Lead Opinion
In February 2011 the Texas Department of Insurance issued a cease and desist letter to Appellant John Gibson, arguing that his use of the words “Texas” and “Workers’ Comp” in the domain name of his website violated § 419.002 of the Texas Labor Code. Gibson filed a complaint in the Northern District of Texas, alleging that the statute was unconstitutional under the First, Fifth, and Fourteenth Amendments. The district court dismissed the complaint for failure to state a claim. For the following reasons, we AFFIRM in part and REVERSE in part.
FACTS AND PROCEEDINGS
John Gibson is an attorney who represents plaintiffs in workers’ compensation claims and contested cases in Texas. Pursuant to this practice, Gibson maintains a website under the domain name of “texasworkerscomplaw.com” in which he discusses matters related to Texas workers’ compensation law. He also uses the website to advertise and disseminate information about his law practice.
On February 7, 2011, Gibson received a cease and desist letter from the Texas Department of Insurance, Division of Workers’ Compensation (“DWC”), requesting that he no longer use the above-stated domain name. The letter alleged
(a) Except as authorized by law, a person, in connection with any impersonation, advertisement, solicitation, business name, business activity, document, product, or service made or offered by the person regarding workers’ compensation coverage or benefits, may not knowingly use or cause to be used:
(1) the words “Texas Department of Insurance,” “Department of Insurance,” “Texas Workers’ Compensation,” or “division of workers’ compensation”;
(2) any term using both “Texas” and “Workers’ Compensation” or any term using both “Texas” and ‘Workers’ Comp”;
(3) the initials “T.D.I.”; or
(4) any combination or variation of the words or initials, or any term deceptively similar to the words or initials, described by Subdivisions (l)-(3).
(b) A person subject to Subsection (a) may not knowingly use or cause to be used a word, term, or initials described by Subsection (a) alone or in conjunction with:
(1) the state seal or a representation of the state seal;
(2) a picture or map of this state; or
(3) the official logo of the department or the division or a representation of the department’s or division’s logo.
Tex. Labor Code § 419.002. Although DWC’s letter requested a response, Gibson did not provide any written response, nor did he request any form of procedural review from DWC.
Instead, Gibson filed the instant suit, alleging that the regulation violates various constitutional provisions including the First Amendment’s guarantee of freedom of speech, the Fourteenth Amendment’s guarantees of equal protection and due process, and the Fifth Amendment’s prohibition on takings. Gibson sought declaratory and injunctive relief pursuant to 28 U.S.C. § 2201 and 42 U.S.C. § 1983 as well as attorneys’ fees pursuant to 42 U.S.C. § 1988. The district court dismissed Gibson’s Fifth and Fourteenth Amendment claims under Federal Rule of Civil Procedure 12(b)(6), along with Gibson’s First Amendment as-applied challenge. The district court declined to consider Gibson’s First Amendment facial challenge. Gibson appealed.
STANDARD OF REVIEW
This court reviews a district court’s dismissal for failure to state a claim de novo, accepting all well-pleaded facts as true and viewing those facts in the light most favorable to the plaintiff. Bowlby v. City of Aberdeen,
DISCUSSION
1. Gibson’s First Amendment As-Applied Challenge
The United States Supreme Court has recognized that commercial
At the outset, we must determine whether the expression is protected by the First Amendment. For commercial speech to come within that provision, it at least must concern lawful activity and not be misleading. Next, we ask whether the asserted governmental interest is substantial. If both inquiries yield positive answers, we must determine whether the regulation directly advances the governmental interest asserted, and whether it is not more extensive than is necessary to serve that interest.
Id. at 566,
First, Gibson argues that the regulation is not content-neutral, and therefore this court should evaluate the regulation under the test traditionally reserved for content-based discrimination. See Turner Broad. Sys., Inc. v. F.C.C.,
Gibson nevertheless argues that the statute at issue amounts to content discrimination because the domain name is “inextricably intertwined” with the content of his website, which includes his views on the need for compensation law reform. But Gibson cannot bootstrap this challenge into one of content discrimination simply by alleging that the content-neutral regulation has a secondary effect on speech that is outside the reach of the regulation. See id. at 725,
Second, Gibson argues that this law places a prior restraint on speech because it operates as a “wholesale prohibition on the use of certain words[.]” This argument is also unavailing. The Su
a. Commercial speech
This brings us to the crux of the question presented by Gibson: whether the district court erred in finding that the statute (a) prohibits commercial speech, and (b) is a valid prohibition of commercial speech under the test set forth in Central Hudson.
We agree with Gibson that his domain name and blog may do “more than propose a commercial transaction.” Bolger v. Youngs Drug Prods. Corp.,
b. Central Hudson analysis
Even if we assume without deciding that the domain name is commercial speech, we must still evaluate whether the statute presents a valid restriction on commercial speech under the test set forth in Central Hudson. To answer this question, we first look to whether the speech restricted by the statute is “false, deceptive, or misleading[.]” Bates v. State Bar of Ariz.,
Appellees primarily argue that the Texas statute is constitutional because Gibson’s domain name amounts to inherently misleading speech. In support of this proposition, they cite to a series of cases in which courts have held that domain names that use trademarks to misidentify the source of a product are outside the reach of the First Amendment. The case law cited by Appellees, however, is unique to the field of trademark infringement, see, e.g., Coca-Cola Co. v. Purdy,
Other than cases involving trademarks, inherently deceptive speech has been found in essentially one other area: attorney solicitation of prospective clients. See, e.g., Ohralik v. Ohio State Bar Ass’n,
The same risks are simply not attendant in the speech at issue here. First, there is no history upon which a court could conclude that speech covered by this statute, and domain names similar to the one at issue, are inherently deceptive.
Although Texas cannot show that the domain name is inherently misleading, that is not the end of our inquiry. Under the Central Hudson test, commercial speech that is not inherently misleading may nevertheless be regulated as long as the regulation directly advances a substantial state interest, and is no more extensive than necessary to serve that interest. Cent. Hudson,
The court below found the law to be constitutional because its intent is to prevent misuse of the DWC’s names and symbols. Gibson v. Bordelon, No. 5:11—CV-039-C,
2. Gibson’s First Amendment Facial Challenge
Gibson also alleges that the statute is facially unconstitutional. A movant may bring a facial constitutional challenge if “no set of circumstances exists under which the Act would be valid.” United States v. Salerno,
We first note that the district court did not err in considering Gibson’s as-applied challenge before reaching his facial challenge. See id. at 484-85,
8. Gibson’s Challenges Under the Fifth and Fourteenth Amendments
In addition to his First Amendment claims, Gibson also alleges that the Texas law is unconstitutional under the Fourteenth Amendment’s guarantees of equal protection and due process, and under the Fifth Amendment’s prohibition of taking without just compensation. None of these allegations are meritorious.
a. Equal Protection
To state a claim under the Equal Protection Clause, a § 1983 plaintiff must either allege that (a) “a state actor intentionally discriminated against [him] because of membership in a protected class[,]” Williams v. Bramer,
Gibson instead argues that this law subjects him to controls not placed on
b. Due Process
Gibson also alleges that § 419.002 deprives him of procedural due process because there is no means or procedure for hearing, and no possibility of appeal from a determination of a violation of that section. Gibson admits that the regulation permits an affected party to provide a written response to the cease and desist letter, which he did not do.
The requirements of procedural due process are “flexible and call[] for such procedural protections as the particular situation demands.” Morrissey v. Brewer,
First, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government’s interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail.
Mathews v. Eldridge,
If an investigation by the division indicates that an administrative violation has occurred, the division shall notify the person alleged to have committed the violation in writing of:
(1) the charge;
(2) the proposed penalty;
(3) the right to consent to the charge and penalty; and
(4) the right to request a hearing Not later than the 20th day after the date on which notice is received the charged party shall:
(1) remit the amount of the penalty to the division or otherwise consent to the imposed sanction; or
(2) submit to the division a written request for a hearing
On the request of the charged party or the commissioner, the State Office of Administrative Hearings shall set a hearing. The hearing shall be conducted in the manner provided for a contested case under Tex. Gov’t Code Ann. § 2001.001 et seq.
An order of the commissioner is subject to judicial review under the substantial evidence rule.
Tex. Labor Code § 415.031, et seq. Under the balancing test set forth in Mathews v. Eldridge, this procedural scheme is sufficient to guarantee Gibson due process of law. While the private interests at issue are significant ($25,000 or more, depending on the extent of the violation), the procedures adequately safeguard against the risk of erroneous deprivations, especially given the availability of judicial review. This scheme gives Gibson sufficient notice and an opportunity to be heard prior to any deprivation, and it is difficult to determine any additional procedures that would further reduce his risk. See Eldridge,
c. Takings
Finally, Gibson cannot succeed on his Fifth Amendment takings challenge because his claim is not yet ripe for adjudication. A takings claim becomes ripe only when “(1) the relevant governmental unit has reached a final decision as to how the regulation will be applied ... and (2) the plaintiff has sought compensation for the alleged taking through whatever adequate procedures the state provides.” Severance v. Patterson,
CONCLUSION
We affirm the district court’s dismissal of Gibson’s Fifth and Fourteenth Amendment claims. We also affirm the district court’s ruling that the regulation at issue is content-neutral and does not amount to a prior restraint. We reverse the district court’s finding that the law is constitutional as applied to Gibson, and remand to permit the parties to more fully develop the record on this issue.
Notes
. In most of the cases cited by Appellees the domain name was actually held not to be protected speech because it was not expressive, not because it was misleading. See, e.g., Planned Parenthood Fed’n of Am. v. Bucci, No. 97-cv-0629,
. Even though Gibson's blog may fall under the rubric of attorney solicitation, the cases considering attorney solicitation are nevertheless distinguishable because the infraction at issue in this case is not directly related to Gibson's practice as an attorney. The Texas Department of Insurance argues that Gibson has violated Texas law by creating confusion with the government agency, not by creating a “potential harm to the solicited client in the form of overreaching, overcharging, under-representation, and misrepresentation.” Ohralik,
. Despite this holding we do not interpret section 419.002 as covering only deceptive commercial speech or interpret Gibson's domain name as misleading.
. Section 419.004 requires the attorney general to bring an action in district court in Travis County to collect any civil penalty assessed under that statute. Although Appellees did not expand on the applicability of this statute, this arguably gives the defendant notice and an opportunity to be heard prior to any deprivation, sufficient to satisfy the re
Concurrence Opinion
concurring only in the judgment to reverse:
The court entertains the First Amendment claim because it reads the Texas statute to prohibit deceptive commercial speech. I see nothing in the statute to justify that reading. The district court saw the word “misuse” in the heading as enough to read deception into the statutory language. I have difficulty with that and, then, with reading Gibson’s domain name as “misuse” or as misleading.
