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American Future Systems Inc. v. Pennsylvania State University and Board of Trustees of Pennsylvania State University and John W. Oswald

decided: April 3, 1980.

AMERICAN FUTURE SYSTEMS, INC., APPELLANT
v.
THE PENNSYLVANIA STATE UNIVERSITY AND BOARD OF TRUSTEES OF THE PENNSYLVANIA STATE UNIVERSITY AND JOHN W. OSWALD, INDIVIDUALLY AND AS PRESIDENT OF THE PENNSYLVANIA STATE UNIVERSITY AND M. LEE UPCRAFT, INDIVIDUALLY AND AS DIRECTOR OF RESIDENTIAL LIFE PROGRAMS OF THE PENNSYLVANIA STATE UNIVERSITY



APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA (D.C. Civil No. 78-0262)

Before Seitz, Chief Judge, and Van Dusen and Weis, Circuit Judges.

Author: Van Dusen

Opinion OF THE COURT

Plaintiff, American Future Systems, Inc. (AFS), challenges on this appeal the Pennsylvania State University (Penn State) regulation forbidding sales demonstrations and solicitations in the university owned and operated residence halls. AFS asserts that the First and Fourteenth Amendments prohibit such a policy. After a trial to the court based on a complaint seeking a declaratory judgment that the regulation was unconstitutional and seeking an injunction restraining defendants from enforcing their policy against commercial solicitation on Penn State's campus, the district court held that this regulation does not violate the First Amendment. American Future Systems, Inc. v. Pennsylvania State University, 464 F. Supp. 1252 (M.D.Pa.1979). After careful consideration of the contentions of plaintiff AFS, we affirm for reasons which differ in some respects from those of the district court.

I.

At its University Park campus in State College, Pennsylvania, Penn State owns and operates 68 residence halls, housing approximately 13,000 students. A "No Trespassing" sign is posted at or near the entrance of each dormitory.*fn1 The floor plans of many of the dormitories are similar. A typical floor has 20 rooms, each occupied by two students. In addition, each floor also has a number of common facilities, such as lavatories, dressing mirrors, a laundry room, a storage room, and a study room. Before students become residents of the dormitories, they must sign a housing contract which states in part:

"The conducting of any business enterprise for personal profit is prohibited in or around the university operated units."*fn2

This statement is amplified by rules set forth in the student handbook:

"The institution . . . has rights and responsibilities of its own. The rights and responsibilities of the institution include: . . . (the) (r)ight to prohibit individuals and groups who are not members of the University community from using its physical and operating facilities for commercial . . . activities." App. at V-26a.

"Lectures, concerts, demonstrations, displays, or exhibits may not be used in any manner as a means of promoting commercial companies, products, or services." App. at V-27a.

"The word "commercial' . . . means any activity or event which results in personal financial gain to the peddler or organization thereof, provided that contact between a peddler and a student shall not be deemed commercial if such contact was invited by the individual student involved." App. at V-28a.

"Persons who are not students or employees of the University, while on University property, are required to . . . abide by University policies and regulations." App. at V-28a.

Pursuant to these guidelines, Penn State prohibits all commercial transactions in the dormitories with one exception: an individual student may invite a salesperson to his or her room in the residence hall for the purpose of transacting business with that student only.*fn3 Penn State's regulation of commercial activities on campus does not prevent businesses from placing advertisements in the student newspapers or on the student radio station. Nor does it preclude sales attempts made via the telephone or the mail.*fn4

AFS, a corporation headquartered in Bryn Mawr, Pennsylvania, sells china, crystal, silverware, and cookware. AFS seeks to sell its wares at demonstrations attended by a hostess, invited guests, and a sales representative. To procure hostesses for these shows, AFS telephones college students at random, asking if they will host a show in their residence hall and promising each of them a gift of merchandise if they do act as hostess. The hostess then invites other students to the show. Each student is told that those who attend the show will be eligible to participate in the drawing of a winner of a four-day vacation in Florida.*fn5 AFS attempts to have 10 to 15 students attend each demonstration. If less than 10 eligible*fn6 students are present, AFS sales representatives are under instructions to ask the hostess to accompany them door-to-door in the residence hall, seeking more guests for the show.*fn7 Once commenced, the AFS shows last approximately one hour. Most of the show consists of a demonstration of the products. At the conclusion of this portion of the show, the holiday drawing takes place. The students who are not interested in purchasing the AFS products are asked to leave. The students who remain are then asked to sign consumer finance contracts right away.*fn8

AFS scheduled 51 sales demonstrations in Penn State residence halls for the last two weeks of September 1977.*fn9 Some of these were interrupted by university officials who informed AFS representatives that they were violating the established policy banning commercial activity. When AFS protested that it had a constitutional right to solicit sales within the residence halls, a Penn State official told AFS that it would be permitted to conduct the demonstration portion of its show if no attempts were made to sell merchandise to ...


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