PHILADELPHIA (Legal Newsline) - Smith & Wesson can pursue a constitutional challenge against New Jersey’s civil investigation of its marketing practices, the Third Circuit Court of Appeals ruled, rejecting the state’s argument that federal courts should stay out of its business.
The decision included a concurrence by a judge who criticized the investigation started by ex-New Jersey Attorney General Gurbir Grewal and continued by new AG Andrew Bruck and suggested it might impinge on citizens’ First and Second Amendment rights. Grewal is now the director of the U.S. Securities and Exchange Commission's Division of Enforcement.
Smith & Wesson filed a civil rights complaint against the New Jersey AG after he issued a subpoena seeking information about advertising and marketing that might violate state consumer protection laws. Among other things, the state sought information about advertising suggesting a concealed firearm “enhances one’s lifestyle,” guns make homes safer and “whether it is safer to confront a perceived threat by drawing a firearm rather than seeking to move away.”
Smith & Wesson challenged the subpoena but lost in New Jersey courts and turned over the documents under a protective order. At the same time, it added to its free-speech suit in federal court by claiming the AG retaliated against it for exercising its First Amendment right to petition the federal court for redress.
The federal district court dismissed the gunmaker’s suit, citing Younger v. Harris, a 1971 U.S. Supreme Court decision that urges federal courts to abstain from certain cases involving matters before state courts. The Third Circuit reversed in a March 11 decision, however, ruling that the AG’s case wasn’t far enough along to merit abstention.
The district court mistakenly treated Younger as a limit on its jurisdiction, the appeals court said, when the decision actually instructs courts not to exercise jurisdiction they possess. The U.S. Supreme Court has further clarified Younger to state it is limited to cases involving state criminal prosecutions, civil enforcement or “civil proceedings involving certain orders uniquely in furtherance of the state courts’ ability to perform their judicial functions,” the Third Circuit said in an opinion by Judge Thomas Hardiman.
New Jersey argued the last two conditions applied, but the Third Circuit disagreed. First, the state’s attempt to enforce a subpoena isn’t equivalent to enforcing a law or regulation that results in punishment, the appeals court said. The state was merely seeking information that might result in an enforcement action later and Smith & Wesson ultimately turned over the documents while it pursued a constitutional case against the state in federal court, the court said.
“Smith & Wesson would be in contempt only by violating the state court’s order, which never happened,” the Third Circuit said.
As for interfering with state judicial functions, one of the leading cases involved the epic battle between Pennzoil and Texaco, where the Supreme Court ruled that federal courts should abstain from deciding the constitutionality of a Texas procedure for transferring property under a state court judgment. But unlike that case, in New Jersey the court was far from reaching a final decision, the Third Circuit said, and the mere possibility Smith & Wesson might get hit with sanctions later wasn’t enough.
“If a threat of contempt were all that was required to trigger abstention, we would have to abstain whenever there was a pending civil proceeding since the contempt power is generally available to enforce court orders,” the court said.
Judge Paul Matey concurred in the decision but also questioned New Jersey’s tactics, saying the AG’s subpoena included misleading descriptions of Smith & Wesson’s advertising that suggested “careful review of New Jersey’s entire investigation is warranted.”
The state has enforced its consumer protection laws for 60 years and has regulated firearms for more than three centuries, including specific limits on gun advertising, the judge wrote.
“Now, for the first time, the State seeks to apply the Consumer Fraud Act to supplement these specific restrictions, waving aside concerns about the protections of the First and Second Amendment rights of New Jersey residents in, as always, the name of `safety,’” he wrote. “It is a well-traveled road in the Garden State, where long-dormant regulatory powers suddenly spring forth to address circumstances that have not changed.”
Gun-range operators might fear advertising “safety” training, he said, and “almost certainly, every shop-owner stocking firearms for `self-defense’ or personal `safety’ can begin planning for periodic advertising inspections from the Attorney General.”