Regulation of charitable donation bins was content-based, likely to be found unconstitutional

by Hannah Dankbar

Planet Aid v. City of St. Johns, Michigan
Federal 6th Circuit Court of Appeals, April 6, 2015

Planet Aid is a non-profit community development organization.  Among its activities, the organization gathers donations of clothing and shoes using unattended, outdoor donation bins. Planet Aid takes these donations and gives them to other organizations around the world.

To establish the donation bins Planet Aid gets consent from property owners of private businesses to put the bin on their property. Planet Aid aims to have donation bins in convenient locations and have a representative of the organization collect the donations on a weekly basis. There is contact information for the representative on the bin to be used on an as-needed basis.

In December 2012 Planet Aid placed two donation bins in the City of St. Johns, Michigan. At the time, St. Johns had no regulation of charitable donation bins. In January 2013 the City sent Planet Aid a letter that read, “clothing donation containers have been found to create a nuisance as people leave boxes and other refuse around the containers.” Planet Aid was instructed to remove the bins by January 23. If they did not remove the bins, the City would. An attorney for Planet Aid asked the City Attorney if they had to be removed by the 23rd, or if they could wait until the City Council/planning commission enacted an ordinance against the bins. Planet Aid was told to remove the bins, and was also told it did not have standing to appeal the decision because it did not own property where the bins were located. The City moved the bins and moved them to a City facility where they were later picked up by Planet Aid.

In December 2013 City Council addressed the issue of charitable donation bins. The planning commission had made a recommendation of a “total prohibition” of such bins to the Council.  At the Council meeting, the Mayor said other communities “had people dropping off their trash” at donation bins, although the Public Works Director responded that trash drop offs at the two bins had “very seldom” occurred.

Ordinance #618 was put in place.  The substantive prohibition of the ordinance read:

No person, business or other entity shall place, use or allow the installation of a donation box within the City of St. Johns….A donation box that exists on the effective date of this ordinance shall not be subject to the prohibition contained herein.

The purpose statement of the ordinance read:

It is the intent of this section to prohibit donation boxes to protect the health, safety and welfare of the citizens of the city by preventing blight, protecting property values and neighborhood integrity, avoiding the creation and maintenance of nuisances and ensuring the safe and sanitary maintenance of properties. Unattended donation boxes in the city may become an attractive nuisance for minors and/or criminal activity. It is also the intent of this section to preserve the aesthetics and character of the community by prohibiting the placement of donation boxes.

In February 2014 Planet Aid filed a complaint in district court claiming that the ordinance violated their First Amendment right of charitable solicitation and giving. They claimed that the ordinance is a content-based restriction and deserved strict scrutiny. The City claimed that the bins were advertisements, and therefore the ordinance is content-neutral. The District granted Planet Aid’s motion for a preliminary injunction pending trial, and the City appealed.

The US Supreme Court has held that speech regarding charitable giving and solicitation is a protected First Amendment activity, and has applied strict scrutiny to local ordinances that presume to regulate charitable giving activities.  The Supreme Court has not addressed unattended donation bins, but the Fifth Circuit invalidated a Texas law that required such bins to make note of whether the donated items would be sold or not (National Federation of the Blind of Texas, Inc. v. Abbott). The Fifth Circuit stated that “public receptacles are not mere collection points for unwanted items, but are rather “silent solicitors and advocates for particular charitable causes.” The Sixth Circuit agreed with the reasoning of the Fifth, and noted that just because speech related to charitable giving may take the form of a bin does not mean it deserves less than strong constitutional protection.

Still, government regulations of protected speech only receive strict scrutiny if they are content-based.  Government actions that merely regulates the time, place, and manner of protected speech are subject to an intermediate level of scrutiny.  The US Supreme Court has analyzed the content-based versus content-neutral question in a number of ways: (1) whether the “government has adopted a regulation of speech because of a disagreement with the message it contains” (Hill v. Colorado); (2) whether the regulation hinders the “communicative impact of the [the speaker’s] expressive conduct.” (Texas v. Johnson); (3) whether the legislature’s predominant intent regarded the content of speech, rather than its’ secondary effects (Renton v. Playtime Theaters, Inc.); (4) whether the regulation is “based on the content of the speech” and not “applicable to all speech irrespective of content” (Consol. Edison Co., 447 U.S. at 536.). Under the guidance of these factors the Sixth Circuit determined that Ordinance #618 was content-based because it only banned outdoor bins that share a common topic – charitable giving – and not other outdoor bins or receptacles  such as dumpsters.  The concerns about overflowing items, trash dumping, and the risk of children climbing into such receptacles apply with equal force to dumpsters, receptacles at recycling centers, and public and private trash cans.

Because the ordinance was found to be content-based, it must stand up to strict scrutiny. The Sixth Circuit determined that there was sufficient evidence on this question to justify the district court’s determination that Planet Aid was likely to succeed on the merits (thereby justifying the preliminary injunction).  For these reasons the Court affirmed the ruling from district court.

NE Federal District Court finds donation box regulation not sufficiently narrowly tailored to prevent fraud

by Rachel Greifenkamp and Gary Taylor

Linc-Drop Inc, v. City of Lincoln

(Federal District Court for the District of Nebraska, February 18, 2014)

In Lincoln, Nebraska the company Linc-Drop (a for-profit corporation) is contracted by the Nebraska chapter of the March of Dimes (a non-profit charity) to maintain donation drop boxes for secondhand clothing that is donated to them. The March of Dimes contracts with landowners for locations to place the donation boxes. The clothing that is donated is technically owned by the March of Dimes but Linc-Drop owns the donation drop boxes. The contract between March of Dimes and Linc-Drop provides that Linc-Drop can be directed to deliver the donated clothing to a location chosen by the March of Dimes; however, this has never happened. Instead, Linc-Drop sells the donated clothing for 20¢ per pound and pays the March of Dimes 2¢ per pound (totaling about $25,000-30,000 per year).

In response to this situation, the City of Lincoln enacted an Ordinance that contained two critical provisions. First, the Ordinance provides that no person may “place or hold out to the public any donation box for people to drop off articles of unwanted household items, clothing or other items of personal property, unless at least 80% of the gross proceeds from the sale of such items shall be utilized for charitable purposes.” (Charitable purposes is not defined in the Ordinance.) Second, the Ordinance requires a permit from the city to legally place a donation box. Only organizations that are tax exempt under Section 501(c)(3) or a school may obtain a permit. The Ordinance also requires that a donation box must clearly identify the charitable organization responsible for maintaining it. Violation of the Ordinance is punishable by a fine of up to $500 or up to 6 months imprisonment, and each day is considered to be a separate offense.

Linc-Drop challenged the constitutionality of the Ordinance on First Amendment grounds, and sought a preliminary injunction preventing the City from enforcing it pending the outcome of the challenge.

According to the Federal District Court for the District of Nebraska, when evaluating the regulation of professional charitable solicitation, the Court considers whether (1) the City had a sufficient or legitimate interest in enacting the Ordinance, (2) the interest identified is significantly furthered by a narrowly-tailored regulation, and (3) the regulation substantially limits charitable solicitations. The City resisted the application of this standard of review, arguing that Linc-Drop is not engaged in charitable solicitation but is rather “using the March of Dimes name to hoodwink the city’s unwitting residents into placing items in the donation boxes instead of donating them to legitimate charitable organizations.”  The Court rejected this position, however, stating that that fact that Linc-Drop is being paid to engage in charitable solicitation does not make it less so.  The court further clarified for the city that the constitutionality of the Ordinance, and not Linc-Drop’s conduct, was the issue of the case. “Whether Linc-Drop is violating the Ordinance, or even whether Linc-Drop is defrauding people, does not change the provisions of the Ordinance or the reasons for its enactment.”

Likewise the Court rejected the city’s position that the boxes are more akin to billboards and should be considered commercial speech.  The Court stated that “the public receptacles are not mere collection points for unwanted items, but are rather silent solicitors and advocates for particular charitable causes….They represent far more than an ‘upturned palm’ or a mere ‘proposal of a commercial transaction that says donate goods here.'”  The solicitation found on the boxes “is characteristically intertwined with informative and perhaps persuasive speech seeking support for particular causes or for particular views on economic, political or social issues.”

In defending the constitutionality of 80 percent requirement of the Ordinance, the City argued that the Ordinance serves two governmental purposes, “preventing deception and ensuring funds go to benefit charitable organizations,” and “protecting charities and the public from fraud.”  The interest in protecting charities and the public from fraud is sufficiently substantial to justify a narrowly-tailored regulation, but the Court pointed out that federal courts have repeatedly decided that using percentages to decide the legality of a fundraiser’s fee is not narrowly tailored to the government’s interest in preventing fraud.  Citing Supreme Court precedence, the Court noted “several legitimate reasons why a charity might reject the State’s overarching measure of a fundraising drive’s legitimacy…even if the government had a valid interest in protecting charities from their won naivete or economic weakness, a percentage requirement was not narrowly tailored to achieve it.”

The Court also struck down the provision barring professional fundraisers from obtaining permits.  Federal courts have prevented local governments from restraining solicitation by professional fundraisers, even if a high percentage of the funds raised would be used to cover administrative costs.  It is therefore axiomatic that the government cannot categorically restrain all solicitation by professional fundraisers, as the permit prohibition would do.  It is not narrowly tailored to the government’s interest in preventing fraud.

The Federal District Court of Nebraska determined that the Ordinance is so plainly at odds with precedent of Supreme Court rulings the the preliminary injunction desired by Linc-Drop was granted, and the City was barred from enforcing any aspect of the Ordinance until a final decision is made by the United States Magistrate Judge.

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