Lead Opinion
In this bill in equity filed in the county court, the plaintiffs seek a declaration that G. L. c. 271, § 6C, inserted by St. 1968, c. 602, entitled, “An Act prohibiting the giving of chances or the offering of prizes by gasoline stations” is unconstitutional as applied to them. The matter was reserved and reported, without decision, to this court by the single justice. We have before us the pleadings and a statement of agreed facts including a substantial number of lengthy exhibits.
The plaintiffs are Mobil Oil Corporation (Mobil), a New York corporation doing business in Massachusetts as both a wholesaler and retailer of motor vehicle fuels; Joseph G. Kulper, the owner of Four Mile Sales & Service in Westfield, who purchases gasoline from Mobil and sells it at retail; and Glendinning Companies, Inc. (Glendinning) , a Connecticut corporation that plans, develops and arranges sales promotions, including promotional games and contests, and mails to its customers in Massachusetts the materials necessary to conduct such games and contests.
The defendant answered and counterclaimed, seeking a declaration that the statute is valid, that the continued use of game promotions is prohibited by G. L. c. 271, § 7, which prohibits lotteries, and that the game pieces used in connection with game promotions are a common nuisance under G. L. c. 271, § 20, which makes possession of
General Laws c. 271, § 6C, provides, “No dealer or seller of motor vehicle fuel shall engage in, promote or in any way operate any contest or game by which a person may, as determined by chance, receive gifts, prizes or gratuities in connection with the sale of goods or services. This section shall apply to any such contest or game whether or not a purchase is required to participate therein” (emphasis added). Violations of the statute are punishable by either fine or imprisonment.
The facts are here set forth. Mobil is a wholesaler and retailer of motor vehicle fuel. Kulper is also a retailer of such fuel. However, the business operations of both Mobil and Kulper are not limited to the sale of motor vehicle fuel. At service stations operated by them, Mobil and Kulper compete with other merchants in the sale of tires, batteries, oil, anti-freeze and other automotive parts and accessories. Competition also exists between Mobil and Kulper and other merchants in providing related automotive services such as tire changing, car washing and lubricating as well as selling, installing and repairing sundry motor vehicle parts and accessories. Also, both companies compete with other merchants in the sale of nonautomotive products such as soft drinks, cigarettes and razor blades. All of these products and services are provided by Mobil and Kulper at the same premises as, and in connection with, the retail sale of motor vehicle fuel.
The financial data before us indicate that the sale of products other than motor vehicle fuel by Mobil and Kulper constitutes an important and substantial part of their overall business. For example, in the first six months of 1968, at the two service stations operated by it in the Boston selling area, Mobil sold more than $60,000 of products other than motor vehicle fuel. Also, during 1967, Kulper sold more than $10,000 of such products at his service
The record before us also demonstrates that there are a substantial number of diverse businesses which compete with Mobil and Kulper in the sale of nonfuel products. These competing businesses include not only car washes, auto body shops, automobile repair garages and automobile dealerships, but also five and ten cent stores, automotive stores, department stores, discount stores, hardware stores, drugstores, variety stores and supermarkets.
Prior to the enactment of the statute now in controversy, Mobil utilized promotional games and contests at service stations operated by it and encouraged their use among service station dealers who bought motor vehicle fuel at wholesale from Mobil and resold it under Mobil’s trade names. There was, however, no right on the part of Mobil to compel dealers to participate in the games. The record is devoid of any facts which would indicate that any compulsion was ever exerted.
The record before us indicates that those businesses which competed with Mobil and Kulper in the sale of non-fuel products also conducted promotional games and contests in connection with the sale of those products.
1. We consider first the defendant’s counterclaim, in which he seeks a declaration that the continued use of game promotions is prohibited by G. L. c. 271, § 7, which outlaws lotteries, and that the game pieces used in connection with the games are a common nuisance under G. L. c. 271, § 20, which makes possession of lottery tickets unlawful.
The use of a counterclaim is permissible in suits for declaratory relief. Growers Outlet, Inc. v. Stone,
This court has consistently held that three elements must exist in order for any scheme to constitute a lottery. The three elements are payment of a price, a prize, and some element of chance. Commonwealth v. Wall,
In this case, the elements of chance and prize were present. In each case, persons calling at participating service stations were entitled to receive game pieces which by themselves or when matched with other game pieces might entitle the recipient to a prize. However, it was made clear to the public through frequent and clear advertising that participants were not required to make any payments or purchases in order to participate in the games. Nothing in the record indicates that this basic rule was not understood.
The defendant argues that the necessary price was present inasmuch as the use of the game increased the volume of business of the participating stations. He relies on decisions from other jurisdictions which have
The “bank night” cases are distinguishable from the present case. Those cases involved schemes whereby prizes were awarded at a theatre close to, or between, the times of performances. Attendance at the theatre at the time of the awarding of the prizes was required. In each of the “bank night” cases, the arrangements were such that, although not required to do so, participants who purchased theatre tickets gained a distinct advantage over those who did not purchase them. See Commonwealth v. Wall, supra, at 73; Commonwealth v. Heffner, supra, at 524.
The game promotions involved in the case before us did not require the presence of any participant at any particular place. Winning pieces were redeemable over a period of weeks. No admission charge, purchase, or payment was required by service stations participating in the games, a fact which was well publicized throughout their use. Finally, those who purchased products at participating service stations gained no advantage whatsoever over those who received their game pieces without making any purchases.
In view of our earlier decisions, we now hold that the incidental increase in business attendant upon the use of promotional games like those involved in the present case is not the type of consideration necessary to make these games lotteries. We decline to follow decisions from other jurisdictions which have reached a different result. On the contrary, we observe that there is ample authority for the result which we have reached here. Caples Co. v. United States,
2. The defendant argues that Glendinning lacks standing to maintain the present proceeding because it has no place of business in this Commonwealth, and employs no agents or employees here, and because the statute by its express terms does not apply to it. This we need not decide, for there are other plaintiffs who do have standing. The statute here involved is not simply one which subjects Glendinning to possible competition. See Circle Lounge & Grille, Inc. v. Board of Appeal of Boston,
3. The plaintiffs contend that G. L. c. 271, § 6C, conflicts with Federal law and is therefore invalid by reason of the “supremacy clause” of the United States Constitution. Art. 6, second par. Specifically, they argue that the matters encompassed by § 6C have been preempted by Federal law because of the Federal Trade Commission’s promulgation of a rule regulating games of chance in the food retailing and gasoline industries (34 Fed. Reg. 13302 [1969], 16 C. F. R. [1971] § 419) and because Federal interests predominate in the area of multimarket advertising. Both arguments fail.
We agree that the Federal Trade Commission (Commission) has been given broad authority by Congress to act in the areas of “unfair methods of competition in commerce, and unfair or deceptive acts or practices in commerce.” 15 U. S. C. §§ 45 (a) (1), 46 (g) (1970). We also agree that rules promulgated by the Commission “have the force and effect of law.” Hill v. Federal Trade
The Supreme Court of the United States has said that “[t]his Court, in considering the validity of state laws in the light of . . . federal laws touching the same subject, has made use of the following expressions: conflicting; contrary to; occupying the field; repugnance; difference; irreconcilability; inconsistency; violation; curtailment; and interference. But none of these expressions provides an infallible constitutional test or an exclusive constitutional yardstick. In the final analysis, there can be no one crystal clear distinctly marked formula.” Hines v. Davidowitz,
In the Perez case, a State statute prohibited the operation of a motor vehicle by any person against whom there was an unsatisfied motor vehicle tort judgment, regardless of whether the affected person had obtained a discharge in bankruptcy. The Supreme Court of the United States declared that the statute was invalid as it frus
An important factor to be considered in determining whether a particular area of legislative concern has been preempted by Federal law is the existence of any manifestations of intent, expressed or otherwise, that the particular Federal law was to occupy the field exclusively. “The intention of Congress to exclude States from exerting their police power must be clearly manifested.” Napier v. Atlantic Coast Line R.R.
An examination of the rule of the Commission, including its scope and effect, and the circumstances existing at the time of its adoption, demonstrate no clear intent that the States may not legislate in the area of promotional games and contests. By its terms, the rule is limited in its coverage in that it regulates only games and contests conducted by the retail food and gasoline industries. The circumstances surrounding its promulgation indicate that only the retail food and gasoline industries were investigated by the Commission and that the rule was designed to prevent actual and potential abuses which were found to exist in those industries. Statement of Basis and Purpose, Trade Regulation Rule on Games of Chance in the Food Retailing and Gasoline Industries, 34 Fed. Reg. 13302 (1969).
We believe that the rule was intended to establish minimum standards of regulation which the Commission deemed necessary to protect the public from deceptive acts and practices. Nowhere in the history of the rule is there any clear indication that the States were to be precluded from legislating in this area. In fact, prior to
Furthermore, as observed above, the rule was promulgated to protect the public from the actual and potential abuses found to exist in this area. General Laws c. 271, § 6C, was enacted to accomplish the same result. As we view the matter, our statute in no way “stands as an obstacle to the accomplishment and execution of the full purposes and objectives” of the Commission. Hines v. Davidowitz,
The plaintiffs’ final argument with respect to preemption is that Federal interest predominates in the area of multimarket advertising. We disagree.
We have repeatedly stated that “[t]he interstate commerce clause did not withdraw from the states the power to legislate with respect to their local concerns, even though such legislation may indirectly and incidentally affect interstate commerce and persons engaged in it.” Commonwealth v. New York Cent. R.R.
The statute here in question does not prohibit the intrastate or interstate advertising and sale of motor vehicle fuel by Mobil or Kulper. The statute is directed only at certain types of promotional activities which take place in Massachusetts. The fact that the promotion and sale of products sold here and elsewhere has been the subject of Federal concern does not prevent our Legislature from adopting reasonable regulations affecting that promotion and sale within Massachusetts. Mueller v. Commissioner of Pub. Health,
4. The plaintiffs make the further argument that the statute is unconstitutional because it arbitrarily interferes with their right to conduct and promote their business and is, therefore, violative of due process. Fourteenth Amendment to the United States Constitution. Arts. 1, 7, 10, 12, of the Declaration of Rights. We do not agree.
We begin our consideration of the issue as to due process of law by stating the well settled rule that “[a] 11 rational presumptions are made in favor of the validity of every legislative enactment. Enforcement is to be refused only when it is in manifest excess of legislative
In McMurdo v. Getter,
Applying the above tests to this case, we conclude that the present statute is a valid exercise of the police power in so far as it seeks to prohibit certain types of promotional activity in connection with the sale of products to the public. Undoubtedly, the Legislature had many considerations in mind when it enacted this statute. Among them must have been a desire to prevent the possible abuses, including unfairness, fraud and deception which might exist in any game of chance. Although the games in question here do not violate our anti-gambling or lottery statutes, our Legislature could appropriately broaden those statutes, as has been done in other jurisdictions.
More importantly, the present statute is not directed at games of chance generally but rather at games of chance when used in connection with the sale of goods. In this
5. The plaintiffs also argue that the statute is unconstitutional because they are being deprived of the equal protection of the laws. Their premise here is that the statute applies to motor vehicle fuel sellers only and prohibits them from using the contests in connection with the sale of any products including those products sold by competitors who are not similarly prohibited from using the contests. They conclude that the statute contains an irrational classification and one that cannot be sustained under the equal protection clauses of the State and Federal Constitutions. Fourteenth Amendment to the United States Constitution. Arts. 6, 7, of the Declaration of Rights.
This argument has two branches. First, the statute is said to be overbroad, indeed, on one possible reading, “grossly overbroad,” because it is not limited to promotional games in connection with the sale of motor vehicle fuel. Second, it is criticized as underinclusive because it does not apply to competing sellers of goods and services other than motor vehicle fuel. The argument appears to have prevailed on both branches in a trial court in Maryland. On appeal the Maryland court suggested that the
We think the statute, properly read, is not overbroad. We do not think the Legislature intended to impose an irrational restriction on owners of dual or multiple businesses. The prohibition is directed to a “dealer or seller of motor vehicle fuel,” and may properly be read to apply to his acts in that capacity. What he may do as a barber at an establishment several miles from his gasoline station, for example, is not affected. The “connection” contemplated by the statute cannot mean a connection with a specific purchase, since the statute by its terms applies “whether or not a purchase is required.” Without anticipating every possible question as to the scope of the statute, we think it requires a functional relation to the business of selling motor vehicle fuel, whether by association with the same selling area, by customary commingling of functions, by specific referral, or othewise.
So read, the statute is not vastly different from one limited to promotional games “in connection with the sale of motor fuels.” Such a statute was held not to deny equal protection of the laws in United Stations of N. J. (US) v. Getty Oil Co. 102 N. J. Super. 459, 474-476, affd. on opinion below sub nom. Del Spina v. Getty Oil Co. 54 N. J. 150. The extension to games “in connection with” other goods and services when part of the business of selling motor vehicle fuel, if it is an extension, is reasonable in the interest of clarification and enforceability.
The record does not establish that the promotional games of gasoline dealers have distinctive misleading characteristics, that they adversely affect the retail price
We have recognized, however, that retail dealers in motor vehicle fuel may for some purposes be treated as a single group presenting special problems. G. L. c. 94, §§ 295A-295C. Slome v. Chief of Police of Fitchburg,
The Legislature could reasonably have thought, in 1968, that some or all of these features of the typical gasoline station made the problem of promotional games more pressing with respect to them than with respect to other retail merchants. The record before us adequately shows that in 1968 the use of games of chance by gasoline stations was very extensive, both in Massachusetts and elsewhere, and that there was a real prospect that it might become more so. Other types of retail establishments share some of the characteristics of gasoline stations and might well have been given similar consideration by the Legislature. The Commission, after studying the same subject, promulgated a rule responding to actual and potential abuses in the retail food industry as well as
“A statutory classification in the area of social welfare is consistent with the Equal Protection Clause of the Fourteenth Amendment if it is ‘rationally based and free from invidious discrimination.’ Dandridge v. Williams,
We know, as everyone does, that representatives of
The plaintiffs’ heavy reliance on Hall-Omar Baking Co. v. Commissioner of Labor & Indus.
6. A decree is to enter in the county court declaring that the operation of the promotional games, as described herein and as previously operated by the plaintiffs, is not prohibited by G. L. c. 271, §§ 7, 20, the so called “lottery statutes,” and further declaring that G. L. c. 271, § 6C, inserted by St. 1968, c. 602, as applied to the plaintiffs,
So ordered.
Notes
Statistics before us indicate that dealer participation declined throughout most of the games.
The exhibits before us demonstrate that the following nonfuel sellers conducted promotional games in competition with the plaintiffs: General Tire stores, “Holiday for 2”; Sears, Roebuck & Company, “Fiesta Days Shopping Spree”; Iandoli’s Supermarket, “Money Letters”; The Big G Discount Food Stores, “Surethingo”; Lech-mere Sales, “Win a Week.”
We observe that there now exists in Maryland a statute which prohibits the use of promotional games by all retail sellers in connection with the sale of all retail goods. Anno. Code Md., art. 27, § 369A.
Dissenting Opinion
(dissenting, with whom Tauro, C.J., joins) I dissent from the majority opinion. In my view the statute is unconstitutional because the plaintiffs are being deprived of the equal protection of the laws. The statute applies to motor vehicle fuel sellers only and prohibits them from using the contests in connection with the sale of any products including those products sold by competitors who are not under a similar prohibition. The statute, with immaterial language deleted, is clear and unambiguous, viz.: “No dealer or seller of motor vehicle fuel . . . [shall engage in or operate promotional games] in connection with the sale of goods or services.” A careful examination of the record in the case and the controlling authorities leads me to the conclusion that the statute does contain an irrational classification and one that cannot be sustained under the equal protection clauses of the State and Federal Constitutions. Fourteenth Amendment to the United States Constitution. Arts. 6, 7, of the Declaration of Rights.
The plaintiffs have an onerous burden of proof in their attempt to establish the unconstitutionality of the statute. All rational presumptions are made in favor of the validity of every legislative enactment. Commonwealth v. Finnigan,
The concurring opinion of Chief Justice Tauro in the Pinnick case appropriately states, in substance, at p. 33, that the task of proving unconstitutionality of a statute is virtually insuperable in the absence of a factual foundation established in the record, by an evidentiary hearing or other means. I have concluded that the plaintiffs
In my opinion the majority of the court have reached an erroneous decision as viewed in the perspective of the statement of agreed facts. I do not suggest that this court’s consideration of the constitutional issues should be so carefully circumscribed as to preclude any consideration of factors which the court concludes are within the realm of common knowledge. However, the court’s reasoning should reflect a reasonable deference to the agreed facts, particularly in view of the fact that the Attorney General has participated as a party to the agreed statement. Cf. State’s Attorney for Charles County v. Triplett,
The inconsistency between the majority’s reasoning and the statement of agreed facts is especially shown in the majority’s statement, with regard to the equal protection issue, that “[t]he Legislature could reasonably have thought, in 1968, that some or all of these features of the typical gasoline station made the problem of promotional games more pressing with respect to them than with respect to other retail merchants.” A fair reading of the statement of agreed facts and attached exhibits does not support this speculation. In fact, a contrary inference fairly arises from the factual statement.
The discussion below of the equal protection issue has been placed, as I conclude it should be, in the framework of the relevant facts as presented to us by the parties.
The record demonstrates that Mobil and Kulper sell many and diverse nonfuel products and that the sale of such products constitutes a substantial portion of their business. The record also shows that a substantial number of nonfuel sellers compete with Mobil and Kulper in
Mobil and Kulper, prior to the enactment of the statute, engaged in the use of promotional games and contests. The fact is also well documented in the record that those in competition with Mobil and Kulper likewise engaged in similar games and contests to promote the competing products. The statute provides that sellers and dealers of motor vehicle fuel shall not utilize such games “in connection with the sale of goods or services.” By its terms, it does not prohibit those in competition with Mobil and Kulper from using the games and contests to promote the sale of competing products and services.
The general principles of law governing the constitutional challenge of a State statute as a denial of equal protection of the laws are well established. “While a State has broad power when it comes to making classifications ... it may not draw a line which constitutes an invidious discrimination against a particular class. . . . Though the test has been variously stated, the end result is whether the line drawn is a rational one.” Levy v. Louisiana,
Having in mind these principles, the test to be applied here is whether there is any rational basis for the Legislature’s prohibition of promotional games of chance, but only when operated by individuals whose business includes selling motor vehicle fuel. Stated differently, is there rational justification for concluding that the sale of nonfuel products by those who sell motor vehicle fuel is any different from the sale of those same products by those whose business does not include the sale of motor vehicle fuel? I believe that no such justification exists either in fact or in reason.
My reading of the statute convinces me that it was primarily designed to prevent the actual and potential abuses found to exist in the use of promotional games and contests when conducted in connection with the sale of products and services. The evil, as determined by the Legislature, is promotional selling itself where the promotion consists of operating games and contests. The prohibition contained in the staute, however, is addressed to motor vehicle fuel sellers only and applies to the sale of all products sold by them. Obviously, the classification is not one based on the type of product since it applies to all products sold by motor vehicle fuel sellers. The distinction seems to be solely one of person: he who sells motor vehicle fuel as a large or small part of his business activity has become so specially affected that his promotion of nonfuel products on the same premises is prohibited, whereas those in competition with him in the sale of nonfuel products who sell no motor vehicle fuel are exempted from the prohibition.
The record establishes no reasonable justification for the distinction made in the statute. No evils found to exist in promotional selling were unique to those whose business activity included the sale of motor vehicle fuel. In fact, a similar rule for the proscription of promotional games promulgated by the Federal Trade Commission was a response to the actual and potential abuses found
In Hall-Omar Baking Co. v. Commissioner of Labor & Indus.
The defendant, in seeking to sustain the constitutionality of the statute, relies on the decisions of this court which have sustained legislation regulating the size and placement of price signs by retail dealers in motor vehicle fuel. G. L. c. 94, § 295C. Slome v. Chief of Police of Fitchburg,
In the Slome case, we specifically noted the narrow scope of our decision with respect to the price sign statute. Before holding that the statute was constitutionally permissible, we observed that it did not purport to regulate those aspects of a gasoline seller’s business which were conducted in competition with other businesses including those selling nonfuel products. “This statute deals only with signs designating the price of motor fuel. ... It in no way limits the proprietor of a filling station in using or displaying, upon any portion of the premises, signs of such dimensions as he may deem convenient, with lettering of such size as he may consider advantageous, advertising every article, including motor
The defendant directs the court’s attention to those decisions which state that when legislative authority is exerted within a proper area, it need not embrace every conceivable problem within that field. See Mulligan v. Hilton,
Furthermore, this court’s decisions which have sustained legislation affecting certain businesses as distinct classes are distinguishable from the present case. In Commonwealth v. Boston & Maine Transp. Co.
In Opinion of the Justices,
In Pioneer Credit Corp. v. Commissioner of Banks,
See footnote 3 of the majority opinion.