Yellow Pages Companies Challenge Seattle Opt-out Ordinance on First Amendment Grounds

[Post by Venkat Balasubramani]

Dex Media West, Inc., et al. v. City of Seattle, et al., Case No. 10-cv-01857 (W.D. Wash. complaint filed Nov. 15, 2010)

In what many will probably characterize as a dinosaur’s last gasp litigation strike, two yellow pages companies sued to invalidate the City of Seattle’s scheme to allow its residents to opt-out from yellow pages distribution. They are likely to be successful this time around. In fact, after reviewing plaintiffs’ summary judgment motion, I’m surprised the City of Seattle just doesn’t go back to the drawing board and rewrite the statute.

Seattle Ordinance 123427 sets up an opt-out scheme for yellow pages which are distributed in the City of Seattle. The ordinance contains a licensing provision, requiring distributors to obtain licenses and pay an annual fee of $100. Yellow pages distributors are required to submit annual reports “describing the quantity of yellow pages phone books . . . distributed within the City during the previous calendar year.” The ordinance further empowers the Director of Seattle Public Utilities to set up an Opt-Out Registry which will “serve as a clearinghouse for residents and businesses to register” and opt-out. The opt-out registry will be made available to distributors, who have to provide their contact information and will also forward any opt-out requests received from residents. The scheme also imposes a “recovery fee” designed to recoup recycling costs ($0.14 per book and $148.00 per ton of yellow pages). Finally, the scheme allows the Director to suspend or revoke a license and fine those who do not comply.

Conceptually, yellow pages fall within the category of materials that citizens should be able to opt-out from. Yellow pages are not political speech. They are heavy and cost money to dispose of, and they are delivered somewhat intrusively to your doorstep. Should the government be allowed to restrict delivery of this material to citizens who opt-out?

The answer is likely yes, and the classic case cited in support of the constitutionality of an opt-out is Rowan v. United States Post Office, 39 U.S. 728 (1970). Rowan involved a statute which allowed people to opt-out from mailings which the recipients deemed obscene and which were sent through the postal service. Although not perfectly analogous, it certainly lends some support to the general idea that an opt-out from unwanted intrusive communications should be constitutionally acceptable.

Generally speaking, challenges to government schemes allowing people to opt-out of other unsolicited communications have not been successful. For example, courts have rejected challenges to the junk-fax statute, on the basis that the government has an adequate interest in preventing the intrusion in privacy and increased costs resulting from an unwanted fax. (See, e.g., State of Mo. v. American Blast Fax, Inc., 323 F.3d 649 (8th Cir. 2003).) The do-not-call list has similarly been upheld against a court challenge. (See FTC v. Mainstream Marketing Services, 345 F. 3d 850 (10th Cir. 2003).) Of course, challenges to anti-spam statutes have not fared particularly well either (a few exceptions notwithstanding).

However, the cases resolving challenges to opt-out schemes make clear that the restrictions have to satisfy two First Amendment principles: the restrictions must be narrowly tailored and not be content based (unless the entire category of content is not entitled to First Amendment protection). And this is where the Seattle ordinance runs into trouble. As pointed out in plaintiffs’ summary judgment motion, the statute suffers from a number of classic flaws – among other things:

– the statute singles out yellow pages from all other types of unsolicited pamphlets, without reference to the harms sought to be remedied;
– the City made exceptions to satisfy local business interests, such as business associations;
– the ordinance also contains a licensing scheme which is at best highly suspect;
– the statute compels the yellow pages publishers to publish an unwanted message (in the form of opt-out notices and messaging on the cover)
– the statute charges the yellow pages companies to dispose of the books even though the unwanted or discarded books are recycled or disposed of by the recipients;
– yellow pages companies already employ opt-out mechanisms and have no interest in delivering yellow pages to recipients who do not want them (there’s no indication that the opt-out system set up by the City will be more effective).

I can see the City being able to penalize distributors who do not comply with constitutionally permissible restrictions, but to think you have to be licensed to distribute yellow pages in the City of Seattle? That just doesn’t sound like it will ever fly.

The City of Seattle argued in its filings that yellow pages are categorically harmful and unwanted, and thus the City should be allowed to ban them altogether, but that’s a tough argument to make. The City also argues that yellow pages are commercial speech which is entitled to a lesser degree of protection. You can access the City’s opposition to plaintiffs’ motion here, but I was not persuaded after reading it.

A possible solution is to set some sort of weight limit or page limit, and say that unsolicited pamphlets (of any type) are fine so long as they do not exceed a certain number of pages or a certain weight. This is one way to tackle the problem without reference to the content in question. Another option is to require the distributors to include an opt-out card which recipients can mail in to opt-out, or to referenced a website where recipients can opt-out, and to penalize any distributors or publishers who fail to honor opt-outs.

Plaintiffs’ motion for summary judgment contains a few interesting facts around advertising. For example, in one yellow pages book, advertising comprises approximately 35% of the directory, and in another it comprises 15-35%. In comparison, as noted in the motion, advertising makes up 58% of Vogue magazine, 52% of Forbes magazine, and 74% of Bride’s magazine.

Underlying this lawsuit is the fact that paper-based yellow pages operations are seeing their end days. Look up services have migrated online, and local advertising is not the greatest source of revenue. (Even Google is struggling to ramp up its local advertising operation, hiring sales people to engage in direct sales.)

In the meantime, we’ll see what the court does with the statute, but I’m highly skeptical of its viability.

Related:

“At Last, You Can Send the Yellow Pages to Hell” (Gizmodo, noting the launch of the “National Yellow Pages Consumer Choice & Opt-Out Site“) (Feb. 1, 2011)

“Verizon seeking permission to stop delivering white pages in Maryland, Virginia” (Washington Post) (Nov. 16, 2010)

“Banned Books in Seattle: Yellow Pages Cries Foul Over ‘Opt-Out’ Law” (WSJ Law Blog) (Nov. 16, 2010)