NOTE: This text was converted to HTML/Web format from a copy of the electronic file used to print the official document that was submitted to the court. This text was not derived from the official printed document itself, and may not be considered a legal copy of the official document. Although the text itself is believed to be identical to that of the originating electronic file, the nature of HTML format makes the exact layout of the text on the page somewhat unpredictable. As a result, this text will not exactly duplicate the appearance of the official printed document, and page numbers in particular should be discounted.

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION

COME NOW Plaintiffs American Charities for Reasonable Fundraising Regulation, Inc., The Creative Advantage, Inc., and Norman W. Leahy, by and through their undersigned attorneys, and move this court pursuant to Fed.R.Civ.P. 59(e) to alter or amend the judgment rendered by this Court on the parties’ motions for Summary Judgment, which judgment was entered by the Clerk of this Court on November 12, 1998. The Plaintiffs respectfully request that this Court reconsider its entire ruling, (Order on Cross Motions for Summary Judgment dated November 12, 1998 hereinafter, “Decision”), and in particular that portion of its order granting the Defendants’ Motion for Summary Judgment, for the following reasons:

1. The Court has legally and factually confused “professional solicitors” with “professional fundraising consultants” with the result that the Court sanctions greater regulation of the consultant group than is appropriate given the facts and the decisional precedents. The logic and language of Court’s very own decision strongly suggests that the court misunderstands the separate and distinct functions of these two distinct classes of fundraisers and that this Court, if it understood the distinction, would have decided this case differently.

2. The Court in the Decision failed to rule on the Plaintiffs’ as applied challenge under the Due Process Clause, despite the fact that the Plaintiffs have fully presented a “case or controversy” under Article III of the United States Constitution and otherwise properly invoked the jurisdiction of this Court.

3. The Court has granted Defendants’ Motion for Summary Judgment when there are significant and material factual disputes raised by Plaintiffs regarding facts alleged by Defendants and not agreed to by Plaintiffs which facts were substantive in the Courts’ logic, reasoning and entire Decision.

Oral argument of this motion is requested.

Standard of Review on a Rule 59(e) Motion

A Court may grant a motion to alter or amend a final judgment under Fed.R.Civ.P. 59(e) if the movant points to evidence in the record which clearly establishes manifest error of law or fact, or to prevent manifest injustice. Wendy’s International, Inc. v. Nu-Cape Construction, Inc., 169 F.R.D. 680, 686 (M.D.Fla.1996). Reconsideration under Rule 59(e) is appropriate where a party demonstrates that the earlier ruling was premised upon a misunderstanding of a relevant regulatory scheme. Atlantic States Legal Foundation, Inc. v. Karg Bros., Inc., 841 F.Supp. 51, 55 (N.D.N.Y. 1993). Such a motion is particularly appropriate “when the court has patently misunderstood a party and has made a decision outside the adversarial issues presented, or has made a mistake, not of reasoning, but of apprehension.” Wendy’s International, 169 F.R.D. at 686. For the reasons set forth below, the Plaintiffs respectfully submit that reconsideration of the Court’s Decision entered on November 12, 1998 is warranted in this case.

1. The Court confused “Professional Fundraising Consultants” with “Professional Solicitors”

The Court’s decision confuses the factual distinction between consultants and solicitors. “Professional Fundraising Consultant” and Professional Solicitor” are sufficiently distinct terms that even the Pinellas County Ordinance (hereinafter, the “Ordinance”) defines each of them separately. Pinellas County Code §42-266. While the Decision asserts that (1) “it is the overt act of solicitation, and not mere ‘advice,’ that triggers the need to obtain a permit,” and (2) “the act of solicitation is what has the potential to cause the greatest harm,” those facts only logically support regulation of actual solicitation, in which the Court acknowledges the Plaintiffs do not engage. Decision at 4, Para. 6. Since even the Court acknowledges that the Plaintiffs do not solicit contributions anywhere (Id.), the Court’s conclusions that validate the Ordinance on the basis of actual solicitation in Pinellas County by Plaintiffs constitute clear legal error.

What distinguishes a “professional fundraising consultant” from a “professional solicitor” under §42-266 is that unlike the solicitor, the consultant “does not manage, conduct, or carry on fundraising activity, or solicit contributions . . . and . . . does not at any time have custody of contributions.” The Decision even found that the Ordinance’s separate definitions of the terms “Professional fundraising consultant” and “Professional solicitor” were sufficiently distinct and clear that they were not susceptible to the Plaintiffs’ vagueness challenge under the First Amendment. (Decision at 37.)

Yet despite the importance of the distinction between those fundraisers who consult and those who solicit, the Court failed to maintain this significant difference throughout its Decision, and as a result of such failure granted summary judgment to the Defendants. In essence, “fundraising solicitors” directly contact the public and/or receive the donations made by the public. An example would be telemarkerters. “Fundraising consultants” do not contact the public and do not receive the donations made by the public. An example would be direct mail consultants. This distinction is absolutely crucial in interpreting the precedents and decisional law regarding the regulation of charitable fundraising. The Courts’ failure to observe it has led to clear legal error.

For example, in Paragraph 11 of the Court’s rendition of the facts, the Court notes that “Professional fundraisers who are required to register with the State of Florida are also required to register with the County.” (Decision at 5.) However, the term “Professional fundraiser” includes within its ambit both Professional Fundraising Consultants and Professional Solicitors. While it is true that out-of-state Professional Solicitors are required to register with the State of Florida because they have contact with Florida citizens, it is simply not true that out-of-state Professional Fundraising Consultants are required to register with the State even when their clients solicit within the State. As a result of a ruling by the State of Florida Department of Agriculture and Consumer Services, out-of-state consultants who only engage in direct mail consulting and who do not solicit need not register with the State since they have no contact with the citizens of Florida. See Op. Fla. Dep’t. Of Agriculture 96-0382 (1996), a copy of which was attached as Exhibit 1 of the Plaintiff’s Brief in Support of Motion for Summary Judgment.

Plaintiffs maintain that they do not mail solicitations into Pinellas County. See Para. 25 of the Complaint and Plaintiffs’ Reply Brief footnote 30. See also Plaintiffs Motion for Summary Judgment Paras. 7, 8, 13, and 14. The Court acknowledged as much when it noted that the Plaintiffs “solicit no contributions.” (Decision at 4, Para. 6) Any solicitations which may occur are done by their client charities, not by the Plaintiffs.

Plaintiff American Charities for Reasonable Fundraising Regulation, Inc. (hereinafter, “ACFRFR”) brought this action on behalf of its “professional fundraising consultant” supporters, as well as on its own behalf. (Plaintiffs’ Complaint at Para. 17.) ACFRFR did not bring this action on behalf of “professional solicitors.” Similarly, Plaintiff The Creative Advantage, Inc. (hereinafter, “TCA”) brought this action as a professional fundraising consultant which does not solicit funds anywhere nor does it exercise any control over monies raised by its client charities. (Plaintiffs’ Complaint at Paragraph 30.). Plaintiff Norman Leahy (hereinafter, “Leahy”) also brought this action as a “professional fundraising consultant” as opposed to “professional solicitor.” (Plaintiffs’ Complaint, Exhibit C.). Leahy’s uncontroverted letter to the Defendants makes clear that he “will not personally be soliciting gifts in [Pinellas] county or elsewhere.” In fact, as a mere provider of copy to his charitable clients, Leahy has no knowledge of where and when those clients ultimately solicit. See Plaintiffs Brief in Support of Motion for Summary Judgment, text accompanying notes 25-8. This Court acknowledged that the Plaintiffs brought this action as “professional fundraising consultants” as opposed to “professional solicitors,” by accepting the Plaintiffs’ allegations as true for purposes of the Defendants’ Motion for Summary Judgment, that Plaintiffs do not solicit contributions. (Decision at 4, Para. 6.)

If consulting about fundraising with a charity which then independently chooses to solicit donations in Pinellas County amounts to some form of indirect solicitation subject to Pinellas County’s regulatory scheme, how does the Ordinance provide notice as to which consultants are subject to its regulatory scheme? Does the Court’s statement that regulation of these activities is legitimate because they “contribute” to solicitation activities in the County clarify the ambit or scope of the Ordinance? (Decision at 27.) Using “contribute” as the standard, literally anyone with any connection to a charity would be subject to regulation by the Defendants. The Plaintiffs do not believe that this Court intended to propound such a result, as demonstrated by the following illustrations of the implications of its Decision.

If merely “contributing” to a charity’s solicitation campaign could subject a person to regulation by Pinellas County, then many lettershops which simply consult with their charity clients regarding the use of certain paper sizes and envelopes would be subject to regulation. Similarly, in-line printers, who often have their artists consult with and design all or portions of direct mail packages for charities, would also be subject to regulation. So too would a “capital campaign” or “major donor” fundraising consultant to a university who simply writes the copy (as Plaintiff Leahy does) for a brochure which may ultimately be presented by university officials when they solicit million dollar donations to build new buildings. Indeed, under the logic of the Court’s decision, even the postman or postwoman who delivers the charity’s letter to the Pinellas County resident would have to register under the Ordinance because they are clearly and directly involved in “contributing” to the making of a solicitation.

The Decision offers no rationale for why Plaintiff Norman Leahy crosses some line established by the Pinellas County Ordinance when he sits in his Virginia home and prepares words, paragraphs or even a suggested letter which his charitable client may choose to alter, mail nationally, or not mail at all. Plaintiff’s evidence at a hearing would have shown that Leahy does not even know if his letter is used, whether it is altered, where it is mailed, when it is mailed, or to whom it is mailed. He solicits no one for any gifts - he merely suggests words to be used to help a charity be successful in their own solicitation. It is hard to see how these actions can be said to be “solicitation” which subjects him to the Pinellas County jurisdiction and regulatory scheme, yet that is exactly what the Court has ruled. Moreover, the Decision dismisses Leahy’s claim without even giving him the opportunity to present his evidence to this Court.

These issues would disappear if the Court consistently employed the logical distinction made by the Court between the act of soliciting and the act of consulting. The former act of soliciting, under the Courts’ logic, does involve minimum contacts, nexus, “danger of defrauding the public,” and “solicitation” under any reasonable definition of that term. The latter act of consulting does not involve any contacts, any nexus, any “danger of defrauding the public”, and certainly does not involve solicitation.

The cases cited by the court also indicate a confusion regarding the role of professional solicitors as distinguished from the role of professional fundraising consultants. Under §42-266 of the Ordinance, Solicitors directly solicit citizens on behalf of their clients. They act as agents of their clients. In contrast, consultants do not solicit anyone under the definition given by §42- 266. They merely advise charities on fundraising techniques and methods. A careful reading of the cases and quotations used by the court in its decision shows that the concerns about regulating solicitors to limit opportunities for fraud are not apposite where the persons being regulated are consultants and not solicitors.

For example the court states: “[t]he County has legitimate reasons to believe that professional solicitors carry with them a real danger of defrauding the public, thereby allowing the County to require and examine applications before turning solicitors loose on the public.” Decision at 14. It is true that solicitors contact the public, but consultants do not contact the public. The Plaintiffs have previously advised this Court that all materials prepared by consultants are reviewed and modified by their charitable clients, and the consultant is not responsible for ensuring that the message reaches the public. See Plaintiffs’ Brief in Support of Motion for Summary Judgment, text accompanying notes 25-28. As the Ordinance makes clear in the definitional distinction between consultants and solicitors, consultants only have contact with their charity clients. See §42-266 of the Ordinance. It is true that charities contact the public, but the same cannot be said of professional fundraising consultants.

If a professional fundraising consultant contacts the public directly to ask for a gift for his or her client, he or she immediately becomes a solicitor under the Ordinance, and must qualify under a completely different regulatory regime not only in Pinellas County but generally in more than 40 states. See the last sentence of the definition of professional solicitor contained §42-266, cited by the Court at page 37 of its Decision, which states that “any person, corporation, association, or other organization which . . . sends materials to the public for the purpose of soliciting funds by a charitable organization or sponsor, shall be considered a professional solicitor and not a professional fundraising consultant” (emphasis in Decision).

The court goes on to support its position with a quotation from the Riley case (Decision at 14-15): “The modern state owes and attempts to perform a duty to protect the public from those who seek for one purpose or another to obtain its money. When one does so through the practice of a calling, that state may have an interest in shielding the public against the untrustworthy, the incompetent, or the irresponsible, or against unauthorized representation of agency.” (emphasis added). What the Riley court approved in that dictum was a licensing system for telephone solicitors who directly contact the public, not for consultants who do not have any contact with the public whatsoever.

Thus, when the Court decides that it is necessary for Pinellas County to regulate those who solicit the public for funds, it decides an issue not properly before it. None of the Plaintiffs engage in solicitation of the public, but instead they merely consult with charities. Furthermore, when the Court decides that the Ordinance “does not directly regulate the commerce of “professional fundraisers” taking place wholly outside of the [County’s] borders,” Decision at 11-12, the court relies on the incorrect premise that “professional fundraising consultants” and “professional solicitors” may be lumped together as “professional fundraisers.” Since the Decision acknowledges that “professional fundraising consultants” do not solicit contributions, it is clear legal error to justify regulation of the Plaintiffs’ consulting activities on the grounds that “professional solicitors” (who are not plaintiffs in this case) solicit the residents of Pinellas County for contributions.

Similarly, when the Court decides that the Ordinance does not require prior approval of the Defendants before the Plaintiffs may engage in interstate commerce, it again relies on the incorrect premise that “professional fundraising consultants” and “professional solicitors” may be properly lumped together as “professional fundraisers.” Decision at 23-25. If the Court consistently applied the distinction it recognized between “soliciting” and “consulting,” Decision at 37, the Court would have recognized that the Defendants’ regulations were of consulting activities which occurred wholly outside Pinellas County, and that simply because someone other than the consultant subsequently solicits in Pinellas County does not bring those consulting activities into Pinellas County. Accordingly, had the Court consistently applied the distinction it drew between “soliciting” and “consulting,” it would not have granted summary judgment to the Defendants in this case.

When the court decides that the Due Process Clause does not bar the Defendants from regulating the Plaintiffs, on the grounds that they “are fundraisers that contribute to solicitations within Pinellas County,” the Court again relies on the incorrect premise that the activities of “professional fundraising consultants” are interchangeable with those of “professional solicitors”. The facts in the record indicate unequivocally that (a) the thing that distinguishes “professional fundraising consultants” from “professional solicitors” is that the former do not solicit contributions; and (b) the Plaintiffs do not solicit contributions. Without interchanging the activities of consultants with those of solicitors, the Court could not have justified regulating consulting activities on the grounds that Plaintiffs solicit within Pinellas County.

The Decision further asserts that the Ordinance does not “directly regulate professional fundraising activities taking place wholly outside the borders of Pinellas County” because “the Ordinance only applies when a charitable organization or professional fundraiser ‘solicit[s] contributions in the County . . . .’” Decision at 11-12 (emphasis in original). The Decision also asserts that “because the County’s Ordinance only regulates charities and their fundraising counsel that solicit within the County . . . the County does not directly regulate commerce by ‘projecting its legislation’ into other jurisdictions.” Decision at 21-22.

These legal conclusions again all rely on the incorrect premise that the consulting activities of “professional fundraising consultants” and the solicitation activities of charitable organizations and their “professional solicitor” agents are interchangeable. However, as was pointed out above, even the Ordinance itself specifically distinguishes between consulting and solicitation. See § 42-266 of the Ordinance. The degree to which fraud may be protected against by requiring the registration of those (solicitors) who contact the public and ask for donations is certainly different from those (consultants) who have no public contact, do not solicit, and who have no control over any donated funds.

The Plaintiffs’ complaint simply put is that the Ordinance treats the separate act of solicitation by the charity as a trigger for regulation of all consulting activities with that charity, which consulting activities take place wholly outside the County. The mere fact that the triggering event for regulation of consulting activity occurs within Pinellas County does not change the fact that the consulting activities regulated occur wholly outside of Pinellas County. Accordingly, the Plaintiffs assert that this Court’s holding that the Defendants are not projecting legislation into other jurisdictions when they attempt to regulate consulting activities which take place wholly outside of Pinellas County constitutes clear legal error.

2. It was clear legal error for the Court to decline to rule on the Plaintiffs’ as-applied challenge under the Due Process Clause

On page 27 of the Decision, the Court holds that “it is premature to decide Plaintiffs Due Process Challenge as applied.” This case presents a clear Article III case or controversy in that the Defendants have threatened both civil and criminal prosecution under the Ordinance, and the Plaintiffs have asked this Court for a determination of their rights pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201. Accordingly, this Court’s refusal to rule on the Plaintiffs’ as applied challenge under the Due Process Clause constitutes clear legal error.

Federal courts have a virtually unflagging obligation to exercise jurisdiction properly invoked. See Colorado River Water Conservation District v. United States, 424 U.S. 800, 817 (1976). The Supreme Court test for whether a case or controversy exists in a declaratory judgment action is

[w]hether the facts alleged, under all circumstances, show that there is a substantial controversy between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment. . . . The difference between an abstract question and a ‘case or controversy’ is necessarily one of degree and must be determined by a review of the facts presented in each case.

Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273 (1941).

A Plaintiff who challenges a statute must demonstrate a realistic danger of sustaining a direct injury as a result of the statute’s operation or enforcement, but he need not wait until actual injury has occurred before he can seek preventive relief. Babbitt v. United Farm Workers National Union, 442 U.S. 289, 298 (1979). When a Plaintiff alleges an intention to engage in a course of conduct arguably affected with a constitutional interest, but proscribed by a statute, and there exists a credible threat of prosecution thereunder, he should not be required to await and undergo a criminal prosecution as the sole means of seeking relief. Doe v. Bolton, 410 U.S. 179, 188 (1973); see also Steffel v. Thompson, 415 U.S. 452 (1974); and Doran v. Salem Inn, Inc., 422 U.S. 922 (1975).

The record is clear that the Defendants have threatened to enforce the particular provisions of the Ordinance challenged herein against the Plaintiffs who bring this challenge. For example, the uncontroverted Affidavit of Marilyn Price ( “Exhibit B” of Plaintiffs’ Complaint which for purposes of Defendants’ Summary Judgment Motion must be accepted as fact), contains sworn testimony that one of Defendants’ agents, John Wood, told her that TCA’s failure to comply with the Ordinance would result in both civil and criminal penalties. Defendants have insisted throughout this litigation that they will prosecute these particular Plaintiffs if they fail to comply with the Ordinance. See e.g., the Defendants’ Answers to paragraph 101 of the Plaintiffs’ Complaint as well as their responses to numbered paragraphs 45- 48 of the Plaintiffs’ Requests to Admit, copies of which are attached hereto as Exhibit “A.”

Since the Plaintiffs have demonstrated that they themselves have been threatened with prosecution under the Ordinance, their request that this Court adjudicate whether application of the Ordinance to their activities violates the Due Process Clause as applied to them is clearly ripe for review. The law is clear that the Plaintiffs need not actually subject themselves to an actual prosecution in order to vindicate their constitutional rights. Since this Court has a virtually unflagging obligation to exercise the jurisdiction properly invoked by the Plaintiffs, it was clear legal error for the Court to not rule on the Plaintiffs’ as-applied challenge under the Due Process Clause.

3. The Court never gave the Plaintiffs an opportunity to present evidence in support of their as-applied challenges

As the Court has noted, the Defendants’ motion for Summary Judgment argued that the Court should declare that the Pinellas’ Ordinance is “facially constitutional under the Commerce Clause, the Fourteenth Amendment’s Due Process Clause, and the First Amendment.” (Decision at 10 and 45.) If the Court’s final order had been limited to a finding that a facial challenge was not sustainable, even though Plaintiffs’ contend such a ruling would have been legally wrong, it nevertheless would have been procedurally correct. However the Court did not simply enter a partial summary judgment denying the facial challenge made by Plaintiffs, it instead entered a final judgment for the Defendants. Plaintiffs’ challenge to the Ordinance was not only a challenge to facial constitutionality but also a challenge as specifically applied to these plaintiffs. (Decision at 9; Complaint at Paras. 120-126.)

In the Decision, the Court has granted summary judgment to Defendants despite the existence of strongly contested material facts. As stated in Plaintiffs’ motion for Summary Judgment:

The Defendant’s have failed to submit any evidence, much less probative evidence that: (1) Plaintiffs had the requisite nexus with Pinellas County to meet the requirements of the Commerce Clause, and (2) Plaintiffs had the requisite minimum contacts with Pinellas County to meet the requirements of the Due Process Clause of the Fourteenth Amendment, and (3) that registration and licensing of PFCs (a) serves a substantial governmental interest, that is (b) narrowly tailored and (c) does not unduly interfere with core free speech protected by the First Amendment.

The court has granted summary judgment to Defendants without any such evidence in a case where the challenge was not only constitutional facial validity but also validity as applied to these Plaintiffs. The Court entered final judgment on the Plaintiffs’ as applied challenges without allowing Plaintiffs to test the Defendants’ evidence which, in fact was never submitted.

In Plaintiffs’ Reply Brief it was pointed out that Defendants have produced no evidence that the County’s regulatory scheme protects the County’s citizens from fraud. (Plaintiffs’ Reply Brief - text accompanying footnotes 9 and 10). Additionally, the court states that “Plaintiffs, who bear the burden of proof, have not come forth with any relevant evidence that the [Ordinance’s] burden on professional fundraisers is ‘clearly excessive . . . .” However, the Plaintiffs have not yet had the opportunity to provide such evidence. The Plaintiffs’ motion for summary judgment on the facial validity of the Ordinance, if granted, would have avoided the necessity for a trial where such evidence would be presented by Plaintiffs. However, by granting the Defendants’ motion for summary judgment, Plaintiffs’ have been prevented from having their day in court to present such evidence relating to their as applied challenges. If the court had sustained the Plaintiffs’ facial challenge there would have been no need for a trial on the Plaintiffs’ as applied challenge. But it was clear legal error for the court to fail to permit the Plaintiffs to present exactly this evidence when Plaintiffs never admitted the lack of existence of any such evidence and maintained consistently that the burden under the Ordinance as applied to them was excessive.

When Plaintiffs stated in their own motion for summary judgment that there are no substantive factual disputes, such statement was in the context of the Plaintiffs’ motion. In other words, Plaintiffs submit that summary judgment could have and should have been granted to them on the basis of the facts admitted by Defendants in their answers and in response to the limited discovery. In particular the interrogatory responses of Defendants showed that Defendants had no evidence that any Plaintiff ever engaged in any contact with any citizens of Pinellas County for the purposes of soliciting a donation. However, simply because the plaintiffs felt that there were no facts in dispute which would prevent the granting of their motion for summary judgment, it does not logically follow that there were no substantive facts in dispute in so far as Defendants’ motion was concerned.

Defendants claim that the burdens of their regulatory scheme upon Plaintiffs are slight in comparison with the purported purposes to prevent fraud. Plaintiffs have challenged this as a matter of fact, and Plaintiffs are prepared to present evidence at trial on the burden the Ordinance imposes. Defendants claim that their regulatory scheme detects, deters and prevents fraud. Plaintiffs similarly challenge this as a matter of fact. Plaintiffs are prepared to present evidence on the lack of success by Pinellas County in detecting or preventing fraud as a result of its regulatory scheme. These facts, if shown by Plaintiffs at trial would clearly affect the outcome of the “balancing tests” used by the Court in ruling on various legal issues. Summary judgment for Defendants was thus clear legal error and has prevented Plaintiffs from being able to challenge the factual assertions made by Defendants which assertions were and are strongly disputed by Plaintiffs.

Respectfully submitted,

PLAINTIFFS AMERICAN CHARITIES FOR
REASONABLE FUNDRAISING REGULATION, INC.,
THE CREATIVE ADVANTAGE, and
NORMAN W. LEAHY

By: __________________________ George K. Rahdert FBN: 213365 Alson M. Steele FBN:701106 Rahdert Anderson McGowan & Steele 535 Central Avenue St. Petersburg, FL 33701 Phone: (813) 823-4191 Fax: (813) 823-6189 Attorneys for Plaintiffs

By: __________________________ Clifford Perlman Pro Hac Vice Seth Perlman Pro Hac Vice Perlman & Perlman 220 Fifth Avenue, 7th Floor New York, New York 10001 Phone: (212) 889-0575 Fax: (212) 889-5228 Attorneys for the Plaintiffs

By: ___________________________
Geoffrey W. Peters
Pro Hac Vice
9024 Trailridge Court
Vienna, VA 22182
Phone: (703) 356-8703
Fax: (703) 356-0684
Attorney for American Charities
for Reasonable Fundraising Regulation, Inc.