Girl Scouts of Manitou Council, Inc. v. Girl Scouts of the U.S., Inc. ___ F.

3d ___, 2011 WL 2119752 (7th Cir. 2011) Though it involved neither federal antitrust nor an antitrust-specific immunity, Judge Posners recent opinion in Girl Scouts elaborately addresses two issues within the Exemptions & Immunities Committees charge to study the scope of federal antitrust: (1) when the application of economic regulation can violate the First Amendment, and (2) when the activities of nonprofits can constitute business or commerce within the scope of economic regulatory statutes. Both issues arise from time to time in federal antitrust litigation, and one might expect the extended analysis in Girl Scouts to surface in antitrust matters in the future. Plaintiff, a local Girl Scouts Chapter in Manitou, Wisconsin (Manitou) challenged an effort by the national Girl Scouts organization (Girl Scouts) to dissolve it. Plaintiff claimed the dissolution would violate a Wisconsin dealer-protection law, the Wisconsin Fair Dealership Law, Wis. Stat. ch. 135, which forbids termination of a franchisee without good cause. Wis. Stat. 135.03. Purportedly both to improve fundraising and to increase its racial diversity, the Girl Scouts engaged in a national redistricting effort to reduce the number of its local chapters. As part of this effort, the Girl Scouts notified Manitou that it would be dissolved, and its territory absorbed by other chapters. Manitou initially won preliminary injunction, but the district court then ruled for the Girl Scouts on summary judgment. The court found that, although the proposed redistricting would indeed violate the Wisconsin statute, applying it to the national organization would violate the First Amendment. The court found the organizations diversity goals to be expressive and therefore constitutionally protected. The Seventh Circuit upheld the finding of statutory violation but reversed the First Amendment ruling. Taking for granted that defendants policies include protected expression and that it licenses local [chapters] . . . to assist in that expressive activity, the court found defendants asserted expressive purposes pretextual. Analyzing the stated goals at length, the court held that the First Amendment [does not] exempt[] the Girl Scouts from state laws of general applicability that have only a remote, hypothetical impact on the organizations message. Though Judge Posner did not cite them, his ruling necessarily implicates a rule first elaborated in three Supreme Court opinions: N.A.A.C.P. v. Claiborne Hardware Co., 458 U.S. 886, 102 S.Ct. 3409 (1982), Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492 (1988), and F.T.C. v. Superior Court Trial Lawyers Assn, 493 U.S. 411 (1990). Those cases held that where a purportedly expressive goal is pursued through economically coercive or harmful means, it will enjoy First Amendment protection only if it is genuinely expressive. Thus, a consumer boycott to protest racial discrimination, which is nonviolent, politically motivated, and seeks no economic advantage for the boycotters cannot be prohibited even by laws of general applicability. Claiborne Hardware, 458 U.S. at 914-15. But where defendants goal is to achieve economic advantage for themselves, Superior Court Trial Lawyers, 493 U.S. at 426, there is no First Amendment protection at all as against generally applicable economic regulatory law. This is so [n]o matter how altruistic [their] motives . . . may have been . . . .

Id. at 426-27. Thus it was necessary to examine the redisticting plans purportedly expressive purpose. The court found no evidence that the proposed redrawing of boundaries was essential or even helpful to the stated diversity goals. Lacking that, the court took its real purpose to be the other one that defendant had alleged in the proceedings: achieving economies of scale and better performance by increasing each chapters territory. The court found the diversity goal to be conjecture at best, and found the plans real purpose to be better described as a business strategy. The court ultimately wrote that the mere possibility that a law of general application might indirectly and unintentionally impede an organizations efforts to communicate its message effectively cant be enough to condemn the law. The court also rejected a second theory on appeal, holding the state statute applicable to nonprofit enterprises when they engage in sufficiently commercial conduct. The statute by its terms applies to relationships in which dealers use their suppliers commercial symbols in the business of offering goods and services. The Seventh Circuit rejected the view that Girl Scouts cookie sales were not business or commerce within the meaning of the statute, setting out an analysis to support its view that [n]o gulf separates the profit from the non-profit sectors of the American economy. Similar issues sometimes surface in federal antitrust actions against non-profits and charitable organizations. See, e.g., Dedication and Everlasting Love to Animals v. Humane Socy of U.S., Inc., 50 F.3d 710 (9th Cir. 1995); United States v. Brown University, 5 F.3d 658, 665-68 (3d Cir. 1993). The length, depth, and scholarly character of Judge Posners analysis may have influence on future antitrust matters. The discussion also resulted in the opinions most memorable line, that [f]rom a commercial standpoint the Girl Scouts are not readily distinguishable from Dunkin Donuts.