The opinion of the court was delivered by: MUIR
Plaintiffs filed this action alleging violations of their constitutional rights and of rights granted by Pennsylvania law on February 5, 1981. Jurisdiction is alleged to arise under 28 U.S.C. §§ 1331 and 1343 and the doctrine of pendent jurisdiction. Also on February 5, 1981, Plaintiffs filed a motion for a preliminary injunction which was denied by this Court in American Future Systems v. Pennsylvania State University, 510 F. Supp. 983 (M.D.Pa.1981). On July 17, 1981, Defendants filed a motion for summary judgment and supporting brief. On August 24, 1981, Plaintiffs responded, and on August 31, 1981, Defendants filed a reply. For the reasons set forth below, Defendants' motion for summary judgment will be granted.
This case is the second one before the Court involving policies of Pennsylvania State University (Penn State) relating to commercial activities in its dormitories. In the first lawsuit, judgment was granted in favor of Penn State upholding its regulations against an attack that they violated American Future Systems' (AFS) First Amendment rights. American Future Systems, Inc. v. Pennsylvania State University, 464 F. Supp. 1252 (M.D.Pa.1979), aff'd 618 F.2d 252 (3d Cir. 1980) ("American Future Systems I ").
AFS is a corporation whose principal business is the sale of cookware, china, crystal, and silverware through demonstrations of its merchandise at colleges throughout the United States. AFS seeks by this action to be permitted to present sales demonstrations at the invitation of individual students in the common areas and dormitory rooms within the residence halls of Penn State, to disseminate commercial information to groups of students through sales demonstrations at the invitation of individual host students in their individual dormitory rooms, and to consummate sales to individual students in the student hosts' rooms and residence halls of Penn State. Plaintiffs Wingert and Brubaker are Penn State students who formerly resided in Penn State residence halls. Wingert withdrew as a student at Penn State in February 1981 and is no longer enrolled. Brubaker, while still enrolled as a student, no longer resides in a Penn State residence hall. Wingert and Brubaker seek relief permitting them to invite AFS to common areas and their individual dormitory rooms and residence halls, to conduct in their rooms and in common areas of residence halls, sales demonstrations to groups of invited students and to invite AFS to their dormitory rooms for purposes of consummating sales of goods to other students following the demonstrations. Plaintiffs DelValle, Varsics, Habacher and Spiller are current Penn State students who do not reside in residence halls. DelValle, Varsics, Habacher and Spiller seek an order permitting them to attend and participate in AFS group demonstrations in common areas and dormitory rooms and to consummate sales from AFS in those rooms.
As this Court already held in its denial of Plaintiffs' motion for a preliminary injunction, the policy of Penn State during the time that American Future Systems I was litigated and now is that (1) AFS may conduct group demonstrations in specified common areas of each residence hall; (2) following those demonstrations a student may invite an AFS representative to the student's room to purchase AFS goods; (3) AFS is free to solicit invitations to individual students' rooms at the group demonstrations or by telephone or mail; (4) AFS is not permitted to conduct group demonstrations in an individual dormitory room; (5) AFS is not permitted to consummate sales in dormitory rooms to a purchaser other than the occupant of the room; (6) AFS is not permitted to conduct group solicitations of sales in the common areas of residence halls; (7) AFS is not permitted to consummate commercial transactions in the common areas of residence halls. American Future Systems v. Pennsylvania State University, 510 F. Supp. 983, 985 (M.D.Pa.1981). It is Plaintiffs' position that under the ruling of the Court of Appeals in American Future Systems I they are entitled to the relief sought in this action. Defendants are of the view that their policies relating to commercial activities in Penn State's dormitories are consistent with the Court of Appeals' opinion in American Future Systems I, and that Plaintiffs are not entitled to relief.
Summary judgment is appropriate when the pleadings, depositions, answers to interrogatories, and admissions in the record, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Rule 56(c) of the Federal Rules of Civil Procedure. Because the bases for granting summary judgment are somewhat different as to Plaintiff AFS, to Plaintiffs Wingert and Brubaker, and to Plaintiffs DelValle, Varsics, Habacher and Spiller, AFS and each group of individual Plaintiffs will be discussed separately.
AFS's primary contention is that the decision of the Court of Appeals in American Future Systems I granted AFS certain rights that Penn State has abridged. To the contrary, the Court of Appeals' opinion contains no declaration of AFS's rights, and in that opinion the Court concluded that Penn State's policies governing commercial activity was wholly consistent with AFS's First and Fourteenth amendment rights. The Court of Appeals recognized that a total suppression of AFS's commercial speech would probably violate AFS's constitutional rights. American Future Systems I, 618 F.2d at 258. In holding that Penn State's distinction between non-commercial and commercial speech was valid, the Court of Appeals noted that Penn State had only restricted, rather than suppressed, speech. "(AFS) sales representatives are allowed into the residence halls to present demonstrations to groups of students, (but) they cannot consummate sales at these gatherings. Even that restriction is removed if the sales representative is invited to the hall by an individual student who decides to purchase the merchandise marketed by AFS." 618 F.2d at 258. There is a dispute as to whether the Court of Appeals' decision in American Future Systems I actually vests in AFS the right to set up group demonstrations of its products in the Penn State residence halls. However, inasmuch as Penn State policies permit such group demonstrations, this Court need not reach that question. The issues now before the Court are (1) whether Penn State may limit AFS to presentations in common areas, as opposed to private rooms, and may limit AFS's actual solicitation to private rooms and not permit such solicitation in common areas; and (2) whether AFS's proposed presentation does in fact constitute solicitation, in whole or in part.
Penn State's policy governing commercial activity in its residence halls has remained unchanged since AFS made its initial attempts to conduct demonstrations of its products in 1977. Specifically, in effect at the time of the American Future Systems I litigation was Penn State's policy that AFS could present demonstrations, but not solicitations of sales in the common areas of residence halls, and that AFS is free to consummate commercial transactions (i. e. solicitation) in student's rooms, but not in common areas. See American Future Systems I, 464 F. Supp. 1252, 1258 (P 59); American Future Systems v. Pennsylvania State University, 510 F. Supp. 983, 985 (M.D.Pa.1981). The record shows that AFS was aware of this policy at the time that it filed the American Future Systems I action. See American Future Systems I, 464 F. Supp. at 1258 (P 59). AFS's attempt to relitigate the constitutionality of Penn State's policies regarding commercial activities in dormitories is barred by the doctrine of res judicata.
The doctrine provides that a party who 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, 153-54, 99 S. Ct. 970, 973-74, 59 L. Ed. 2d 210 (1979). The purpose of this doctrine is to ensure finality in the adjudication of disputes and to provide a conclusive resolution not only of matters that were actually considered but also of all of those which could have been considered. 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, three elements must be present: (1) there must be an identity of parties; (2) there must be in existence a valid, final judgment on the merits by a Court of competent jurisdiction; and (3) 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) (memorandum). There can be no dispute as to the first two requirements. Here, AFS and the same Penn State defendants have been involved in both actions. Further, there is a final, valid judgment upholding Penn State's policy governing commercial activities in dormitories. 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), citing Williamson v. Columbia Gas & Electric Corp., 186 F.2d 464 (3d Cir. 1950), cert. denied, 341 U.S. 921, 71 S. Ct. 743, 95 L. Ed. 1355 (1951). Based on the allegations of Plaintiffs' complaint, the exhibits attached thereto, and affidavits submitted in this matter, the Court concludes 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. The Court also concludes that AFS had in that action opportunity to present to the Court and to the Court of Appeals any claims 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 adversely affected by Penn State's policies. Since the Court of Appeals has already upheld the validity of Penn State's policies with respect to commercial activities within residence halls, and since AFS had a full and fair opportunity to litigate the validity of that policy, or any aspect thereof, in the first action, res judicata operates to preclude AFS's challenge to that policy in this action. Therefore, summary judgment will be granted in favor of the Defendants as to AFS's claim that Penn State's policy with respect to commercial solicitation and activity in the dormitories violates AFS's First and Fourteenth Amendment rights.
AFS's second claim is that Penn State's position that it may censor the substance of AFS's demonstrations violates AFS's constitutional rights. Penn State contends that certain portions of the AFS demonstration involve the solicitation of sales rather than educational or informational material within the normal meaning of "demonstration." Penn State claims that these provisions which involve price, credit and guarantee terms, are properly considered commercial rather than educational in nature, and are therefore properly restricted to individual solicitation in private rooms and may be excluded from the demonstrations in common areas. (Defendants' Brief in Support of Motion for Summary Judgment at pp. 11-12.) AFS, in response, claims that if it were to present its demonstrations in the manner required by the University, it might appear to its listeners to be engaging in sharp business practices. AFS claims that if it is allowed to demonstrate and display its products, but is not allowed to give information regarding prices, guarantees, exchange policies and specially designed credit terms to fit students' budgets, its sales representatives' credibility as legitimate and honest people would be undermined. (Plaintiffs' Brief in Opposition to Defendants' Motion for Summary Judgment at pp. 8-9).
The Court of Appeals' decision in American Future Systems I specifically upheld Penn State's regulations to the extent that they rested upon a distinction between commercial and non-commercial speech. Addressing the question of solicitation and consummation of sales in common areas, the Court of Appeals first noted that Penn State had advanced reasonable objectives to support its ban on group commercial activity in its residence halls. Finding that Penn State had not acted in an arbitrary, capricious, or invidious manner in distinguishing between commercial and non-commercial speech (i. e. solicitations as opposed to demonstrations), the Court concluded that Penn State's policies do not violate the First Amendment. American Future Systems I, 618 F.2d at 259. Thus, AFS's position that the Court of Appeals did not anticipate or recognize distinctions between educational programs and commercial solicitation (Plaintiffs' Brief in Opposition to Defendants' Motion for Summary Judgment at p. 8) is clearly erroneous.
In American Future Systems I, this Court and the Court of Appeals were not faced with the question of whether particular aspects of AFS's presentations were educational or commercial. Thus, this aspect of AFS's claim is not barred by res judicata.
AFS's proposed presentation is evidenced by the cue cards that are attached to the complaint. The parties have agreed in their statement of material facts that the cue cards in Exhibit E of the complaint constitute substantially all of AFS's presentation. Cards 1 through 23 are clearly educational and instructional in nature, and it is permissible to convey this information at AFS's group demonstrations. Cards 24 through 31 relate to guarantee and payment plans offered to the students. These cards constitute solicitation of sales, and Penn State may constitutionally prohibit AFS from presenting this information as a part of its demonstrations. The material contained in cards 32 through 36 is informational and permissible. The material in the first paragraph of card 37 deals with the price of AFS's goods, and constitutes impermissible solicitation. The material contained in the remainder of card 37 and cards 38 ...