Appellant
Posadas de Puerto Rico Associates
Appellees
Tourism Company of Puerto Rico, et al.
Appellant's Claim
That provisions and implementing regulations of Puerto Rico's Games of ChanceAct of 1948 suppressed commercial speech in violation of the First Amendmentand the equal protection and due process guarantees of the Constitution.
Chief Lawyer for Appellant
Maria Millagros Soto
Chief Lawyer for Appellees
Lino J. Saldana
Justices for the Court
Warren E. Burger, Sandra Day O'Connor, Lewis F. Powell, Jr., William H. Rehnquist (writing for the Court), Byron R. White
Justices Dissenting
Harry A. Blackmun, William J. Brennan, Jr., Thurgood Marshall, John Paul Stevens
Place
Washington, D.C.
Date of Decision
1 July 1986
Decision
Affirmed the decisions of the Puerto Rico Superior Court and the Puerto RicoSupreme Court that the act was constitutional.
Significance
The ruling continued a trend of the Court to allow the state greater latitudein the regulation of commercial speech related to activities deemed to be potentially harmful, such as smoking, consumption of alcohol, and gambling.
A Two-Edged Sword
The present effort of several U.S. cities to legalize casino gambling to spureconomic growth has a number of predecessors. Many Caribbean islands, facedwith limited traditional economic prospects, turned to gambling as a means ofpromoting tourism. Ironically, those who support the legalization of gambling view it primarily as an economic development strategy, all parties in the debates over the legalization of gambling agree that gambling produces some negative social effects. When Puerto Rico decided to legalize certain forms ofcasino gambling in the years immediately following World War II, its government clearly recognized the negative aspects of legal gambling, and constructedits legislation accordingly. The Puerto Rico Games of Chance Act of 1948 legalized roulette and dice and card games within licensed gambling rooms, but specified that such gambling rooms were to be for the exclusive use of tourists. The act also forbade the advertising of Puerto Rican gambling establishments within Puerto Rico. Although the act was expanded to allow the playing ofbingo in 1972 and the operation of slot machines in 1974, its ban on the useof Puerto Rican casinos by residents of Puerto Rico remained intact.
What Constitutes Commercial Speech?
In 1975 a group of investors known as Posadas de Puerto Rico Associates beganoperation of the Condado Holiday Inn and Sands Casino in Puerto Rico. In 1978 Posadas was twice fined by the Tourism Company of Puerto Rico for violatingthe act's prohibition against advertising casino facilities within Puerto Rico. Posadas argued that the fines were unwarranted in that its casino had undertaken no mass market advertising, but was told by the company in 1979 thatthe prohibition against advertising contained in the act "includes the use ofthe `casino' in matchbooks, lighters, envelopes, inter-office and/or external correspondence, invoices, napkins, brochures, menus, elevators, glasses, plates, lobbies, banners, flyers, paper holders, pencils, telephone books, directories, bulletin boards or in any hotel dependency or object which may be accessible to the public in Puerto Rico." Posadas then sought a declaration from the Superior Court of Puerto Rico that the act violated, both on its face and as interpreted by the company, constitutional protection of commercial speech.
Initial Ruling and a Constitutional Question?
The superior court ruled in favor of the company, with some reservations. Itfound that the act was not unconstitutional on its face, but that its interpretation by the company was overly stringent and did violate Posadas' First Amendment rights. The superior court ruled that the state did have a compellinginterest in regulating speech regarding casinos since the sole intent of theact was "to contribute to the development of tourism," and the act specifically barred residents of Puerto Rico from gambling houses. Despite finding theact legally admissible and binding, the superior court did temper the strictinterpretation of the act's prohibition of advertising applied by the company. Its ruling allowed suggestive words, such as "casino," to appear even in mass market advertising of gambling establishments within Puerto Rico, as longas these words were not emphasized within the advertisement, and such advertising was "addressed to tourists" and did not encourage residents of Puerto Rico to enter gambling houses. The superior court also allowed hotels and casinos to produce and distribute memorabilia and items of clothing bearing theirname and logo on their premises. Posadas was not satisfied by this partial victory and appealed the case to the Puerto Rico Supreme Court, which agreed with the superior court that the act was not unconstitutional. Posadas then appealed the case to the U.S. Supreme Court, which heard arguments on 28 April1986.
Regulation of Truthful Advertising
By a 5-4 margin the Supreme Court upheld the decision of the lower courts, ruling that the act was constitutional. The Court also agreed that discouragingparticipation in legal gambling by residents of Puerto Rico constituted a compelling state interest. In deciding on the constitutionality of the company's interpretation of the act, the Supreme Court applied the test for establishing violation of First Amendment protection of commercial speech developed inCentral Hudson Gas and Electric Corporation v. Public Service Commissionof New York, (1980). This test involves applying four questions to any commercial speech: does the speech promote a lawful activity and is it truthful?; is there a compelling state interest in regulating the speech?; do any regulations applied to the speech advance the state's compelling interest in such regulation?; are any regulations of the speech excessive to the state's compelling interest in such regulation? The Court ruled that the company's interpretation of the act met each of the four prongs of the Central Hudsontest, and as such affirmed the decision of the superior court. The four dissenting justices advanced the position that commercial speech that promotes alawful activity and is truthful in content should be afforded the same protection as other forms of speech.
Impact
Posadas de Puerto Rico v. Tourism Company of Puerto Rico, et al. confirmed the Court's willingness to allow greater state regulation of commercialspeech in the name of a compelling state interest, as first seen in Central Hudson. Significantly, the Court split along its perceived political lines, with the more conservative justices constituting a majority. The decision also evidenced the Court's tendency to allow greater state regulation of speech-promoting activities perceived to be potentially harmful, such as the use of tobacco products, gambling, and consumption of alcohol.
Related Cases
Posadas de Puerto Rico Associates
Appellees
Tourism Company of Puerto Rico, et al.
Appellant's Claim
That provisions and implementing regulations of Puerto Rico's Games of ChanceAct of 1948 suppressed commercial speech in violation of the First Amendmentand the equal protection and due process guarantees of the Constitution.
Chief Lawyer for Appellant
Maria Millagros Soto
Chief Lawyer for Appellees
Lino J. Saldana
Justices for the Court
Warren E. Burger, Sandra Day O'Connor, Lewis F. Powell, Jr., William H. Rehnquist (writing for the Court), Byron R. White
Justices Dissenting
Harry A. Blackmun, William J. Brennan, Jr., Thurgood Marshall, John Paul Stevens
Place
Washington, D.C.
Date of Decision
1 July 1986
Decision
Affirmed the decisions of the Puerto Rico Superior Court and the Puerto RicoSupreme Court that the act was constitutional.
Significance
The ruling continued a trend of the Court to allow the state greater latitudein the regulation of commercial speech related to activities deemed to be potentially harmful, such as smoking, consumption of alcohol, and gambling.
A Two-Edged Sword
The present effort of several U.S. cities to legalize casino gambling to spureconomic growth has a number of predecessors. Many Caribbean islands, facedwith limited traditional economic prospects, turned to gambling as a means ofpromoting tourism. Ironically, those who support the legalization of gambling view it primarily as an economic development strategy, all parties in the debates over the legalization of gambling agree that gambling produces some negative social effects. When Puerto Rico decided to legalize certain forms ofcasino gambling in the years immediately following World War II, its government clearly recognized the negative aspects of legal gambling, and constructedits legislation accordingly. The Puerto Rico Games of Chance Act of 1948 legalized roulette and dice and card games within licensed gambling rooms, but specified that such gambling rooms were to be for the exclusive use of tourists. The act also forbade the advertising of Puerto Rican gambling establishments within Puerto Rico. Although the act was expanded to allow the playing ofbingo in 1972 and the operation of slot machines in 1974, its ban on the useof Puerto Rican casinos by residents of Puerto Rico remained intact.
What Constitutes Commercial Speech?
In 1975 a group of investors known as Posadas de Puerto Rico Associates beganoperation of the Condado Holiday Inn and Sands Casino in Puerto Rico. In 1978 Posadas was twice fined by the Tourism Company of Puerto Rico for violatingthe act's prohibition against advertising casino facilities within Puerto Rico. Posadas argued that the fines were unwarranted in that its casino had undertaken no mass market advertising, but was told by the company in 1979 thatthe prohibition against advertising contained in the act "includes the use ofthe `casino' in matchbooks, lighters, envelopes, inter-office and/or external correspondence, invoices, napkins, brochures, menus, elevators, glasses, plates, lobbies, banners, flyers, paper holders, pencils, telephone books, directories, bulletin boards or in any hotel dependency or object which may be accessible to the public in Puerto Rico." Posadas then sought a declaration from the Superior Court of Puerto Rico that the act violated, both on its face and as interpreted by the company, constitutional protection of commercial speech.
Initial Ruling and a Constitutional Question?
The superior court ruled in favor of the company, with some reservations. Itfound that the act was not unconstitutional on its face, but that its interpretation by the company was overly stringent and did violate Posadas' First Amendment rights. The superior court ruled that the state did have a compellinginterest in regulating speech regarding casinos since the sole intent of theact was "to contribute to the development of tourism," and the act specifically barred residents of Puerto Rico from gambling houses. Despite finding theact legally admissible and binding, the superior court did temper the strictinterpretation of the act's prohibition of advertising applied by the company. Its ruling allowed suggestive words, such as "casino," to appear even in mass market advertising of gambling establishments within Puerto Rico, as longas these words were not emphasized within the advertisement, and such advertising was "addressed to tourists" and did not encourage residents of Puerto Rico to enter gambling houses. The superior court also allowed hotels and casinos to produce and distribute memorabilia and items of clothing bearing theirname and logo on their premises. Posadas was not satisfied by this partial victory and appealed the case to the Puerto Rico Supreme Court, which agreed with the superior court that the act was not unconstitutional. Posadas then appealed the case to the U.S. Supreme Court, which heard arguments on 28 April1986.
Regulation of Truthful Advertising
By a 5-4 margin the Supreme Court upheld the decision of the lower courts, ruling that the act was constitutional. The Court also agreed that discouragingparticipation in legal gambling by residents of Puerto Rico constituted a compelling state interest. In deciding on the constitutionality of the company's interpretation of the act, the Supreme Court applied the test for establishing violation of First Amendment protection of commercial speech developed inCentral Hudson Gas and Electric Corporation v. Public Service Commissionof New York, (1980). This test involves applying four questions to any commercial speech: does the speech promote a lawful activity and is it truthful?; is there a compelling state interest in regulating the speech?; do any regulations applied to the speech advance the state's compelling interest in such regulation?; are any regulations of the speech excessive to the state's compelling interest in such regulation? The Court ruled that the company's interpretation of the act met each of the four prongs of the Central Hudsontest, and as such affirmed the decision of the superior court. The four dissenting justices advanced the position that commercial speech that promotes alawful activity and is truthful in content should be afforded the same protection as other forms of speech.
Impact
Posadas de Puerto Rico v. Tourism Company of Puerto Rico, et al. confirmed the Court's willingness to allow greater state regulation of commercialspeech in the name of a compelling state interest, as first seen in Central Hudson. Significantly, the Court split along its perceived political lines, with the more conservative justices constituting a majority. The decision also evidenced the Court's tendency to allow greater state regulation of speech-promoting activities perceived to be potentially harmful, such as the use of tobacco products, gambling, and consumption of alcohol.
Related Cases
- Virginia Pharmacy Board v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748 (1976).
- Carey v. Population Services International, 431 U.S. 678 (1977).
- Central Hudson Gas and Electric Corp. v. Public Service Commission ofNew York, 447 U.S. 557 (1980).
- Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (1985).
- Renton v. Playtime Theaters, 475 U.S. 41 (1986).
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