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NATIVE AMERICAN ARTS, INC. v. BUNDY-HOWARD

October 15, 2001

NATIVE AMERICAN ARTS, INC., PLAINTIFF,
V.
BUNDY-HOWARD, INC., ETC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Shadur, Senior District Judge.

    MEMORANDUM OPINION AND ORDER

Native American Arts, Inc. ("Native American") has filed a six-count Complaint against numerous defendants, alleging violations of the Indian Arts and Crafts Act (the "Act," 25 U.S.C. § 305e*fn1). Defendants Bundy-Howard, Inc. d/b/a Bear Tracks ("Bear Tracks") and 9-Mile Creek Traders (collectively "Movants") now move for judgment on the pleadings pursuant to Fed.R.Civ.P. ("Rule") 12(c), arguing that the Act is unconstitutional. For the reasons set forth in this opinion, the motion is denied.

Judgment on the pleadings in favor of a defendant is appropriate when defendant clearly establishes that plaintiff cannot prove any set of facts that would support the claim for relief and that there are no material issues of fact to be resolved (Northern Ind. Gun & Outdoor Shows, Inc. v. City of South Bend, 163 F.3d 449, 452 (7th Cir. 1998)). In considering such a motion the court must accept as true all facts alleged by plaintiff and must draw all reasonable inferences from the pleadings in plaintiffs favor (id.; Gillman v. Burlington N.R.R., 878 F.2d 1020, 1022 (7th Cir. 1989)), though the court is not bound to accept defendant's legal characterization of the facts (Scott v. O'Grady, 975 F.2d 366, 368 (7th Cir. 1992)). Hence this opinion's factual recital is drawn from Native American's Amended Complaint (cited "Count ___ ¶ ___"), and it omits "Native American alleges" or any like usage (without of course making or implying any factual findings).*fn2

Background

Bear Tracks and 9-Mile Creek Traders violated the Act by offering, displaying for sale and selling art, crafts and jewelry in a manner that falsely suggests the goods were Indian-made (Count I ¶¶ 18, 25, 29-38). Section 305e(a) prohibits:

directly or indirectly, offer[ing] or display[ing] for sale or sell[ing] a good, with or without a Government trademark, in a manner that falsely suggests it is Indian produced, an Indian product, or the product of a particular Indian or Indian tribe or Indian arts and crafts organization, resident within the United States. . . .

Several of the terms in that subsection have statutory definitions. Thus Section 305e(d)(1) says an "Indian" is "a member of an Indian tribe" or a person "certified as an Indian artisan by an Indian tribe." While "Indian product" is not defined in the statute, Section 305a(d)(2) says the term is to be defined in regulations promulgated by the Secretary of the Interior. Sections 305 through 305d vest power in the Indian Arts and Crafts Board ("Board"), an Interior Department agency, to enforce much of the Act — and Section 305b specifies "[t]hat all rules and regulations proposed by the Board shall be submitted to the Secretary of the Interior and shall become effective upon his approval."*fn4 In turn the Board has defined "Indian product" as "any art or craft product made by an Indian" (Reg. § 309.2(d)). Under Sections 305e(a) and (b) plaintiffs may recover the greater of treble damages or $1,000 per day for each day that the offending product is offered for sale or sold, as well as punitive damages and attorney's fees.

Constitutionality of the Act

In support of their motion for judgment on the pleadings, Movants contend that the Act is unconstitutional because (1) it violates procedural due process, (2) it also violates substantive due process and (3) Board's regulations exceed the scope of its authority. Those arguments will be addressed in turn.

Procedural Due Process Challenge

Movants' procedural due process attack has two prongs: first, various provisions assertedly fail to provide fair notice to putative defendants, and second, there is assertedly no standard for application of the punitive damages and attorney's fees provision. Because the Act provides adequate notice of what is prohibited by the statute and provides adequate standards for non-arbitrary enforcement, both challenges are rejected.

1. Void-for-Vagueness Doctrine

Under the void-for-vagueness doctrine, a law is unconstitutional "if its prohibitions are not clearly defined" (Karlin v. Foust, 188 F.3d 446, 458 (7th Cir. 1999), quoting Grayned v. City of Rockford, 408 U.S. 104, 108, 92 S.Ct. 2294, 33 L.Ed.2d 222 (1972)). There are two parts of the vagueness test: Laws must "give the person of ordinary intelligence a reasonable opportunity to know what is prohibited," and they must contain "explicit standards" to avoid "arbitrary and discriminatory enforcement" (Grayned, 408 U.S. at 108-09, 92 S.Ct. 2294; Karlin, 188 F.3d at 458-59). What level of vagueness is constitutionally tolerable depends on a congeries of factors — and in this case those factors not only counsel in favor of tolerating some imprecision in the statute but also compel the rejection of Movants' position even apart from any generous construction of the language employed.

First, economic regulations are subject to a less stringent vagueness test than laws that inhibit the noncommercial exercise of constitutionally protected rights (Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 498-99, 102 S.Ct. 1186, 71 L.Ed.2d 362 (1982)). Here the parties agree that the Act impacts commercial speech (M.Mem.5), and although such commercial speech is also protected by the First Amendment (Virginia State Bd. of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748, 762, 96 S.Ct. 1817, 48 L.Ed.2d 346 (1976)), the fact that such protection is grounded in providing the public with truthful and accurate information deprives commercial speech that is deceitful, misleading or fraudulent of such protection (Central Hudson Gus & Elec. Corp. v. Public Serv. Comm'n of N.Y., 447 U.S. 557, 561-64, 100 S.Ct. 2343, 65 L.Ed.2d 341 (1980); United States v. Raymond, 228 F.3d 804, 815-16 (7th Cir. 2000)).

In that respect Section 305e(a) prohibits displaying, offering for sale, or selling an item in a manner that creates the false impression that the item was Indian-made when in fact it was not. So the statute directly addresses false and misleading speech that misrepresents authenticity — hence unprotected conduct.*fn5

Second, it is true that the Act requires some products to contain affirmative representations about their origin to avoid creating a "false suggestion" (goods that may appear to be "Indian products" but were actually not Indian-produced). But that relatively minor infringement on expression — in this instance, the imposition of compelled expression — does not appreciably increase the stringency of a vagueness test.

Again the speech involved is commercial speech, afforded less constitutional protection than other forms of expression (Central Hudson, 447 U.S. at 562-63, 100 S.Ct. 2343). And that being so, Zauderer v. Office of Disciplinary Counsel of Supreme Court of Ohio, 471 U.S. 626, 651 & n. 14, 105 S.Ct. 2265, 85 L.Ed.2d 652 (1985) teaches there are "material differences between disclosure requirements and outright prohibitions on speech," such that "the First Amendment interests implicated by disclosure requirements are substantially weaker than those at stake when speech is actually suppressed."

2. Vagueness of the Act's Language?

With those principles established, this opinion turns to Movants' challenges to several of the statutory terms on that basis. They will be dealt with seriatim. And because the speech at issue is commercial in nature, the focus will be on the statute's impact on Movants — as Hoffman ...


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