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Fifth Circuit Court of AppealsFifth Circuit Court of Appeals

Xcaliber International Limited, LLC v. Attorney General State of Louisiana, ____ F. 3d ____ (5th Cir. July 20, 2010)

A Louisiana statute requiring tobacco manufactures to deposit funds in escrow in order to sale cigarettes in the state does not violate the U.S. Constitution.

Xcaliber, a manufacturer and seller of discount cigarettes, challenges an amendment to the Louisiana law implementing the tobacco settlement between the largest manufacturers of cigarettes and the State of Louisiana. The amendment was an Escrow Statute requiring escrow payments by tobacco manufacturers. Xcaliber sought to prevent the enforcement of the amendment by alleging the amendment violates the Equal Protection and Due Process Clauses of the U.S. Constitution and is preempted by the Sherman Act. The district court granted summary judgment for the State of Louisiana and Xcaliber appeals to the Fifth Circuit.

The Court found that the amendment did not violate the Sherman Act.

The Court held that Xcaliber’s equal protection challenge to the amendment will be subject to rational-basis review rather than heightened scrutiny. The Court held that a statute is only subject to heightened scrutiny on an equal protection challenge if it “proceeds along suspect lines [or] infringes fundamental constitutional rights” and the amendment did neither. The Court held under rational-basis review, the amendment “must be upheld against an equal protection challenge if there is any reasonably conceivable state of facts that could provide a rational basis for the classification.” The Court found that Louisiana articulated several reasons for passing the tobacco settlement legislation and explained why the amendment is important to furthering the goals of the tobacco settlement and thus, the amendment does not violate the Equal Protection Clause under rational-basis review.

Xcaliber asserted that the amendment violated the Due Process Clause because a deprivation based on a future, hypothetical finding of judicial liability is an adjudicative deprivation that requires pre-deprivation process directed at determining whether the liability actually exists and the amendment does not provide any pre-deprivation process. The Court found that the escrow deposits are legislative preconditions for the privilege of engaging in future cigarette sales in Louisiana and since the amendment is legislative in character, not adjudicative, no further process is required and no due process violation.

Sonnier v. Crain, ____ F. 3d ____ (5th Cir. July 27, 2010)

This case deals with the interest of a University to preserve its property for educational purposes and a person’s First Amendment right of free speech.

Sonnier and others entered the campus of Southeastern Louisiana University (“SLU”) to express a religious message to students. Sonnier did not seek a permit as required by SLU’s speech policy before conducting this activity. Sonnier was told he could not speak on campus that day since he had not applied seven days in advance. Sonnier filed suit against the University alleging the speech policy violated his First Amendment right to free speech under 42 USC §1983. Sonnier brought both a facial and as-applied challenge to the speech policy. Sonnier challenged the following provisions of the speech policy:

  1. The seven day notice requirement;
  2. The two hour, once per week limitation;
  3. The collection of personal information;
  4. The security fee requirement; and
  5. The limitation of speech to three specific locations.

Sonnier filed a motion for preliminary injunction retraining enforcement of the speech policy. The district court denied the motion for preliminary injunction on the grounds that Sonnier had not established a facial challenge to the policy. Sonnier appeals to the Fifth Circuit.

The Court limited its review to the district court’s denial of the preliminary injunction on facial challenge grounds and reserving the right of Sonnier to present evidence on his as-applied challenge at his permanent injunction hearing. The Court found that “a facial challenge … is, of course, the most difficult challenge to mount successfully, since the challenger must establish that no set of circumstances exist under which the act would be invalid.” The Court held that in order to succeed in a facial challenge, a plaintiff must establish the regulation would be invalid in all circumstances.

The Court found that Sonnier was unable to establish that the seven day notice requirement, the two hour once per week limitation, the collection of personal information and the limitation of speech to three specific locations on campus would be under no circumstances necessary. The Court found that the University has a significant interest in preserving its property for educational purpose and limiting where outside speakers may assemble or demonstrate and the speech policy is narrowly tailored to that purpose. The Court found no authority that requires a public university to throw open its entire campus for public assemblies or demonstrations.

The Court found that the security fee provision of the policy was unconstitutional because the University had the sole discretion in determining both the need for, and the strength of the security at a public assembly or demonstration and assessing the cost of additional security on the sponsoring individual or organization. The policy was further deficient in that it had no objective factors directing how to establish the amount of the security fee and thus, the University had unbridled discretion which is unconstitutional.

Zarnow v. City of Wichita Falls, Texas, ____F. 3d ____ (5th Cir. August 9, 2010)

The police obtained a search warrant to search Zarnow’s home after the discovery of a gun, boxes of shells, blasting caps, ammunition, and fuses in his office. During the search of Zarnow’s home, the police seized items which were not covered by the search warrant. The police justified their seizure under the “plain view” doctrine. Zarnow filed suit against the City, Police Chief and officers for violations of the Second, Fourth, Fifth, Sixth, and Fourteenth Amendments under 42 USC §1983. The district court granted summary judgment for the City and individual defendants and Zarnow appeals to the Fifth Circuit.

The Court found that the City had impliedly delegated its policymaking authority to the Police Chief but Zarnow failed to establish the existence of a custom or policy which resulted in a constitutional violation. The Court found that Zarnow presented no evidence of a pattern of unconstitutional conduct.

Zarnow argued that the City and Police Chief ratified the officers’ unconstitutional conduct because they defended the officers’ actions. The Court found that good faith statements made in defending complaints against municipal employees do not demonstrate ratification.

Zarnow argued that the Police Chief may have incurred liability on behalf of the City by failing to supervise his subordinates during the search. The Court found that a supervisory official is liable if he demonstrates deliberate indifference to a plaintiff’s constitution protected rights. The Court found that there was no deliberate indifference by the Police Chief in that he shared the same errant view of the “plain view” doctrine as his officers. The Court held that negligence misinformation is insufficient to establish supervisory liability and unintentionally negligent oversight does not satisfy the deliberate indifference standard.

The Court did not consider Zarnow’s argument that a single incident of unconstitutional conduct by a policymaker may impute liability to the City on the grounds that Zarnow raised this issue for the first time on appeal and had not alleged in the district court that the Police Chief personally committed such a violation.

As to Zarnow’s contention that the City had a policy of inadequate training of its police officers, the only evidence presented by Zarnow was that the officers expressed an unlawful interpretation of the “plain view” doctrine. The Court found that in order for liability to attach on an inadequate training claim, a plaintiff must allege with specificity how a particular training program is defective. The Court found that Zarnow presented no evidence that the City’s training practices are inadequate and the district court’s judgment was affirmed.

S & M Brands, Inc. v. Caldwell, ____ F. 3d _______ (5th Cir. August 10, 2010)

Louisiana’s settlement agreement with tobacco manufactures and the enactment of statutes to implement the terms of the settlement do not violate the U.S. Constitution.

Plaintiffs, a cigarette manufacturer, a cigarette dealer and a smoker, who did not join in the Master Settlement Agreement (“MSA”) relating to tobacco manufacturers, filed suit against the Louisiana Attorney General seeking to invalidate the MSA and the Louisiana Escrow Statute on the grounds they are unconstitutional because they violated the Compact Clause, the First Amendment, and Commerce Clause, and the Due Process Clause. The parties filed motions for summary judgment and the district court granted judgment for the Attorney General. Plaintiffs appeal to the Fifth Circuit.

The Court noted that they recently decided a case, Xcaliber International Limited, LLC v. Caldwell, where many of the same challenges being raised by the Plaintiffs to the MSA and Escrow Statutes were made in that case. The Court found that the MSA did not interfere with federal supremacy or increase state’s power over the federal government and thus, did not violate the Compact Clause.

As to Plaintiffs’ argument that the MSA and the Louisiana Escrow Statute violate the Commerce Clause and the Due Process Clause because they create extraterritorial price increases, the Court found that the MSA and the Louisiana Escrow Statute only allows Louisiana to regulate and collect escrow payments based on the sale of cigarettes within Louisiana’s jurisdiction and thus, there is no violation of Due Process or Commerce Clause.

As for Plaintiffs’ First Amendment claims, the Court found that Plaintiffs’ First Amendment rights have not been abridged or deprived by the MSA because Plaintiffs are not a party to the MSA and they were not coerced to join the MSA and thus, are not subject to its speech restrictions. The Court found that the Louisiana Escrow Statute does not in any way compel or abridge speech and thus, there is no First Amendment violation.

Cao v. Federal Election Commission, ____ F. 3d _____ (5th Cir. September 10, 2010)

This case deals with the interplay between congressional campaign finance reform and the fundamental right to free speech under the First Amendment. Plaintiffs, a U.S. Representative and the Republican National Committee, challenge the statutory provisions of the Federal Election Campaign Act relating to campaign contributions and expenditures. Plaintiffs asserted eight constitutional challenges and the district court certified four questions and dismissed the remaining four challenges as frivolous. Plaintiffs appeal to the Fifth Circuit.

The Court found that many of the Plaintiffs’ constitutional challenges raise questions which have been previously addressed by the U.S. Supreme Court. The U.S. Supreme Court has recognized there are different levels of constitutional scrutiny for contributions and expenditure limits. The Supreme Court has distinguished independent expenditures from those expenditures that are prearranged or coordinated with a particular candidate. The Supreme Court has found that “prearranged or coordinated expenditures” are constitutionally equivalent to contributions and would be subjected to the same limitations and scrutiny that applies to contributions.

The Court found that the $5,000 contribution limitation on political parties and political action committees is constitutional. The Court found that the fact the $5000 contribution limit is not adjusted for inflation is not unconstitutional because the contribution level is not so “suspiciously low” which would warrant some type of adjustment. The Court further found that it is the legislature, not the courts, which possess the particular expertise in determining whether limits on contributions are necessary. The Court found that Congress could regulate coordinated expenditures as contributions because of the sufficiently important governmental interests in preventing the potential for political corruption by circumvention of the campaign finance laws. The Court found that independent expenditures cannot be regulated or limited but the expenditures in this case are not independent expenditures.

The Court found that the provisions in the Federal Election Campaign Act constitute a constitutionally permissible regulation of political parties’ campaign contributions and coordinated expenditures and do not infringe upon the rights of the Plaintiffs to engage in political debate and discussion.