REPORT TO MAYOR AND COUNCIL NO. 03-01 CA

DATE: June 10, 2003

A study recently was undertaken of Chapter 5.28 of the Sunnyvale Municipal Code, which regulates "peddlers and solicitors." The purpose of the study was to determine whether the Chapter complies with the requirements of the First Amendment as currently expressed by the courts. Based on this study, a number of constitutional problems with Chapter 5.28 have been identified.

As a result, the City Attorney recommends that the Council take the following action:

1. Repeal Chapter 5.28 (see Attachment 1)

2. Enact a new Chapter 5.28 (see Attachment 2)

The City of Sunnyvale has regulated "uninvited peddlers and solicitors" – i.e., door-to-door salespeople – since 1951. As originally enacted, Sunnyvale's regulations totally prohibited "solicitors, peddlers, hawkers, itinerant merchants and transient vendors of merchandise" from visiting private residences, without invitation, for the purpose of selling or advertising "goods, wares and merchandise, newspapers, books, pictures, periodicals, magazines, insurance and building and loan stock or accounts."

Absolute bans against door-to-door sales were once common throughout the United States. They were called "Green River ordinances" because they were patterned after an ordinance that was upheld in a 1933 case called City of Green River, Wisconsin v. Fuller Brush Company. Historically, the U.S. Supreme Court held that the First Amendment only protects the right to go door-to-door to express political, social, or religious ideas -- not to engage in commercial activities. As a result, Sunnyvale's Green River ordinance survived at least three court challenges between the 1950's and 1970's.

In 1976, the U.S. Supreme Court held, for the first time, that purely "commercial speech" is entitled to First Amendment protection. Legal scholars debated the constitutionality of "Green River ordinances" for several years after this holding. In 1991, however, the Ninth Circuit Court of Appeals finally addressed the question and struck down a Green River ordinance from the city of Pocatello, Idaho. The court recognized that Green River ordinances are intended to serve important municipal interests, such as preserving residential privacy and deterring crime, but the court concluded that a total ban on door-to-door salespeople was excessive and did not sufficiently advance those interests. The Pocatello decision effectively invalidated every Green River ordinance within the 9th Circuit's jurisdiction, including California.

In response to Pocatello, Sunnyvale repealed its Green River ordinance in 1992, replacing the outright ban with the licensing scheme that currently appears in Chapter 5.28 of the Municipal Code.

Chapter 5.28 of the Sunnyvale Municipal Code regulates "peddlers" and "solicitors," who are defined as persons who go to private residences "carrying or transporting goods, wares, merchandise or personal property of any nature and offering the same for sale", or soliciting orders for the sale of such items. (§5.28.020.) All "peddlers" and solicitors" must obtain a license from the Director of Public Safety. (§5.28.060.) The license may be denied if the "the moral character or business reputation of the applicant will endanger the public health, safety or general welfare". (§5.28.060(b).) Such decision can be appealed to the City Manager. (§5.28.150.) A license can be revoked on notice and a hearing for grounds specified in §5.28.030, such as fraud or conviction of a crime of moral turpitude.

Section 5.28.170 provides that "nonprofit, charitable and religious organizations" are exempt from the licensing requirement. However, "Before commencing any fund drive the organization shall file with the director of public safety the dates of solicitation and a verified statement or a declaration under the penalty of perjury, signed by the president or other duly authorized officer of the organization indicating that the organization qualifies as tax exempt under federal or state income tax laws."

Section 5.28.110 makes it unlawful "for any person, while conducting the business of peddler or solicitor, whether licensed or unlicensed, to enter upon any residential premises in the city where the owner, occupant or person legally in charge of the premises has posted at the entry to the premises, or at the entry to the principal building on the premises, a sign bearing the words ‘No Peddlers,’ ‘No Solicitors,’ or words of similar import." Under section 5.28.120, solicitation is prohibited between nine p.m. and eight a.m.

Constitutional law has continued to evolve in the last ten years, with the courts issuing many important decisions on a variety of First Amendment topics. In just the past year, the U.S. Supreme Court struck down a state effort to limit tobacco advertising; upheld a Virginia law against cross burning; and struck down a city ordinance that required persons to obtain a permit before going door-to-door to promote any "cause." As a result of these and other developments in the case law, Sunnyvale's peddling and solicitation regulations need to be revised.

First, a note on terminology: many statutes and legal opinions use words like "peddler," "solicitor" and "canvasser" in a confusing manner. "Peddling" usually means the act of travelling from place to place to sell something; e.g., door-to-door sales. "Solicitation" usually means asking for money or other compensation for any reason, which may involve anything from peddling, to panhandling (begging), to organized charitable fundraising. Somewhat confusingly, "solicitation" is used in Sunnyvale Municipal Code Chapter 5.28 to refer to a person who solicits orders rather than actually carrying goods from door-to-door. One could also debate whether the word "peddler" should include a person who sells services (car washing, lawn mowing, etc.) as opposed to goods. However, the most important thing to remember is that "peddling" and "solicitation" almost always refer to activities involving money. "Canvassing," by contrast, usually means handing out literature or otherwise traveling about to promote a cause, without necessarily collecting money. Note that all three activities can be combined in one individual. For example, a person might go door-to-door to get signatures on a petition (canvassing), while at the same time, asking for donations (soliciting) and selling buttons and bumper stickers (peddling).

For purposes of this discussion, "peddling" will specifically refer to sales of goods or services, while "soliciting" – to be consistent with how the word is generally used in the case law, as well as in other parts of the Sunnyvale Municipal Code (see Chapter 9.56 – "Solicitation of Employment, Business or Contributions of Money or Other Property") – will mean asking for money or other compensation or donations for any reason.

When attempting to regulate peddling and/or solicitation, the fundamental principle is that the communication of ideas, even for a commercial purpose, is protected by the First Amendment. Therefore, it goes without saying that any regulatory effort must meet the constitutional criteria established by the courts.

The U.S. Supreme Court has said that "the State's interest in protecting the well-being, tranquility, and privacy of the home is certainly of the highest order in a free and civilized society". "[I]ndividuals are not required to welcome unwanted speech into their own homes and . . . the government may protect this freedom." Therefore, it is well-established a city may regulate door-to-door peddling and solicitation. The more difficult question becomes: what sort of regulations will the courts find to be constitutionally acceptable?

In the recent case Watchtower Bible & Tract Society v. Village of Stratton, the Court struck down an ordinance that required anyone going door-to-door to promote a "cause" to register with the city. This regulation applied to people who were merely expressing ideas, even if they were not selling anything or asking for money. The Court held that the regulation violated the First Amendment. The Court basically concluded the right to knock on doors and talk to other people about one's ideas is so fundamental to our democratic society that even a slight burden, such as a registration requirement, is completely unacceptable. However, the Court also commented "[h]ad [the ordinance] been construed to apply only to commercial activities and the solicitation of funds, arguably the ordinance would have been tailored to the Village's interest in protecting the privacy of its residents and preventing fraud." [Emphasis added.] The Court noted these were "important interests that the Village may seek to safeguard through some form of regulation of solicitation activity."

Similarly, the California Supreme Court has upheld carefully drafted laws against so-called "aggressive panhandling" on the ground that soliciting money – whether by individuals or organizations – poses special risks to the public that justify regulation. Those risks include the possibility that persons solicited for funds will be defrauded or unduly harassed.

In another case involving peddling and solicitation, the U.S. Supreme noted cities have a substantial interests in preventing fraud and protecting residential privacy, and "a narrowly drawn ordinance that does not vest in municipal officials the undefined power to determine what residents will hear or see may serve those interests consistent with the First Amendment." [Emphasis added.]

The preceding sentence is instructive because it identifies the two grounds that have doomed most of the peddling and solicitation regulations reviewed by the courts:

• First, an acceptable regulation must be "narrowly drawn," that is, it must "target[] and eliminate[] no more than the exact source of the 'evil' it seeks to remedy."
  
• Second, the regulation must not give government officials unfettered discretion to determine what speech is allowed and what is not.

There are several reasons why courts might conclude that a statute is not "narrowly drawn." The three most common problems are (1) ineffectiveness, (2) vagueness, and (3) overbreadth.

1. Ineffectiveness. Some laws are simply ineffective – they infringe on constitutional rights without actually accomplishing their stated purpose. This was one of the key problems with the ordinance in the recent Watchtower v. Stratton case. The U.S. Supreme Court found that the Village of Stratton's permitting scheme imposed an "intolerable" burden on free speech, while doing virtually nothing either to prevent crime or protect the privacy of residents. The Court noted that residential privacy would be amply protected by requiring canvassers to honor "no solicitation" signs. Moreover, the Court expressed doubt that the Village's permitting scheme would actually deter any criminal activity.

2. Vagueness. Another common problem with peddling ordinances is vagueness. A fundamental requirement of due process is that a statute must be sufficiently clear so as to allow "persons of ordinary intelligence a reasonable opportunity to know what is prohibited." Moreover, "when First Amendment freedoms are at stake, an even greater degree of specificity and clarity of laws is required." A corollary of this principle is that a law must contain sufficient objective criteria to guide government officials in interpreting and enforcing it. In one case, for example, a city enacted an ordinance making it unlawful to display a sign on a vehicle if the vehicle was parked in a manner designed "to attract attention." This provision was found to be unconstitutionally vague because there are obviously a myriad of factors that might distinguish a vehicle parked "to attract attention" from one that is not. As a result, the ordinance required police officers to make ad hoc, subjective decisions about whether or not the law had been broken. The inherent subjectivity of the ordinance meant that the police or other public officials could apply it in a discriminatory fashion. This possibility raises the specter of government censorship, which is unquestionably contrary to the most fundamental American values.

3. Overbreadth. In other situations, a law may be perfectly clear and effective, yet it sweeps in more speech than necessary to serve its purpose. This is the problem of overbreadth. Legislation that enters the gray area between commercial speech and "core" or "traditional" free speech (i.e., speech concerning political, social or religious matters) is particularly at risk of overbreadth. Although the U.S. Supreme Court has held that government can regulate commercial speech to a greater extent than fully protected speech, the precise line between these two forms of speech is anything but clear.

In the area of door-to-door solicitation, fundraising is a classic example of an activity that combines a "core" religious or political message with a commercial activity, such as selling books, T-shirts, buttons, candy, cookies, etc. Even if a regulation is expressly directed only at commercial activities, it may run afoul of the Constitution because it ends up restricting fully protected speech as well. In 1998, for example, the Ninth Circuit struck down an ordinance from the city of Las Vegas that made it unlawful to distribute handbills advertising "commercial transactions," "products" or "services" in certain locations. The court held the ordinance was unconstitutionally overbroad because it restricted fully protected speech that was "inextricably intertwined" with commercial speech, such as newspapers containing commercial advertisements, or conversely, advertisements for charitable fund-raisers.

One solution to the problem of overbreadth is to exempt both "fully-protected" and "intertwined" speech from the regulation, but this raises a thorny problem of definition. Obviously, anyone can claim their activity expresses a "message," even a message as mundane as "our product is superior to their product." The Sunnyvale Municipal Code attempts a compromise by exempting "nonprofit, charitable and religious organizations" from the licensing scheme if the organizations qualify as tax-exempt under applicable federal law. (Sunnyvale Municipal Code §5.28.170). Unfortunately, in 1997 the Ninth Circuit struck down a similar non-profit/for-profit distinction adopted by the city of Venice Beach, California, to regulate persons plying wares in the city's busy tourist districts. The court held there was "no justification in allowing those with membership in a nonprofit organization to sell items and solicit donations, while disallowing those with no nonprofit membership from the same activities." A law that makes distinctions between different categories of speakers risks another constitutional pitfall: content discrimination. Content-based restrictions on speech are presumptively unconstitutional, and will be upheld only if the government can prove that the regulations are the "least restrictive means" necessary to serve a "compelling" public interest.

To summarize, a number of principles can be gleaned from the above and other cases:

• Cities have a substantial interest in preventing crime and fraud and preserving residential privacy. Cities can enact laws to serve these interests, as long as such laws are consistent with the Constitution.
  
• Cities cannot completely prohibit door-to-door peddling (selling goods) or solicitation (asking for money for any purpose).
  
• Cities can impose reasonable "time, place, and manner" restrictions on peddling and solicitation. For example:
• Cities can require that peddlers and solicitors honor "no solicitation" signs.
• Reasonable time-of-day restrictions are also acceptable.
  
• Licensing schemes: although cities cannot require "canvassers" to get a license before going door-to-door to promote their cause, the U.S. Supreme Court has indicated a narrowly-tailored licensing scheme that applies only to commercial activities and/or solicitation of funds might be acceptable.
  
• An acceptable licensing scheme will possess the following features: (1) it will be carefully designed to address specific harms that can be shown to flow from unregulated peddling and soliciting; (2) it will be effective in preventing or remedying those harms; (3) it will be content-neutral; (4) it will contain objective standards that eliminate the risk that government officials will use the law to censor unpopular speech.

The major problem with Chapter 5.28, as currently written, is the distinction between for-profit and non-profit organizations. Certainly no one wants to put an undue burden on youth cookie sales or other worthy fundraising activities. However, simply exempting non-profit organizations is not an ideal solution. The law ends up treating people differently based on the content of their speech. Moreover, the law singles out tax-exempt non-profits for special treatment. Finally, the exemption undermines the very rationale for having the regulations in the first place, i.e., protecting the privacy of homeowners and preventing crime and fraud. Charitable fundraisers are just as bothersome as commercial fundraisers, and may be just as likely to be a "front" for criminal or fraudulent activities.

There are three possible solutions to this dilemma:

1. Eliminate the license requirement entirely and simply require peddlers to register with the City (to aid in their identification in case of complaints) and to adhere to certain standards of behavior such as time-of-day restrictions and "no solicitation" signs.

2. Impose the full license requirement on all peddlers regardless of whether or not they are engaged in for-profit or non-profit activities.

3. Create an exemption based on the dollar value of the goods or services being sold. The rationale for such an exemption would be that the sale of low-value items (cookies, candy, candles etc.) poses a lesser risk of fraud. This would have the collateral effect of exempting most charitable fund-raising from the regulations, because door-to-door fundraising usually involves small items of minimal value. This would also mean, of course, that some commercial peddlers will also be exempt.

Any of these three options is acceptable from a legal perspective. Option (3), however, is recommended because this option preserves the basic regulatory scheme while balancing the free speech rights of persons engaged in peddling, without imposing an undue burden on charitable fund-raisers whose activities might otherwise be hampered.

The proposed revisions are attached hereto as Exhibit A. These revisions are based on a Model Ordinance recently presented at a League of California Cities conference. The revisions are intended to replace Chapter 5.28 of the Municipal Code in its entirety.

Specific analysis of each section in proposed Chapter 5.28

Comment: the courts have strongly suggested that peddling ordinances should contain findings related to the need for the regulation of peddlers in the particular community.

Comment: a new definition had been created that eliminates the confusing use of the dual term "peddling and solicitation."

Comment: this section imposes a general licensing requirement and then creates an exemption where asking price (or requested donation) for the goods or services is less than $20. This dollar amount could be made either higher or lower as the council prefers.

Comment: the application process will remain essentially unchanged.

Comment: unchanged

Comment: the language used in this section has been streamlined somewhat as compared to the current ordinance. The most significant change is the addition of specific grounds on which an application can be denied. In addition, the issuance of identification badges, which was previously handled in a separate section, has been combined with this section for the sake of clarity.

Comment: unchanged.

Comment: unchanged.

Comment: the language has been revised somewhat but the effect of the provision is unchanged.

Comment: this section includes some additional regulations concerning how peddlers are to conduct their activities, such as display of identification badges. Three new provisions that have been found useful by other cities have been added, including: (1) a requirement that peddlers provide signature for comparison to their license upon request by a police officer or other city official; (2) a requirement that peddlers taking orders for future delivery give a receipt to the consumer if requested; and (3) a requirement that peddlers provide certain information about their employers when asked by a consumer.

Comment: the procedures for revoking a license have been streamlined. Rather than requiring all revocations to be heard by the city manager, the director of public safety will be empowered to revoke the license for certain ennumerated causes. The peddler will then have an opportunity to file an appeal with the city manager.

Comment: this provision makes it clear that persons merely distributing handbills are not required to obtain a peddler's permit.

Comment: unchanged.

No fiscal impact to adoption of revised regulations. Some potential savings of the cost of enforcing sections recommended for repeal, but more importantly, savings of future litigation costs.

Standard Council Agenda posting and publication, including availability in the Library and on the City's website.

1. Adopt ordinance repealing Chapter 5.28 and adopting a new Chapter 5.28.

2. Make other changes to Chapter 5.28.

3. Make no changes to Chapter 5.28.

Alternative #1, adopt proposed ordinance revising Chapter 5.28.

Valerie J. Armento
City Attorney

1. Current Chapter 5.28.

2. Proposed Chapter 5.28.