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Commercial Speech Digest |
UPDATE |
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Court Strikes Law on Repair Shop 'Steering'
A New York law prohibiting insurance companies from suggesting particular repair shops to their clients violates the First Amendment, a federal district court has ruled. Two insurance companies, Allstate Insurance Co. and Geico General Insurance Co., challenged Section 2610(b) of the state's insurance statute. State officials argued the law was necessary to regulate the insurance industry and to protect consumers from the coercive practice of "steering" -- giving insureds unsolicited referrals to repair shops that have special deals with insurance companies. Although the federal court recognized that the state had substantial interests in regulating the insurance industry and protecting consumers, the court determined that Section 2610(b) did not directly and materially advance those interests. "The Department set forth no reliable proof that consumers experience any confusion about their rights in the repair shop selection process, or in any way feel coerced or intimidated," the court wrote. The judge noted that the insurance companies were often in the "best position to assist customers" in selecting an appropriate repair shop. The court also determined that the statute was not narrowly tailored enough to survive constitutional scrutiny. The court noted that state antitrust laws were a better way of regulating the insurance industry and promoting competition. Allstate Insurance Co. v. Serio, 97 CIV. 0670 (RCC), 97 CIV. 0023 (RCC) (S.D.N.Y. May 5, 2000). City Can Ban Auctions in Residential Areas The city of Coral Gables, Fla., can prohibit auctions of commercial goods in residential areas without violating commercial speech rights, a three-judge panel of the U.S. Court of Appeals for the Eleventh Circuit has ruled. In 1996, the city issued several citations to Jim Gall, Auctioneers for "conducting business from a residence" after the company held a three-day auction at a private residence where commercial goods were sold. The company challenged the city's ban as a violation of its commercial speech rights. Applying the Central Hudson test, the panel determined the city had a substantial interest in maintaining neighborhood aesthetics and traffic flow. The company argued the ban did not directly advance the city's interests in part because the city allowed garage sales and open houses. However, "the Constitution does not require the City to choose between curing all of its aesthetic problems or curing none at all," the panel said. Finally, the court determined the regulation was narrowly enough drawn to satisfy constitutional scrutiny. The ban, according to the panel, was a proper balance between the commercial interests of businesses and the city's interests in "preserving the character of its residential neighborhoods." Jim Gall, Auctioneers, Inc. v. City of Coral Gables, No. 99-11517 (11th Cir. April 27, 2000). More Attempts To Restrict Outdoor Ads Legislatures in several states began the year by attempting to restrict or ban outdoor advertising for alcohol and tobacco. A bill introduced in the California Assembly would ban alcohol ads within 1,000 feet of schools and playgrounds. A measure in the West Virginia House would impose an outright ban on all forms of outdoor tobacco advertising. A Rhode Island bill would ban tobacco and alcohol billboards within one mile of schools. None of the measures has passed yet. A 1,000-foot ban on tobacco billboards in Massachusetts was stayed by a First Circuit judge in February. The matter is still pending.
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CSD Editorial Board
Steven G. Brody, Esq.
Robert Corn-Revere, Esq.
P. Cameron DeVore, Esq.
David L. Hudson, Jr., Esq.
Daniel L. Jaffe
John Kamp
Paul McMasters
Prof. Robert M. O'Neil
Dr. Craig R. Smith
Daniel E. Troy, Esq.
John J. Walsh, Esq.
Prof. Harvey Zuckman |
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