Snell v. Engineered Systems & Designs, Inc.Snell v. Engineered Systems & Designs, Inc.
In this appeal from the Court of Chancery, we consider whether Section 2825 of the Delaware Professional Engineers’ Act, 24
Del.C.,
chapter 28 (the “Act”), may constitutionally prohibit Engineered Systems and Designs (“ESD”) from using the term “engineered” in its trade name. The Council of the Delaware Association of Professional Engineers (the “Council”) brought this action for a declaratory judgment and injunctive relief, claiming that Section 2825 bars ESD’s use of that term and that the statute is constitutional. ESD counterclaimed under
We agree with the Court of Chancery on this record that the Council did not prove that ESD could be constitutionally prohibited from using the term “engineered” and we conclude that the Court of Chancery correctly denied the Council’s motion for injunctive relief, but we reach these conclusions on different grounds and, thus, reverse in part. We hold that the Court of Chancery erred when it held that ESD’s use of the term “engineered” is a per se violation of Section 2825 and that the Act is unconstitutional as applied to ESD. We agree with the Court of Chancery that ESD’s counterclaim should be dismissed, but in view of our analysis of the case, we hold that it should be dismissed as moot. We remand to the Court of Chancery with directions to enter an appropriate declaratory judgment, to dismiss ESD’s counterclaim as moot, and for other proceedings consistent with this Opinion. Accordingly, we: (1) REVERSE the holding that Section 2825 is unconstitutional as applied to ESD; (2) AFFIRM the denial of injunctive relief; (3) AFFIRM the dismissal of ESD’s counterclaim; and (4) REMAND for proceedings consistent with this Opinion.
1. STATUTORY HISTORY
The Act
2
regulates the practice of engineering within Delaware so as to “safeguard life, health and property and to promote the public welfare.”
The Act establishes the Delaware Association of Professional Engineers (“DAPE”) to self-regulate the practice of engineering in Delaware.
II. THE FACTS
As the record in the Court of Chancery shows, there is no disputed issue of material fact, thus presenting matters of law for the plenary review of this Court.
See Hoechst Celanese v. Certain Underwriters at Lloyd’s, London,
Del.Supr.,
ESD is a Delaware corporation with its principal place of business in New Castle County. Its primary activities include the development, manufacture and sale of instruments for measuring various parameters of water and instruments for measuring radiation. ESD is not licensed to practice engineering, does not practice engineering, and does not employ anyone who engages in the practice of engineering as defined in the Act. ESD has never held itself out as an engineering firm and has responded to all inquiries regarding its activities by stating that it is “a manufacturing concern and does not provide any engineering services.” It nonetheless has used the word “engineered” as an adjective in its business name and advertising since 1975. 4
ESD admits to being in “potential” violation of
The trial court found, in response to a motion for summary judgment, that
Based on that analysis the Court of Chancery held that
III. THE STATUTE AND APPLICABLE PRINCIPLES OF STATUTORY CONSTRUCTION
... any name, title, description or designation, either orally or in writing, that will lead to the belief that such person is entitled to practice engineering as defined in this chapter, including without limitationthe words “engineer” or “engineering” or any modification or derivative of those words; ...
(emphasis added). The Court of Chancery interpreted
This Court has spoken on the proper approach to the construction of statutes in various contexts, noting “the strong judicial tradition in Delaware in support of a presumption of the constitutionality of a legislative enactment.”
Opinion of the Justices,
DehSupr.,
[W]e become mindful of the traditional self-restraint of this Court whenever it becomes engaged in testing the constitutionality of an act of the General Assembly. ... Legislative acts should not be disturbed except in clear cases, and then only upon weighty considerations; a legislative enactment is cloaked with a presumption of constitutionality and should not be declared invalid unless its invalidity is beyond doubt. Klein v. National Pressure Cooker Co., Del.Supr.,31 Del.Ch. 459 ,64 A.2d 529 (1949).
Justice v. Gatchell,
Del.Supr.,
Based on this judicial tradition, we hold that the Court of Chancery erred in finding that
The interpretation of the statute is aided by the synopsis to a recent amendment to
IV. FIRST AMENDMENT JURISPRUDENCE AS A BACKDROP TO STATUTORY CONSTRUCTION
There is no dispute that, pursuant to the State’s police power, the General Assembly may regulate the practice of engineering and the engineering profession within Delaware.
See State v. Durham,
Del.Super.,
Commercial speech is “‘linked inextricably’ with the commercial arrangement it proposes.”
Edenfield v. Fane,
In
Central Hudson,
the United States Supreme Court has developed a test for determining whether a state’s circumscription of commercial speech runs afoul of the First Amendment.
Under Central Hudson, the government may freely regulate commercial speech that concerns unlawful activity or is misleading. Id., [447 U.S.] at 563-564,100 S.Ct., at 2350 . Commercial speech that falls into neither of those categories, like the advertising at issue here, may be regulated if the government satisfies a test consisting of three related prongs: first, the government must assert a substantial interest in support of its regulation; second, the government must demonstrate that the restriction on commercial speech directly and materially advances that interest; and third, the regulation must be “ ‘narrowly drawn,’ ” id., at 564-565,100 S.Ct., at 2350-51 .
— U.S. at -,
The analysis has been held to involve an investigation of whether the speech is “actually or inherently misleading” or merely “potentially misleading.”
Peel v. Attorney Reg
Using this analysis, the Court of Chancery found that ESD’s use of the term “engineered” was not actually or inherently misleading, but rather potentially misleading. Slip op. at 10-14,
Based upon our reading of the Act, we hold that
y. ESD’S USE OF TERM “ENGINEERED” IS NOT MISLEADING ON THIS RECORD
Having determined that
The Council contends that the Court of Chancery erred in its determination that the term “engineered” is not actually or inherently misleading. The Court of Chancery’s determination that ESD’s use of the term “engineered” was not actually or inherently misleading, although resembling a factual question, is actually a matter of law,
Peel,
We agree with the Court of Chancery that the term “engineered,” as used by ESD, is not inherently misleading.
Peel
requires that, for a company’s commercial use of a term to be inherently misleading, the term must be likely to deceive the public based upon the general public’s use of the term.
Peel,
We look first to the statutory analysis of whether or not use of the term “will lead to the belief that [ESD] ... is entitled to practice engineering-”
engineer vt ... 8. to arrange, manage, or carry through by skillful or artful contrivance.
Random House Unabridged Dictionary,
at 645 (2d ed. 1993). In the absence of proof to the contrary, ESD’s use of the adjective “engineered” in its title would seem to describe the method of producing its product. Thus, it conforms more to the dictionary definition of an adjective derived from the verb “engineer” than it does to the
We now examine whether ESD’s use of the adjective “engineered” in this context “will lead to the belief’ that ESD is entitled to practice engineering.
Y. BURDEN OF PROOF TO SHOW STATUTORY VIOLATION
Having determined that
From an appellate perspective, a decision granting summary judgment over the objection of the non-movant, does not, strictly speaking, present for review “factual findings” but rather presents the legal conclusion that there is no factual bar to the determination of the legal merit of the movant’s position. Since that determination is made on a paper record we are free to draw our own inferences as to the legal significance of such evidence. Given the same record, the Court is as institutionally competent to discern the existence of factual disputes as is the trial court.
Id.
(quoting
Merrill v. Crothall-American, Inc.,
Del.Supr.,
We find that the Council has not satisfied its burden. The Council’s evidence was limited to: (1) anecdotal evidence of approximately four persons who called ESD in a given year to inquire whether ESD offered engineering services; and (2) a 1992 Gallup Organization poll (the “Gallup Poll”), 11 in which 85 percent of a random sample of Missouri residents stated that, for a company to use the word “engineering” in its name, its work should be supervised by a licensed engineer.
Although the Council submitted that, on average, four people per year called ESD and asked if it provides engineering services, this evidence does not create an issue of material fact whether a reasonable person would be misled by ESD’s use of the word “engineered.” In order to prove that a reasonable person would have been misled, specific evidence in the nature of a survey 12 or actual proof of the state of mind of a reasonable number of callers might suffice. Those questions are not before us, but on the record before us, proof is missing that a reasonable person would be misled.
Further, there are two reasons why the impact of the 1992 Missouri Gallup Poll is not probative of the question whether a reasonable person would be misled in this case, notwithstanding the fact that relevant survey information is generally helpful in cases such as these,
see, e.g., Moore v. California State Bd. of Accountancy,
The Council relies on
McWhorter v. State of Ala. Bd. of Registration for Professional Eng’rs & Land Surveyors,
Ala.Supr.,
Based on the fact that the Council has failed to satisfy its burden of showing by a preponderance of the evidence that ESD’s use of “engineered” in its title would mislead a reasonable person, we hold that
y. ESD’S COUNTERCLAIM
ESD counterclaimed against the Council pursuant to
To support a
VI. CONCLUSION
The order of the Court of Chancery provides:
1. The Delaware Association of Professional Engineers’ request for an injunction against Engineered Systems & Designs’ use of the term “engineered” is denied.
2. The Delaware Association of Professional Engineers request for declaratory judgment that 24 Del.G.§ 2825 is constitutional on its face is denied.24 Del. C. § 2825 cannot be enforced against ESD, but may stih be appbed against inherently misleading speech.
3. Defendant ESD’s claim under42 U.S.C. § 1983 against plaintiffs is dismissed.
We hold that the Court of Chancery erred in construing
Finally, we REMAND this proceeding to the Court of Chancery with directions to enter an appropriate declaratory judgment and for other proceedings consistent with this Opinion. Jurisdiction is not retained.
Notes
. The Act became law on July 7, 1972, and succeeded
. The Act requires any corporation or partnership that offers engineering services to obtain a Certificate of Authorization. 24 Del.C. % 2821(e).
. It is important to observe that the record in this case is limited to an analysis of the word "engineered” as a modifier of the nouns “systems” and “designs.” As such, it is used as an adjective derived from the past tense of the transitive verb "to engineer.” Although there was an allegation in the complaint that defendant also used the term “engineering," that allegation either was not pressed before the Court of Chancery or did not form a basis for that court's decision:
engineering_, n. 1. the art or science of making practical application of the knowledge of pure sciences, as physics or chemistry, as in the construction of engines, bridges, buildings, mines, ships, and chemical plants. 2. the action, work, or profession of an engineer. 3. skillful or artful contrivance; maneuvering.
Random House Unabridged Dictionary, at 645 (2d ed. 1993). Whether or not ESD’s use of the noun (or gerund) "engineering” would have created a different issue is not now before the court.
. Apparently this admission was intended to test the constitutionality of the statute. We are not bound, however, by the admission insofar as it is designed to seek an advisory opinion. There must be an actual controversy.
See Stroud v. Milliken Enterprises, Inc.,
Del.Supr.,
. See supra note 5.
.
See In re Tavel,
Del.Supr.,
. As the Court of Chancery noted, the "over-breadth doctrine!,]” which permits a parly to argue that a statute interferes with protected speech even if the statute is constitutional as applied to the party before the court,
Broadrick v. Oklahoma,
. The United States Supreme Court has not defined with any specificity the concept of "inherently misleading” commercial speech. The Court of Appeals for the Fifth Circuit gave some guidance, however, when it found that terms might be inherently misleading when they " 'ha[ve] no fixed, ascertainable meaning to the average Consumer ... [and are] amorphous, and ... misleading to the public_’ "
Joe Conte Toyota, Inc. v. Louisiana Motor Vehicle Comm’n,
5th Cir.,
.
any professional service performed for the general public such as consultation, investigation, evaluation, planning, design or responsible supervision of construction or operation in connection with any public or private utilities, structures, buildings, machines, equipment, processes, works or projects wherein the public welfare or the safeguarding of life, health or property is concerned or involved when such professional service requires the application of engineering principles and data, but it does not include the work ordinarily performed by persons who operate or maintain machinery or equipment, neither does it include engineering services performed by an employee of a firm or corporation that does not offer professional engineering services to the general public.
. "The Missouri Board of Architects, Professional Engineers and Land Surveyors contracted with The Gallup Organization of Lincoln, Nebraska to conduct a survey to determine the expectations of Missourians regarding the use of the word ‘engineer’ or its derivatives in titles and company names.” Max D. Larsen, Ph.D., The Gallup Organization, Inc. Missouri Board of Architects, Professional Engineers and Land Surveyors — Reasonable Person Study (Dec. 19, 1992).
. This analysis with regard to surveys is analogous to that regularly used in trademark cases. It is customary in trademark cases to use survey information when attempting to show a confusing similarity between a trademark sought to be protected and a trade or business name that is alleged to be infringing.
See Draper Communications v. Delaware Valley Broadcasters L.P.,
Del. Ch.,
. See supra note 4.
. The Council offered to discontinue efforts to enforce