Safelite Group, Inc. et al v. Jepsen et al
ORDER; Plaintiffs' Motion 2 for a Preliminary Injunction is DENIED. Signed by Judge Janet Bond Arterton on 12/18/2013. (Morril, Gregory)
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
SAFELITE GROUP, INC., et al.,
Civil No. 3:13cv1068 (JBA)
December 18, 2013
GEORGE JEPSEN, et al.,
RULING DENYING PLAINTIFFS’ MOTION
FOR A PRELIMINARY INJUNCTION
On June 3, 2013, Connecticut Daniel Governor Malloy signed House Bill 5072,
“An Act Concerning Automotive Glass Work,” into law as Public Act 13-67 (“PA 13-67”)
to take effect on January 1, 2014. The law is targeted at insurance companies doing
business in Connecticut and third-party claims administrators or adjusters that also own
automotive glass-repair shops, and mandates that if such entities recommend the use of
their affiliated glass repair shop to insurance policyholders, they must also provide the
name of at least one non-affiliated repair shop. Plaintiffs Safelite Group, Inc. and Safelite
Solutions LLC (collectively “Safelite” or Plaintiffs) seek declaratory and injunctive relief,
contending that portions of PA 13-67 violate their rights under the First and Fourteenth
Amendments (Count One) and the Dormant Commerce Clause (Count Two). Plaintiffs
now move [Doc. # 2] for a preliminary injunction enjoining Defendants (the “State”)
from implementing or enforcing PA 13-67(c)(2).1 For the reasons that follow, Plaintiffs’
motion is denied.
Safelite, based in Columbus, Ohio, owns Safelite Solutions, which provides claims
management services for 18 of the top 30 insurance companies. (O’Mara Decl. ¶ 3, Ex. 1
to Pls.’ Mem. Supp.) Safelite Solutions typically manages the entire claims process for an
insurance company, maintaining a telephone hotline for policyholders to report claims
and schedule appointments for repairs. (Id. ¶ 6.) Safelite also owns Safelite AutoGlass,
the largest vehicle-glass repair company in the United States, serving more than 4.5
million customers each year. (Id.)
If a policyholder does not express a preference for a particular vehicle glass repair
shop, Safelite operators will recommend a glass repair shop based on the policyholder’s
location and the preferences of his or her insurance company.
companies that employ Safelite Solutions as their claims administrator have selected
Safelite AutoGlass as one of their preferred glass repair shops, and Safelite operators
recommend that policyholders use Safelite AutoGlass for their repairs because Safelite
believes that its own shops provide the best customer service and are the most reliable.
(Id. ¶ 9–11.)
If there is no Safelite AutoGlass location near the claimant, Safelite
operators may refer him or her to an independent glass repair shop from Safelite’s
network of non-affiliated shops, which have agreed to certain pricing terms and other
By agreement of the parties, Plaintiffs are not seeking a preliminary injunction
on their Dormant Commerce Clause claim. (See Defs.’ Mem. Opp’n [Doc. # 42] at 3 n.1.)
conditions regarding their work. (Id ¶ 7.) Because most customers do not frequently
utilize vehicle glass repair services and rely upon Safelite’s telephone operators, Safelite
contends that its recommendations provide policyholders with “an extremely valuable
service.” (Id. ¶ 10.)
Although there are over 70 non-affiliated repair shops in Connecticut that are part
of Safelite’s network, from January 1, 2012 to June 30, 2013, insureds selected Safelite
AutoGlass for their repairs approximately 55% of the time. (See Pls.’ Amend. Resp. and
Obj. to Def. Inter. and Req. for Prod. at Inter. No. 13., Ex. A to Defs.’ Mem. Opp’n.)
Some of Safelite’s insurance company clients require Safelite to provide policyholders
with the name of a non-Safelite affiliated repair shop in addition to Safelite AutoGlass. In
such instances, the rate at which customers utilize Safelite AutoGlass drops to as low as
Against this background, the Connecticut General Assembly debated PA 13-67.
The Insurance and Real Estate Committee of the Connecticut General Assembly heard
testimony that only two third-party insurance claims administrators maintained
relationships with auto glass repair shops in Connecticut: Safelite Solutions and a
Massachusetts-based company, which was associated with a Massachusetts-based
automotive glass repair shop. (See Comm. Hearing, Ex. 5 to Pls.’ Mem. Supp. at 61.)
Existing Connecticut law already prohibits “steering”—the practice of an insurer
or claims administrator requiring a customer to use a particular auto repair shop—and
further mandates that written estimates for repairs contain boldface disclosures to
customers of their right to select a repair shop of their choice. See Conn. Gen. Stat. § 38a354.
The Connecticut Insurance Department submitted written testimony to the
Committee stating that no customers had complained of being coerced into using a
particular repair shop against their will, and opined that PA 13-67 was “unnecessary”
because “consumers are adequately protected by current law.” (State of Conn. Ins. Dep’t,
Testimony Before the Ins. and Real Estate Comm., Conn. Gen. Assembly (Jan. 31, 2013),
Ex. 3 to Pls.’ Mem. Supp. at 1.)
Numerous Connecticut legislators advocated for the law on the basis that it would
benefit in-state businesses over out-of-state companies, while some legislators’ statements
also indicate that the law was motivated to protect consumers from the undue influence
of insurance company-affiliated repair shops. For example, Rep. Robert W. Megna
explained that “the essence of this bill” was that insurance companies and third-party
claims administrators “can’t tell an individual to have their automotive glass replaced at a
particular shop.” (Conn. Gen. Assembly House of Rep. Session Unofficial Tr. (May 7,
2013), Ex. 4 to Defs.’ Mem. Supp. at 62.) Rep. Megna expanded his explanation that the
bill would “help out those small businesses that employ people, spend money, do
economic development—in our state while at the same time prevent[ing] an insurer from
essentially trying to influence the place where your automobile gets fixed which is in their
best financial interest.” (Id.)
Public Act 13-67
In May 2013, the General Assembly adopted PA 13-67, which provides in relevant
No glass claims representative for an insurance company doing business in
this state or a third-party claims administrator for such company shall
provide an insured with the name of, schedule an appointment for an
insured with or direct an insured to, a licensed glass shop that is owned by
(A) such company, (B) such claims administrator, or (C) the same parent
company as such insurance company or claims administrator, unless such
representative or claims administrator provides the insured with the name
of at least one additional licensed glass shop in the area where the
automotive glass work is to be performed.
The State contends that “[i]mplicit in Connecticut’s enactment of P.A. 13-67 is the
legislative determination that Connecticut’s existing statutes did not adequately protect
consumer choice or prevent insurance claims administrators with affiliated repair shops
from steering work to their affiliated shops.” (Defs.’ Mem. Opp’n at 4.) Safelite contends
that the true purpose of the law was to help out local small businesses at the expense of
large out-of-state companies and that this purpose was expressly stated by multiple
legislators during debate over the bill.
“[A] preliminary injunction is an extraordinary remedy that should not be
granted as a routine matter.” JSG Trading Corp. v. Tray–Wrap, Inc., 917 F.2d 75, 80 (2d
Cir. 1990). “Generally, preliminary injunctive relief is appropriate when the movant
shows ‘(a) irreparable harm and (b) either (1) likelihood of success on the merits or (2)
sufficiently serious questions going to the merits to make them a fair ground for litigation
and a balance of hardships tipping decidedly toward the party requesting the preliminary
In their Complaint, Plaintiffs also challenge the constitutionality of PA 1367(b)(2) and Conn. Gen. Stat. § 38a-354(b)(2), which both prohibit Safelite from telling
claimants that choosing a non-affiliated repair shop will result in delays or a lack of
guarantee for the work. Plaintiffs have not moved to preliminarily enjoin these
relief.’” Int’l Dairy Foods Ass’n v. Amestoy, 92 F.3d 67, 70 (2d Cir. 1996) (quoting Jackson
Dairy, Inc. v. H.P. Hood & Sons, Inc., 596 F.2d 70, 72 (2d Cir. 1979)). An injunction that
“stays ‘government action taken in the public interest pursuant to a statutory . . . scheme’
. . . must satisfy the more rigorous ‘likelihood of success prong.’” Id. (quoting Able v.
United States, 44 F.3d 128, 131–32 (2d Cir. 1995) (first alteration in original)). In
addition, the “loss of First Amendment freedoms, even for minimal periods of time,
unquestionably constitutes irreparable injury.” New York Progress & Prot. PAC v. Walsh,
733 F.3d 483, 486 (2d Cir. 2013) (quoting Elrod v. Burns, 427 U.S. 347, 373 (1976)).
“There is no longer any room to doubt that what has come to be known as
‘commercial speech’ is entitled to the protection of the First Amendment, albeit to
protection somewhat less extensive than that afforded ‘noncommercial speech.’”
Zauderer v. Office of Disciplinary Counsel of Supreme Court of Ohio, 471 U.S. 626, 637
(1985). “Commercial speech that is not false or deceptive and does not concern unlawful
activities . . . may be restricted only in the service of a substantial governmental interest,
and only through means that directly advance that interest.” Id. at 638. In Central
Hudson Gas & Electric Corp., v. Public Service Commission of New York, 447 U.S. 557
(1980), the Supreme Court articulated the test for determining whether a restriction on
commercial speech is constitutionally permissible:
For commercial speech to come within [the First Amendment], it at least
must concern lawful activity and not be misleading. Next, we ask whether
the asserted governmental interest is substantial. If both inquiries yield
positive answers, we must determine whether the regulation directly
advances the governmental interest asserted, and whether it is not more
extensive than is necessary to serve that interest.
Id. at 566.
Initially, both parties contended that Central Hudson controlled here despite the
“material differences between disclosure requirements and outright prohibitions on
speech” in the commercial context. Zauderer, 471 U.S. at 650. In other contexts, the
protections of the First Amendment prohibit compelled speech in addition to compelled
silence. Agency for Int’l Dev. v. Alliance for Open Soc’y Int’l, Inc., 133 S. Ct. 2321, 2327
(2013) (It is “a basic First Amendment principle that ‘freedom of speech prohibits the
government from telling people what they must say.’”). “‘Purely commercial speech,’”
however, “‘is more susceptible to compelled disclosure requirements’ than is personal or
political speech.” New York State Rest. Ass’n v. New York City Bd. of Health, 556 F.3d 114,
132 (2d Cir. 2009) (quoting Riley v. Nat’l Fed’n of the Blind of N. Carolina, Inc., 487 U.S.
781, 796 n.9 (1988)).
After the Court asked the parties to address whether the Supreme Court’s analysis
in Zauderer should control in light of the Second Circuit’s holdings in New York State
Rest. Ass’n and Nat’l Elec. Mfrs. Ass’n v. Sorrell, 272 F.3d 104 (2d Cir. 2001), Defendants
adopted the position that Zauderer, and not Central Hudson, should control. Plaintiffs
maintained that because provisions of PA 13-67 restrict speech and PA 13-67(c)(2)
mandates “controversial” and not purely “factual” speech, Central Hudson still applies.
In this Circuit, the Supreme Court’s analysis in “Zauderer, not Central Hudson
Gas & Electric Corp. . . ., describes the relationship between means and ends demanded by
the First Amendment in compelled commercial disclosure cases. The Central Hudson
test should be applied” only “to statutes that restrict commercial speech.” Sorrell, 272
F.3d at 115. In Zauderer, the Supreme Court upheld an Ohio law that required attorney
advertisements referring to contingent-fee rates to specify whether fees were computed
before or after the deduction of court costs and expenses, and to disclose that clients
would be liable for costs (as opposed to legal fees) if they lost.
471 U.S. at 633. The
Supreme Court reasoned that “[b]ecause the extension of First Amendment protection to
commercial speech is justified principally by the value to consumers of the information
such speech provides, appellant’s constitutionally protected interest in not providing any
particular factual information in his advertising is minimal.” Id. at 651 (internal citation
omitted). The compelled warnings were justified because they were “reasonably related
to the State’s interest in preventing deception of consumers,” who might not understand
“the distinction between ‘legal fees’ and ‘costs,’” and might incorrectly conclude “that
employing appellant would be a no-lose proposition in that his representation in a losing
cause would come entirely free of charge.” Id. at 652.
The Supreme Court cautioned, however, “that unjustified or unduly burdensome
disclosure requirements might offend the First Amendment by chilling protected
commercial speech.” Id. Ohio, however, had not attempted to “prescribe what shall be
orthodox in politics, nationalism, religion, or other matters of opinion or force citizens to
confess by word or act their faith therein.” Id. (internal quotation marks omitted).
Instead, the state had “attempted only to prescribe what shall be orthodox in commercial
advertising, and its prescription has taken the form of a requirement that appellant
include in his advertising purely factual and uncontroversial information about the terms
under which his services will be available.” Id.
The distinction between Central Hudson and Zauderer is critical here. Under
Central Hudson, the State has the burden of demonstrating that its speech restriction
advances a substantial state interest in a “in a direct and material way.” Edenfeld v. Fane,
507 U.S. 761, 767 (1993)). The Supreme Court has “made clear that if the Government
could achieve its interests in a manner that does not restrict speech, or that restricts less
speech, the Government must do so.” Thompson v. W. States Med. Ctr., 535 U.S. 357, 371
(2002). Under Zauderer, however, “laws mandating factual disclosures are subject to the
rational basis test” only, New York State Rest. Ass’n, 556 F.3d at 133 n.21, and there need
only be “a rational connection between the purpose of a commercial disclosure
requirement and the means employed to realize that purpose,” Sorrell, 272 F.3d at 115.
The State “has no obligation to produce evidence, or empirical data to sustain . . .
rationality.” New York State Rest. Ass’n, 556 F.3d at 135 n.23 (quoting Lewis v. Thompson,
252 F.3d 567, 582 (2d Cir. 2001)) (alterations in original).
Further, the State need not establish that its disclosure requirement is the “least
restrictive means,” nor that the law is not “under-inclusive:”
Because the First Amendment interests implicated by disclosure
requirements are substantially weaker than those at stake when speech is
actually suppressed, we do not think it appropriate to strike down such
requirements merely because other possible means by which the State
might achieve its purposes can be hypothesized. Similarly, we are
unpersuaded by appellant’s argument that a disclosure requirement is
subject to attack if it is “under-inclusive”—that is, if it does not get at all
facets of the problem it is designed to ameliorate. As a general matter,
governments are entitled to attack problems piecemeal, save where their
policies implicate rights so fundamental that strict scrutiny must be
applied. The right of a commercial speaker not to divulge accurate
information regarding his services is not such a fundamental right.
Zauderer, 471 U.S. at 651 n.14 (internal citation omitted).
While the speech requirement in Zauderer was intended to combat deceptive
advertising, the Second Circuit has held that “Zauderer’s holding was broad enough to
encompass” “laws mandating factual disclosures . . . even if they address non-deceptive
speech.” New York State Rest. Ass’n, 556 F.3d at 133 & n.21. For example, in Sorrell, the
Second Circuit upheld a Vermont statute that required the manufacturers of enumerated
mercury-containing products to label their products and packaging to inform consumers
that the products contained mercury and should be recycled or disposed of as hazardous
waste. 272 F.3d at 107. The law was not intended to combat consumer deception, “but
rather to better inform consumers about the products they purchase” with the hope that
newly informed consumers would properly dispose of mercury-containing products and
thereby protect “human health and the environment from mercury poisoning.” Id. at
115–16. Applying Zauderer, the Second Circuit concluded that the statute was “rationally
related” to the state’s environmental goal. Id. at 115.
Eight years later in New York State Rest. Ass’n, the Second Circuit upheld a New
York City Health Code regulation that sought to combat rising rates of obesity by
requiring chain restaurants to post the calorie content of items on their menus. 556 F.3d
An association of restaurants argued that the mandate forced them “to
communicate to their customers that calorie amounts should be prioritized” over other
nutritional indicators, such as fat, sodium, and cholesterol. Id. at 134. Although the
restaurants conceded that calorie content was “factual,” they contended that they did “not
believe that disclosing calorie information would reduce obesity,” and they should not
have “to ‘cram’ calorie information ‘down the throats’ of their customers.” Id. at 133.
The Second Circuit concluded that New York City’s regulation was rationally related to
its goal of reducing obesity and that under Zauderer, the city was not precluded from
requiring “‘under-inclusive’ factual disclosures.” Id. at 134.
The Proper Analytical Framework
The standard of review applicable here depends upon whether PA 13-67(c)(2)
restricts commercial speech or merely mandates the disclosure of purely factual
information. Initially, both parties analyzed the issue under the Central Hudson standard
as if PA 13-67(c)(2) in fact restricts speech. Safelite contends that in prohibiting it from
referring a customer to its affiliated repair shop unless it also “recommends” an
unaffiliated shop, the State provides “an unconstitutional choice between censorship and
compelled speech.” (Pls.’ Mem. Supp. [Doc. # 2-1] at 26.)
At oral argument on December 2, 2013, the State clarified that, as the text of PA
13-67(c)(2) suggests, Safelite need not “recommend” another shop; it merely has to
“provide the insured with the name” of an additional shop.
Indeed, PA 13-67(c)(2)
does not restrict what Safelite can say regarding its own shops, and the State represented
that Safelite could explicitly inform callers that it is mandated by law to also provide the
name of a non-affiliated repair shop and could even say that Safelite did not recommend
that shop and instead recommend using Safelite AutoGlass. (Dec. 2, 2013 Oral Argument
Tr. [Doc. # 49] at 27.) At oral argument on December 16, 2013, the State acknowledged,
however, that Safelite is confined by PA 13-67(b)(2)’s prohibition on stating to claimants
that choosing a non-affiliated repair shop “will result in delays in or a lack of guarantee
for the automotive glass work.”
Although Safelite does not seek to preliminarily enjoin PA 13-67(b)(2), it
contends that this provision restricting speech combined with PA 13-67(c)(2)’s
compelled speech on the same subject matter moves the analysis from Zauderer to
Central Hudson territory. In support of this contention, Plaintiffs cite the Supreme
Court’s decision in Milavetz, Gallop & Milavetz, P.A. v. United States, 559 U.S. 229
(2010), upholding a federal statute compelling debt relief agencies to include certain
disclosures in their advertisements, such as “that the assistance [sought] may involve
bankruptcy relief.” Id. at 233 (quoting 11 U.S.C. § 528(b)(2)(A)). The Supreme Court
applied Zauderer rather than Central Hudson, explaining that because the statute “is
directed at misleading commercial speech . . . . and because the challenged provisions
impose a disclosure requirement rather than an affirmative limitation on speech, the . . .
less exacting scrutiny described in Zauderer governs our review.” Id. at 249. Plaintiffs
contend that this passage demonstrates that Zauderer only applies when there are no
restrictions on speech.
Whether the speech restrictions of PA 13-67(b)(2) violate the First Amendment
on their own is not at issue here, because Plaintiffs have not sought a preliminary
injunction regarding this provision. Additionally, even if PA 13-67(b)(2) imposes a
speech restriction that is properly analyzed under Central Hudson, it does not necessarily
follow that the entire statute, and in particular, PA 13-67(c)(2) must be analyzed under
Central Hudson. In fact, in Zauderer itself, the Supreme Court applied Central Hudson to
strike down two restrictions that had been applied to an attorney advertisement while
upholding the disclosure requirement as applied to the same advertisement.
Zauderer, 471 U.S. at 638. In doing so, the Supreme Court rejected the very argument
that Safelite now advances—that the Central Hudson analysis must be applied to the
disclosure requirements just as it was applied to the speech restrictions. Id. at 650.
Likewise, a portion of the statute at issue in Milavetz restricted a debt relief agency from
advising a person to “incur more debt in contemplation of” a bankruptcy filing. Milavetz,
559 U.S. at 233.3
Additionally, the Second Circuit has made clear that despite “the existence of
‘doctrinal uncertainties left in the wake of Supreme Court decisions,’” including Milavetz,
“‘from which the modern commercial speech doctrine has evolved,’” courts in the Second
Circuit are still “bound by precedent distinguishing commercial and noncommercial
speech and applying different standards of review to laws mandating commercial speech
disclosures and laws restricting commercial speech.” Connecticut Bar Ass’n v. United
States, 620 F.3d 81, 93 n.15 (2d Cir. 2010) (quoting Bad Frog Brewery, Inc. v. N.Y. State
Liquor Auth., 134 F.3d 87, 94 (2d Cir. 1998)); see also id. at 95 (noting that the Second
Circuit’s “conclusion that [the same statute as was at issue in Milavetz] regulates only
commercial speech comports with this court’s prior treatment of similar disclosure
requirements.” (citing New York State Restaurant Ass’n, 556 F.3d at 131–32 and Sorrell,
272 F.3d at 113)). Accordingly, Milavetz does not mandate a different approach from the
Second Circuit’s analysis in New York State Rest. Ass’n and Sorrell.
The Supreme Court interpreted the phrase to refer “to a specific type of
misconduct designed to manipulate the protections of the bankruptcy system,” i.e.
“advising a debtor to incur more debt because the debtor is filing for bankruptcy, rather
than for a valid purpose.” Id. at 243. Adopting this “narrower reading” of the restriction,
the Supreme Court upheld the provision. Id. at 242.
In fact, Safelite acknowledges that PA 13-67(c)(2) contains no restrictions on
speech. See Pls.’ Mem. Supp. at 25 (“The law permits all speech by Safelite as long as that
speech is accompanied by a referral to an unaffiliated vehicle glass repair shop.”). Indeed,
PA 13-67(c)(2) does not restrict what Safelite can say, but rather, as the State contended
at oral argument on December 16, 2013, creates a “trigger,” mandating that Safelite
provide the name of a competitor if, and only if, Safelite directs claimants to its affiliated
Safelite also contends that cases upholding compelled commercial disclosure are
all limited to purely factual disclosures intended to combat potential false or misleading
It contends that there are no cases that have upheld a disclosure
requirement that is specifically triggered by the speaker’s making of another statement.
But the regulation at issue in Zauderer is not meaningfully different; it did not prohibit
attorney advertisements but rather required that, if made, such communications be
accompanied by appropriate disclosures.
Plaintiffs also contend that Zauderer is inapplicable because PA 13-67(c)(2) goes
beyond mandating “purely factual and uncontroversial” information. See Zauderer, 471
U.S. at 651. Safelite contends that the disclosure is “controversial” for three reasons: (1)
Safelite is forced to make it against its will; (2) the disclosure is related to a competitor
rather than itself; and (3) in the context in which it is made, the disclosure will be
misleadingly seen by claimants as an endorsement of its competitors. It contends that
the information is not “factual,” because Safelite is required to exercise judgment in order
to decide which non-affiliated repair shop to present to its customers.
These arguments are unavailing. Just because there are no objective criteria
describing exactly which non-affiliated repair shops Safelite must name, it does not follow
that the disclosures are no longer “purely factual and uncontroversial information.” PA
13-67(c)(2) does not require it to express any opinion at all regarding these names nor to
take a position in any ongoing debate. Safelite’s latitude to expressly inform consumers
that it does not recommend the non-affiliated repair shop it is compelled to name
mitigates any risk that providing the name could be seen as an implied endorsement of
that business. The name of a business is a far cry from an encroachment upon the core
First Amendment values discussed in Zauderer, i.e., an attempt to “prescribe what shall be
orthodox in politics, nationalism, religion, or other matters of opinion.” Zauderer, 471
U.S. at 651. In fact, beyond location, nothing in PA 13-67(c)(2) limits the number of
non-affiliated repair shops that Safelite can provide to claimants, reducing the degree of
judgment that Safelite must exercise. See PA 13-67(c)(2) (requiring the provision of “the
name of at least one additional licensed glass shop”).
Similarly, the fact that Safelite would prefer to not make the required disclosure is
insufficient to make it “controversial.” For example, in New York State Rest. Ass’n, the
plaintiffs specifically objected that the disclosure requirements forced them to
communicate a message that they found disagreeable—that “disclosing calorie
information would reduce obesity” and that it should be prioritized over other nutritional
indicators, such as fat, sodium, and cholesterol in evaluating whether food is healthy. See
556 F.3d at 133–34; see also Zauderer v, 471 U.S. at 650 (“Ohio has not attempted to
prevent attorneys from conveying information to the public; it has only required them to
provide somewhat more information than they might otherwise be inclined to present.”).
At oral argument on December 16, 2013, Safelite cited Entm’t Software Ass’n v.
Entm’t Software Ass’n, 469 F.3d 641, 643 (7th Cir. 2006), which addressed the
constitutionality of an Illinois statute that required video game retailers to label “sexually
explicit” video games with a four-inch square label with the numerals “18.” Contrasting
the statute with that in Sorrell, the Seventh Circuit held that the requirement violated the
First Amendment because the compelled speech did not involve a “purely factual
disclosure,” but instead forced the retailer to communicate “a subjective and highly
controversial message—that the game’s content is sexually explicit.” Id. at 652.
“sexually explicit” video game was defined as a video game
that the average person, applying contemporary community standards
would find, with respect to minors, is designed to appeal or pander to the
prurient interest and depict or represent in a manner patently offensive
with respect to minors, an actual or simulated sexual act or sexual contact,
an actual or simulated normal or perverted sexual act or lewd exhibition of
the genitals or post-pubescent female breast.
Id. at 643. Thus, the constitutional infirmity in Entm’t Software Ass’n was in part that the
“State’s definition of this term is far more opinion-based than the question of whether a
particular chemical is within any given product.” Id. at 652 (citing Sorrell, 272 F.3d at
114). Importantly, the state conceded that its law was a content-based restriction on
speech subject to strict scrutiny, and although the Seventh Circuit cited Sorrell, its analysis
focused not on commercial speech but rather on the restrictions that the law imposed on
core First Amendment expression in video games. See id. (“Because the [law] potentially
criminalizes the sale of any game that features exposed breasts, without concern for the
game considered in its entirety or for the game’s social value for minors, distribution of
God of War is potentially illegal, in spite of the fact that the game tracks the Homeric
epics in content and theme.”).4
It can hardly be said that simply providing the name of a repair shop implicates
core First Amendment values or conveys the same character of information as the term
“sexually explicit” did in Entm’t Software Ass’n. See Disc. Tobacco City & Lottery, Inc. v.
United States, 674 F.3d 509, 526-27 (6th Cir. 2012) (noting that Entm’t Software Ass’n
“involved a state attempting to restrict core speech in the form of ‘art and literature’”)
Safelite also attempted to distinguish Zauderer, New York State Rest. Ass’n, and
Sorrell on the basis that in those cases the plaintiffs were required to disclose information
about themselves, whereas PA 13-67(c)(2) requires Safelite to also disclose information
about its competitors.5 Indeed, the State’s proffered interest in promoting consumer
choice and preventing consumers from being induced to use a glass repair shop owned by
a claims administrator like Safelite has the stated intent of influencing consumer behavior
in a way that may be economically detrimental to Safelite. But the potential economic
detriment to Safelite from identification of its competitors does not encroach upon the
The Supreme Court subsequently confirmed that video games are expression
protected by the First Amendment. See Brown v. Entm’t Merchants Ass’n, 131 S. Ct. 2729,
2733 (2011) (“Like the protected books, plays, and movies that preceded them, video
games communicate ideas—and even social messages—through many familiar literary
devices (such as characters, dialogue, plot, and music) and through features distinctive to
the medium (such as the player’s interaction with the virtual world).”).
Another provision of PA 13-67 requires Safelite to inform policyholders of their
right under Connecticut law to choose the licensed glass shop of their choice. See PA 1367(1)(c)(1). Safelite does not challenge this provision, and at oral argument on December
16, 2013, referred to this provision as a compelled purely factual disclosure that is
core First Amendment values that Zauderer suggested might violate the First
Instead, the “State has attempted only to prescribe what shall be orthodox in
commercial advertising.” Zauderer, 471 U.S. at 651 (1985). As in New York State Rest.
Ass’n and Sorrell, PA 13-67(c)(2)’s compelled disclosure is intended “to better inform
consumers about the products they purchase.” Sorrell, 272 F.3d at 115. In fact, in New
York State Rest. Ass’n, the statute was explicitly intended to lead consumers to make a
particular choice—for “healthier food.” 556 F.3d at 134–35.
Other courts have upheld disclosure requirements that, like PA 13-67(c)(2), are
intended to encourage competition and reduce the economic power of a dominant player.
For example, in Pharmaceutical Care Management Ass’n v. Rowe, the First Circuit upheld
a Maine law that required pharmacy benefit managers—”middlemen in the lucrative
business of providing prescription drugs” with “tremendous market power”—to disclose
At oral argument on December 16, 2013, Safelite contended that it had found no
cases in which any court upheld a requirement that a business refer to a competitor. In
BellSouth Adver. & Publ’g Corp. v. Tennessee Regulatory Auth., 79 S.W.3d 506, 520 (Tenn.
2002), however, the Tennessee Supreme Court upheld a state regulation that required
BellSouth to include on the cover of its phonebook the names and logos of its local
competitors, because it was reasonably related to the government’s interest in “informing
consumers about their choices in the local telecommunications” market and “promoting
free competition.” The court noted that while the rules in Zauderer “compelled attorneys
to disclose additional information about themselves,” and the Tennessee regulations
compelled “BellSouth to disclose information about the identity of its competitors,” the
“ultimate object” of both regulations was “the same: to inform consumers.” Id.
to insurance companies financial arrangements with third parties that might benefit the
managers to the detriment of health care providers. 429 F. 3d 294, 298 (1st Cir. 2005).7
The First Circuit held that the law was “reasonably related” to Maine’s stated
interest in preventing consumer deception and controlling prescription drug costs, and
that the benefit managers had only “a minimal interest in withholding the information”
that the law required of them. Id. at 310.
Safelite relies heavily upon the Fifth Circuit’s decision in Allstate Ins. Co. v.
Abbott, 495 F.3d 151, 164 (5th Cir. 2007), which struck down a Texas law that prohibited
“an insurer from providing to tied repair facilities a recommendation, referral or
description not provided on identical terms to other preferred repair facilities.” Although
the State incorrectly contends that the Texas law prohibited an insurer from
recommending a body shop that it owned to its customers (see Defs.’ Mem. Opp’n at 17),
the Texas law was more restrictive than PA 13-67(c)(2), because an insurer was
prohibited from “recommending” its own shop unless it also recommended an
independent shop on equal terms.
In New York State Rest. Ass’n, 556 F.3d at 133, the Second Circuit cited Rowe
with approval and noted that the First Circuit had also accepted a “broader reading” of
Zauderer—i.e., that its more lenient review was not limited to disclosures intended to
combat consumer deception. Citing New York State Rest. Ass’n, Sorrell, and Rowe, courts
in other circuits have noted the distinct approach taken by the First and Second Circuits.
See, e.g., Tepeyac v. Montgomery Cnty., 779 F. Supp. 2d 456, 463 (D. Md. 2011) (“Some
courts have suggested that the standard described in Zauderer controls all cases involving
truthful, compelled commercial speech, even if the disclosure requirements are not
intended to prevent consumer fraud.”); R.J. Reynolds Tobacco Co. v. Food & Drug Admin.,
696 F.3d 1205, 1227 n.6 (D.C. Cir. 2012) (Rogers, J. dissenting) (same).
Despite this distinction, Abbott is similar to PA 13-67(c)(2) in other material
respects, but it is nevertheless inapposite here, because the Fifth Circuit’s analysis of
compelled commercial speech differs significantly from that of the Second Circuit. In
Abbott, the Fifth Circuit held that Zauderer’s rational basis review was limited to
compelled commercial speech designed to combat “the potential for customer confusion”
and instead analyzed the Texas statute under Central Hudson. Id. In New York State
Rest. Ass’n, however, the Second Circuit explicitly rejected this limitation on Zauderer in
favor of a “broader” reading. See New York State Rest. Ass’n, 556 F.3d at 133 & n.21.
Thus, the Fifth Circuit’s reasoning for invalidating the law under the exacting
scrutiny of Central Hudson is inapplicable here, and this Court will apply the more
lenient Zauderer analysis.
Under rational basis review, even if this Court were to
conclude that PA 13-67(c)(2) was “under-inclusive” or did not employ the least restrictive
means necessary, such findings would not provide a basis for invaliding the law as long as
it is rationally related to a legitimate state interest. See New York State Rest. Ass’n, 556
F.3d at 134.
For similar reasons two other decisions cited by Plaintiffs are inapposite. In
Allstate Ins. Co. v. Serio, No. 97-cv-670 (RCC), 2000 WL 554221, at *1 (S.D.N.Y. May 5,
2000), the New York Department of Insurance regulation at issue not only compelled
disclosure, but also restricted speech. Insurance companies were flatly prohibited from
providing policyholders with a referral or recommendation to an affiliated repair shop
unless customers explicitly requested advice. Id. at *7. Further, insurers were prohibited
from even attempting to prompt customers to ask for a referral by informing them about
the existence of these restrictions or otherwise attempting to prompt customer inquiries.
Id. Given the restriction on speech, the district court analyzed the regulations under
Central Hudson instead of Zauderer.8
Similarly, Allstate Ins. Co. v. State of South Dakota, 871 F. Supp. 355, 357 (D.S.D.
1994), examined a South Dakota law that contained even greater restrictions on speech
than the New York regulation: a blanket prohibition on insurers advising policyholders
about the existence of affiliated auto glass repair shops. Because that statute banned
certain speech, the Central Hudson analysis governed.
Plaintiffs also misplace reliance on International Dairy, 92 F.3d at 69, in which the
Second Circuit applied the Central Hudson analysis to invalidate a Vermont statute that
required manufacturers to identify products derived from cows treated with synthetic
growth hormones. Because it was undisputed that synthetic growth hormones had no
effect on human health, “Vermont’s sole expressed” justification for enacting the law was
to safisfy “consumer curiosity” regarding the production of dairy products. Id. at 73 n.1.
By its own terms, the Second Circuit’s ruling was limited to holding that this asserted
interest “alone is not a strong enough state interest to sustain the compulsion of even an
accurate, factual statement.” Id. at 74. The Second Circuit distinguished International
Although PA 13-67(b)(2) contains restrictions on speech—albeit far less
stringent than those at issue in Serio—Plaintiffs have not moved for relief from this
provision and only contest the compelled speech of PA 13-67(c)(2). Additionally, Serio
was decided before Sorrell and New York State Rest. Ass’n, and on appeal, the Second
Circuit declined to address the constitutional issues and instead certified to the New York
Court of Appeals the question of whether the Department of Insurance had correctly
interpreted state law in promulgating the regulation at issue, see 261 F.3d 143, 153 (2d
Cir. 2001), which the Court of Appeals held it had not, see 98 N.Y.2d 198, 207 (2002). In
light of this decision on state-law grounds, on remand, the district court dismissed the
challenge as moot. See 2003 WL 21418198, at *6 (S.D.N.Y. 2003).
Dairy on this basis in both Sorrell, 272 F.3d at 115 n.6 (“The disclosure statute at issue
here, however, is based on Vermont’s substantial interest in protecting human health and
the environment from mercury poisoning.”), and New York State Rest. Ass’n, 556 F.3d at
134 (“Given New York’s interest in preventing obesity . . ., [International Dairy] is
inapplicable.”). Because the State has established that PA 13-67(c)(2) is based on the
governmental interest in promoting consumer choice and preventing steering,
International Dairy is inapplicable, and the Court’s analysis is governed by the rational
basis review outlined in Zauderer, New York State Rest. Ass’n, and Sorrell.
Rational Basis Review
Under the deferential standard of rational basis review, Plaintiffs’ challenge fails.
They argue that the State’s asserted interest in protecting consumer choice and
preventing steering is merely a post-hoc rationalization for the State’s true protectionist
intent, which is not “not in ‘protecting consumer choice’ so much as it is in ensuring that
consumers make particular choices” in favor of local businesses. (Reply [Doc. # 45] at 3.)
Safelite also contends that the limited disclosure required by the law does not directly and
materially advance the State’s interest in consumer protection and is a greater imposition
upon speech than is required to advance the State’s limited interests. (See Pls.’ Mem.
Supp. at 25–29.)
While some legislators may have expressed a protectionist motivation during the
debate over PA 13-67, under rational basis review “the Government has no obligation to
produce evidence, or empirical data to sustain the rationality of a statutory classification,
and instead can base its statutes on rational speculation. Any reasonably conceivable
state of facts will suffice to satisfy rational basis scrutiny. The burden falls to the party
attacking the statute as unconstitutional to negative every conceivable basis which might
Thompson, 252 F.3d at 582 (internal quotation marks, citations, and
Whatever might have been the motivation of some legislative proponents, there is
ample basis in the record for the Court to conclude that PA 13-67(c)(2) is rationally
related to the State’s interest in promoting consumer choice and preventing steering.
While existing Connecticut law already prohibited steering and mandated some written
disclosures, see Conn. Gen. Stat. § 38a-354, the State could have rationally concluded that
claims administrators owning repair shops nevertheless were able to exercise undue
influence and stifle consumer choice.
Safelite’s position that PA 13-67(c)(2) was
unnecessary given the absence of consumer complaints and the existence of other laws to
protect consumers is of no moment here, because the State does not bear the burden of
producing evidence or empirical data to sustain rationality and can rely instead upon
rational speculation. See Thompson, 252 F.3d at 582. Safelite also asserts that PA 1367(c)(2) will not materially advance consumer choice, because providing consumers with
the name of just one additional name will not promote overall fair competition, and the
law is under-inclusive in that it only applies to Safelite and one other company. Under
rational basis review, however, the law may be valid even if the State had alternate means
of achieving its goals or if the law is “under-inclusive,” i.e., only combats a limited aspect
of the problem. See New York State Rest. Ass’n, 556 F.3d at 133 n.22.
Because the Court concludes that PA 13-67(c)(2) is rationally related to the State’s
goal of protecting consumer choice and preventing steering, Plaintiffs have not
demonstrated that they are likely to succeed on the merits of their First Amendment
For the foregoing reasons, Plaintiffs’ motion [Doc. # 2] for a preliminary
injunction is DENIED.
IT IS SO ORDERED.
Janet Bond Arterton, U.S.D.J.
Dated at New Haven, Connecticut this 18th day of December, 2013.
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