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New Jersey State Lottery Commission v. United States

decided: January 2, 1974.



Van Dusen, Gibbons and Rosenn, Circuit Judges. Seitz, Chief Judge, Van Dusen, Aldisert, Adams, Gibbons, Rosenn, Hunter, Weis and Garth, Circuit Judges.

Author: Gibbons


GIBBONS, Circuit Judge.

This case is before us pursuant to 28 U.S.C. § 2342(1) and 47 U.S.C. § 402(a) on the petition of New Jersey State Lottery Commission to review a declaratory ruling of the Federal Communications Commission. Proceedings before the FCC commenced in February 1971 when Jersey Cape Broadcasting Corporation, a licensee of broadcast frequencies operating in Wildwood, New Jersey, filed a request for a declaratory ruling on the question whether its broadcast of the winning weekly number in the New Jersey State Lottery would violate 18 U.S.C. § 1304. Jersey Cape proposed to broadcast, during three consecutive regular news broadcasts on each Thursday, the day of the lottery drawing, and at no other time, a statement:

"The winning state lottery number drawn today is (and then recite the winning number)."

In its declaratory ruling issued July 14, 1971 the FCC ruled that the proposed statement would violate 18 U.S.C. § 1304 and the FCC's rules interpreting that statute. 36 Fed. Reg. 13813 (1971). In a second ruling on July 27, 1971 the FCC made clear that its ruling prohibited the statement even as a news item in a regular news broadcast. 36 Fed. Reg. 14347 (1972). Thereafter petitioner New Jersey State Lottery Commission, pursuant to 47 U.S.C. § 405*fn1 filed with the FCC a timely petition for reconsideration. The FCC decision before us denied this petition for reconsideration. In re Jersey Cape Broadcasting Corp., FCC 72-702, filed July 27, 1972. The Lottery Commission filed a petition for review of the July 27, 1972 Memorandum and Order in this court within the time permitted by the statute.*fn2 47 U.S.C. §§ 402(c), 405.

Before the FCC the Lottery Commission established its status as a person aggrieved or whose interests would be adversely affected. The State Lottery is authorized by a 1969 amendment to the state constitution and by the State Lottery Law, N.J. Stat. Ann. §§ 5:9-1 to 5:9-25. The Lottery Commission commenced sale of lottery tickets in December 1970. The winning number is drawn every Thursday morning. The Lottery Commission claims that each Thursday it is confronted with a difficult problem in coping with the public demand for information of the winning number. Its telephone service was temporarily suspended on August 19, 1971, due to an overload of telephone calls. Records of the New Jersey Bell Telephone Company indicate that its twelve automatic answering and announcement machines in Newark, specially installed for the Lottery Commission to announce the winning numbers to callers in the northern half of New Jersey, receive an average of 5,500 calls between the hours of 9:30 a.m. and 2:30 p.m. on Thursdays. Five additional machines have been installed in Newark. In addition to the calls completed, 32,000 and 63,000 "overflow" calls were attempted on August 12 and August 19, 1971, respectively. Many phone calls requesting the winning lottery number have also been made to newspapers throughout the state commencing at approximately 11:30 a.m. on Thursdays. On a typical Thursday, 2,750,000 ticketholders are interested in the winning number.

The FCC, in issuing the challenged ruling, acted pursuant to the Communications Act of 1934. See Act of June 19, 1934, ch. 652, 48 Stat. 1064, 1086, 1088, 1091. The provisions of that statute relevant to this case are found at 18 U.S.C. § 1304, 47 U.S.C. § 312(a)(6) and 47 U.S.C. § 326. 18 U.S.C. § 1304 provides:

Whoever broadcasts by means of any radio station for which a license is required by any law of the United States, or whoever, operating any such station, knowingly permits the broadcasting of, any advertisement of or information concerning any lottery, gift enterprise, or similar scheme, offering prizes dependent in whole or in part upon lot or chance, or any list of the prizes drawn or awarded by means of any such lottery, gift enterprise, or scheme, whether said list contains any part or all of such prizes, shall be fined not more than $1,000 or imprisoned not more than one year, or both.

The FCC can under 47 U.S.C. § 312(a)(6) revoke any station license for a violation of 18 U.S.C. § 1304. 47 U.S.C. § 326 provides:

Nothing in this chapter shall be understood or construed to give the Commission the power of censorship over the radio communications or signals transmitted by any radio station, and no regulation or condition shall be promulgated or fixed by the Commission which shall interfere with the right of free speech by means of radio communication.

In its ruling the FCC made no effort to reconcile the three statutory provisions. Relying entirely on 18 U.S.C. § 1304, on its Supplementary Declaratory Ruling, 21 F.C.C. 2d 846 (1970), and on the decision of the Second Circuit in New York State Broadcasters Association v. United States, 414 F.2d 990 (2d Cir. 1969), cert. denied, 396 U.S. 1061, 24 L. Ed. 2d 755, 90 S. Ct. 752 (1970) (which does not discuss 47 U.S.C. § 326), the FCC held that it had authority to prohibit a broadcast frequency licensee from announcing the winning lottery number as a news item in a regular news broadcast.*fn3 We conclude that the FCC misconstrued the congressional mandate in the Communications Act of 1934. Nothing in that statute was intended to permit the exercise by the FCC of control over editorial decisions of broadcast journalists. On the contrary as 47 U.S.C. § 326 makes clear, Congress expected the FCC's actions to be consistent with the first amendment.

The FCC ruling imposes a small prior restraint. It is, nonetheless, a prior restraint upon the dissemination of information of interest, on the day of the lottery, to perhaps 58% of New Jersey's adult population. There are three possible justifications for such a restraint. One is that the information is of such nature that it is not protected by the first amendment. E.g., Miller v. California, 413 U.S. 15, 37 L. Ed. 2d 419, 93 S. Ct. 2607 (1973); Paris Adult Theatre I v. Slaton, 413 U.S. 49, 37 L. Ed. 2d 446, 93 S. Ct. 2628 (1973); United States v. Orito, 413 U.S. 139, 37 L. Ed. 2d 513, 93 S. Ct. 2674 (1973); Kaplan v. California, 413 U.S. 115, 37 L. Ed. 2d 492, 93 S. Ct. 2680 (1973); United States v. 12 200-Ft. Reels of Super 8mm. Film, 413 U.S. 123, 93 S. Ct. 2665, 37 L. Ed. 2d 500 (1973). The second is that although the information ordinarily is protected by the first amendment, the agency applying the restraint is exempt from its strictures. E.g., Lloyd Corp. v. Tanner, 407 U.S. 551, 33 L. Ed. 2d 131, 92 S. Ct. 2219 (1972). The third is that although the information is protected and the agency is not exempt from the first ...

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