C. 3001. The Postal Service may refuse to deliver lottery-related responses for, or permit the payment of money orders to, a person conducting a lottery. 39 U.S.C. 3005. After an administrative proceeding, the Postal Service may return to a sender mail, appropriately marked as in violation of Section 3005, addressed to any person engaged in a lottery or a scheme involving fraud or false representations. 39 U.S.C. 3005. And under 39 U.S.C. 3007, the Postal Service may sue in a federal court and, on a showing of probable cause, obtain a preliminary injunction detaining lottery-related incoming mail to a person alleged to be engaged in a lottery or similar scheme, pending the conclusion of those administrative proceedings. B. Proceedings Below Appellee Minnesota Newspaper Association, Inc., is an organization of general and special interest newspapers published in Minnesota. Minnesota law allows non-profit charitable organizations to operate gaming activities for fund-raising purposes. App. infra, 1a-2a. Appellee claimed that its member newspapers distributed a significant portion of their circulation through the mails and that its members wanted to publish advertisements and news stories about these lotteries, but were afraid to do so because of uncertainty about the meaning of 18 U.S.C. 1302 and 39 U.S.C. 3001 and 3005, and because of warnings they had received from local postal inspectors to the effect that they could be prosecuted for mailing such materials. App., infra, 3a. Appellee therefore brought this action in the United States District Court for the District of Minnesota, challenging the constitutionality of those statutes under the First Amendment and the Due Process Clause. On cross-motions for summary judgment, the district court granted partial summary in favor of each party. The court said that the statutes were constitutional insofar as they applied to lottery advertisements, but that they violated the First Amendment to the extent that they restricted the mailing of lists of lottery winners. App., infra, 4a-20a. The district court first held that lottery advertisements (including advertisements containing prize lists) fell squarely within the definition of "commercial speech," and that the restrictions imposed by 18 U.S.C. 1302 on mailing such advertisements met the standards for the regulation of commercial speech set forth by this Court in Central Hudson Gas & Elec. Corp. v. Public Serv. Comm'n, 447 U.S. 557 (1980), and Posadas de Puerto Rico Assocs. v. Tourism Co., No. 84-1903 (July 1, 1986). App., infra, 7a-13a. Although the advertisements that appellee's member newspapers sought to publish concerned lawful activity that was not inherently misleading (id. at 8a), the court found that the statutory restrictions were valid because they advanced two substantial governmental interests: Congress's interest in preserving the states' power to prohibit or limit gambling within their borders, and Congress's interest in restricting the interstate growth of private lotteries and reducing the threat of organized criminal involvement in gambling activity. Id. at 8a-11a. Both interests, the court held, were directly advanced by Section 1302 in a manner no more extensive than is necessary. App., infra, 11a-13a. The court also concluded that the statute should not be construed to extend to general news reports or editorial comment concerning lotteries. Those materials, the court held, can be distributed through the mails. App., infra, 16a. Notwithstanding its conclusion that the statute does not extend to news stories and editorial commentary, the district court nevertheless concluded that the prize list clause was unconstitutional. App., infra, 13a-15a. The court recognized that a list of prize winners is an effective promotional device for a lottery, but ruled that such a list does not amount to commercial speech unless it is found in an advertisement. Id. at 13a-14a. Because Section 1302 independently prohibits the mailing of advertisements promoting lotteries, the court concluded that the prize list clause was designed to restrict the publication of prize lists in noncommercial speech (App., infra, 14a), and therefore was invalid unless the restriction was narrowly tailored to serve a compelling governmental interest. Ibid. Finding that the interests promoted by Section 1302 were not compelling, the court held the prize list was unconstitutional, but could be severed from the remainder of the statute. App., infra, 14a-15a, 16a. The court acknowledged that its holding was inconsistent with this Court's decision in In re Rapier, supra, but it concluded that the rationale of that ruling had been superseded by this Court's more recent First Amendment decisions. App., infra, 15a. The district court accordingly entered a judgment declaring, inter alia, that "the restrictions in 18 U.S.C. Section 1302, and its implementing regulations, on the mailing of lists of prizes awarded from a lottery are unconstitutional" and permanently enjoined appellants "from further enforcement of the restrictions on prize lists." App., infra, 20a; id. at 21a-22a. /17/ THE QUESTION IS SUBSTANTIAL Private organizations sometimes conduct lotteries to raise revenues. There is a longstanding federal policy against the use of the mails to promote such lotteries, whether or not they are legal under state law. Thus, it is illegal to import tickets for such lotteries in foreign commerce, or to distribute such tickets in interstate commerce or through the mails, 18 U.S.C. 1301 and 1302, or to distribute through the mails publications that contain advertisements about such lotteries or lists of the prizes they award. 18 U.S.C. 1302. The constitutionality of this regulatory scheme had been upheld by this Court on three separate occasions: the Court twice rejected First Amendment challenges to the predecessor versions of Section 1302 in Ex parte Jackson, 96 U.S. 727 (1878), and In re Rapier, 143 U.S. 110 (1892), and rejected a Commerce Clause challenge to the predecessor to Section 1301 in Champion v. Ames (Lottery Case), 188 U.S. 321 (1903). In this case, the district court upheld over a First Amendment challenge the clause forbidding the distribution through the mails of publications containing lottery advertisements, but held unconstitutional the parallel clause in that section prohibiting the mailing of publications containing lists of prizes awarded by lotteries. The district court ruled that the prize list clause was unconstitutional because it could be used to restrict the distribution through the mails of news reports about lotteries. The district court, however, misinterpreted the prize list clause, which complements the advertisement clause. Properly construed, the ban on the mailing of publications containing lottery prize lists is valid for the same reasons given by the district court for upholding the ban on the mailing of publications containing lottery advertisements. 1. a. The district court noted that Section 1302 contains separate clauses prohibiting the mailing of lottery advertisements and the mailing of lists of prizes awarded in a lottery. The court concluded that the advertisement clause was directed at commercial speech, and that the constitutionality of that clause must be examined under the reduced standard of protection that is appropriate for commercial speech. See, e.g., Posadas de Puerto Rico Assocs. v. Tourism Co., No. 84-1903 (July 1, 1986); Central Hudson Gas & Elec. Corp. v. Public Serv. Comm'n, 447 U.S. 557 (1980); Friedman v. Rogers, 440 U.S. 1 (1979); Virginia State Bd. of Pharmacy v. Virginia Citizens Consumer Council, 425 U.S. 748 (1976). But the district court also reasoned that, because a prize list contained in an advertisement would be independently covered by the advertisement clause, the prize list clause must have been designed to apply to something other than commercial speech. App., infra, 13a-14a. Accordingly, the court concluded that the prize list clause, unlike the advertisement clause, had to be measured against the higher standard of review appropriate for noncommercial speech. The fatal flaw in the district court's reasoning is its unstated assumption that commercial speech is exactly coterminous with advertising, and that a statutory provision directed at a particular type of speech intended to promote the success of a lottery can be considered commercial speech only if it is contained in an advertisement. But this Court has never equated commercial speech with advertising. See Bolger v. Youngs Drug Products Corp., 463 U.S. 60, 66-68 (1983). Instead, the Court has consistently identified "the core notion of commercial speech" (id. at 66) as those forms of expression that do "no more than propose a commercial transaction" (Pittsburgh Press Co. v. Pittsburgh Comm'n on Human Relations, 413 U.S. 376, 385 (1973)), or that are "related solely to the economic interests of the speaker and its audience" (Central Hudson, 447 U.S. at 561). An advertisement that "communicate(s) information, expresse(s) opinion, recite(s) grievances, protest(s) claimed abuses, and (seeks) financial support on behalf of a movement whose existence and objectives are matters of the highest public interest and concern" (New York Times Co. v. Sullivan, 376 U.S. 254, 266 (1964)) clearly would not be regarded as commercial speech. Equally clearly, certain types of expression not ordinarily described as advertising but integrally related to a commercial transaction -- such as a proposed contract -- would have to be regarded as commercial speech. The key elements of commercial speech, therefore, are its subject matter (whether it relates to an ordinary commercial transaction) and the relationship of the speaker to the transaction (whether the speaker has direct financial interest in the transaction or in the promotion of the transaction), not whether the speech is formally denominated as "advertising." For example, under this Court's decisions a newspaper could publish news stories or editorials about lotteries, their prizes, or their participants, and those forms of discourse would clearly not be regarded as commercial speech. In our view, moreover, if a newspaper published a list of winning lottery numbers because it believed that the list or the numbers themselves were newsworthy, that too should not be considered as commercial speech, even if the newspaper published the list because it hoped to increase its circulation and thereby increase its revenues. But if the newspaper published a list of prizes because it expected to receive a share of a lottery's proceeds, or because it had sponsored the lottery itself, such a list in our view would amount to commercial speech, because it would be speech directly related to a commercial transaction in which the newspaper has a financial interest. Similarly, if the newspaper were paid to publish a list of prizes, such a list should be regarded as commercial speech, because it would be speech about a commercial transaction that the newspaper had been directly paid to promote. The district court was therefore in error in concluding that a statute that regulates something other than advertising cannot be regarded as a regulation of commercial speech. The prize list clause of Section 1302 can and should be construed to apply only to a form of commercial speech -- i.e., the publication of lists of lottery prizes by one who has a direct financial interest in a lottery or in its promotion -- and not to other forms of discourse about lotteries, such as editorials or news stories. So construed, that clause is a lawful restriction on commercial speech promoting lotteries. b. This construction of Section 1302 is supported by the language of the statute. As the district court recognized (App., infra, 16a), Section 1302 does not list news reports among the items to which the statute applies, and its structure shows that it was not designed to exclude from the mails documentaries, news stories, or editorials about lotteries. It applies to "(a)ny newspaper, circular, pamphlet, or publication of any kind," and therefore is sufficiently broad to include various promotional materials that contain nothing resembling a news story. /18/ The all-inclusive scope of the statute suggests that the prize list clause was not designed to zero in on news reports or editorials about lotteries. The most likely reason Congress included a separate prize list clause was to ensure that the Act would apply to circulars or other promotional materials distributed by the sponsor of a lottery that would not be regarded as either an advertisement or a legitimate news story. /19/ Moreover, the fact that Section 1302 lists lottery advertisements and prize lists in tandem strongly suggests that these clauses should be read in a complementary manner. See, e.g., Third Nat'l Bank v. Impac Ltd., 432 U.S. 312, 322 (1977); Jarecki v. G.D. Searle & Co., 367 U.S. 303, 307 (1961); Virginia v. Tennessee, 148 U.S. 503, 519 (1893). /20/ Lotteries, like other forms of gambling, often use prize lists for the same purpose as advertisements: in order to attract participants. By identifying the prizes that will be (or have been) awarded in a lottery, a prize list can promote future sales of lottery tickets. A prize list can also serve as a device for notifying winners, a function essential to the conduct of a lottery. The prize list clause should therefore be read as applying to the same conduct as the advertisement clause, i.e., to the use of the mails to promote a lottery by one who has a direct financial interest either in the lottery or in its promotion. c. To be sure, if read expansively and without regard for the purpose Congress had in mind when it enacted the Anti-Lottery Act of 1890, the text of the prize list clause could be read to apply to editorial comment, documentaries, or other forms of discourse about lotteries, their participants, and their winnings. That construction of the statute would raise the type of serious First Amendment questions discussed by the district court. That court concluded that Section 1302 does not apply to those forms of discourse, however, and we agree with that ruling. Congress did not adopt the Anti-Lottery Act of 1890 in order to deprive newspapers of the use of the mails for publishing news commentary about lotteries. /21/ Rather, newspapers were listed in the Act because they were a relatively inexpensive way for a lottery to distribute advertisements and because the Attorney General had concluded that the existing law did not cover newspapers that published lottery advertisements. Congress therefore exercised its power under the Postal Clause, Art. I, Section 8, Cl. 7, in order to deprive lotteries of the use of the mails to conduct or promote their games. In fact, by 1890 the Louisiana Lottery was the only lottery still operating legally, and it derived more than 90% of its revenue from out-of-state bettors. It was the target of the Anti-Lottery Act of 1890, not newspapers. /22/ Congress concluded that the only effective way to suppress the Louisiana Lottery -- to "cut (it) down to a mere local gambling establishment, answerable to the police powers of the local government" (21 Cong. Rec. 8717 (1890) (Rep. Hitt)) -- was to exclude from the mails newspapers and the other publications that contained its advertisements and related promotional materials and thereby deny the lottery access to its primary source of income. The references in Section 1302 to "any advertisement of any lottery" and to "any list of the prizes drawn or awarded by means of any such lottery" should be interpreted in light of this overriding purpose. The materials that were the focus of Congress's concern were what would today clearly be called commercial speech. Interpreting Section 1302 to apply only to commercial speech is thus not "plainly contrary to the intent of Congress" (DeBartolo Corp. v. Florida Gulf Coast Building & Constr. Trades Council, No. 86-1461 (Apr. 20, 1988), slip op. 6), and avoids the constitutional issues raised by the district court's interpretation of the Act. Ibid.; NLRB v. Catholic Bishop, 440 U.S. 490, 499-501 (1979); United States v. 12 200-Ft. Reels of Super 8MM. Film, 413 U.S. 123, 130 n.7 (1973). /23/ The prize list clause, like the advertisement clause, should be read as a restriction on commercial speech. 2. When read in the manner suggested above, the prize list clause in Section 1302 is valid for the same reasons given by the district court for upholding the advertisement clause in the same section: the prize list clause, like the advertisement clause, applies to a form of commercial speech, and the statutory scheme satisfies the standards for the regulation of commercial speech set forth in Central Hudson and Posadas. /24/ Section 1302 reasonably advances several legitimate governmental interests. The statute applies to both legal and illegal lotteries. Horner v. United States, 147 U.S. 449, 456, 466 (1893). To the extent that it reaches lotteries that are illegal under federal or state law, the statute is clearly valid, because the government may regulate or ban entirely speech proposing an illegal transaction. Hoffman Estates v. The Flipside, Hoffman Estates, Inc., 455 U.S. 489, 496 (1982); Central Hudson, 447 U.S. at 563-564; Pittsburgh Press, 413 U.S. at 388. Section 1302 also may be constitutionally applied to advertisements and associated promotional material about lawful gambling activities. As the district court explained in connection with the advertisement restrictions, Section 1302 safeguards the policies of those states that have prohibited lotteries. /25/ Moreover, by restricting the growth of private lotteries, Section 1302 reduces the threat of organized criminal involvement in gambling activities. App., infra, 8a-11a. The statute therefore advances principles of federalism and protects the welfare of the citizens of those states that have declared that private lotteries are against public policy. Both goals are legitimate interests for Congress to advance through federal law. See South Carolina v. Baker, No. 94, Orig. (Apr. 20, 1988), slip op, 5-7; Posadas de Puerto Rico Assocs. v. Tourism Co., slip op. 11-12; Garcia v. San Antonio Metropolitan Transit Auth., 469 U.S. 528, 550-554 (1985). The mailing restrictions directly promote those interests, because the states lack authority to regulate the mails. App., infra, 12a. Finally, the mailing restrictions are not unduly burdensome. Publications, including newspapers, are not forbidden from publishing commercial lottery advertisements or lists of lottery prizes; they simply may not use the mails if they do so. This Court's recent decision in Posadas de Puerto Rico Assocs. v. Tourism Co., supra, also supports the constitutionality of Section 1302. In that case, this Court upheld over a First Amendment challenge regulations limiting the commercial advertising of casino gambling to nonresidents of Puerto Rico, even though casino and other gambling activities were legal in that jurisdiction. The Court found that Puerto Rico had a legitimate interest in restricting commercial gambling advertising in order to safeguard the moral well-being of its citizens, and to prevent both corruption and the infiltration of organized crime. Slip op. 11-12. Moreover, the Court ruled that restricting commercial advertising was a reasonable means of advancing those interests, because the government could reasonably believe that commercial casino advertising would enhance the demand for casino gambling. Id. at 12. The regulations were also tailored to Puerto Rico's interest in protecting the welfare of its citizens. Id. at 14-15. Finally, the Court held that, because Puerto Rico could ban gambling altogether, Puerto Rico could instead take the less restrictive step of restricting commercial advertising about that activity. Id. at 16. The same analysis is appropriate here. Participating in a lottery, like any other form of gambling, is not a constitutionally protected activity. The federal government and the states can prohibit that activity entirely. E.g., Posadas, slip op. 16; Champion v. Ames (Lottery Case), 188 U.S. at 356-358; In re Rapier, 143 U.S. at 134; Stone v. Mississippi, 101 U.S. 814, 821 (1879). For much of our history, the states did just that. Section 1302 therefore reasonably and directly promotes the type of interests that this Court found legitimate in Posadas. The district court's decision to invalidate the prize list clause in its entirety erroneously denies Congress the authority to bar from the mails a narrow category of commercial speech that plays a direct and integral role in the conduct of an activity that Congress and the states are entitled to discourage or suppress. 3. The district court's permanent injunction against further enforcement of the prize list clause also conflicts with this Court's decisions in Ex parte Jackson, supra, and In re Rapier, supra. In Ex parte Jackson, the Court held that a person could be prosecuted under the Act of July 12, 1876, for depositing in the mails a letter containing a circular offering prizes in a lottery. In so ruling, the Court rejected a claim that the Act violated the First Amendment, holding that "the object of Congress has not been to interfere with the freedom of the press, or with any other rights of the people; but to refuse its facilities for the distribution of matter deemed injurious to the public morals." 96 U.S. at 736. Similarly, the Court upheld the Anti-Lottery Act of 1890 over a First Amendment claim in In re Rapier, supra. In that case, two defendants were convicted for sending through the mails a newspaper containing an advertisement and a circular about the Louisiana Lottery. Relying on Ex parte Jackson, supra, the Court rejected the claim that the Act violated the First Amendment, concluding that "(t)he circulation of newspapers is not prohibited, but the government declines itself to become an agent in the circulation of printed matter which it regards as injurious to the people." In re Rapier, 143 U.S. at 134. Accord Horner v. United States (No. 1), 143 U.S. 207, 213 (1892); Horner v. United States (No. 2), 143 U.S. 570, 578 (1892) (relying on In re Rapier). The district court's ruling directly conflicts with this Court's decisions in the Rapier and Jackson cases. In fact, the district court acknowledged that its ruling was inconsistent with Rapier. App., infra, 15a. Moreover, in cases decided after Jackson and Rapier that involved schemes to defraud the public, the Court has upheld the constitutionality of two related statutes that also date from the era of the Anti-Lottery Act of 1890: 39 U.S.C. 3005 and 3007, which authorize the Postal Service to initiate administrative and judicial proceedings in order to intercept reply mail induced by a fraudulent scheme. Public Clearing House v. Coyne, 194 U.S. 497, 505-516 (1904) (relying on In re Rapier); Donaldson v. Read Magazine, 333 U.S. 178, 189-191 (1948) (relying on Coyne); Lynch v. Blound, 404 U.S. 1007 (1972), aff'g 330 F. Supp. 689 (S.D.N.Y. 1971) (three-judge court) (39 U.S.C. 3005); Outpost Dev. Corp. v. United States, 414 U.S. 1105, aff'g 369 F. Supp. 399 (C.D. Cal. 1973) (three-judge court) (39 U.S.C. 3005, 3007). The Third, Fifth, and Ninth Circuits have also upheld the constitutionality of this enforcement mechanism. United States Postal Service v. Athena Products, Ltd., 654 F.2d 362 (5th Cir. Unit B 1981), cert. denied, 456 U.S. 915 (1982) (both sections); United States Postal Service v. Beamish, 466 F.2d 804, 806-807 (3d Cir. 1972) (Section 3007); Hollywood House Int'l, Inc. v. Klassen, 508 F.2d 1276 (9th Cir. 1974) (Section 3005). See also Original Cosmetics Products, Inc. v. Strachan, 459 F. Supp. 496 (S.D.N.Y. 1978), aff'd, 603 F.2d 214 (2d Cir.) (Table), cert. denied, 444 U.S. 915 (1979) (Section 3005). As the Fifth Circuit explained in 1981, the Court's recent commercial speech decisions do not undermine validity of these statutory provisions. United States Postal Service v. Athena Products, Ltd., 654 F.2d at 366-368. /26/ Sections 3005 and 3007 also apply to lotteries, and, for the reasons discussed above, the application of those statutes to commercial speech does not violate the First Amendment. Given this extensive contrary authority, the district court's judgment invalidating in its entirety the prize list clause clearly presents a substantial federal question that should be resolved by this Court. CONCLUSION Probable jurisdiction should be noted. Respectfully submitted. CHARLES FRIED Solicitor General JOHN R. BOLTON Assistant Attorney General THOMAS W. MERRILL Deputy Solicitor General PAUL J. LARKIN, JR. Assistant to the Solicitor General ANTHONY J. STEINMEYER IRENE SOLET Attorneys MAY 1988 /1/ See generally J. Ezell, Fortune's Merry Wheel 1-59 (1960); A. Spofford, Lotteries in American History, S. Misc. Doc. No. 57, 52d Cong., 2d Sess. 174-195 (1893); National Inst. of L. Enforcement & Crim. Just., LEAA, U.S. Dep't of Justice, The Development of the Law of Gambling: 1776-1976, at 500-519 (1977) (hereinafter The Development of the Law of Gambling); Blakey & Kurland, The Development of the Federal Law of Gambling, 63 Cornell L. Rev. 923 (1978). /2/ Blakey & Kurland, supra, 63 Cornell L. Rev. at 927. The dominant Nineteenth Century view was that lotteries were harmful to society. See, e.g., Champion v. Ames (Lottery Case), 118 U.S. 321, 356-358 (1903); Stone v. Mississippi, 101 U.S. 814, 818 (1879); Phalen v. Virginia, 49 U.S. (8 How.) 163, 168 (1850). /3/ Blakey & Kurland, supra, 63 Cornell L. Rev. at 931. /4/ See Horner v. United States, 147 U.S. 449, 456, 466 (1893); 4 Cong. Rec. 3656 (1876) (Rep. Cannon); Lottery Circulars, 15 Op. Att'y Gen. 203, 203-204 (1877). /5/ One shortcoming in the Act was that the Postmaster General lacked the authority to seize letters that he suspected of containing lottery advertisements. Lotteries, 16 Op. Att'y Gen. 5 (1878). /6/ Lotteries -- Non-Mailable Matter, 18 Op. Att'y Gen. 306, 309 (1885). The Attorney General concluded that a newspaper did not become a "circular" by publishing an advertisement. Id. at 309. /7/ See 21 Cong. Rec. 8714 (1890) (Rep. Evans). /8/ Exclusion of Lotteries from Postal Facilities, 17 Op. Att'y Gen. 77, 77 (1881) (emphasis in original) (the Louisiana Lottery "is the only lottery conducted under the sanction of law in the United States"); see 21 Cong. Rec. 8714-8717 (1890) (summary of state laws prohibiting lotteries); H.R. Rep. 2678, 49th Cong., 1st Sess. 2-3 (1886) (same); S. Rep. 11, 49th Cong. 1st Sess. 1-11 (1886) (same); H.R. Rep. 787, 50th Cong., 1st Sess. Pt. 2, at 1-2 (Views of the Minority) (1888). /9/ Use of the Mails for Lottery Purposes, H.R. Exec. Doc. 22, 46th Cong., 2d Sess. 16 (1880) (Letter from the Postmaster-General Key to the House of Representatives) ("(t)he lottery company most extensively using the mails for the transmission of its circulars, tickets, & c., is the Louisiana State Lottery"); id. at 27-28 (Letter from New York City Post Office General Superintendent Forrester to New York City Postmaster James (Oct. 14, 1879)); id. at 28-29 (Letter from New Orleans Postmaster McMillen to Assistant Attorney General Freeman, Post Office Dep't (Nov. 4, 1879)); Letter from New Orleans Postmaster McMillen to Postmaster-General Key (Nov. 12, 1879)); J. Richardson, A Compilation of the Messages and Papers of the Presidents 1789-1897, H.R. Misc. Doc. 210, 53d Cong., 2d Sess. Pt. 9, at 80-81 (Special Message to Congress from President Harrison (July 29, 1890) (noting that it would be "practically impossible" for lotteries to survive if the mails were closed to them); 21 Cong. Rec. 8706 (1890); id. at 8711 (statement of Rep. Wilkinson); id. at 8717 (statement of Rep. Hitt); id. at 8721 (statement of Rep. Price); J. Ezell, supra, at 251; The Development of the Law of Gambling 673-677; Blakey & Kurland, supra, 63 Cornell L. Rev. at 935-936. /10/ 21 Cong. Rec. 8706 (1890) (statement of Rep. Moore that the Louisiana lottery derived 93% of its income from out-of-state bettors); J. Ezell, supra, at 251. /11/ See S. Rep. 233, 48th Cong., 1st Sess. (1884); id. at 12-15 (Views of the Minority); H.R. Rep. 826, 48th Cong., 1st Sess. (1884); S. Rep. 11, 49th Cong., 1st Sess. (1886); H.R. Rep. 2678, 49th Cong., 1st Sess. (1886); id. at 4-6 (Views of the Minority); H.R. Rep. 787, 50th Cong., 1st Sess. (1888); id. Pt. 2, at 1-4 (Views of the Minority); S. Rep. 1579, 51st Cong., 1st Sess. (1890); id. at 1-4 (reprinting House Report); see generally J. Ezell, supra, at 251-263; The Development of the Law of Gambling, 513-518; Blakey & Kurland, supra, 63 Cornell L. Rev. at 937-940. /12/ Some contemporary commentators have concluded that the Anti-Lottery Act of 1890 was instrumental in bringing about the demise of the Louisiana Lottery. J. Ezell, supra, at 263-264; Blakey & Kurland, supra, 63 Cornell L. Rev. at 940. /13/ J. Ezell, supra, at 267-268. /14/ Id. at 268-269. /15/ Act of Mar. 2, 1895, ch. 191, 28 Stat. 963; Act of Mar. 4, 1909, ch. 321, Section 213, 35 Stat. 1129-1130; Act of June 25, 1948, ch. 645, Section 1302, 62 Stat. 762; Act of Oct. 31, 1951, ch. 655, Section 29, 65 Stat. 721; Act of Sept. 13, 1961, Pub. L. No. 87-218, Section 2, 75 Stat. 492. /16/ Related provisions of Title 18 include: Section 1301, which prohibits the importation or interstate transportation of lottery tickets, advertisements, or lists of prizes; Section 1303, which prohibits any Postal Service officer or employee from acting as a lottery agent; Section 1304, which prohibits broadcasters from broadcasting lottery advertisements; Section 1305, which creates a special exemption for fishing contests; and Section 1306, which prohibits financial institutions from selling lottery tickets for state-operated lotteries. /17/ The court also rejected appellee's equal protection challenge to the advertising restriction of 18 U.S.C. 1302, on the ground that the distinctions complained of were rationally related to legitimate governmental interests. App., infra, 17a-19a. Finally, the court ruled that 39 U.S.C. 3001 and 3005 could not be applied to restrict the mailing of newspapers containing prize lists in news reports. App., infra, 19a. /18/ The text of the Anti-Lottery Act of 1890 made the same point. As adopted, the first clause of that Act applied to any "letter, postal-card, or circular concerning any lottery" and any "list of the drawings at any lottery." The second clause referred to "any newspaper, circular, pamphlet, or publication of any kind containing any advertisement of any lottery * * * or containing any list of prizes awarded at the drawings of any such lottery." Section 1, 26 Stat. 465 (Rev. Stat. Section 3894 (Supp. 2d ed. 1874 (1891)). That section included prize lists that were found in all types of mailed matter, including the types of promotional materials that would be generally distributed by the sponsors of a lottery, or that would be sent to an individual in response to an inquiry about a lottery's prizes. /19/ Some lottery sponsors may not have included a list of their prizes in every circular. For example, in 1880 the Postmaster General reported that the National Banking Company issued bonds on the drawings of the Louisiana, Havana, and Kentucky lotteries, and that one of its circulars said: "Circulars containing lists of securities dealt in, with full and explicit information, sent free." Use of the Mails for Lottery Purposes, H.R. Exec. Doc. 22, supra, at 9. /20/ "The maxim noscitur a sociis, that a word is known by the company it keeps, while not an inescapable rule, is often wisely applied where a word is capable of many meanings in order to avoid the giving of unintended breadth to the Acts of congress." Jarecki v. G.D. Searle & Co., 367 U.S. at 307. This maxim stated a "familiar" rule that was "applicable to all written instruments" in 1893. Virginia v. Tennessee, 148 U.S. at 519. It is therefore reasonable to assume that Congress was aware of that rule when Congress adopted the Anti-Lottery Act of 1890 and to interpret Section 1302 with that rule in mind. /21/ There was considerable debate in Congress on the question whether the Anti-Lottery Act of 1890 would violate the First Amendment. Supporters of the Act argued that it was constitutional under this Court's decision in Ex parte Jackson, supra. See S. Rep. 233, 48th Cong., 1st Sess. 1 (1884); S. Rep. 11, 49th Cong., 1st Sess. 12 (1886); H.R. Rep. 2678, 49th Cong., 1st Sess. 1 (1886); H.R. Rep. 787, supra, Pt. 2, at 2-4 (Views of the Minority); 21 Cong. Rec. 8710 (1890) (Rep. Caldwell); id. at 8712 (Rep. Wilkinson). Opponents of the bill argued that Ex parte Jackson did not sanction the exclusion of newspapers from the mails, and that, if enacted, the Act would serve as a precedent for the exclusion from the mails of other types of commentary that future Congresses would find detrimental to the public. See S. Rep. 233, supra, at 13-15 (Views of the Minority); H.R. Rep. 826, 48th Cong., 1st Sess. 2-4 (1884); H.R. Rep. 2678, supra, at 4-6 (Views of the Minority); H.R. Rep. 787, supra, at 1. The Fifty-First Congress ultimately concluded that it was lawful to exclude newspapers containing lottery advertising from the mails. As Representative Wilkinson explained (21 Cong. Rec. 8712 (1890)): It is said also that this is a blow to the freedom of the press, which, with freedom of speech, Congress is forbidden by the first amendment to the Constitution to make any abridgement of. Sir, if this is a blow against the freedom of the press it is such a blow as the State of New York has struck where lottery advertisements are forbidden in the newspapers. It is such a blow as other States in this Union have struck who have done likewise, but I have never yet heard it has there been considered a blow at the freedom of the press. The freedom of the press, as I understand it, consists in the right of the editors of the newspapers to freely express their views on public questions without let or hinderance by those in authority. It means to forbid that censorship of the press once so prevalent in European countries and still common in those countries, but this matter of advertisements seems to me to be a different affair. I hold in my hand as good a paper, as well supplied with news, as interesting as paper to read, perhaps, as any in the United States, a paper which is published in a State where lottery advertisements are forbidden and where no newspaper dares to print one, and it seems to thrive and prosper and makes no complaint that its rights have been interfered with. /22/ That is clear from the numerous references to the Louisiana Lottery during the consideration of the Anti-Lottery Act of 1890. See Message from the President of the United States, S. Exec. Doc. 196, 51st Cong., 1st Sess. 1 (1890); 21 Cong. Rec. 8699 (1890) (Rep. Hopkins); id. at 8705 (Rep. Moore); id. at 8707 (Rep. Hopkins); id. at 8707-8708 (Rep. Rogers); id. at 8708 (Rep. Hill); id. at 8711-8713 (Rep. Wilkinson); id. at 8713 (Rep. Evans); id. at 8719 (Rep. Hansbrough); ibid. (Rep. Blount). /23/ In the 12 200-Ft. Reels of Film case, for example, the Court said (413 U.S. at 130 n.7) that it would construe the term "obscene" in the federal laws prohibiting the importation of obscene material in a manner consistent with the definition of obscenity adopted in Miller v. California, 413 U.S. 15 (1973). A similar analysis is appropriate here. /24/ The United States District Court for the District of Columbia also recently upheld the constitutionality of the advertisement clause in Section 1302 over a similar First Amendment objection. Aimes Publications, Inc. v. United States Postal Service, No. 86-1434 (D.D.C. Feb. 23, 1988), appeal pending (D.C. Cir.). /25/ Of course, the prohibition adversely affects the policies of those states that have authorized private lotteries. See The Lottery Advertising Clarification Act: Hearings on H.R. 1568 Before the Subcomm. on Administrative Laws and Governmental Regulations of the House Comm. on the Judiciary, 100th Cong., 1st Sess. 13-14, 20-22 (1987) (testimony of Deputy Assistant Attorney General Kmiec). When the Anti-Lottery Act was enacted in 1890, however, that matter was of little or no concern, because the Louisiana Lottery was then the only legal lottery still operating in the United States, and more than 90% of its income came from out-of-state. See pages 4-5, supra. The House of Representatives is presently considering H.R. 3146, 100th Cong., 2d Sess. (1988), known as the Lottery Advertising Clarification Act of 1988, which would expand the exemption in 18 U.S.C. 1307 to include materials promoting a lottery that is "authorized or not otherwise prohibited by law in the State in which it is conducted." H.R. Rep. 100-557, 100th Cong., 2d Sess. Pt 1, at 1 (1988); see 134 Cong. Rec. H3073-H3079, H3102-H3103 (daily ed. May 10, 1988). /26/ The decision below is also inconsistent with the decisions of the Second and Third Circuits with respect to the constitutionality of 18 U.S.C. 1304, which prohibits broadcasting information about lotteries. The Second Circuit in New York State Broadcasters Ass'n v. United States, 414 F.2d 990 (1969), cert. denied, 396 U.S. 1061 (1970), upheld the constitutionality of the statute as applied to information directly promoting a state-conducted lottery. Although the Third Circuit in New Jersey State Lottery Comm'n v. United States, 491 F.2d 219 (1974) (en banc), dismissed as moot, 420 U.S. 371 (1975), held that Section 1304 would be unconstitutional if it were applied to prohibit the broadcasting of a winning lottery number in a lawful state-conducted lottery, the court held that the statute could constitutionally be applied to compensated broadcasts, and possibly to some uncompensated promotional advertisements beyond the context of broadcast journalism. 491 F.2d at 224. This Court granted certiorari to review the Third Circuit's decision, but later ordered the case dismissed as moot after Congress enacted 18 U.S.C. 1307, which exempts state-run lotteries from Section 1304. United States v. New Jersey State Lottery Comm'n, 420 U.S. 371 (1975). The district court's ruling in this case invalidating the prize list clause in Section 1302 goes well beyond the decisions of the Second and Third Circuits. The district court determined that the prize list clause in Section 1302 is invalid because it applies to such lists reported in news stories, but the judgment entered by the district court invalidated the prize list clause in its entirety. App., infra, 21a-22a. Under the district court's judgment, the Postmaster could not apply the prize list clause to any type of publication, including circulars prepared and disseminated by the sponsors of an illegal numbers racket. Both the Second and Third Circuit decisions noted above, however, would uphold Section 1302 if it was applied in that manner. The decision below therefore is also inconsistent with the decisions of the Second and Third Circuits in the lottery broadcasting cases. APPENDIX