The petitioner in this case, Nick Nefedro, wishes to open a fortunetelling business in Montgomery County. Montgomery County, however, has an ordinance ("the Fortunetelling Ordinance") that prohibits the acceptance of remuneration for fortunetelling. Nefedro has asked us to determine whether the Fortunetelling Ordinance violates his right to freedom of speech under the First Amendment to the United States Constitution and Article 40 of the Maryland Declaration of Rights. Montgomery County argues that the Ordinance does not implicate those constitutional provisions or, in the alternative, that it is consistent with the federal and state constitutions. After reviewing the facts of the case and the relevant sources of law, we shall agree with Nefedro.
This case arose in the Circuit Court for Montgomery County. On May 28, 2008, Nefedro filed suit against the County and Isiah Leggett, the County Executive for Montgomery County (collectively, "the County"). In his complaint, Nefedro challenged the Fortunetelling Ordinance on the grounds that it violates the First Amendment and Article 40 of the Maryland Declaration of Rights. The parties filed cross-motions for summary judgment, as well as oppositions and replies to those motions. On December 11, 2008, the trial court granted summary judgment in favor of the County, concluding that the Fortunetelling Ordinance is constitutional. Nefedro noted a timely appeal to the Court of Special Appeals. Before the intermediate appellate court had an opportunity to hear arguments in the case, we issued a writ of certiorari on our own motion. Nefedro v. Montgomery County, 410 Md. 165, 978 A.2d 245 (2009).
The following facts are not in dispute. Nefedro is engaged in the fortunetelling business in several locations across the country. In this business, he charges customers a fee in exchange for fortunetelling, palm reading, and other related services. Nefedro has stated that he intends to open a location for his fortunetelling business in Montgomery County.
There is some dispute about what Nefedro has done in furtherance of his expressed intent to open a business in Montgomery County. Nefedro claims that he leased property in Montgomery County, paid rent on the property, purchased furnishings for the property, placed a sign in the storefront announcing that the fortunetelling business would soon open, and attempted to acquire a business license from the Montgomery County Licensing Department.
There is no dispute that the Fortunetelling Ordinance prohibits the acceptance of remuneration for the performance of fortunetelling. The Ordinance states:
Montgomery County Code, § 32-7 (1999).
Nefedro filed suit against the County. In his suit, Nefedro asked the court for a declaratory judgment, pursuant to Maryland Code (1973, 2006 Repl. Vol.), § 3-406 of the Courts and Judicial Proceedings Article, stating that the Fortunetelling Ordinance violates his First Amendment right to freedom of speech and Article 40 of the Maryland Declaration of Rights.
Nefedro appealed the trial court's ruling. While the case was before the Court of Special Appeals, we granted certiorari on our motion to answer the following question:
After receiving briefs and hearing arguments from both parties, we answer this question in the affirmative and reverse the judgment of the Circuit Court.
As an initial matter, the County argues that Nefedro lacks standing to challenge the Fortunetelling Ordinance. In "a multitude of cases," this Court has "recognize[d] the availability of actions for declaratory judgments or injunctions challenging the validity of statutes or regulations which may, in the future, be applied to or adversely affect the plaintiffs." Jackson v. Millstone, 369 Md. 575, 588-90, 801 A.2d 1034, 1042-43 (2002) (citing many cases).
The record shows that, at the very least, the Fortunetelling Ordinance will adversely affect Nefedro.
We now address Nefedro's First Amendment challenge to the Fortunetelling Ordinance. Nefedro argues that the Ordinance violates his right to freedom of speech as guaranteed by the First Amendment.
The Fortunetelling Ordinance Regulates Speech
There seems to be no dispute between the parties in this case that fortunetelling is speech.
The First Amendment, as applied to the states by the Fourteenth Amendment, prohibits the states from passing laws "abridging the freedom of speech." U.S. Const. amend. I. The United States Supreme Court has explained:
Ashcroft v. ACLU, 535 U.S. 564, 573, 122 S.Ct. 1700, 1707, 152 L.Ed.2d 771, 780 (2002) (Ashcroft I).
Assuming, as we do, that fortunetelling is speech, the question before us is whether the Fortunetelling Ordinance violates the First Amendment by improperly restricting that speech. The County argues that the Ordinance does not implicate the First Amendment at all because it prohibits not fortunetelling itself, but the receipt of remuneration for fortunetelling. This is not a meaningful distinction. The Supreme Court has held that a restriction on compensation for speech implicates the First Amendment. In United States v. National Treasury Employees Union, the Court found unconstitutional the application of a federal law that banned honoraria for federal employees.
Cases involving "Son of Sam" laws further illustrate the principle that restrictions on the receipt of remuneration for speech implicate the First Amendment.
Other jurisdictions, including this one, have explicitly followed Simon & Schuster in concluding that restrictions on remuneration for speech implicate the First Amendment. In Curran v. Price, 334 Md. 149, 638 A.2d 93 (1994), we concluded that the Maryland "Son of Sam" statute implicates the First Amendment. The statute, Maryland Code (1957, 1992 Repl. Vol., 1993 Cum. Supp.) Art. 27, § 764, had been modeled after the invalidated New York statute. Curran, 334 Md. at 159-60, 638 A.2d at 98. It required parties to submit to the State certain crimes-related speech contracts and compensation arising from those contracts. Curran, 334 Md. at 154-56, 638 A.2d at 96-97. Although the Legislature had amended the statute to address some of the concerns raised in Simon & Schuster, we concluded that the statute still placed a burden on speech. Curran, 334 Md. at 161, 638 A.2d at 99. As we explained, "to deny compensation for certain speech will chill such speech." Curran, 334 Md. at 162, 638 A.2d at 99. The state supreme courts in Arizona, California, Massachusetts, Nevada, and Rhode Island have each reached the same conclusion. See State ex rel. Napolitano v. Gravano, 204 Ariz. 106, 60 P.3d 246, 250-52 (App.2002) (concluding that the First Amendment applied to a law that called for the forfeiture of royalties from books based on racketeering activities); Keenan v. Superior Court, 27 Cal.4th 413, 117 Cal.Rptr.2d 1, 40 P.3d 718, 722 (2002) (concluding that "California's analogous provision [to the statute at issue in Simon & Schuster] similarly imposes a content-based financial penalty on protected speech"); Opinion of the Justices to the Senate, 436 Mass. 1201, 764 N.E.2d 343, 347 (2002) ("Consistent with other courts, we conclude that [a pending bill proposing a `Son of Sam' law] is a content-based regulation of speech."); Seres v. Lerner, 120 Nev. 928, 102 P.3d 91, 97 (2004) ("Because [the `Son of Sam' law] is a content-based restriction on speech, the statute must pass a strict scrutiny level of review, in line with relevant case authority."); Bouchard v. Price, 694 A.2d 670, 676 (R.I.1997) ("[W]e are persuaded that the criminal royalties act is a content-based statute."). Like the Fortunetelling Ordinance, "Son of Sam" laws restrict the ability of an individual to receive remuneration for his or her speech.
The above notwithstanding, the County repeatedly asserts, and the dissent agrees, that fortunetelling is "inherently fraudulent" and, as a result, should not receive any First Amendment protection. Indeed, the First Amendment does not protect fraudulent statements. Illinois ex rel. Madigan v. Telemarketing Assocs., 538 U.S. 600, 612, 123 S.Ct. 1829, 1836, 155 L.Ed.2d 793, 804 (2003) ("[T]he First Amendment does not shield fraud."). We are not, however, persuaded that all fortunetelling is fraudulent. While we recognize that some fortunetellers may make fraudulent statements, just as some lawyers or journalists may, we see nothing in the record to suggest that fortunetelling always involves fraudulent statements. Indeed, fortunetellers, like magicians or horoscope writers, are able to provide entertainment to their customers or some other benefit that does not deceive those who receive their speech. Just as many other courts have concluded, we view this non-fraudulent speech as receiving protection under the First Amendment. See,
In response, the County and the dissent have cited a number of cases in which courts have referred to fortunetelling as fraudulent. We are unpersuaded by these cases. In most of them, the courts were not asked to consider whether fortunetelling was protected speech. See Mitchell v. City of Birmingham, 222 Ala. 389, 133 So. 13 (1931) (addressing the authority of a municipality to pass an ordinance inconsistent with state law); Bridewell v. City of Bessemer, 35 Ala.App. 337, 46 So.2d 568 (1950) (addressing the authority of a municipality to levy a prohibitory licensing fee outside its city limits); White v. Adams, 233 Ark. 241, 343 S.W.2d 793 (1961) (addressing whether the vocation of fortunetelling is a common right or a privilege upon which the state may impose a prohibitory tax); Fay v. Lambourne, 124 A.D. 245, 108 N.Y.S. 874 (1908) (addressing a suit by fortunetellers asking for an injunction prohibiting other fortunetellers from using a particular trade name). In another case, there was no freedom of speech argument before the court and the fortunetelling remuneration ban at issue included an explicit exemption for fortunetelling performed "for the purpose of entertainment or amusement." Ballard v. Walker, 772 F.Supp. 1335 (E.D.N.Y.1991) (addressing N.Y. Penal Law § 165.35 (McKinney 1988)). Yet another case, In re Bartha, 63 Cal.App.3d 584, 134 Cal.Rptr. 39 (1976), has been explicitly disavowed by that state's supreme court. Spiritual Psychic, 217 Cal.Rptr. 225, 703 P.2d at 1122 ("We are unable to subscribe to Bartha's broad characterization of fortunetelling as an exclusively commercial activity, and to the theory that it therefore can be indiscriminately regulated, or, in this instance, wholly prohibited."). These cases do not affect our conclusion that some fortunetelling is simply not fraudulent.
The only two cases that the County and the dissent have cited that might have any persuasive effect are a 1928 decision from the Supreme Court of Ohio, Davis v. State, 118 Ohio St. 25, 160 N.E. 473 (1928), and an unreported opinion from the United States District Court for the District of Maryland, Mitchell v. Hartford County, No. L-01-3998 (D.Md. Sept. 5, 2002). In regard to Davis, we agree with the United States District Court for the Northern District of Ohio, which rejected Davis when striking down a fortunetelling ban, stating:
Angeline v. Mahoning County Agric. Soc'y, 993 F.Supp. 627, 633 (N.D.Ohio 1998) (citations and quotations omitted). As for Mitchell, we decline to do as that court did and "defer to the legislative finding... that fortunetelling is inherently deceptive and, therefore, is unprotected speech." Mitchell, No. L-01-3998 at 3. Such deference would allow legislatures to ban any manner of protected speech by simply declaring it "inherently deceptive." Accordingly, we conclude that the Fortunetelling Ordinance regulates speech that the First Amendment protects.
Fortunetelling Is Not Commercial Speech
The County argues that if we conclude that the Fortunetelling Ordinance regulates speech, as we have, then it is still constitutional because, according to the County, the law regulates only commercial speech. While we acknowledge that laws restricting commercial speech receive less scrutiny than laws restricting noncommercial speech, we disagree that the Fortunetelling Ordinance regulates commercial speech.
The Supreme Court has explained that laws regulating commercial speech do not receive the same level of heightened scrutiny as laws regulating other types of speech. In Central Hudson Gas & Electric Corp. v. Public Service Commission, the Court explained that although the First Amendment "protects commercial speech from unwarranted governmental regulation," there is a "`commonsense' distinction between speech proposing a commercial transaction, which occurs in an area traditionally subject to government regulation, and other varieties of speech." 447 U.S. 557, 561-62, 100 S.Ct. 2343, 2349, 65 L.Ed.2d 341, 348 (1980) (quoting Ohralik v. Ohio State Bar Assn., 436 U.S. 447, 455-56, 98 S.Ct. 1912, 1918, 56 L.Ed.2d 444, 453 (1978)). Accordingly, "[t]he Constitution... accords a lesser protection to commercial speech than to other constitutionally guaranteed expression." Cent. Hudson, 447 U.S. at 562-63, 100 S.Ct. at 2350, 65 L.Ed.2d at 348-49.
In this regard, our initial determination is whether fortunetelling is commercial speech. The general rule is that commercial speech is speech that "propose[s] a commercial transaction." Bd. of Trs. of State Univ. of N.Y. v. Fox, 492 U.S. 469, 473-74, 109 S.Ct. 3028, 3031, 106 L.Ed.2d 388, 399 (1989) (quoting Va. State Bd. of Pharmacy v. Va. Citizens Consumer Council, Inc., 425 U.S. 748, 762, 96 S.Ct. 1817, 1826, 48 L.Ed.2d 346, 358 (1976)); see also Lubin v. Agora, 389 Md. 1, 23, 882 A.2d 833, 846 (2005) (explaining that commercial speech is "speech that does no more than propose a commercial transaction" (quoting Posadas de P.R. Assocs. v. Tourism Co. of P.R., 478 U.S. 328, 340, 106 S.Ct. 2968, 2976, 92 L.Ed.2d 266, 279 (1986))); Jakanna v. Montgomery County, 344 Md. 584, 595, 689 A.2d 65, 70 (1997) ("Commercial speech is `expression related solely to the economic interests of the speaker and its audience.'" (quoting Cent. Hudson, 447 U.S. at 561, 100 S.Ct. at 2349, 65 L.Ed.2d at 348)). The line between commercial and noncommercial speech can sometimes be difficult to discern, see Zauderer v. Office of Disciplinary Counsel of Supreme Court of Ohio, 471 U.S. 626, 637, 105 S.Ct. 2265, 2274, 85 L.Ed.2d 652, 663 (1985) ("More subject to doubt, perhaps, are the precise bounds of the category of expression that may be termed commercial speech ...."), but the Court has foreclosed the idea that speech is commercial simply because it is made for an economic benefit, see Bolger, 463 U.S. at 66-67, 103 S.Ct. at 2880, 77 L.Ed.2d at 477 (explaining
Fortunetelling is not commercial speech. The purpose of fortunetelling is not to propose a commercial transaction, nor is it solely related to the economic interests of the speaker. Fox, 492 U.S. at 473-74, 109 S.Ct. at 3031, 106 L.Ed.2d at 399; Jakanna, 344 Md. at 595, 689 A.2d at 70. The purpose of fortunetelling is instead to provide some other benefit to the individuals involved, whether entertainment or information that sheds light on future events. This is true even though the fortuneteller may receive money in exchange for his or her services; the fact that there is an economic motivation for speech does not transform non-commercial speech into commercial speech. Bolger, 463 U.S. at 66-67, 103 S.Ct. at 2880, 77 L.Ed.2d at 477; New York Times, 376 U.S. at 265-66, 84 S.Ct. at 718, 11 L.Ed.2d at 698. The fact that some aspect of fortunetelling may involve commerce also does not transform it into commercial speech.
The Fortunetelling Ordinance Is Not Narrowly Tailored
Having determined that the Fortunetelling Ordinance regulates fully protected speech based on its content, we now determine whether the Ordinance nonetheless passes muster under the First Amendment. A statute that regulates speech based on its content is "`presumptively invalid,' ... and the government bears the burden to rebut that presumption." United States v. Playboy Entm't Group, 529 U.S. 803, 817, 120 S.Ct. 1878, 1888, 146 L.Ed.2d 865, 882 (2000) (quoting R.A.V. v. City of St. Paul, 505 U.S. 377, 382, 112 S.Ct. 2538, 2542, 120 L.Ed.2d 305, 317 (1992)). Not every statute of this sort, however, is unconstitutional. The Supreme Court has explained that a statute
A statute is not "narrowly tailored" if "a less restrictive alternative would serve the Government's purpose." Playboy Entm't, 529 U.S. at 813, 120 S.Ct. at 1886, 146 L.Ed.2d at 879. This requirement "ensure[s] that speech is restricted no further than necessary to achieve the [intended] goal, for it is important to ensure that legitimate speech is not chilled or punished." Ashcroft v. ACLU, 542 U.S. 656, 666, 124 S.Ct. 2783, 2791, 159 L.Ed.2d 690, 701 (2004) (Ashcroft II). To that end, a court's question in determining whether a statute is narrowly tailored is "whether the challenged regulation is the least restrictive means among available, effective alternatives." Ashcroft II, 542 U.S. at 666, 124 S.Ct. at 2791, 159 L.Ed.2d at 701.
Cases involving freedom of speech demonstrate the narrow-tailoring requirement. In Ashcroft II, the Supreme Court considered the constitutionality of a federal statute that was intended to protect minors from sexually explicit materials on the Internet. 542 U.S. at 659-60, 124 S.Ct. at 2788, 159 L.Ed.2d at 697. To achieve that goal, the statute imposed a fine and prison time for the knowing posting on the Internet of content that was "harmful to minors," as defined by the statute, unless the defendant could prove that he or she took reasonable measures to make the harmful content accessible only by adults. Ashcroft II, 542 U.S. at 661-62, 124 S.Ct. at 2789, 159 L.Ed.2d at 698-99. The Court concluded that the statute was not narrowly tailored because the plaintiffs had suggested a less restrictive alternative that would be at least as effective, if not more so, than what the statute required: blocking and filtering software employed by the Internet user, as opposed to the content creator. Ashcroft II, 542 U.S. at 666-70, 124 S.Ct. at 2791-94, 159 L.Ed.2d at 701-04. Similarly, in Playboy Entertainment, the Court considered a statute that required cable television operators to fully block sexually-oriented channels during hours when children might be viewing.
The Fortunetelling Ordinance is not narrowly tailored. According to the County, the purpose of the Fortunetelling Statute is to combat the fraud that apparently ensues from fortunetelling. There is at least one less restrictive, effective means for combating fraud: laws making fraud illegal without respect to protected speech.
Fortunetelling may be pure entertainment, it may give individuals some insight into the future, or it may be hokum. People who purchase fortunetelling services may or may not believe in its value. Fortunetellers may sometimes deceive their customers. We need not, however, pass judgment on the validity or value of the speech that fortunetelling entails. If Montgomery County is concerned that fortunetellers will engage in fraudulent conduct, the County can enforce fraud laws in the event that fraud occurs. The County need not, and must not, enforce a law that unduly burdens protected speech to accomplish its goal. Such a law will curtail and have a chilling effect on constitutionally protected speech.
HARRELL, J., dissents.
HARRELL, J., dissenting.
I dissent from the reasoning and conclusion reached in the Majority Opinion, namely, that Montgomery County Code § 32-7
Maj. Op. at 599, 996 A.2d at 858. The Majority Opinion, in the face of a tide of judicial decisions from other jurisdictions expressing the view that the business of commercial fortunetelling is "inherently fraudulent" and, as such, is not entitled to protection against government restriction, offers a handful of contrary opinions (Maj. op. at 599-600, 996 A.2d at 858-59), endeavors to distinguish the greater body of cases on point (Maj. op. at 599-602, 996 A.2d at 858-60), and hazards an inapt analogy to lawyers and journalists (Maj. op. at 599-600, 996 A.2d at 858-59), the latter of which fails to recognize that, although some lawyers or journalists may make fraudulent statements, the practice of such professions without fraud is attainable. I would affirm the judgment of the Circuit Court for Montgomery County and hold that Montgomery County's election to protect its citizens (and their money and other assets) from for-profit fortunetellers, palmists, card readers, and the like, does not violate Appellant's constitutional right to free speech.
Long-standing Supreme Court precedent establishes that the guarantees of the First Amendment do not provide insulation from government restriction of speech that is fraudulent. See Illinois ex rel. Madigan v. Telemarketing Assocs., Inc., 538 U.S. 600, 612, 123 S.Ct. 1829, 1836, 155 L.Ed.2d 793, 804 (2003) ("[T]he First Amendment does not shield fraud."); Va. State Bd. of Pharmacy v. Va. Citizens Consumer Council, Inc., 425 U.S. 748, 771, 96 S.Ct. 1817, 1830, 48 L.Ed.2d 346, 364 (1976) ("Untruthful speech, commercial or otherwise, has never been protected [by the First Amendment] for its own sake."); Gertz v. Robert Welch, Inc., 418 U.S. 323, 340, 94 S.Ct. 2997, 3007, 41 L.Ed.2d 789, 805 (1974) ("[T]he intentional lie ... belong[s] to that category of utterances which `are no essential part of any exposition of ideas, and are of such slight social value as a step to truth that any benefit that may be derived from them is clearly outweighed by the social interest in order and morality.'" (quoting Chaplinsky v. New Hampshire, 315 U.S. 568, 572, 62 S.Ct. 766, 769, 86 L.Ed. 1031, 1035 (1942))). See also United States Sec. and Exch. Comm'n v. Pirate Investor LLC, 580 F.3d 233, 255 (4th Cir.2009) ("Punishing fraud, whether it be common law fraud or securities fraud, simply does not violate the First Amendment."); Commodity Trend Serv., Inc. v. Commodity Futures Trading Comm'n, 233 F.3d 981, 992 (7th Cir.2000) ("Laws directly punishing fraudulent speech survive constitutional scrutiny even where applied to pure, fully protected speech.").
Many jurisdictions deem the business of commercial fortunetelling to be an inherently fraudulent activity. Ballard v. Walker, 772 F.Supp. 1335, 1341 (E.D.N.Y. 1991) ("The fortune telling statute, in particular, was designed to protect against `a prevailing species of fraud whereby its practitioners, professing occult powers of prognostication, annually bilk a gullible public of many millions of dollars.'" (quoting N.Y. Penal Law § 165.35 (McKinney
Recognizing the foregoing analyses, Judge Legg of the United States District Court for the District of Maryland, in an unpublished memorandum opinion in Mitchell v. Harford County, No. L-01-3998 (D.Md. Sept. 5, 2002), upheld, on summary judgment, the constitutionality of anti-fortunetelling statutes passed by the City of Aberdeen and Harford County that are nearly identical to § 32-7 of the Montgomery County Code.
Id. at 1. Similarly, the Harford County Code provided:
Id. at 1-2. The plaintiff challenged the constitutionality of the respective statutes, arguing, inter alia, that they "violate[d] the guarantees of free speech contained in the First Amendment of the United States Constitution and Article 40 of the Maryland Declaration of Rights." Id. at 2.
In rejecting the plaintiff's contentions and granting summary judgment in favor of the governmental defendants, Judge Legg stated:
Id. at 3. The District Court observed further that, "[e]ven if fortunetelling were protected speech, the statutes would withstand constitutional scrutiny," opining:
Id. at 3-5.
Although the District Court's decision in Mitchell is not binding upon this Court for at least a couple of reasons, it is, in my view, sufficiently persuasive as to move me to conclude that affirmance of the judgment of the Circuit Court for Montgomery County is the correct outcome in the present case. The Fortunetelling Ordinance contained in the Montgomery County Code is, in essence, identical to the provisions upheld against First Amendment challenge by the District Court in its decision in Mitchell. By limiting its application to what many jurisdictions have concluded to be the inherently fraudulent business of fortunetelling for remuneration, rather than preventing all fortunetelling, the ordinance restricts no more speech than is necessary to further the County's expressed and significant interest in preventing fraud from being perpetrated upon its citizens. The Majority opinion, deeming itself more insightful about the nature of commercial fortunetelling than the largely factual assessment of the Montgomery County government, substitutes its judgment for that of the legislative body. I, on the other hand, would hold that § 32-7 of the Montgomery County Code does not
The problem with Nefedro's reliance on these cases is that they concern the applicability of the First Amendment when the government places restrictions on the expenditure of money by a speaker in furtherance of his or her own speech. For example, an individual must often spend money to have someone circulate a petition, so a restriction on paid petition circulators restricts the individual's ability to circulate the petition. Meyer, 486 U.S. at 422-23, 108 S.Ct. at 1892, 100 L.Ed.2d at 435-36; see also Buckley, 424 U.S. at 19, 96 S.Ct. at 635, 46 L.Ed.2d at 688 ("[V]irtually every means of communicating ideas in today's mass society requires the expenditure of money.") The present case, on the other hand, concerns a restriction not on the expenditure of money in furtherance of one's own speech, but on the receipt of money in exchange for speech. This is a related, but analytically distinct, issue.
Montgomery County Code, § 32-7 (2004).