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April 1, 1981

AMERICAN FUTURE SYSTEMS, INC., et al., Plaintiffs,

The opinion of the court was delivered by: MUIR

The Plaintiffs filed this action alleging violations of their constitutional rights and of rights granted by Pennsylvania law. Jurisdiction is alleged to arise under 28 U.S.C. §§ 1331 and 1343 and the doctrine of pendent jurisdiction. Contemporaneously with the filing of the complaint the Plaintiffs filed a motion for a preliminary injunction. A brief in support of the motion was filed on February 13, 1981 and an opposing brief was filed on February 27, 1981. The Plaintiffs have chosen not to file a reply brief. For the following reasons, the motion for a preliminary injunction will be denied.

This case is the second chapter in the controversy between American Future Systems, Inc. (AFS) and the Pennsylvania State University regarding the latter's policies relating to commercial activities in its dormitories. The first chapter resulted in a judgment in favor of Penn State upholding its regulations against an attack that they violated American Future Systems's First Amendment rights. American Future Systems, Inc. v. The Pennsylvania State University, 464 F. Supp. 1252 (M.D.Pa.1979), aff'd, 618 F.2d 252 (3d Cir. 1980) (American Future Systems I ). The facts insofar as they are relevant to the Court's determination of the Plaintiffs' motion for a preliminary injunction are those taken from the Plaintiffs' complaint and the attachments to the complaint.

 The policy of Penn State during the time that American Future Systems I was litigated and now is that AFS may conduct group demonstrations in specified common areas of each residence hall and that following those demonstrations a student may invite an AFS representative to the student's room to purchase AFS goods. AFS is also free to solicit invitations to individual student's rooms at the group demonstrations or by telephone or mail. What Penn State does not permit are group demonstrations in an individual dormitory room or sales in dormitory rooms to a purchaser other than the occupant of the room. Also prohibited are group solicitations of sales or the consummation of commercial transactions in the common areas of the residence halls.

 It is the Plaintiffs' position that under the ruling of the Court of Appeals in American Future Systems I they are entitled to the relief sought in the complaint. This is not the appropriate occasion for the Court finally to determine if the Plaintiffs are correct. At this juncture, it is only necessary for the Court to determine whether Plaintiffs have satisfied the requirements for the issuance of a preliminary injunction granting the relief sought in the complaint.

 The standards for a preliminary injunction that maintains the status quo are set forth in The Continental Group, Inc. v. Amoco Chemicals Corporation, 614 F.2d 351, 356-7 (3d Cir. 1980), as follows:

To support a preliminary injunction, the moving party must demonstrate that irreparable injury will occur if relief is not granted to maintain the status quo until a final adjudication on the merits can be made and that there is a reasonable probability of eventual success on the merits. In addition, the court must weigh the possibility of harm to the nonmoving party as well as to any other interested persons and, when relevant, harm to the public.

 In this case, the Plaintiffs do not seek to maintain the status quo but request preliminary relief that alters the status quo to permit them to sell merchandise in a manner currently prohibited by Penn State regulations. In a situation in which a litigant seeks a preliminary injunction that alters the status quo pending final judgment "the burden on the moving party is particularly heavy." Punnett v. Carter, 621 F.2d 578, 582 (3d Cir. 1980). The Plaintiffs in this case, therefore, must convince the Court that the equities weigh decidedly in their favor. Schlesinger v. Carlson, 489 F. Supp. 612, 619 (M.D.Pa.1980).

 The Plaintiffs in this action may conveniently be divided into three groups based on their statuses and the relief they seek. As a consequence, the Court will address the elements separately for each group.

 AFS's contention that it has shown a high probability of success on the merits rests on its conclusion that the decision of the Court of Appeals in American Future Systems I granted it certain rights that Penn State has abridged. This contention is without merit. The decision by the Court of Appeals upheld as constitutional Penn State's regulations that prohibit group demonstrations in a student's dormitory room, commercial solicitations at group demonstrations, and sales to a student at a location in a dormitory other than the student's own room. Based on that decision, the Court concludes that AFS has practically no chance of succeeding on the merits in its contention that it must be permitted to conduct group sales demonstrations in student's rooms and be permitted to consummate sales in a student's room to someone other than that student.

 The decision in American Future Systems I specifically upheld Penn State's regulations to the extent that they rested on a distinction between commercial speech and other types of speech. For this reason, the Court concludes that AFS has failed to show a probability of success on the merits with respect to its contention that the entire presentation as evidenced by the cue cards that are attached to the complaint as part of Exhibit E must be permitted at the group demonstration. Cards 24 through 31 relate to the guarantee and payment plans offered to the students. It appears to the Court that it is likely that those materials constitute solicitation of sales at a group demonstration, conduct that Penn State may constitutionally prohibit. The same conclusion applies to cards 52 through 65 as well as those portions of cards 66 and 67 that involve distribution of contracts to the group.

 There is, however, a more fundamental reason why AFS is unlikely to succeed on the merits of this litigation. The doctrine of res judicata provides that a party that has suffered an adverse judgment may not in subsequent litigation against the same party seek to relitigate any issue that was or could have been determined in the first action. See Montana v. United States, 440 U.S. 147 at 153-54, 99 S. Ct. 970 at 973-74, 59 L. Ed. 2d 210 (1979); Cramer v. General Telephone & Electronics Corp., 582 F.2d 259, 266 (3d Cir. 1978), cert. denied, 439 U.S. 1129, 99 S. Ct. 1048, 59 L. Ed. 2d 90 (1979). In order for res judicata to apply there must be an identity of parties, the existence of a final judgment on the merits by a court of competent jurisdiction, and the second action must concern the same subject matter or cause of action as the prior suit. Sworob v. Harris, 451 F. Supp. 96, 99-100 (E.D.Pa.), aff'd, 578 F.2d 1376 (3d Cir. 1978) (Mem.). There can be no dispute that the first two requirements are present in this case. As to the third requirement, the second action may be said to involve the same cause of action if liability is sought to be imposed on a different theory but based on the same "liability creating conduct" of the defendant which gave rise to the first action. Coggins v. Carpenter, 468 F. Supp. 270, 280 (E.D.Pa.1979).

 Based on the allegations of the complaint and the exhibits attached thereto it appears to the Court that AFS is complaining about the same conduct of which it complained in American Future Systems I, namely, Penn State's regulations limiting access by AFS to the university's dormitories. It also appears that AFS had in that action opportunity to present to this Court and to the Court of Appeals any claim it might have had as to the precise contours of the permissible scope of group demonstrations as well as any other matters relating to any other constitutional rights that may have been affected by Penn State's policies. At this juncture AFS has not demonstrated a probability of success on the merits of its litigation because its claims are likely to be foreclosed by the doctrine of res judicata on account of the outcome of America Future Systems I.

 Plaintiffs Brubaker and Wingert are students who reside in Penn State residence halls and who wish to act as hosts to group demonstrations and to conduct sales in their dormitory rooms. According to the attachments to the complaint, both of these plaintiffs were advised by letter that common areas in the dormitories could be used to demonstrate ...

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