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
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
Native American is an Indian arts and crafts organization within the
meaning of the Act.*fn3 It is wholly Indian-owned, and it
distributes authentic Indian arts and crafts (Count I ¶ 3). Bear
Tracks is a corporation operating retail establishments in the Northern
District of Illinois that sell arts, crafts and jewelry (Count I ¶
4). 9-Mile Creek Traders is a wholesaler and manufacturer of Indian art
and jewelry (Count I ¶ 11).
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
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
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 Estates, 455 U.S. at 496-97, 102 S.Ct. 1186 (among other cases)
has made plain:
Finally, it is irrelevant whether the ordinance has an
overbroad scope encompassing protected commercial
other persons, because the overbreadth doctrine does
not apply to commercial speech.
(a) "Aggrieved" Party
Movants contend that the lack of a statutory definition of the term
"aggrieved" party renders the Act unconstitutional because it does not
give a person of ordinary intelligence fair notice of the extent of that
person's potential liability. Section 305(e)(a)(2) (emphasis added)
provides for the greater of treble damages, or, "in the case of each
aggrieved individual Indian, Indian tribe, or Indian arts and crafts
organization, not less than $1,000 for each day on which the offer or
display for sale or sale continues." On that score Federal Election
Comm'n v. Akins, 524 U.S. 11, 19, 118 S.Ct. 1777, 141 L.Ed.2d 10 (1998)
counsels that "[h]istory associates the word `aggrieved' with a
congressional intent to cast the standing net broadly."
It is frankly difficult to understand Movants' quarrel with the use of
"aggrieved," which is patently tautological: Any private party within any
of the statutorily specified categories who or that has sustained damages
from a statutory violation is obviously "aggrieved" and may therefore
recover such damages. And that of course tracks Article III's standing
requirements, under which a plaintiff must show (1) a concrete and
particularized injury, (2) a causal connection between the injury and the
challenged conduct and (3) the likelihood that the injury is redressable
by a favorable decision (Lujan v. Defenders of Wildlife, 504 U.S. 555,
560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992); United States v. Tribal
Dev. Corp., 49 F.3d 1208, 1211 (7th Cir. 1995)). Surely any defendant of
ordinary intelligence is on fair notice that if that defendant's actions
cause a concrete and particularized injury to a member of a statutory
class, the offender can expect to be sued.
As an "Indian arts and crafts organization," Native American is within
a class authorized to sue under Section 305e(c). And the Complaint (which
must be taken as true) alleges that Movants sold and marketed items in a
manner falsely suggesting they were Indian-made when in fact they were
not. Under any sensible reading of the term "aggrieved," Native American
— competing in the market place by offering legitimate Indian-made
products — fits comfortably within that term. Enough said.
(b) "Falsely Suggests"
As stated earlier, Section 305e(a) (emphasis added) imposes liability
against a person who "offers or displays for sale or sells 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 tribe or Indian arts and crafts organization." While Movants'
attack on the emphasized language may perhaps pose a less tautological
question than their challenge to the term "aggrieved," that attack also
Native American does not allege that Movants' products are
Act-violative simply because they are designed in a traditional Indian
style or motif. Instead Count I ¶ 37 alleges that such products in a
traditional Indian style or motif were advertised, marketed, and sold in
a manner falsely suggesting they were authentic Indian products,
including express representations by Bear Tracks' sales clerks, Count I
¶ 44 asserts the unqualified use of the word "Indian" and other terms
on advertising materials, and Count I ¶ 39 charges Movants with
advertising and marketing products in a traditional Indian style along
with other products expressly represented to be Indian products. Again
those allegations must be accepted as true.
It will be recalled that Congress conferred on the Board the regulatory
power to flesh out various of the statutory terms — and the Board
had done just that. For example, Reg. § 309.3(a) specifies that "the
unqualified use" of the term "Indian" or "Native American" or of the name
of an Indian tribe in connection with an art or craft product conveys to
the reader both that (1) the maker is a member of an Indian tribe or is a
certified non-member artisan and (2) that the art or craft is an Indian
product. And Reg. § 309.2(d) defines "Indian product" as "any art or
craft product made by an Indian," including art works in a "traditional
or non-traditional Indian style or medium." It follows then that if
"Indian" or "Native American" is used in connection with a product, for
purposes of the Act that equates to a representation that the product has
been made by an Indian or certified artisan. If no Indian or certified
artisan has in fact made the product, that representation falsely
suggests that the product is of Indian origin, in violation of the
statute. No vagueness whatever is even arguably involved.
Hoffman Estates and like cases confirm that for a court to resolve
alleged void-for-vagueness contentions, it is unnecessary to go beyond
what the commercial speaker has itself done. Hence this opinion need not
go on to consider whether that flaw attaches to the notion that products
in a traditional Indian style or motif, but that are silent as to their
origin, can also "falsely suggest" that they are "Indian products." If
Native American delivers as is advertised (an admittedly bad pun) by the
Complaint, any such silence is not at issue — in each instance
Movants are said to have made their false suggestions either by express
misrepresentations or by misleading conduct. Again that suffices to
withstand any challenge on vagueness grounds.
Finally in that respect, Movants have argued that there can be
reasonable differences of opinion as to whether a product made in a
traditional Indian style falsely suggests Indian origin. But whether a
particular manner of advertising or sale has actually conveyed a false
suggestion is a question of fact to be determined by the factfinder. Such
disputes are not properly resolved via a Rule 12(c) motion.
(c) Compensatory Damages Provision
Movants also urge that the Act's compensatory damages provision is
unconstitutionally vague, though they fail to cite any supporting caselaw
and rely instead on a series of confusing hypothetical damages
calculations. In that regard Section 305e(a) provides:
A person specified in subsection (c) of this section
may, in a civil action in a court of competent
jurisdiction, bring an action against a person who
offers or displays for sale or sells 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, to . . .
(1) obtain injunctive or equitable relief; and
(2) recover the greater of —
(A) treble damages; or
(B) in the case of each aggrieved individual
Indian, Indian tribe, or Indian arts and crafts
organization, not less than $1,000 for each day on
which the offer or display for sale or sale
That language is certainly not so ambiguous that it fails to provide
fair notice of the extent of potential liability under the Act. It is
sufficiently plain from the use of the words "good" and "product" that
$1,000-per-day damages floor applies to each different type of product
rather than to each item of inventory, as Movants speculate. Had Congress
instead intended to impose the potentially astronomical liability of
$1,000 per day for each individual piece of a falsely suggestive product
offered for sale or sold, it would surely have specified such
extraordinary exposure explicitly — and it did not.
On the flip side of that coin, Movants' speculation that perhaps $1,000
per day may be assessed only once no matter how many types of products
violate the Act (M.Mem.3-4) cannot withstand scrutiny either
(D.Mem.3-4). Section 305e(a) uses the words "good" and "product" in
singular form. It could scarcely be more evident that Movants can expect
damages to be assessed for each separate "good" or "product," rather than
suffering a single assessment for all goods or products collectively.
This common sense view comports with the manner in which other statutes
have been read (see, e.g., United States v. H.B. Gregory Co., 502 F.2d 700,
706-07 (7th Cir. 1974)).
In sum, the damages provision provides adequate notice as to the extent
of Native American's potential liability. Movants' challenge fails.
(d) Punitive Damages and Attorney's Fees Provisions
Next Movants contend that the lack of standards in the provisions for
punitive damages and attorney's fees renders the Act unconstitutionally
vague, although once again they fail to cite even a single case. On that
score Section 305e(b) provides simply that in addition to the other
relief provided for, "the court may award punitive damages and the costs
of suit and a reasonable attorney's fee."
To be sure, the statute itself provides no yardstick, but the same may
be said of countless statutes that confer the right to seek such relief,
instead leaving it to the courts to create and apply standards. It is
really unnecessary to say more than that about fee-shifting, and only
brief thought is needed to dispatch the vagueness challenge as to
As for that remedy, universal caselaw teaches that such damages may be
imposed to achieve the objectives of punishment and deterrence where
defendants act "wantonly and wilfully or were motivated in their actions
by ill will, malice, or a desire to injure the plaintiffs" (Allahar v.
Zahor, 59 F.3d 693, 696 (7th Cir. 1995), quoting earlier caselaw; see
also BMW of North America Inc. v. Gore, 517 U.S. 559, 568, 116 S.Ct.
1589, 134 L.Ed.2d 809 (1996)). In applying the constitutional prohibition
against punitive damage awards that are "grossly excessive" (Gore, id.),
the Supreme Court has established three guideposts (Cooper Indus., Inc.
v. Leatherman Tool Group, Inc., 532 U.S. 424, ___, 121 S.Ct. 1678, 1687,
149 L.Ed.2d 674 (2001)):
In Gore, we instructed courts evaluating a punitive
damages award's consistency with due process to
consider three criteria: (1) the degree or
reprehensibility of the defendant's misconduct, (2)
the disparity between the harm (or potential harm)
suffered by the plaintiff and the punitive damages
award, and (3) the difference between the punitive
damages awarded by the jury and the civil penalties
authorized or imposed in comparable cases.
Although those standards are not spelled out in the Act, the same may
be said of like statutory provisions in every jurisdiction. Certainly the
Act does not call for punitive damage awards in excess of those permitted
by the Gore formulation. Like other similar legislation, it merely states
that "judges may award punitive damages." Courts are certainly
capable of applying the Supreme Court standards to the Act. Movants'
challenge on vagueness grounds is an empty one.
Substantive Due Process Challenge
Movants also argue that the $1,000 per day per good damages floor
specified in Section 305e(a)(2)(B) violates substantive due process. As
with punitive damages, the specification of compensatory damages by
legislatures is not without limit.*fn6 Browning-Ferris Indus. of
Vermont, Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 276, 109 S.Ct.
2909, 106 L.Ed.2d 219 (1989) at least suggests that "the Due Process
clause places outer limits on the size of a civil damages award made
pursuant to a statutory scheme."
To begin with, the Act deals with the selfsame problem that is
addressed in trademark cases in pointing out the need for injunctive
relief because of the inadequacy of a remedy at law against the
infringer. As this Court has said in Instramentalist Co. v. Marine Corps
League, 509 F. Supp. 323, 333 (N.D.Ill. 1981), quoted and followed by our
Court of Appeals in Hyatt Corp. v. Hyatt Legal Servs., 736 F.2d 1153,
1158 (7th Cir. 1984):
[T]here is no effective way to measure the loss of
sales or potential growth — to ascertain the
people who don't knock on the door or to identify the
specific persons who do not reorder because of the
existence of the infringer.
In such a situation, where the infringer's own conduct has made the
precise calculation of damages more difficult (see, e.g., Bigelow v. RKO