Lead Opinion
Opinion by Judge B. FLETCHER; Dissent by Judge WARDLAW.
OPINION
In this сonsolidated appeal, defendants-appellants (collectively “Defendants”) appeal the denial by the district court of their motions for judgment on the pleadings. Plaintiffs-appellees (collectively “Plaintiffs”) brought this diversity suit against Defendants to enforce California Civil Code §§ 2527 and 2528. These statutes require Defendants to supply the results of bi-annual studies of California pharmacies’ retail drug pricing for private uninsured customers to their clients, who are third-party payors such as insurance companies and self-insured employer groups. In their motions for judgment, Defendants argued that California Civil Code § 2527 (herein-after “§ 2527”) compels speech in violation of the United States and California Constitutions. The district court denied the motions, first reasoning that it was not bound by the state appellate court decisions striking down the statute under the California Constitution, and then holding that § 2527 does not unconstitutionally compel speech. Defendants obtained permission to file an interlocutory appeal. We accordingly have jurisdiction under 28 U.S.C. § 1292(b).
In this appeal, we must decide (1) whether we are bound by the Eñe doctrine to follow the state appellate court decisions striking down § 2527, and, if not, (2) whether § 2527 violates the First Amendment or the California Constitution’s free speech provision. We conclude that Eñe does not require us to follow the state appellate court decisions, and that
I.
A. Factual Background
Plaintiffs own five independent rеtail pharmacies licensed in California. Defendants are current or former pharmacy benefit managers (“PBMs”). They “contract with third-party payors or health plan administrators such as insurers, HMOs, governmental entities, and employer groups to facilitate cost-effective delivery of prescription drugs to health plan members or other persons to whom the third-party payors provide prescription drug benefits.” PBMs assist in the “processing of prepaid or insured prescription drug benefit claims submitted by a licensed California pharmacy or patron thereof.” In other words, PBMs act as intermediaries between pharmacies and third-party payors such as health insurance companies. Pursuant to this role, PBMs may create networks of retail pharmacies that agree to accept certain reimbursement rates when they fill prescriptions for health plan members. According to Defendants, network reimbursements “generally are lower than what pharmacies would charge uninsured, cash-paying customers.”
Section 2527, the challenged statute, requires “prescription drug claims processors”
The legislative history of § 2527 reveals that the original bill, introduced by the
B. Procedural Background
In 2002, Plaintiffs filed a class action complaint in the Central District of California (Beeman 02) alleging, inter alia, that Defendants failed to conduct the fee studies mandated by § 2527(c). In 2004, Plaintiffs filed a second complaint (Bee-man 04) alleging the same violation against a second group of Defendants. Both cases were assigned to Judge Virginia Phillips, but have not been consolidated. The district court has diversity jurisdiction over both cases pursuant to 28 U.S.C. § 1332.
The district court granted Defendants’ motions to dismiss both cases, concluding that Plaintiffs lacked an injury-in-fact sufficient to confer Article III standing. See TDI Managed Care,
While the appeal of the district court’s standing decision was pending in this court, three of the five Plaintiffs filed suit against some but not all of the Beeman 02 and Beeman 04 Defendants in Los Angeles County Superior Court. Like the federal actions, that suit alleged that Defendants failed to comply with the requirements of § 2527. In Bradley v. First Health Services Corp., No. B185672,
Meanwhile, in TDI Managed Care,
Since this appeal was filed, the district court has granted in part Defendants’ motions for summary judgment based on res judicata. The court held that the three Plaintiffs who brought suit in Bradley are precluded by the final judgment in that case from pursuing their overlapping claims in federal court. The district court further held, however, that the Plaintiffs who were not parties in that state court suit are not so precluded, and can continue to pursue their federal action. On February 25, 2008, we stayed the district court proceedings pending our decision in this appeal.
II.
“In an interlocutory appeal, we review de novo the district court’s denial of a motion for judgment on the pleadings.” Metrophones Telecomm., Inc. v. Global Crossing Telecomm., Inc.,
A. Erie Doctrine
We first determine whether, in exercising diversity jurisdiction over this case, we are bоund by the California state appellate courts’ holdings that § 2527 is unconstitutional under the California Constitution’s free speech provision. The seminal ease of Erie Railway Co. v. Tompkins,
The district court, in concluding that it was not bound by the state appellate court holdings, considered only the ARP decision. It declined to consider the two unpublished decisions, citing California Rule of Court 977(a).
1.
First, the district court reasoned that it was not bound by the state appellate court decisions because they “rest entirely on interpretations of federal, not state law.” It is true that ARP, the first state appellate court opinion on the issue of § 2527’s constitutionality, “applied legal principles derived exclusively from federal constitutional law.” The state court decisions to which ARP cites either were similarly decided under the federal Constitution or serve only as duplicate references to analogous federal decisions. Nonetheless, the ultimate conclusion reached in ARP is one of state law, not federal law. See ARP,
No authority supports the premise that, when a state court relies primarily on federal cases to reach a conclusion under state law, its decision is exempt from Erie. Thus, the state court’s exclusive reliance upon and application of federal case law does not automatically allow federal courts to disregard its holding as the substantive law of the state. Pursuant to Erie, ARP’s holding as to § 2527’s constitutionality under the California Constitution’s free speech provision is the rule of decision that a federal court sitting in diversity must apply (subject to the “convincing evidence” exception discussed below).
The district court alternatively-reasoned that, even if ARP’s holding was one under state law, “there is convincing evidence that the Supreme Court of California” would not follow them. We agree. We hold that there is convincing evidence that, in assessing the constitutionality of § 2527, the Supreme Court of California would construe article I, section 2 of the California Constitution as coextensive with the First Amendment. Because, as we explain in Part B below, § 2527 does not violate the First Amendment, we believe that the Supreme Court of California would deem § 2527 constitutional under the state constitution as well. Accordingly, we conclude that, in this case, the state supreme court would not follow the holdings of the state appellate courts. Erie does not, therefore, require us to apply ARP, A.A.M. Health, or Bradley in deciding whether Defendants’ motions should have been granted.
California courts generally “follow the United States Supreme Court in matters concerning free speech doctrine ... unless persuasive reasons are presented for taking a different course.” Gallo Cattle Co. v. Kawamura,
(1) something “in the language or history of the California provision suggests that the issue before us should be resolved differently than under the federal Constitution”; (2) “the high court ‘hands down a decision which limits rights established by earlier precedent in a manner inconsistent with the spirit of the earlier opinion’ (3) there are vigorous “dissenting opinions [or] incisive academic criticism of those decisions”; or (4) following the federal rule would “overturn established California doctrine affording greater rights.”
Id. at 959,
Considering these limited categories, we find no reason to believe that the California Supreme Court would not, in accordance with its general practice, decide the issue before us by relying primarily, if not exclusively, on First Amendment precedent. The California Supreme Court has interpreted free speech protections under the California Constitution to be “in some ways broader” than those under the First Amendment. Kasky v. Nike, Inc.,
Indeed, none of the state appellate court decisions opining on § 2527’s constitutionality even suggests that its holding turns on a more expansive reading of California’s free speech provision than of the First Amendment. Instead, these opinions rely exclusively on federal First Amendment doctrine to reach their conclusions. ARP mentions the U.S. Supreme Court by name six times, and the key parts of its holdings are expressly based on its purported adoption of federal precedent. See, e.g., ARP,
It is evident that the California Supreme Court, like the state appellate courts, would analyze the issue of § 2527’s constitutionality under article I, section 2 of the California Constitution by following First Amendment doctrine. And because, as discussed below, § 2527 is constitutional under the First Amendment, we believe that the California Supreme Court would reach the same conclusion under its own constitution.
Conversely, we conclude that the Supreme Court of California would reject the holdings of ARP, A.A.M. Health, and Bradley. Indeed, in analyzing and applying First Amendment law, the state appellate courts committed several critical errors. First, the ARP court ignored the Supreme Court’s most recent case on compelled speech, Rumsfeld v. Forum for Academic and Institutional Rights,
Citing ARP extensively, neither subsequent unpublished state appellate court decision offers any significant analytic support for its conclusion. Bradley relies almost exclusively on ARP, and does little to fill the gaps in that opinion’s reasoning. A.A.M. Health, at least, acknowledges the Supreme Court’s holding in FAIR.
Thus, all three state appellate decisions are fatally flawed in their analysis of federal precedent. These errors provide further evidence that the Supreme Court of California would not reach the same result. Cf. Briceno,
We are convinced that the California Supreme Court would, consistent with this opinion, rely primarily on (and correctly apply) First Amendment jurisprudence when presented with the question of § 2527’s constitutionality under the California Constitution. And because, as explained below, the statute is constitutional under the First Amendment, the California Supreme Court would not follow the holdings of the state appellate courts, but rather would uphold the statute’s constitutionality. Eñe does not, therefore, require us to apply to this case the state courts’ holding that § 2527 is unconstitutional under the California Constitution.
As we are not bound under Eñe to follow the state appellate decisions, we now independently assess the constitutionality of § 2527. Because the result under both the United States and California Constitutions turns on First Amendment law, we start our analysis there. It is a well-established principle that freedom of speech not only protects the right to speak, but also “prohibits the government from telling people what they must say.” FAIR,
1.
As a preliminary matter, we must decide whether Defendants mount a facial or an as applied challenge to § 2527. Plaintiffs argue that Defendants’ argument is based on nothing more than “the words of the statute,” and is therefore a facial challenge. Defendants respond that, because they raise the statute’s unconstitutionality in response to Plaintiffs’ attempts to enforce the statute against them, this is an as applied challenge.
We conclude that this case presents a facial challenge. The thrust of Defendants’ argument is that neither they nor any other PBM should ever have to comply with § 2527’s directive because the statute itself unconstitutionally compels speech. See Doe v. Reed, — U.S.-,
Thus, in order to succeed in their facial challenge to § 2527, Defendants must show that “no set of circumstances exists under which the [statute] would be valid.” Reno,
Moving to the merits of Defendants’ argument, we evaluate the speech compelled by § 2527 in order to determine whether it infringes on the First Amendment. The Supreme Court first established the Constitution’s prohibition on compelled speech in West Virginia Bd. of Education v. Barnette,
In the wake of these seminal decisions, the Court has further developed the doctrine of compelled speech in several specific contexts. As relevant here, ARP and Defendants rely heavily on Riley v. National Federation of the Blind of North Carolina,
Notably, then, under Riley, compelled disclosures of fact, like compelled matters
Recently, the Court further clarified the line between content-based compulsion of speech that infringes upon the First Amendment (as in Barnette and Wooley), and that which does not. In FAIR,
Consistent with Barnette, Wooley, and Riley, FAIR makes clear that not all fact-based disclosure requirements are subject to First Amendment scrutiny.
We now apply this precedent to the statute at issue here. Defendants argue that § 2527 constitutes a content-based compulsion of speech because it forces PBMs to advocate for pharmacies “in the hope that the insurance companies will provide greater remuneration to [them].” This argument, however, significantly mischaracterizes the nature of § 2527’s requirement. The statute requires PBMs merely to conduct or obtain the results of studies of the prices charged by pharmacies to their private customers and to report the objective data revealed by these studies to the third-party health plan managers for whom they process claims. The “compelled speech” at issue, therefore, is nothing more than the reporting of the purely statistical facts that these studies yield. The statute does not in any way regulate the content of the speech — content is instead dictated solely by the results of the studies themselves. See id. at 57,
Like the speech in FAIR, the compelled speech here does not in any way resemble the type of political messages at issue in Barnette and Wooley. Nothing in the statutory scheme forces the PBMs to advocate any position or “endorse” any “pledge or motto” that is contrary to their beliefs. See FAIR,
We note that Defendants’ and the state appellate courts’ repeated emphasis on the purpose for which § 2527 was enacted — in hopes that the reported pricing information could serve as the basis for future increases in pharmacy reimbursements — is of limited significance. That the legislation was motivated by political considerations does not mean that the obligations that it places on the speaker are, in fact, political or ideological in nature.
Furthermore, in contrast to the factual reporting requirement in Riley, the pricing study results compelled by § 2527 in no way alter, chill, or otherwise affect a PBM message that enjoys First Amendment protection. Whereas the law in Riley threatened to interfere with core protected speech, by “hampering] the legitimate efforts of professional fundraisers to raise money for the charities they represent,”
Moreover, even if this part of FAIR’S reasoning was controlling, it applies similarly to the statute here. The primary prescription of § 2527 is conduct-based: it requires PBMs to conduct, or obtain the results of, pharmacy pricing studies. The statute also requires that the results of these studies, that is, a document contabaing the results of the performed conduct, be transmitted to a third party. This “compelled speech,” or the transmission of the study results, is not the main thrust of the statute’s requirement — this speech is required only as the method by which PBMs’ clients are to become informed of the study mandated by the statute.
We hold that, under the applicable precedent, § 2527 does not offend the First Amendment by compelling speech that affects the content of the speaker’s message. Therefore, we need not apply to it any level of constitutional scrutiny. See Envtl. Def. Ctr., Inc., v. EPA
3.
The parties debate several other theories under which § 2527 could raise First Amendment concerns and thereby require constitutional scrutiny. We discuss briefly why each theory is unavailing or inapplicable here.
a.
First, though they do not clearly raise the argument in their briefs, Defendants refer to a line of cases that concern forced accommodation of another’s speech. The First Amendment limits the government’s power to force individuals to accommodate a third party’s message that would interfere with then’ own expression of ideas. FAIR,
Forced accommodation was first considered in Miami Herald Publishing Co. v. Tornillo,
There is a considerable measure of overlap between the forced accommodation cases and the compelled speech analysis in Riley. Both focus on how the compulsion of speech or the compelled accommodation of another’s speech effectively chills or frustrates the speaker’s own ability to express his views pursuant to his First Amendment rights. See FAIR,
b.
Defendants also argue that the court should invalidate § 2527 under United States v. United Foods, Inc.,
c.
The parties devote some portion of their briefs to discussing whether the speech compelled under § 2527 constitutes “commercial speech.” Compelled “commercial speech” cases generally involve challenges to disclosure requirements designed to prevent deceptive consumer advertising. See, e.g., Zauderer v. Office of Disciplinary Counsel of Supreme Court of Ohio,
Though the disclosures mandated by § 2527 are similar to commercial disclosures in that they contain factual information related to commerce, Defendants and ARP correctly recognize that the disclosures required by § 2527 do not constitute commercial speech. ARP,
Section 2527 neither aims to reduce deceptive advertising to consumers nor compels disclosures in the context of a commercial transaction. Therefore, its requirements do not qualify as compelled “commercial speech” subject to a lower form of scrutiny. This conclusion, however, is of little significance in our analysis. Because the reporting requirements of § 2527 do nothing to compel or affect the content of any protected speech, commercial or otherwise, they are not subject to any form of First Amendment scrutiny.
Pursuant to the foregoing analysis, we conclude that Defendants are not entitled to a judgment that § 2527 violates the First Amendment.
C. Article I, section 2 of the California Constitution
Finally, we must decide whether Defendants’ motion should have been granted on the ground that the statute violates article I, section 2 — -the free speech provision — of the California Constitution. Because the California Supreme Court has not decided this question or one analogous to it, we must “predict how the highest state court would decide the issue,” using any relevant material as guidance. Vestar Dev.,
As we have held, the California Supreme Court would construe the state free speech provision as being coextensive with the First Amendment with respect to § 2527. Therefore, in accordance with our First Amendment analysis, we believe that California’s highest court would hold that § 2527 is constitutional under the California Constitution’s free speech provision. We therefore hold the same.
We realize that, in so holding, we are creating a degree of disparity between the federal and state courts that could temporarily result in forum-shopping. Plaintiffs and others similarly situated may now sue in federal court to enforce what we have held to be a constitutional statute, while their ability to do so in state court remains subject to question. This is the unavoidable result of our faithful application of the “convincing evidence” standard under Erie.
As a practical matter, however, this concern is a minor one. ARP, A.AM. Health, and Bradley were all decided in California’s second appellate district. This is the only one of California’s six appellate districts in which an erroneous interpretation of federal precedent on this issue operates as the current law. The other districts are not bound by that position and are free to resolve the question de novo. See 9 Wit-kin, Cal. Proc. 5th, Appeal, § 498 (2008) (“A decision of a Court of Appeal is not
If the Supreme Court of California eventually considers § 2527 and decides to construe the California free speech provision more broadly than the First Amendment in this context, then we will, of course, be bound by its decision. Our decision today is based on our analysis of First Amendment compelled speech precedent, or the body of law upon which every single judge to have opined on § 2527’s constitutionality has relied. The California Suprеme Court may choose to depart from that analysis; at this stage, however, we have no basis on which to believe that it would. Thus, as we are currently charged with predicting how the Supreme Court of California would decide, we must conclude that § 2527 is constitutional under article I, section 2 of the California Constitution.
III.
Because the statute that Plaintiffs seek to enforce is constitutional under both the United States and California Constitutions, the district court’s denial of Defendants’ motions for judgment on the pleadings is hereby
AFFIRMED.
Notes
. Although Defendants maintain that they are not "prescription drug claims processors” under the statute, the issue is not contested for purposes of this appeal.
. California Civil Code § 2527(c) reads:
On or before January 1, 1984, every prescription drug claims processor shall have conducted or obtained the results of a study or studies which identifies the fees, separate from ingredient costs, of all, or of a statistically significant sample, of California pharmacies, for pharmaceutical dispensing services to private consumers. The study or studies shall meet reasonable professional standards of the statistical profession. The determination of the pharmacy’s fee made for purposes of the study or studies shall be computed by reviewing a sample of the pharmacy’s usual charges for a random or other representative sample of commonly prescribed drug products, subtracting the average wholesale price of drug ingredients, and averaging the resulting fees by dividing the aggregate of the fees by the number of prescriptions reviewed. A study report shall include a preface, an explanatory summary of the results and findings including a comparison of the fees of California pharmacies by setting forth the mean fee and standard deviation, the range of fees and fee percentiles (10th, 20th, 30th, 40th, 50th, 60th, 70th, 80th, 90th). This study or these studies shall be conducted or obtained no less often than every 24 months.
Cal. Civ.Code § 2527(c).
.California Civil Code § 2527(d) reads:
The study report or reports obtained pursuant to subdivision (c) shall be transmitted by certified mail by each prescription drug claims processor to the chief executive officer or designee, of each client for whom it performs claims processing services. Consistent with subdivision (c), the processor shall transmit the study or studies to clients no less often than every 24 months.
Cal. Civ.Code § 2527(d).
. In their Complaints, Plaintiffs allege violations of only state law. Defendants aver that § 2527 violates the United States Constitution as an affirmative defense to Plaintiffs’ allegations. Under the well-pleaded complaint rule, therefore, there is no federal question jurisdiction, and the district court’s jurisdiction is based solely on diversity of citizenship. See Vaden v. Discover Bank,
. California Rule of Court 977(a) reads: "[Unpublished opinions] An opinion of a Court of Appeal or an appellate department of the superior court that is not certified for publication or ordered published shall not be cited or relied on by a court or a party in any other action or proceeding....”
. A.A.M. Health and Bradley rely heavily on ARP, in addition to federal case law, in reaching the same conclusion. Like ARP, those decisions interpret only California’s free speech provision, and not the First Amendment.
. Notably, Gerawan came down before United States v. United Foods, Inc.,
. ARP cites to Gerawan only in conjunction with federal precedent and for the general proposition that, "like the First Amendment ],” the California Constitution protects against compelled speech. Gerawan,
. The state court’s errors in applying federal law are more fully discussed in our First Amendment analysis in Part B, below.
. Defendants and our dissenting colleague place great weight upon the fact that, after the district court's decision on the motions for judgment on the pleadings, the Supreme Court of California denied Plaintiffs’ petition for review of Bradley. According to Defendants, the Supreme Court of California's refusal to reject ARP, A.A.M. Health, and Bradley in favor of the district court’s constitutional analysis is the best evidence that it would not decide the constitutionality of § 2527 differently from the California appellate courts.
A state’s highest court’s refusal to grant discretionary review of a lower court decision is not dispositive of whether it agrees with the lower court’s holding. See Ryman,
. As the Supreme Court has held, "charitable appeals for funds ... involve a variety of speech interests' — communication of information, the dissemination and propagation of views and ideas, and the advocacy of causes — that are within the protection of the First Amendment.” Schaumburg v. Citizens for a Better Environment,
. We readily acknowledge, as both FAIR and our dissenting colleague point out, that compelled disclosures are not immune from First Amendment scrutiny merely because they involve facts rather than opinions. See FAIR,
. The statute does require, in addition to the data, "a preface, an explanatory summary of the results and findings including a comparison of the fees of California pharmacies by setting forth the mean fee and standard deviation, the range of fees and fee percentiles (10th, 20th, 30th, 40th, 50th, 60th, 70th, 80th, 90th).'' Cal. Civ.Code § 2527(c). This analysis, however, is entirely objective, and does not carry with it a particular message or viewpoint.
. The Dissent argues that our "interpretation of the First Amendment contradicts decades of Supreme Court precedent extending constitutional protection to communications containing truthful information.” But this assertion misapprehends our position. We agree, of course, that the government may not prohibit speakers from disseminating facts. The cases that the Dissent cites all make this basic point. For the government to compel factual speech, however, is quite different from its prohibiting factual speech. This case deals only with the former. See Riley,
.As was noted in ARP, the purpose of the enacted bill may have been for the benefit not only of pharmacies, but also insurers and insured consumers. See ARP,
. Indeed, most disclosure requirements, from nutritional facts on packaged foods to the financial details of publicly traded companies, are designed to remedy information asymmetries and potentially alter individuals’ behavior as they become more well-informed market participants. As long as those who are compelled to disclose are not required to endorse the possible result of a better-informed market, just as the law schools in FAIR were not required to “endorse” the military’s hiring policies, the fact that legislators may desire the resulting behavior is irrelevant. In such cases, the disclosing party is required only to provide the raw facts that others may use to make their own decisions.
. The Supreme Court’s recent decision in Sorrell v. IMS Health Inc., -U.S.-,
. Notably, Defendants do not allege that § 2527 is unconstitutional because it impermissibly regulates conduct.
. Consistent with the cases cited by the Dissent, we readily agree that the transmission of the pricing survey results constitutes speech. The § 2527-reguIated conduct to which we refer, and that we believe is the statute's primarily regulatory effect, is the actual performance of the pricing studies, as distinguished from the transmission of their results. We fully accept that the transmission, even to the extent that it involves some conduct, constitutes speech. We also recognize that the performance of pricing surveys is not completely devоid of speech. Our point is simply that the § 2527 is effectuated primarily through conduct rather than through speech, just as, under FAIR, the Solomon Amendment’s equal access requirement primarily regulates the schools’ conduct, even while such conduct might inherently contain speech.
Moreover, the Dissent incorrectly asserts that to consider § 2527 "as conduct-based ... is akin to considering the laws in Wooley and Miami Herald Publishing Co. v. Tornillo,
. Defendants argue that Environmental Defense Center and cases like it are inapposite because the disclosure requirements at issue there were part of a "comprehensive regulatory scheme.” This argument misses the mark. In Environmental Defense Center, we did note that the disclosure requirements at issue were “consistent with the overall regulatory program of the Clean Water Act,”
. Notably, as a matter of state law, the ARP decision expressly distinguishes Johanns v. Livestock Marketing Ass’n,
Dissenting Opinion
dissenting:
It has been more than seven decades since the Supreme Court ended the “mischievous” regime of Swift v. Tyson,
The majority disregards not one but three intermediate California appellate decisions holding that California Civil Code § 2527 violates Article I, section 2 of the California Constitution. See ARP Pharmacy Servs., Inc. v. Gallagher Bassett Servs., Inc.,
In point of fact, the California Supreme Court denied review of the last of the appellate court decisions, leaving the precedent intact. The failure to follow the intermediate state courts violates the Eñe
I.
We confront in § 2527 an unusual law without clear analogies in existing precedent. The statute requires drug claims processors to undertake or obtain studies about pharmacy pricing, summarize the results, and transmit the material to their clients. § 2527(c)-(d). Essentially, it requires Business A to speak about Business B to Business C. Unlike a disclosure law, it does not require that regulated entities divulge information about themselves to the public, but rather that they privately producе information about third parties to their clients. Cf. Zauderer v. Office of Disciplinary Counsel of Supreme Court of Ohio,
As our free speech jurisprudence treats “[e]aeh method of communicating ideas [as] ‘a law unto itself,’ ” so must it afford unique treatment to each different method of government mandated communication of ideas. Metromedia, Inc. v. City of San Diego,
The California Constitution provides that “[e]very person may freely speak, write and publish his or her sentiments on all subjects, being responsible for the abuse of this right. A law may not restrain or abridge liberty of speech or press.” Cal. Const, art. 1 § 2. This clause “enjoys existence and force independent of the First Amendment” of the United States Constitution. Gerawan Farming, Inc. v. Lyons,
The majority identifies two “critical errors” in the Court of Appeal panel decisions that it believes the California Supreme Court would not make: giving insufficient weight to Rumsfeld v. Forum for Academic and Institutional Rights, Inc.,
In FAIR, the Court rejected a First Amendment challenge to the Solomon Amendment, a statute restricting federal funding to universities that do not grant military recruiters comparable access to other employers looking to hire at their law schools.
The FAIR Court did nоt find a constitutional violation because the particular factual statements at issue were both hypothetical and ancillary to a comprehensive regulatory regime. The Court determined that the e-mails and bulletin board postings would only be “ ‘compelled’ if, and to the extent, the school provides such speech for other recruiters,” and that such compulsion would be “plainly incidental to the Solomon Amendment’s regulation of conduct.” Id. That stands in stark contrast to § 2527, where the compulsion is not contingent on any voluntary conduct by the regulated party, and where it is not ancillary to any comprehensive regulatory scheme. Rather, § 2527 is a direct, standalone government mandate of speech. Therefore, the Court of Appeal panels’ treatment of FAIR in this context was not erroneous, and it does not provide convincing evidence that the California Supreme Court would rule differently.
The Riley Court first held quite broadly that “mandating speech that a speaker would not otherwise make necessarily alters the content of the speech. We therefore consider the Act as a content-based regulation of speech.”
In other words, the Riley Court held that the particular law compelling speech failed exacting scrutiny because of its chilling effect; it did not hold that a chilling effect is a prerequisite to any First Amendment scrutiny at all. The FAIR Court made this clear when it cited Riley for the proposition that “compelled statements of fact (‘The U.S. Army recruiter will meet interested students in Room 123 at 11 a.m.’), like compelled statements of opinion, are subject to First Amendment scrutiny.”
In faulting the California courts for relying on Riley’s holding about factual speech, the majority makes the stunning assertion that § 2527 is not subject to any First Amendment scrutiny because it requires only the dissemination of “objective” data, and “Defendants are not compelled to convey a viewpoint or perform any subjective analysis of the numbers they report.” No authority is cited for the prоposition that compelled speech must contain subjective analysis or overt opinion in order to implicate constitutional rights. Indeed, it is well established that “the First Amendment’s proscription of
The majority’s narrow interpretation of the First Amendment contradicts decades of Supreme Court precedent extending constitutional protection to communications containing truthful information. For instance, the majority’s reasoning fails to account for fact-based news reporting, which is considered protected speech under both the First Amendment and the California Constitution. See, e.g., Lafayette Morehouse, Inc. v. Chronicle Publ’g Co.,
Most recently, in Sorrell v. IMS Health, 564 U.S. ——,
The majority asserts that the compulsion of factual speech is “quite different from” the prohibition of such speech, but in fact, “in the context of protected speech, the difference is without constitutional significance, for the First Amendment guarantees ‘freedom of speech,’ a term necessarily comprising the decision of both what to say and what not to say.” Riley,
III.
“[WJhere there is no convincing evidence that the state supreme court would decide differently, a federal court is obligated to follow the decisions of the state’s intermediate appellate courts.” Vestar Dev. II, LLC v. Gen. Dynamics Corp.,
The district court issued its ruling in this case on May 15, 2007, after the three California Court of Appeal panels had rendered their judgments that § 2527 violates the state constitution. However, in opting not to afford Erie deference to those judgments, the district court did not have the benefit of the California Supreme Court’s decision to deny review of Bradley, which occurred on June 13, 2007. See Bradley,
Two important “aims of the Erie rule[are] discouragement of forum-shopping and avoidance of inequitable аdministration of the laws.” Kohlrautz v. Oilmen Participation Corp.,
. The case law relied on by the majority illustrates the dangers of disregarding state court decisions and imposing our own interpretations of legal gray areas. The first case cited by the majority for the proposition that we
. The majority’s suggestion that § 2527 may primarily regulate conduct because it requires the compiling and transmission of a document, is contrary to explicit Supreme Court precedent. See Bartnicki v. Vopper,
. That the California Supreme Court denied review in Bradley, leaving state precedent intact in the face of a contrary federal district court holding, only further indicates that the intermediate state appellate courts correctly applied state law, and certainly does not count as convincing evidence that the California Supreme Court would uphold the statute.