vanderbilt journal of

entertainment law practice

VOLUME 2, NUMBER 2

SPRING 2000

Picking Teams: This Aint Playground Kickball Anymore Wanna Buy a Bowie?

Deaf and Siteless: The ADA and the WWW

Coming Soon . . . to a PC Near You?

contents
Pullman Bonds Interview with David Pullman By Hewson Chen

VOLUME 2, NUMBER 2 SPRING 2000

137 161
Completion Bonds By James W. Coupe

210
Olympic Drug Testing By Kim Betz & Jill Pilgrim

Fighting the Phantom Menace: The Motion Picture Industrys Struggle to Protect Itself Against Digital Piracy By S.E. Oross ConcertsRated or Raided? First Amendment Implications of Concert Ratings By Deborah Cazan The Wrong Tool for the Right Job: Are Commercial Websites Places of Public Accomodation Under the Americans with Disabilities Act of 1990? By Patrick Maroney First (Amendment) & Goal: High School Recruiting Rules and the State Actor Theory By David W. Dulabon ART & INDUSTRY FORUM Truckin In Style Along the Avenue: How the Grateful Dead Turned Alternative Business and Legal Strategies Into a Great American Success Story By Brian C. Drobnick

149 170 191 219 242

Write an article for the VANDERBILT JOURNAL OF ENTERTAINMENT LAW & PRACTICE. Articles can vary from an in-depth analysis of a particular law to a word-to-the-wise practical discussion of legal topics spanning the spectrum of the entertainment industry. Submit articles to: Editor-in-Chief, VANDERBILT JOURNAL OF ENTERTAINMENT LAW & PRACTICE, 131 21st Ave. S., Nashville, TN 37203-1181. Please visit our webpage at www.vanderbilt.edu/Law/jentlaw/. 133

contributors
Kim Betz Assistant Legal Counsel, USA Track & Field, Inc. Kim Betz, Esq., became Assistant Legal Counsel for USA Track & Field, Inc. in February 1998. She assists with interpretation of USA Track & Field regulations and by-laws and administers and oversees the USATF disciplinary process. Ms. Betz was born in Cincinnati, Ohio, and is a 1991 graduate of Indiana UniversityBloomington. She received a graduate degree from the University of Cincinnati in 1993. In 1997, Ms. Betz received her J.D. from Indiana University School of Law-Bloomington. She is an active cross country athlete. She was NCAA Division I Cross Country Champion in 1987 and an Olympic Trial Qualifier in the 1500/3000 in 1988.

James W. Coupe Senior Vice President, Business and Legal Affairs for Cinema Completions International, Inc. Mr. Coupe graduated from Hamilton College with a B.A. in European History having spent his junior year at the University of Paris (the Sorbonne). He graduated from Vanderbilt University Law School in 1974 where he wrote for the VANDERBILT JOURNAL OF TRANSNATIONAL LAW. Upon completing a clerkship for Chief Judge Lloyd F. MacMahon of the U.S. District Court for the Southern District of New York, Mr. Coupe was associated with several Wall Street law firms before moving to Los Angeles. He has been in the completion guaranty business since 1988. Mr. Coupe oversees the negotiations and refining of all documents relating to completion bond financing with an eye for reconciling the business and legal issues with each projects producers, distributors, and banking institutions. Recently, he finalized the transactions for On the Sixth Day, Rules of Engagement, Traffic, and Crouching Tiger, Hidden Dragon. Before joining CCI, Jim was General Counsel for the Completion Bond Company where he was instrumental in negotiating the transactions for such well-known movies as Driving Miss Daisy, Dances With Wolves, and The Silence of the Lambs.

Jill Pilgrim General Counsel/Director of Business Affairs, USA Track & Field, Inc. Jill Pilgrim joined the USATF national office as General Counsel/Director of Business Affairs in July 1998. She handles general corporate matters; supervises outside litigation counsel; oversees USATF eligibility and grievance procedures; negotiates and drafts sponsorship, licensing, and merchandising contracts; and interprets national and international Olympic sports rules and regulations. Ms. Pilgrim was born in London, England, and graduated from Princeton University, where she received a B.A. degree in 1980. She then attended Columbia University Law School, graduating in 1984. Ms. Pilgrim has extensive background experience in for-profit and not-for-profit corporate matters, as well as entertainment law, contract negotiations, and sports law. She has served on numerous boards and committees and is the founder of The Center for the Protection of Athletes Rights, Inc., a not-for-profit athlete advocacy group. She has authored several published articles, including Whos Protecting Athletes Rights? The Tonya Harding Story; Attorneys, Athletes, and Agents: Whos Responsible?; The Supreme Courts Assault on Athletes Rights; What is Sports Law; and The Competition Behind the Scenes at the Atlanta Centennial Olympic Games. At age 16, Ms. Pilgrim was a nationally ranked runner in Canada and captured the National Junior Championship in 100m. She was also a nationally ranked collegiate sprinter, competing for Princeton University and the Atoms Track Club of Brooklyn, NY.

David Pullman Founder, Chairman, and CEO of The Pullman Group, LLC David Pullman received his undergraduate degree from the University of Pennsylvania and an MBA from the Wharton Graduate School of Finance. In the early 1990s, he worked with the investment firm Gruntal and then in partnership with Fahnestock & Co. In 1997, Pullman orchestrated an industry first: an issue of bonds backed by royalties from David Bowies catalog. In 1998, with over a decade of experience on Wall Street, Pullman founded The Pullman Group, LLC. To date, he has appeared in an array of publications, from BILLBOARD to BUSINESS WEEK. For more information, consult <www.pullmanco.com>.

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vanderbilt journal of

entertainment law practice

Editors Clayton Basser-Wall Mary H. Beard William DeCoste Joshua Ferguson Damon Goode Mark Hillier Kristen Knudsen Rikki Lober Thomas C. Quinlen Harlan R. Schreiber John W. Todd R. Craig Tolliver Sheri Tolliver Ian Wu

Faculty Advisors J. H. Reichman Robert Covington Editor-in-Chief Steven Lopez Executive Editor Adam Newton Publisher Thomas J. Dobbins Managing Editor Aimee Todd

Senior Editors Mark J. Plotkin, Music James Shinn & Patrick Willis, Film/TV Jim MacDonald, Internet Daniel A. Cohen, Sports Heather Roberts, Online Meredith A. Schaffran, Development

Associate Editors Douglas Abell Jordan S. Arnold Cornelius Cowles Cinnamon Davis Andrea P. Ivory Thomas P. Keating Benjamin Olive Price Thompson

Symposium Editor Melissa Kaufman Case Competition Director Marc Moss

Advisory Board Mike Milom Wyatt, Tarrant & Combs, Nashville, TN Malcolm Mimms, Jr. Loeb & Loeb, Nashville, TN Tom Sherrard Sherrard & Roe, Nashville, TN Visit our website at

Writers Lauren Adams David Barry Bari Brooks Sean Bukowski Terry Bynum Deborah Cazan Hewson Chen Sonja Clayton-Pedersen Brian C. Drobnick David W. Dulabon Ty Ford Ronald Gaither Carla Fisher Kimberly Gilman Nadine Haig Coretta Johnson Karen Jordan Anna Lee Ekumene Lysonge Patrick Maroney Charles Mayfield Scott E. Oross Roy Partain Cherron Payne Linda Potapova Kenneth Sanney Jamie Smith Joycelyn Stevenson Sabrina Thomas Juan Villasenor Printer Vanderbilt University Printing Services Thomas J. Fox, Director

www.vanderbilt.edu/Law/jentlaw/
2000 Vanderbilt Law School

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A one-year subscription for the VANDERBILT JOURNAL OF ENTERTAINMENT LAW & PRACTICE consists of two issues per year, available in print, CD, or both. Please remit checks or money orders payable to JELP Subscriptions. To subscribe, please complete the form below and return it with payment to: JELP Subscriptions 131 21st Ave., S. Nashville, TN 37203-1181 Name: ______________________________________________________________________________ Company/Firm/Business: ______________________________________________________________________________ Address: ______________________________________________________________________________ Phone: ______________________________________________________________________________ Fax: ______________________________________________________________________________ Email Address: ______________________________________________________________________________ Occupation: ______________________________________________________________________________ Please check your preference: Please check your area of interest:

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from the editor

wo years ago, thirty-six law students embarked on an uncertain journey to create

a new law journala legal publication that would fuse creative form with engaging content. The result, the VANDERBILT JOURNAL OF ENTERTAINMENT LAW & PRACTICE, you

hold in your hands. Now these founding members move on to face the legal and corporate challenges beyond law school. It is never easy to pass the torch when youve helped light the flame. This transition has been made easier, however, by the knowledge that the spark will only burn brighter under the care of those who follow. This issue is testament to the dedication of the now more than sixty law students who together make the journal an endeavor that will continue beyond our counting. The same enthusiasm still drives journal members who cite-check when they should be studying, design pages when they could be planning their weddings, and troubleshoot computer problems when most are enjoying the spring weather. That enthusiasm also marks the professional authors who, when approached by the concept of a new journal with a different style and format, embraced the idea. Often working hours that closely resembled those of a first-year associate (or law student), they have earned the appreciation of students and readers alike. We owe them a great debt. In this issue, you will read several of their pieces, ranging in topic from Bowie bonds to Olympic drug testing to completion bonds. This issue also features the first in a series of contributions from the class of 2001, our successors in vision. We would like to thank Dean Kent Syverud, Dean Don Welch, Professor Jerome Reichman, Richard Lescallette, Brian Waack and the staff at Vanderbilt Printing Services, and, especially, Professor Robert Covington, for all of his careful editing and endless patience. Finally, we extend our thanks to the reader, to whom this journal was, and is, devoted. The road was long, but it was well worth every mile.

Sincerely,

Steven Lopez Editor-in-Chief

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film/tv

itanic was. So was Waterworld. Heck, even The Adventures of Baron Munchausen was. Blockbusters? No. Oscar winners? Wrong again. Yet these three films do share one unfortunate characteristic each of these pictures was over budget, drastically in some cases. Although caused by different forces and cured by different individuals, each film eventually forced someone to pay a great deal of money unexpectedly. Like many unforeseen expenses, these too can be insured against. Enter stage right, a completion guaranty company. Any and all film productions financed by non-producer third parties should have a completion guaranty.1 In the most fundamental terms, a completion guaranty2 does exactly what its name impliesit guarantees that a film will be completed and delivered to the distributor by a certain date. In furtherance of this promise, the completion guarantor has the contractual authority and obligation to: 1) compel the producer to complete and deliver the film and advance any sums in excess of the budget required by the producer to do so, 2) take over production herself and complete and deliver the film, or 3) abandon production and repay the financier out-of-pocket expenditures plus interest with respect to the film up to the contractually established limit of liability. Understanding the detailed operations of a completion guaranty requires a base knowledge of the underlying film transaction. The simplest form of film financing involves four major players: producer, distributor, financier, and guarantor.3 The first contract occurs between the producer and dis-

By James W. Coupe

Understanding the Completion Guaranty Business in Hollywood

tributor. Under a typical arrangement, the producer agrees to make the film and deliver it to the distributor in accordance with a number of agreed upon technical specifications. In return, the distributor must pay the cost of the budget plus interest. These specs include such things as the screenplay, running requirements, and often cast and director. Once such an agreement is in place, the producer secures financing from a bank or other financier in the amount payable under the distribution agreement.4 The producer then assigns the distribution agreement to the bank as its sole collateral.5 Simultaneously, the distributor agrees not to interfere with the film and to pay back the bank upon timely delivery of the completed film.6 As with any loan, the financier conducts a credit analysis on the distributor and takes the risk that the distributor will default. However, banks and cer-

uarantyin
a hit (or miss)
137

tain financiers are not in the business of producing films and frequently want and need to protect themselves from the risk that the film will not be completed in accordance with the contractual provisions. As a result, the financier will typically require the producer to secure a completion guaranty. The guarantor assures that the banks collateral (the film) will be completed and delivered in a timely and technically correct fashion. In an effort to minimize the risk inherent in guaranteeing the completion of a motion picture, the guarantor and financier use an inter-party agreement.7 All of the aforementioned participants to the financing execute this agreement, which thereafter, by its terms, becomes the overriding and unifying agreement of the financing process. This document reconciles all of the inconsistencies among the various contracts heretofore involved in the transaction and sets forth, in very narrow terms, the obligations of the completion guarantor in relation to the film.8 In the event of conflict between the inter-party agreement and the distribution agreement, the interparty agreement prevails. Therefore, the completion guarantor insures that the film will be delivered in accordance with the inter-party agreement. This relieves the completion guarantor from the untenable position of assuming risk based on several interdependent and inconsistent agreements. Obviously, the actual process of acquiring and executing a completion bond is much more complex than may appear from this brief description. This Article seeks to answer a number of frequently asked questions regarding the obligation and liability undertaken by the completion guarantor.

dozens of other production issues must also be insured. The completion guaranty provides no protection from potential losses with regard to this interest. Therefore, one should properly view a completion guaranty as a supplemental form of security only.9 This notwithstanding, the total insurance package will be reviewed and approved by the completion guarantor from both a coverage and limit perspective since the completion guarantor assumes responsibility for the insurance vis--vis the bank or financier. In addition, the producer must purchase errors and omissions, general liability, auto liability, guild travel, workers compensation, payroll, and umbrella coverage. When a film is shot in a foreign location, foreign general and auto liability must be purchased as well as foreign workers compensation. This comprehensive insurance package is designed to cover any insurable risk on the film. In contrast, the completion guarantors risk is limited purely to the completion risk. The conditions and exceptions in the completion guaranty further limit the completion guarantors potential liability. As a first condition to the completion bond, the producer must execute the producers completion agreement, which sets forth the rights and obligations of the completion guarantor vis-a-vis producer.10 The guarantor should also confirm that all fees due to it have been paid and that the 10 percent contingency for the film has been funded.11 The completion guaranty fee, which typically equals two to three percent of the budget, usually must be paid upon issuance of the completion guaranty documents.12 In addition, a completion guarantor will sometimes require a deferred fee of one to two percent of the budget. If required under the documentation, the producer will pay the deferred fee only if the completion guarantor is required advance funds towards completion of the film.13 The deferred fee is either paid to the completion guarantor to hold in escrow, or reserved, but not advanced, as part of the bank loan. This fee acts as an additional contingency to be applied by the completion guarantor in the exercise of her discretion towards the completion of the film after the original contingency is depleted.14 On a theoretical level, the completion guarantor may wish to become involved in managing the film as soon as cost overages and/or delay problems begin to occur. The completion guarantor would then examine why the overages are occurring and require the producer to take appropriate steps to get the production back on course. However, the contingency fee and, if applicable, deferred fee serve as a cushion for the guarantor. The vast major-

The Extent of the Risk

On the surface, guarantying a film may appear like quite a risky undertaking. In fact, however, a number of factors aid in reducing much of the risk. One principal factor is the existence of insurance. The insurance package for the film greatly limits the extent of the guaranty obligation. Insurance always serves as the primary economic protection for the film. The completion guaranty merely supplements the insurance. In addition, the completion guaranty is further limited by the conditions and exceptions contained in the completion guaranty itself. As previously mentioned, the completion guarantor insures that the film will be completed by a specified time and in a specified manner. Of course, property and

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ity of all films that are guarantied are completed within this 10 percent buffer. Consequently, the completion guarantor has the necessary flexibility to work with the producer in a constructive manner towards the common goal of keeping the film on budget and on schedule. As a result, the completion guarantor can frequently avoid the need to become more directly involved with the project. The second condition to the completion guaranty should require that the film financier make available, as needed, an amount equal to the budget of the film. The producer or the completion guarantor use these monies to pay for the items contained in the approved budget. If the full financing of the budget is not provided according to the approved cash schedule, the completion guarantor

ity for the producers failure to obtain title to or license to use the story, script, music or other rights in connection with the film. In addition, the completion guaranty excludes responsibility for the film infringing or allegedly infringing the rights of others, including invasion of privacy claims. Instead, the producer and the financier would look to the errors and omissions insurance policy for protection against these claims. 2. The completion guaranty excludes coverage for war risk and certain specified nuclear perils. This exclusion is standard for all policies relating to the film. 3. The completion guarantor does not guaranty that the film will be shot in a certain way, that the director or the actors will correctly interpret the screenplay, or that

The completion guarantor may wish to become involved in managing the film as soon as cost overages and/or delay problems begin to occur. The completion guarantor would then examine why the overages are occurring and require the producer to take appropriate steps to get the production back on course.
does not have any responsibility to perform under the completion guaranty. In addition, the completion guarantor has the right to accelerate the cash flow of the film if required. Although the completion guarantor always verifies the financing and the cash flow schedule to confirm that they can sufficiently and timely cover all requirements of the budget, it does not assume any financial risk regarding the credit-worthiness of the financier. On a similar note, the completion guaranty agreement typically prohibits the financier from interfering with the use of these funds advanced for the production. If the completion guarantor believes that the financier is not complying with either of these requirements, the completion guaranty usually sets forth a procedure whereby the completion guarantor notifies the financier and gives the financier three business days to cure the interference. As an additional deterrent to financier interference, the agreement should make clear that the financier is responsible for all costs incurred as a result of the interference.15 Typical exclusions in a completion guarantee agreement include: 1. The completion guarantor will not take responsibilthe film will be a commercial success. The completion guarantor is responsible only for the technical quality of the film. 4. The completion guaranty typically excludes any responsibility for the film's failure to conform to the standards and requirements of the production code of the Motion Picture Association of America (MPAA) or any other group or organization of similar nature having censorship, seal, or rating authority over motion pictures, wherever located. However, the completion guarantor usually guaranties a MPAA rating no more restrictive than R. 5. The completion guaranty further excludes delivering items not listed on the delivery schedule approved by the completion guarantor at the start of the film. The approved delivery schedule should be attached to the completion guaranty and inter-party agreement as an exhibit. The completion guaranty will also not cover editing after the film is completed and delivered to the distributor. 6. The completion guaranty does not protect against the risk of dishonesty, fraud, or criminality on the part of the financier or its officers and employees or its bankruptcy. 7. The completion guaranty will not cover the legal fees of the producer or the bank in excess of the amounts specified in the budget. Additionally, the completion

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guarantor will not be liable for the interest costs which are in excess of the budgeted amount or if not in the budget, an amount agreed upon between the bank and completion guarantor. A completion guaranty fee is not assessed on the interest in order to be covered under the completion guaranty. 8. Losses arising from the variation in currency exchange rates from those rates of exchange used in computing the approved budget are also excluded from coverage under the completion guaranty. The producer typically solves the currency loss risk by purchasing forward contracts from the bank. 9. Any cost, expense, or delay arising from a strike, or other labor action by the Teamsters or the International Association of Theatrical and Stage Employees, or the forced unionization of the film's crew by such guilds is excluded from the completion guaranty.16 10. The completion guarantor does not guaranty a lien-free film, only that it will pay the costs of production

pletion guarantor, at any one time in the process, never accumulates too much risk on an individual film or the group of films being guarantied. During the pre-production period, the main activities of the producer include preparing the film for principal photography, hiring the cast and crew, and ordering the materials and equipment necessary for the production of the film. In this time frame, which typically lasts four to eight weeks, the completion guarantor bears little risk. As a practical matter, the completion guaranty is normally not put in place until just before the shooting of the film. Under these circumstances, the completion guarantor would have to sign off on any expenses incurred until the date of closing of the completion guaranty and make sure that all were budgeted. Even if the completion guaranty is put in place during the pre-production period, the risk during this period is minimal. The money spent on pre-production pales in comparison to the amount spent during filming.

Once principal photography wraps, the completion guarantor, although not completely out of the woods, can breathe a great sigh of relief.
required to fulfill its obligation to complete and deliver the films set forth in the completion guaranty. Thus, if the producer incurs costs such as an unbudgeted wrap party, the completion guarantor will not pay these costs and the charge may become a lien on the film. This list of exclusions is not exhaustive, but contains the most basic exclusions. After the completion guarantor performs the production and legal analysis on a particular film, it may also add special exclusions on a case by case basis. During the production phase of the film, the risk to the completion guarantor increases significantly from the pre-production period. In production, the cast and crew perform the bulk of the work relating to the film, which consequently results in the greatest expenditure of funds. As a result, the guarantor takes great pains to insure that every step of the production process follows the guidelines set forth in the completion agreement. For example, the completion guarantor frequently sends a representative to the set to make sure that the film is being made in accordance with the approved budget, script, and schedule. This production representative, who may stay on the set for a few days or several weeks, views the shooting of the film as well as the dailies to make sure that the film follows the screenplay. These eyes and ears of the completion guaranty company are committed to making sure that the director and the producer are not increasing the scope of the film. Regardless of whether a representative is sent to the set, the completion guarantor receives and reviews daily status reports and weekly cost reports sent to it by the producer. These reports include a summary of the estimated costs associ-

The Duration of the Risk

Due to the inherent nature of film production, the risk faced by the completion guarantor ebbs and flows as the film moves through the phases of production. There are three distinct phases of the making of a film: the pre-production period, the production period, and the post-production period. The risk for a film going over budget is greatest during the production period, when principal photography takes place. Fortunately, this is also the shortest period in the production process. Thus, the com-

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ated with finishing the project, up to and through the delivery date. In this way, the completion guarantor is able to closely monitor the film and take early action if the film starts to veer off course. Once principal photography wraps, the completion guarantor, although not completely out of the woods, can breathe a great sigh of relief. The post-production period commences when filming ends and the production company begins the editing process. Few employeeslimited to the editor, the director, the producer, and key crew membersremain on the payroll for the duration. Consequently, the funds spent during this phase are quite limited in comparison to the production period. The completion guarantor will ensure against adverse developments in this phase by insisting that the producer include funds in the budget for a postproduction supervisor who is approved by the completion guarantor. The supervisor coordinates the activities of post-production and makes sure that the producer, director, and editor stay within the post-production budget and on schedule to deliver the film on time. In addition, the producer must continue to issue cost reports to the completion guarantor so that the completion guarantor can take corrective action if the post-production begins to go over budget. Finally, if harboring any doubts regarding the films conformity to specifications, the completion guarantor can exercise its contractual right to view the rough cut of the film to make sure that it conforms to the technical specifications. However, a completion guarantor who ignores the post-production period does so at its own peril. Many films, not properly monitored, have gone over budget in post-production. In sum, the completion guarantor can manage the risk during all phases of a films production by instituting the appropriate procedures during all phases of production.

The Guarantors Payoff Risk

A complete payoff rarely takes place when financing through a completion guaranty.17 Furthermore, the completion guarantor has substantial protections, cushions, and cure periods regarding its payoff risk involved in delivering the film to the distributor. If problems do arise, the completion guarantor can ultimately arbitrate any dispute with the distributor that cannot be successfully resolved within the cure periods provided for in the inter-party agreement. During the production of the film, the guarantor has sole discretion to decide whether to abandon the film and

repay the financier all advanced funds or complete and deliver the film. Even so, productions are rarely abandoned. The most common situation in which films are abandoned during production involve insurable events for which the completion guarantor would not be held responsible. For example, when John Candy tragically died two weeks before the end of principal photography of Wagons East, the filmmakers abandoned the project. However, the cast insurance on the film completely repaid the bank all advances made to finance the film. In such a situation, the completion guarantor does not incur any costs on the abandonment, retains her up-front fee, and is released from all of its obligations under the completion guaranty.18 Moreover, the involuntary payoff risk of the completion guaranty not covered by insurance applies only in two situations: (1) when the film is not delivered to the distributor on time, or (2) the film as delivered to the distributor does not conform to the technical specifications of the inter-party agreement. While these payoff risks may seem significant, the analysis below will show that they are almost entirely within the control of the completion guarantor and are cushioned by the cure periods built into the inter-party agreement. In fact, the completion guarantor underwrites both the delivery date and the technical specifications of the film. If the completion guarantor cannot negotiate either of these key terms to her satisfaction, it can and should simply decline to issue a completion guaranty for the film. In underwriting the time frame for the film, the completion guarantor examines the budget, schedule, and script to determine whether the film can be delivered on the delivery date signed in the budget and schedule. However, the completion guarantor does not accept the budgeted delivery date as the contractual delivery date for purposes of the completion guaranty. Most completion guarantors add a cushion of two to four weeks as a normal part of the underwriting process to account for unforeseen events. In addition, a further cushion period of between 60 to 90 days of automatic extension, which the completion guarantor can trigger is added to the delivery date for periods of force majeure and/or exigencies of production.19 Given the broad definition of force majeure, the completion guarantor does not have to justify extending the delivery date of the film by as many as 90 days, but must merely give notice to all parties. The Thief and the Cobbler (released as Arabian Knight) offers one famous example of a film where the

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failure to timely delivery resulted in liability under a completion guaranty. This payoff concerned a pen and ink animation being done in England. The completion guarantor who agreed to guaranty this film did not have any expertise in estimating how long animated films usually take to complete. A pen and ink film is very different from a live action film in that this animation requires the drawing of thousands of individual cells which are then hand painted in various colors. This process is a very meticulous and lengthy operation, involving hundreds of animators. As such, controlling the production presents many challenges not typically faced by a completion guarantor. Although the completion guarantor in question attempted to properly underwrite the film by consulting an animation expert, it did not take into account how complicated this animation would be to complete. When the film missed the delivery date, the distributor agreed to extend the delivery date for several months. However, the delivery date was so miscalculated that the domestic distributor ultimately decided, after a number of extensions, that it would no longer wait for the film. Although the completion guarantor had to repay the bank, it was able to complete the film by retaining the foreign distributor and securing a new domestic distributor. Non-compliance with the technical requirements of the distribution agreement comprises the other potential forfeiture risk.20 Moreover, to insure against human technical error, the completion guarantor will only approve crew members, such as the director of photography, who are experienced and know how to shoot a film in a technically correct manner. Pursuant to the producers completion agreement, the completion guarantors representative is given the right to view the results of each days filming in order to verify that the film is being shot in accordance with the screenplay and in a technically correct way. In sum, the uninsured technical risk relating to the film materials themselves is not significant except in some of the low budget films. An often overlooked, but potentially important, technical specification is the eventual MPAA rating. Typically, the completion guarantor would only guaranty a rating no more restrictive than R. This means that the film does not contain scenes that would preclude it from being distributed by the major film distributors and theater chains, as most distributors do not market NC-17 films. Given the liberalized standards of the MPAA, the completion guarantor has more flexibility in taking this risk than a decade ago. Nonetheless, the completion

guarantor should follow a careful procedure before agreeing to such a guaranty. The completion guarantor would first review the screenplay to make sure that it does not contain scenes of violence or sex which pose a risk of a NC-17 rating. In questionable situations, the completion guarantor would get written inducement letters from the producer and the director agreeing to shoot the screenplay in such a way that it qualifies for an R rating. In situations where a NC-17 rating is awarded on a preliminary basis by the MPAA, the completion guarantor should have the right to re-edit the film to qualify for an R rating by removing the scenes to which the MPAA objects. In addition, filmmakers typically shoot extra footage for their films to be used in the television version of the film. This footage often contains cover shots which film around sex or violence and could substitute for the scenes cited as objectionable by the MPAA. If the film as delivered is timely and technically correct, then the completion guarantor has no further responsibility and is automatically released from its obligations under the completion guaranty and inter-party agreement. Therefore, if the distributor defaults on its payment obligation once the film is delivered, the financier has no cause of action against the guarantor. Moreover, one should keep in mind that the number of films encountering delivery problems due to technical problems is minute; estimated to be fewer than 3 percent of all films guarantied on an industry-wide basis. The procedure for delivery of the film to the distributor is clear and structured. The producer, under close supervision by the completion guarantor, delivers the film elements and gives notice of delivery to the distributor with a copy to the completion guarantor.21 The distributor has approximately 10 days to respond. If the distributor fails to respond, then the film is automatically deemed delivered, the banks payment from the distributor is vested, and the completion guarantor is automatically released. If the distributor objects to the film as delivered for technical reasons it must state the specific objections in a detailed written response. Once notified, the completion guarantor has 30 business days to cure the defects. If the distributor still objects to the film, the delivery becomes subject to arbitration.22 At first glance, it might appear that the completion guarantor would be in a payoff situation if all of the film elements were not delivered on time. However, the documents are typically drafted to give the completion guar-

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antor additional flexibility should the film encounter time problems. If all the film elements are not delivered by the extended delivery date (that is, the completion guarantor has exhausted all of its cushions and extension periods under the completion guaranty), the completion guarantor could still deliver the missing items within the 30 day cure periodprovided that the essential physical delivery items were delivered. Typically, the distributors routinely extend the delivery date of films beyond those dates cushioned by the inter-party agreement. Distributors have a built-in incentive for such extensions as they want

picture, but it must be able to articulate the reasons for the takeover, such as the producers failure to follow instructions or the specific financial overages which make the completion guarantor more exposed to financial risk. The completion guarantor usually examines the production cost figures available after the first two weeks of filming to make this determination. If after examining these figures, the completion guarantors production executive projects that the course of production will result in an amount equal to or greater than a certain percentage of the contingency being expended for

In situations where a NC-17 rating is awarded on a preliminary basis by the MPAA, the completion guarantor should have the right to re-edit the film to qualify for an R rating by removing the scenes to which the MPAA objects.
the producer to create the best film possible and not to feel pressured or rushed by an artificial delivery date. the costs or the expenses of the production, then the completion guarantor would give instructions to the producer and assume control over the film if the instructions were not implemented. This standard can be substantiated through weekly cost reports from the producer, as all such reports must include an estimated cost of completing the film. This estimated cost to complete will show what the film will cost if the production continues to follow a certain course of production. By using such a standard as part of the agreement between the producer and the completion guarantor, both the parties know where they stand as far as the completion guarantors right of takeover is concerned.23 On virtually all films, the completion guarantors representative would examine the first cost reports after two weeks of filming. After analyzing the data, the guarantor has three potential courses of action. The guarantor should remain uninvolved if the data, projected over the course of the production, indicates that very little of the contingency will be spent. If these reports indicate that an amount between 25 and 40 percent will be exhausted before the film wraps, then the completion guarantor may wish to begin issuing instructions to the producer. However, experience shows that most completion guarantors would likely not exercise the takeover option unless the cost reports projected that a larger percentage of the contingency would be exhausted by the end of principal photography. Should the guarantor decide to take the production over, the producer is typically granted up

The Risk of Tort Actions

In theory, a completion guarantor exercising his right to terminate the producer may be accused of a wrongful termination claim. Like with nearly all risks, however, there are steps the guarantor can take to reduce this possibility. For example, the guarantor can predicate the right to take over the production on accepted industry standards and further allow the producer ample time to cure the events giving rise to takeover. In addition, the producer may simply be left in placeprovided she follows the completion guarantors instructions and refrains from interfering with the completion and delivery of the film. The completion agreement should clearly establish the producers obligations towards the completion guarantor and set forth objective standards designed to avoid potential claims of bad faith. As part of the documentation, the producer also acknowledges and agrees to waive any third party beneficiary interest under the completion guaranty or any other documents to the completion guaranty transaction. The takeover language in the producers completion agreement usually sets further standards for takeover. This means that the completion guarantor can take over production if it deems itself insecure with regard to the

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to 72 hours to cure, if possible, the cause of the overages. As a practical matter, this usually involves securing from the distributor a deposit into the production account of sufficient funds, in the completion guarantors judgment, to eliminate the overage amount and to replenish at least part of the contingency. If the producer, financier, or distributor fails to deposit these funds, then the completion guarantor would likely move to take over the motion picture. Unless the producer and the crew members are uncooperative, they will stay in place and follow the orders of the completion guarantors representative, who takes the necessary actions to bring the production back on course and finish the film.

production company is a special purpose company often formed to make the film. This indemnity is composed of two categories. The first category provides immediate payment indemnity relating to losses due to specific breaches of the producers completion agreement, which will not be realized from a special purpose production company.25 The second type serves as a general indemnity covering the advances made by the completion guarantor to complete the film. Under this general indemnity, the individual producers and the production company both agree that any proceeds payable to them from the exploitation of the film will first be paid to the completion guarantor until fully recouped for its advances.26

Despite common misconceptions to the contrary, the obligation undertaken by a completion guaranty company is quite limited and well worth the associated risk.
If only a moderate percentage of the contingency were projected to be exhausted, the completion guarantor and the production representative would choose a more moderate approach. This strategy includes monitoring the film more closely and meeting with the producer and the director to encourage them to bring the production back on course. The completion guarantor should also require that the production representative countersign all checks issued by producers and countersign all material and work orders. At the present time, none of the completion guaranty companies are imposing the personal indemnity requirement on the producers as a normal part of the underwriting process. All too frequently, individual producers simply do not possess assets substantial enough and/or would not put those assets at risk. In addition, the banks and the financiers that lend in the entertainment area are agreeing to look solely to the distribution agreement as collateral, so that the loan is extended to the producers on a non-recourse basis. This is not to say that the guarantor has no way of stressing to the producer the need to complete the film on budget. As an alternate route, a completion guarantor unsure about a project could require a larger contingency up front, such as 15 percent of the direct cost budget. For a more direct impact, the guarantor may wish to require the producer and/or director to pledge part of their fees until delivery of the film. Furthermore, unsold foreign territories in excess of the collateral used for the bank loan could be made available to the completion guarantor to further collateralize the producers obligation. These approaches avoid the completion guarantors requiring a personal indemnity, thus avoiding any negative marketing implications for the completion guaranty company.

Shifting the Risk

A completion guarantor is not likely to obtain an indemnity from the individual producers or, in the case of a parent company, a corporate indemnity. However, as discussed herein, there may be better approaches which achieve the same protection for the completion guarantor, while appealing to the producer. Accommodating the producers is important as they, with the approval of the financier, have the role of actually selecting the completion guarantor. As referenced earlier in this article, the producers completion agreement between the completion guarantor and the producer sets forth the producers obligations towards the completion guarantor.24 This arrangement typically limits the producers indemnification of the guarantor to the indemnity of the production company. A

Recovering on the Risk

When the producer negotiates an agreement with the

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distributors, one of the key terms involves the right to receive a portion of the proceeds from the exploitation of the film.27 Typically, various deductions are made from the gross receipts of the film prior to payment of these proceeds. These deductions include distribution fees, gross participations to actors, distribution expenses, and recovery of the financing costs of the film plus interest on these items. The financing costs are paid by the distributor, upon delivery of the film, to the bank. In turn, the completion guarantor, under its producers completion agreement and the inter-party agreement, requires the producer to assign all rights to receive any proceeds from the film payable to the producer. This assignment attempts to protect any advances made by the completion guarantor, although completion guarantors recovery in event of a loss is dependent on the commercial success of the film. Additionally, the assignment is secured by a security interest, protected by filing UCC-1 statements in the appropriate jurisdictions and a mortgage of copyright with the U.S. Copyright Office. Under the interparty agreement, the distributor agrees to pay the proceeds of the film due to the producer directly to the completion guarantor when the completion guarantor has been required to advance funds under the completion guaranty. In cases where the producer has not secured a share of the receipts of the film as part of the distribution agreement, the completion guarantor negotiates directly with the distributor to secure a recoupment position. The guarantor then becomes the last item of cost on the film, before the film occupies a profit position. The exact definition of the profit position of a picture varies from distributor. In essence, however, it is the point at which the distributor has recovered its investment in the film, its financing costs, print and advertising costs, distribution fees, and interest on all these items and is subject to further deduction for residuals and participations by actors and the director. Under this approach, the completion guarantor would recoup before either the distributor or the producer received any net profits from the film. Obviously, the completion guarantor must carefully underwrite the producers recoupment position. If correctly done, this recoupment can work to reimburse the completion guarantor for part or all of its advances plus interest. For example, the completion guarantor fully recovered the approximately $1 million in over budget funds in Fried Green Tomatoes due to the favorable recoupment position negotiated between the producer

and distributor.27

Spreading the Risk

In the completion guaranty transaction, distributors have no active involvement in making the film. Their role involves simply paying for the film upon delivery after its completion. As a result, they could not be added as a party to the completion guaranty or give any indemnification to the completion guarantor. As part of the financing arrangement, described herein, the distributor gives up any controls it may have under the distribution agreement. Indeed, the inter-party agreement specifically requires the distributor to give up any supervisory or takeover rights in the film in favor of the completion guarantor. As a result, the distributor becomes a passive party to the financing transaction. After it negotiates the technical specifications with the completion guarantor, it does not become active in the process until the film is delivered. As a practical matter, the completion guarantor will allow the distributor to enhance or improve the film as it moves through the production process. However, the distributor must deposit, in advance, the full costs of any requested enhancements or changes made to the film into the production account. The completion guarantor has sole control over determining how much the distributor must deposit and how many weeks this change will add to the delivery date. The completion guarantor will add a cushion to any estimate and secure an agreement from the distributor for additional funds and time if the original estimate turns out to be insufficient. Therefore, although the distributor may be allowed a certain level of input into the process, the inherent nature of the relationships keeps the risk from shifting onto the distributor.28

Still Worth the Risk

Despite common misconceptions to the contrary, the obligation undertaken by a completion guaranty company is quite limited and well worth the associated risk. As an initial matter, the obligation merely serves as secondary policy to all the other insurance on the motion picture. Second, the completion guaranty sets forth a number of conditions and exceptions which further narrow the obligation of the completion guarantor. Finally, the inter-party agreement works to reduce the completion

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guarantors exposure by requiring the completion guarantor to deliver a film which conforms to well-defined, narrow, technical qualifications. Most completion guarantors will use their experienced team of production, legal and financial professionals to carefully underwrite each film. By implementing their procedures in a consistent manner, these professionals can insure that each film fits within the completion guarantors underwriting parameters (i.e., the screenplay can be made, for the budget, and within the time allowed in the production schedule). Also, the team will jointly evaluate the credentials of the producer and director to determine whether they present a good risk for a completion guaranty.29 Completion guarantors will also establish careful monitoring systems for the film as it moves

through the various stages of production, including as previously mentioned receiving regular reports and sending representatives to the set when appropriate. Special attention will be focused on all films when they are in principal photography. Moreover, the completion guarantor will design and implement special controls on a case by case basis, in light of the special production factors of a particular film. This business can be done with minimal losses and substantial returnsif careful underwriting and monitoring procedures are used and administered through a highly trained and specialized professional staff. N
The author thanks Ken Sargent, his assistant, and Joshua Ferguson for their help with this article.

1 See Elizabeth O. Hubbart, When Worlds Collide: The Intersection of Insurance and Motion Pictures, 3 CONN. INS. L.J. 267, 304 n.19 (1997) (quoting Ken Coopman, [S]enior [V]ice [P]resident and the Bank of Americas [E]ntertainment [G]roup, I wouldnt finance a film without a completion bond.). 2 See Thomas F. R. Garvin, Counseling Clients in the Entertainment Industry 1997 (Film-Advanced), 474 PRACTISING L. INST./PAT. 321, 404 (1997) (providing a definition of Completion Guaranty in a sample completion guaranty agreement). 3 See id. (identifying the producer, distributor, lender and guarantor in a sample clause in a completion guarantee agreement). 4 See Tim Connors, Beleaguered Accounting: Should the Film Industry Abandon Its Net Profits Formula?, 70 S. CAL. L. REV. 841, 862 (1997) (A bank will provide the producer with production financing secured by the studios promise to pay the cost of production and by a completion guaranty companys promise to supply additional funds (or repay the bank loan) should the film go over budget.). 5 See Matthew C. Thompson, Balancing Grants of Film Rights, 14 No. 7 ENT. L. AND FIN. 1 (1998) (The bank will not lend production financing to the producer unless it is granted a first position security interest. Likewise, the completion guarantor will not bond the film unless it is granted a second security interest, subordinate only to the bank. Accordingly, the bank and the completion guarantor will insist that the distributor acknowledge that it has no interest in the film until the minimum guarantee is paid in full.). It should be noted that the distributor has the right to make pre-delivery sales and has lab access to film materials to make trailers and advertising materials prior to delivery of the film. 6 In this context, a completed film is one which meets all of the contractual requirements (e.g. running time, screenplay). 7 The inter-party agreement is the most important document of the financing process. Entered into by the financier, guarantor, distributor and producer, it sets out all the terms and conditions required for delivery and provides for arbitration to settle all disputes. 8 Specifically, the agreement dictates the specific technical requirements to which the film must conform.

9 The additional portfolio insurance coverage typically consists of insuring the cast; props, sets, and wardrobe; extra expenses; third party property damage; miscellaneous equipment and office contents; money and currency; negative film coverage, faulty stock camera, and processing coverage. 10 In order for the completion guarantor to issue a completion guaranty agreement, it must have a corresponding agreement executed by the producer which acts as a security agreement and sets out the duties, representations, warranties, and convenants of the producer. This document also grants the completion guarantor the right to regulate the production and, under certain conditions, take over completion and delivery of the film. A number of exhibits are attached, including a bank account takeover letter appointing the guarantor as sole signatory on the account upon notice to the production account bank and a power of attorney in favor of the completion guarantor allowing him to complete and deliver the film on takeover. 11 The completion guaranty fee is the premium charged by the completion guarantor. The percentage is taken against the direct budget costthe above-the-line costs plus the below-the-line costs. The above-the-line costs include the writer fees, development costs, director and cast costs. The below-the-line costs consist of the all the costs of producing the filmlabor, transportation, post-production, sets, and so forth. 12 See Kim Williamson A New Bond Among Guarantor, HOLLY-WOOD REPORTER, Jun. 27, 1994, available in 1994 WL 14328340 (Back in 1980the year before C[ompletion] B[ond] C[o.] launchedthe standard premium was a flat 6 percent . . . During the following decade, the lure of that steady rate of return drew more companies to the business . . . and a rate war ensued. Premiums dropped to a net 3 percent (6 percent with half of that rebated if no claim resulted), then ratcheted to 3 percent minus rebate and finally fell as low as 1 percentsometimes still minus a rebate. . . The industry has now settled down, [t]he rates have climbed back not to where they were in the early 80s but to an area thats at least functionable for both an underwriter and a bonder.). 13 In the present climate, completion guarantors only assess this fee on particularly risky projects.

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14 See infra p. 138 (demonstrating a breakdown of these fees in the context of our $5,000,000 hypothetical budget). See also infra Exhibit B p. 148 (summarizing how these fees would work under three separate scenarios). 15 See infra pp. 139-40 (providing examples of additional limitations often contained in a completion guaranty). 16 In order to save substantial benefits payments called "fringes," many producers make their motion pictures with non-union crews. The producer is specifically prohibited from hiring union crew members if the film is being done non-union. However, occasionally the producer either violates these prohibitions, or does not know that he has hired union crew members. In these cases, the exception protects the completion guarantor from said risks. If the bank wants the exclusion lifted, the completion guarantor can structure an additional contingency to protect itself from the cost of forced unionization, which can be estimated in advance from the size of the crew on the film. 17 But see supra note 12 (providing examples of large payoffs) (Completion Bond Co. . . [paid on] $18 million payout to Fuji Bank on . . . The Thief and the Cobbler . . . (this film was discussed in the November 26, 1988 FORBES MAGAZINE article. Please approximate amounts) and another $5 million on Malcolm X. Film Finances . . . spent $14 million to complete the unexpectedly costly The Adventures of Baron Munchausen and $10 million on Highlander II: The Quickening.). 18 Ultimately, the insurer that provided the cast insurance sold the film back to the producers. They eventually completed it with photo doubles and CGI (Computer Generated Imaging) technology and the film was distributed. Brandon Lee in The Crow, Natalie Wood in Brainstorm, James Dean in Giant provide additional examples of this phenomenon. 19 Force majeure includes any accident, fire, explosion, casualty, epidemic, act of God, earthquake, flood, torrential rain, strike, walkout, picketing, labor controversy, civil disturbance, embargo, riot, act of public enemy, war or armed conflict (whether or not there has been an official declaration of war), unavailability of the director or any principal cast member or other key element for the film (i.e., actor, director, location, etc.), unavailability of essential materials and supplies, equipment, transportation, power or other commodity, failure or delay of any transportation agency, laboratory or any other furnisher of essential supplies, equipment or other facilities, enactment of any law, any judicial or executive order or decree, the action of any legally constituted authority, or other event or cause of the nature of force majeure beyond the control of producer, or the Guarantor, if applicable, whether similar or dissimilar to any of the foregoing, which causes an interruption or suspension of or materially hampers, interferes with or delays the commencement of production or the production or delivery of the film. 20 It should be noted that the completion guarantor is protected by insurance for certain technical defects in the film caused by faulty camera and stock. 21 See Matthew C. Thompson, Triggering the Millennium Film Guarantee Obligation, 13 No. 12 ENT. L. AND FIN. 1 (1998) (The producer typically argues that delivery of the film is accomplished by a mere notice of availability issued by the producer or the completion guarantor stating that the specified film elements to which the distributor will be granted access once the minimum guarantee is paid in full are on deposit with a previously agreed upon film laboratory.).

22 Most films do not go into arbitration on any technical difficulties since these are either covered by insurance, or they can be corrected within the 30 business day period. However, when a distributor does not like a film from a commercial viewpoint it may try to arbitrate on an invalid technical objection to get out of paying for the film. 23 There are other reasons why the takeover may occur, such as when the director is not shooting the script approved by the completion guarantor and the distributor. 24 The producers completion agreement sets forth the duties, responsibilities, warranties, and covenants of the producer. This document further grants the guarantor the right to regulate the production, including potential takeover. 25 Some examples of this category would be losses due to breaches of the producers representations and warranties regarding the financial particulars of the film, monies required to be paid by the producer to cure a producer default situation, and payments for additional insurance if required by the completion guarantor. 26 See Donald L. Baraf et al., Counseling Clients in the Entertainment Industry 1999, 553 PRACTICING L. INST./PAT. 9, 113-114 (1999) (If the completion guarantor . . . has provided funds for the production of the [p]icture, such funds shall be recouped as part of the negative cost. In addition, an amount equal to interest on the negative cost shall also be recouped by the respective [f]inancier . . . and the [g]uarantor (if provided for in the completion guaranty).); accord Robert J. Haft & Peter M. Fuss, 4C Tax-Advantaged Sec. at 11.04 (1996) (discussing the at risk rule) (P]roduction cost overruns are, for a fee included in the budget, to be furnished by a completion guarantor (recouped by the guarantor from exploitation proceeds).) 27 Exploitation, in this context, means the right to sell and screen the film. 28 The reason that distributors do negativepick-ups defined as financings where distributor pays on delivery is that they can do this type of film as off balance sheet financing. 29 See Mark Litwak, A Checklist for Indie Film Investors to Minimize Risk, 15 No. 4 ENT. L. AND FIN. 3 (Jul. 1999) (Before issuing the policy, the completion bond company will closely review the production personnel, script and budget, and assess whether it thinks this team of individuals can bring in this script within the shooting schedule and budget proposed. The completion bond company usually is quite diligent in its review, because, if the film goes over budget, the bond company is financially responsible.).

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Exhibit A
Projected possible out-of-pocket costs of the financier and/or the producer prior to the completion guarantor being held responsible for funding overages

$5,000,000 Budget Film

Completion Guaranty Fee
Fee paid when completion guaranty issued: (3 percent of $5,000,000 budget) This fee is non-refundable and is not applied toward overages $150,000

Contingency
Contingency must be funded as part of the budget If film develops overage problems: (contingency of 10 percent of budget to be used as completion guarantor directs) $500,000

Deferred Fee (when applicable)

Deferred Fee of 2 percent is sometimes required as part of budget (to be used as extra contingency when Contingency depleted before completion guarator advances funds) $100,000

TOTAL: Advances from financier and/or producer to completion guarantor

(inclusive of Deferred Fee)

$750,000 $600,000

TOTAL: Advances to be used for potential overages

Exhibit B
Cost/Risk Analysis

$5,000,000
Cost to Financier/Producer Scenario 1
Financier obtains completion guaranty. Producer brings the film in on budget or within the 10 percent contingency. Total cost to Financier/Producer is the 3 percent completion guaranty fee of $150,000. Deferred fee, if paid or reserved, is refunded to financier. Completion guarantor retains premium of $150,000 and incurs no other costs other than normal overhead.

Cost to Completion Guarantor

Scenario 2
Financier obtains completion guaranty. Producer goes $550,000 over budget. Financier/Producer pays $150,000 completion guaranty fee. Financier/ Producer must fund the 10 percent contingency of $500,000 + pay 2 percent deferred fee of $100,000 to completion guarantor to be used for overages. Note that the 2 percent deferred fee may or may not be applicable depending whether it was agreed as part of the bonded film. Completion guarator has no out-of-pocketcosts if deferred fee has been obtained. First, the $500,000 contingency would be applied toward the $550,000 of overages. The remaining $50,000 would be paid out of the monies reserved for the deferred fee as administered by completion guarantor, if deferred fee applicable. If no deferred fee, the gurantor would be liable for $50,000.

Scenario 3
Financier obtains completion guaranty. Producer goes $650,000 over budget. Financier/Producer pays $150,000 completion guaranty fee which is retained by completion guarantor. Financier/ Producer must fund the 10 percent contingency of $500,000 + , if applicable, pay 2 percent deferred fee of $100,000 to completion guarantor to be used to fund overages. Completion guarantor is protected from paying the first $600,000 of overages by the $500,000 contingency and the $100,000 deferred, if applicable. The remaining $50,000 would be paid by completion guarantor, or, if no deferred fee, the completion guarantor would be liable for $150,000 in overages.

film/tv

phantom menace
f

fighting the

the motion picture industrys struggle to protect itself against digital piracy

ade in on a typical college dorm room. A

student sits in front of a desktop PC, mouse in hand, while two others watch a nearby TV from the comfort of the couch. A few simple clicks later, the student takes a place on the couch. The TV is turned off, the lights are dimmed, and all eyes turn to the computer monitor. As the unmistakable orchestral signature of John Williams fills the room, the words Star Wars, Episode I: The Phantom Menace scroll up from the bottom of the screen. For the next two hours or so, the students enjoy a free private screening of a blockbuster movie that everyone else has paid eight dollars to see at a theater. This seemingly innocuous scene is the model of film piracy in the 21st century, and it

by s.e. oross

has the Motion Picture Association of America

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(MPAA) scrambling for answers. Digital technology, combined with the influence of the Internet, represents an increasingly dangerous threat to the protection of copyrights in the global marketplace. Industries like Hollywood with business models based primarily on selling and/or licensing intellectual property have much to lose if that protection falters. Jack Valenti, the president of the MPAA, knows this all too well. In recent testimony before the House Subcommittee on Telecommunications, Trade and Consumer Protection of the Commerce Committee, he described how the growing availability of certain digital technology could turn online piracy into the bane of the motion picture industry.1 Noting that Internet pirates have already succeeded in bringing movies such as Eyes Wide Shut, Toy Story II, and Star Wars, Episode I: The Phantom Menace to viewersin some cases before they were even released in theatersValenti commented, Currently our films are protected by two factorsthe amount of time needed to download a full-length motion picture and the lack of unprotected digital copies of our works.2 Nevertheless, he advocated stronger measures for enforcing copyrights in the digital age, adding, One of the nations greatest trade assets is at risk. If you cannot protect what you own, then you own nothing.3 This Note will examine in detail the reasons behind Valentis warning, beginning with a look at the technology itself and its initial effects on the industry. Next, the analysis will turn to the legal avenues currently available for fighting the new forms of piracy, discussing the inadequacies of each, particularly in the realm of enforcement. Finally, it will draw from some early industry responses to the online threat in an effort to find possible alternative means of countering, or at least subduing, the rising threat of the phantom menace known as digital piracy.

average of $2.5 billion each year to worldwide piracy.5 Despite the damage caused by traditional methods of piracy, the industry has proven itself at least somewhat capable of fighting back. With leads given by tipsters6 and the help of the FBI, the MPAA has sent powerful messages to would-be video pirates. In the early 1990s, raids on suspected pirates seized more than one million illicit video copies worth a total of over $60 million.7 In 1996, a task force dubbed Operation Copy Cat infiltrated and ended what was the largest video piracy ring in United States history.8 Originating in New York, the pirate operation used 17 locations throughout the city to produce and sell nearly 100,000 pirated films per week.9 In the course of the sting, law enforcement officials arrested 36 individuals, seized over 800 VCRs, and confiscated nearly 80,000 bootleg videos.10 While such efforts represent merely the tip of the billion-dollar iceberg, similar operations also resulting in arrests and seizures offer hope in the traditional anti-piracy fight. Digital piracy, however, represents a new species of threat, one that began years ago with a solution to a different problem. As anyone whos made the switch from vinyl or cassettes to CDs knows, the debut of digital recording technology meant significantly better quality and reproducibility than was possible with conventional analog techniques. Audio and video captured in a digital format could also easily be stored, modified, and played back using common personal computer equipment. The trouble with digital recording, whether audio or video, was that it took up spacea lot of space. Just a few seconds of CD-quality sound, for example, required roughly the same amount of space as this entire document. Add a bit of video, and the sizes quickly became unmanageable for the average user, especially if the data had to be downloaded from a remote server located across the globe. High-volume storage media and faster connection speeds alleviated some of the problem, but they couldnt reconcile the increases in quality with the attendant increases in file size. That answer came in 1988 when, in response to the growing need for manageable digital audio-visual standards, the International Organization for Standardization11 formed a group known as the Moving Picture Coding Experts Group (MPEG).12 Its mandate was to create a universal means of delivering high-quality digital audio and video in as small a package as possible. The 1992 solution, known as MPEG-1, used a simple strategy to compress the size of the file without com-

the technology of piracy

Film piracy itself is nothing new to the motion picture industry. For years, the MPAA and its international counterpart, the Motion Picture Association (MPA), have coordinated efforts with law enforcement agencies in the United States and abroad to stop the flow of bootleg films that accompanied the rise of video recording devices.4 From so-called back-to-back copying, whereby video distributors make several illicit copies from a single authorized original, to more extensive black market enterprises, Hollywood studios estimate they lose an

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promising the quality of the audio-visual data contained therein. The trick was just thata trick. Essentially, MPEG compression standards perform a trompe loeil of sorts whereby redundant information is simply discarded without the users ever knowing. For instance, since video often consists of live action in front of a static backdrop, MPEG-1 video records only the changes from one frame to the next, rather than the full content of each frame. The result, however, is dramatic: digital audio/video files that can be reduced to as little as 1/50 of their original size. The implications for some copyright holders quickly proved to be just as dramatic. Layer III, a component of MPEG-1 developed to accommodate audio portions of the MPEG standard, was the first shot fired in a minor revolution against the recording industry. Offering CD-quality sound in relatively small files,13 MPEG-1, Layer III files, otherwise known as MP3s, opened the doors for an unprecedented rush of unauthorized copying of popular music. The Recording Industry Association of America (RIAA) watched in horror as entire CDs traded hands again and again via the Internetcompletely free of charge. To this day, MP3s remain a serious obstacle to the traditional business model employed by the music industry, which continues to struggle with the consequences of the widespread unauthorized distribution of its products.14 The initial effect of new digital technology on the motion picture industry was nowhere near as damaging. But even in the early days of MPEG, enterprising pirates saw the potential of compressed digital video in the form of Video Compact Discs or VCDs. All but overlooked in the United States, VCDs gained widespread popularity in Asian markets following the MPEG advances.15 From a technology standpoint, the principle couldnt have been simpler. VCDs took existing audio CD formats and, with the help of MPEG-1, added full-motion video that could then be viewed by anyone with a personal computer equipped with a CD-ROM drive and readily available video software components.16 The effect on the movie industry, however, quickly proved to be as complex as it was subtle. Pirates who were accustomed to dealing in bootlegged videos could now re-record and encode the bootlegs as MPEG-1 files, which could then be burned onto a VCD.17 From there, the normal channels of distribution followed, but with one major difference. Having been converted to a digital format, the bootlegged VCDs no longer suffered from the decreased quality associated

with successive generations of ordinary VHS videotapes.18 But that was only the beginning. The second phase in the expanding frontier of digital piracy grew out of the explosion of the Internet in the mid 90s. Building on the MPEG foundation was Microsofts Media Player, a free program capable of playing all varieties of compressed audio-video files. Then came the flood of codecs, new compression and decompression utilities that delivered MPEG-1 files of greater length and quality in even smaller packages. The last stepone that even now has yet to be fully realizedis the advent and increased availability of broadband connections, such as cable and digital subscriber lines (DSL), that give users the capability to download hundreds of megabytes in a matter of minutes. Suddenly, the physical exchange of pirated

currently our films are protected by two factorsthe amount of time needed to download a full-length motion picture and the lack of unprotected digital copies of our works. nevertheless, one of the nations greatest trade assets is at risk. if you cannot protect what you own, then you own nothing.
videotapes or VCDs has become largely obsolete, having been replaced by its free and anonymous electronic equivalent. If Asian VCD pirates posed a problem for the Hollywood machine, then the current Internet culture is a downright terror. With current MPEG-1 and codec technology, a full-length feature film can be condensed into a file as small as 600Mb, with relatively minimal losses in sound and picture quality.19 While such file sizes still mean download times of several hours (or possibly even days) for ordinary V.90 phone modems, users with high-end broadband connections can download the latest films in about the same amount of time it would take them to drive to the nearest theater. The supply side is handled by a new breed of digital pirates who use

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a combination of traditional Internet protocols such Internet Relay Chat (IRC) and anonymous File Transfer Protocol (FTP) in addition to websites to promote and distribute their wares free of charge. By offering hit movies such as American Pie, Austin Powers: The Spy Who Shagged Me, and The Blair Witch Project within mere days of their theater release, pirates like the infamous EviliSO20 have already gained worldwide attention by offering users some of Hollywoods biggest hits free of charge. Perhaps the most anticipated film of the decade, The Phantom Menace quickly became as prevalent and popular online as in theaters, much to the ire of creator George Lucas. Reportedly, the newest James Bond movie, The World is Not Enough, found an Internet audience even before its theater release.21 The more mainstream threat could come from attacks on Hollywoods own technological advances. Based on the relatively new MPEG-2 standard, Digital Versatile Discs (DVDs) offer better compression of better pictures and sounds. When DVDs were proposed, the film industry found itself in a dilemma. On one side, the new technology combined digital audio and video to allow the most faithful representation of a film outside of a theater. On the other side, and of extreme importance to an industry already plagued by piracy, the potential for digital copies solved the film bootleggers primary problem of the degenerating quality of analog copies. The compromise was to protect DVDs through an encryption system known as Content Scramble System (CSS). In other words, CSS was intended as Hollywoods way of protecting its intellectual property rights in the digital age. But as all software publishers know, copy protection is almost always short-lived. CSS proved to be no exception when a 16-year-old Norwegian hacker seeking to create a Linux DVD player developed a program called DeCSS that stripped DVDs of their protective shell and allowed copies to be made.22 Despite the rapid legal and technological responses described below, the spread of DeCSS to all corners of the world via the Internet has opened the floodgates for DVD piracy. Its not difficult to see what path this will take. With over 4,000 films currently available on DVD in the United States and over 40 new titles being added every month, the DVD format is a critical part of the industrys future.23 DeCSS places that future on the same unsteady technological footing as audio CDs. Would-be pirates need only rip the contents and burn them onto blank CDsor simply offer them for direct downloading. In either case, the digital pirates treasure

has grown immeasurably richer.

enforcing intellectual property rights in the digital age

The question for Hollywood and the MPAA now becomes how to secure what is rightfully theirs. But while few wonder where the equities lie in most cases of piracy, the success and innovations of the digital pirates cast some doubt on the present laws effectiveness. In some ways, recent legislation has attempted to correct the problem. In other ways, unfortunately, it has failed to do so. The Constitution grants Congress the authority to promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.24 Throughout the years, copyright has been recognized as a limited monopoly right necessarily arising from this language.25 The primary benefits, however, are meant to be public rather than private.26 As the Supreme Court noted in one landmark case, the limited grant [of monopoly privileges via copyright] is a means by which an important public purpose may be achieved. It is intended to motivate the creative activity of authors and inventors by the provision of a special reward, and to allow the public access to the products of their genius after the limited period of exclusive control has expired.27 During the period of limited monopoly, however, the owner of a copyright holds several exclusive rights regarding the use of the protected subject.28 The development of copyright law since the passage of the 1897 Act has seen a steady rise in the criminal consequences attached to violations.29 Whereas infringement once constituted only a misdemeanor, revisions quickly transformed it into a felony, with increasingly severe penalties in the 1909, 1976, 1982, and 1997 versions.30 Willful copyright infringement for commercial purposes, such as the sale of bootleg films, now constitutes a criminal offense31 punishable by fines and jail terms proportional to the value of the pirated works.32 On the proper set of facts, courts have little difficulty applying the law to the full benefit of copyright holders.33 In fact, some courts have been willing to affirm copyright infringement convictions based on simple circumstantial evidence.34 As one court put it, Nothing in the record suggests that motion picture copyright holders ever grant permission

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to other persons to copy and distribute their products without receiving anything in return, let alone to video store owners, one of their most important markets.35 One of the problems in obtaining a conviction lies with finding the defendant. Often transporting and marketing their wares from foreign countries, modern-day pirates are adept at avoiding law enforcement agents. Even when a group or individual is located, studios routinely must choose between being denied domestic judicial relief because of jurisdictional limitations, or taking their chances with the often inadequate relief offered by foreign courts.36 Pirates operating online are even more elusive, immune from a legal framework that never anticipated their presenceor rather, their omnipresence. True phantom menaces, they can appear and disappear at will, cross all the worlds borders at once, and cause millions of dollars worth of damage with a days work. One possible solution has been increased regulatory efforts. This is the aim of the Department of Justice, whose Computer Crime and Intellectual Property Section (CCIPS) was created to battle the ever-expanding

influence of copyright infringers, especially those operating on the Internet.37 CCIPSs staff of roughly two dozen attorneys with specialized technical knowledge organizes and executes plans in coordination with various enforcement agencies aimed at stopping high-tech crimes such as digital piracy.38 In 1996, CCIPS began its first major anti-copyright infringement initiative, called Operation Counter Copy.39 By April 1997, its efforts had produced 35 indictments throughout the United States, including several based on the illegal copying and/or distribution of films.40 In addition to Operation Counter Copy, the DOJ has also recently coordinated its anti-piracy efforts with the FBI and United States Customs officials in a joint Intellectual Property Rights Initiative started in July 1999.41 Focusing especially on known problem areas, including domestic ports in New York, New Jersey, and South Florida, where intellectual property crimes tend to be the most prevalent, the new task force aims to combat the problem both domestically and internationally.42 Moreover, the industry itself has consistently sought to defend its own products against acts of piracy.

DivX and Wrapster

ominous sequels
of hackers who took existing software and modified it to serve an unintended purpose. The Wrapster revelation involves wrapping files so that they appear to be MP3s, the only currency that Napster users are able to trade.5 Once this is done, any type of file, including everything from software applications to movies, can be exchanged through Napster.6 The MPAAs preliminary success in combatting DeCSS may hint at a short lifespan for both DivX and Wrapster. But with new tools of piracy springing up virtually every week, it may not matter much. In either case, Hollywood can look forward to another season of sequels appearing soon on PCs everywhere.
1 See Online Movie-swapping Sites Spring Up, HOUSTON CHRON., March 28, 2000, at 4. As noted there, this DivX bears no relation to the recently abandoned DVD timed-rental scheme. 2 See John Borland, Hacked Video Technology Provides Look at MP3-like Films (visited on March 27, 2000) <http:// news.cnet.com/news/0-1005-2001591614.html>. 3 See id. 4 See P.J. Huffstutter & Greg Miller, Hackers Find New Uses for Song-swap Software, L.A. TIMES, March 24, 2000, at C1. 5 See Fiona Harvey, Inside Track: Alarm over Wrap Music, FIN. TIMES (LONDON), March 28, 2000, at 16. 6 See id.

Its easy to see why Hollywood loves sequels. Relatively easy to produce and even easier to market to a predisposed audience, sequels to hit movies are the closest the industry can come to a sure thing. But as digital pirates begin to craft their own follow-ups to hits like DeCSS, only one thing is sure: Hollywood wont love these sequels. Built on new MPEG technology, DivX is the latest word in audio/video compression.1 Its authors, two hackers known only as MaxMorice and Gej, combined MPEG-4 video output with an MP3 audio stream to create the basic compression standard.2 From there, playback of DivX files required only a simple modification to Microsofts Media Player. The audio-visual improvements were readily apparent in a recent test conducted by CNET.com. According to CNETs report, a 667 MB DivX version of Mars Attacks! managed VCR-quality playback even in full-screen mode.3 Another recent sequel is gaining much more notoriety, however. Some of the attention no doubt comes primarily as a reflection of that focused on the originalthe infamous Napster. By allowing users to pool their collections of MP3s in a single shared network environment, Napster quickly became one of the most popular and most controversial Internet applications.4 Its unofficial successor, Wrapster, seems capable of displacing Napster in both areas. Like DivX, Wrapster is work

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Predictably, the MPAA and MPA have led the way. As noted earlier, the MPAA and its international alter-ego direct a comprehensive worldwide anti-piracy effort. By working independently and through local authorities and legal systems in numerous countries, the organization acts as a strong advocate for the American motion picture industrys intellectual property rights. In addition to the MPAA, individual studios and producers have occasionally taken steps to defend their interests in their products. Most recently, and most notably, George Lucas and Lucasfilm, Inc. adopted a hard-line stance against threats of digital piracy. Even prior to the release of Lucas long-awaited Star Wars, Episode I: The Phantom Menace, the studio began issuing notices to various website operators, warning of the consequences of online copyright infringement. When reports of pirated copies of the film surfaced, attorneys for Lucasfilm sent ceaseand-desist orders to several website operators who had posted infringing material on their sites.43 Another possible solution to the problems of enforcement came in the form of the No Electronic Theft (NET) Act, which closed some of the holes of traditional copyright law.44 Before the 1997 passage of the NET Act, Title 17 of the United States Code criminalized only willful copying intended to bring about some tangible form of financial gain.45 Consequently, in United States v. LaMacchia, the defendant, a student at MIT, had created a software piracy ring where users could post and download illegal copies of popular software applications.46 While recognizing the economic harm of LaMacchias actions, the court, restrained by the language of the statute then in effect, concluded that the case had to be dismissed due to the absence of commercial motivation or financial gain by LaMacchia.47 On such a rationale, it is easy to see how the same loophole applies to digital pirates like EviliSO, whose reward is often merely the fame and prestige obtained in certain circles for their successes.48 To address this profitless piracy, the NET Act amended portions of the Copyright Act, making it illegal to reproduce or distribute copyrighted works whose combined value exceeds $1,00049 or to infringe on any copyright for purposes of commercial advantage or private financial gain.50 The expansive effect of the amendment truly becomes clear when one reads the definition of financial gain, which according to 101, includes receipt, or expectation of receipt, of anything of value, including the receipt of other copyrighted works.51

While promising on paper, the amendments have been somewhat less effective in practice. Since its passage in 1997, the NET Act has produced a grand total of one federal convictionthat of a University of Oregon student sentenced to two years conditional probation for providing for download a number of pirated software programs, films, and audio recordings.52 Pirate groups such as EviliSO remain hidden away in the numerous dark corners of the global network, insulated from laws that cannot punish virtual defendants. Even assuming an eventual discovery, it remains unclear whether the albeit expansive definition of financial gain in the Act actually covers intangible benefits like fame among fellow pirates. If notoriety is all that a given pirate receives or expects to receive for his efforts, will the NET Act be enough? Perhaps not wanting to bet its future on the answer, the MPAA has centered most of its recent infringement claims around another new legislative enactment designed in part to combat digital piracy. Passed in 1998, the Digital Millennium Copyright Act (DMCA) was quickly hailed as the revolutionary panacea of which the evolving global electronic marketplace was in sore need.53 While portions of the Act may represent advances in Internet law, several sections raise doubts of whether even such omnibus legislation could ever match the versatility and creativity of the digital pirates. Like the NET Act, the DMCA has an attractive ring to itespecially to the ears of the MPAA, RIAA and Software and Information Industry Association (SIIA),54 all of which lobbied heavily for its passage. But, as with the NET Act, the value of the DMCA to the film industry in particular remains largely speculative. The test cases that are just now surfacing may present more questions about the legitimacy of the DMCA than remedies for aggrieved copyright holders. Any regulatory solution points back to the familiar problems of enforcement. Arguably, the DMCA fares no better than traditional copyright law in this arena, thanks in part to its handling of online service provider (OSP) liability.55 Traditionally, common carriers have been exempt from liability for copyright infringement for merely providing the facilities that link sender and receiver, as long as they retain no control over the actual content of the transmissions.56 However, copyright law also specifies that assisting another party in its direct infringement of a copyright itself can support charges of contributory infringement.57 In some early Internet copyright infringement cases, aggrieved plaintiffs,

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unable to track down the direct infringers, sought to use the contributory infringement doctrine as a means of gaining relief from the OSPs instead. Landmark cases such as Sega Enterprises58 and Playboy Enterprises,59 both of which held OSPs liable for the illegal actions of their users, gave copyright holders a powerful weapon against infringementif they couldnt find the actual source of the problem, they could simply shut down the access point. In reality, however, these cases presented a serious obstacle for the survival and growth of the Internet, one that found its remedy in Title II of the DMCA. Subtitled the Online Copyright Infringement Liability Limitation Act (OCILLA), Title II sought to limit the exposure of OSPs to consequences arising from the improper actions of users. It outlines four safe harbor areas under which an OSP60 remains immune from liability for possible contributory copyright infringement.61 The first area deals with transitory communications, covering all transmissions for which the OSP remains a passive conduit and refrains from any participation in, or interference with, the materials being exchanged.62 The second encompasses caching activities, whereby an OSP might temporarily retain user materials on its system in order to deliver them more quickly to future recipients.63 The third exemption applies to storage services, providing that OSPs may not be held liable for any users infringing materials appearing on their systems as long as the OSP has no actual knowledge of the material and derives no financial benefit from it.64 The final area covers information location tools such as link lists and search engines, which remain free from liability for any copyright infringement that may occur on a target web site.65 Despite these rather expansive safe harbors for OSPs, other provisions of Title II do require that OSPs abide by copyright law. In order to be eligible for the exemptions discussed above, an OSP must adopt, implement, and inform its users of a policy providing for termination of accounts that repeatedly make use of infringing materials.66 Similarly, OSPs must designate an agent to receive notices of infringement from copyright holders,67 then comply with all reasonable requests to remove the infringing content.68 Finally, in what may be the most powerful single clause of Title II, copyright owners are granted the right to obtain subpoenas requiring the OSP to turn over the account information of an infringing user for purposes of identifying and locating that user.69

Here again, however, strong enforcement measures are tempered with several lenient sections. Title II clearly states that qualification for the liability exemptions does not require an OSP to monitor its service or affirmatively seek out information about copyright infringement by its users. This leaves copyright holders like the typical film studio in the familiar position of having to investigate and pursue suspected instances of piracy.

the digital millennium copyright act was quickly hailed as the revolutionary panacea of which the evolving global electronic marketplace was in sore need. while portions of the act may represent advances in internet law, several sections raise doubts of whether even such omnibus legislation could ever match the versatility and creativity of the digital pirates.
OSPs themselves possess no real incentive to curb even suspected instances of infringement, so long as the suspicion falls short of the knowledge requirements of the statute. Thus, absent notice from the copyright owner, actual knowledge of infringement,70 or aware[ness] of facts or circumstances from which infringing activity is apparent,71 an OSP bears no real risk of liability on behalf of its users. The end result is that Title IIs message to individual pirates is similarly tepid: when the party gets shut down on one block of the Internet, its simply time to move on to the next block. So far Hollywoods best weapon has been a different section of the DMCATitle Is prohibition on circumventing copy protection systems. Title I, Chapter 12 specifies in part, No person shall manufacture, import, offer to the public, provide, or otherwise traffic in any technology, product, service, device, component, or part thereof, thatis primarily designed or produced for the purpose of circumventing a technological measure that effectively controls access to a work protected under this title.72 These words appear to give the MPAA a strong

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weapon against the parties responsible for creating and distributing DeCSS, a weapon that its members quickly used to gain an injunction against the continued dissemination of the circumvention utility.73 In that case, defendants posted copies of DeCSS on their websites, one of which even went by the domain name, <www.dvd-copy.com>.74 Upon discovering the sites, plaintiffs immediately filed for an injunction, citing the irreparable harm caused by threats to the DVD market and their overwhelming likelihood of success based on the DMCA.75 Besides attempting to use the OSP exemptions discussed above, defendants utilized two other portions of the DMCA to counter plaintiffs claims

proactive strategies aimed at thwarting pirates activities, as demonstrated by george lucas aggressive defense of the phantom menace, both secure immediate protection and simultaneously signal to would-be copiers a strong and determined legal presence behind a copyrighted work.
of infringement. First, defendants sought to invoke the reverse engineering exception to Title I, which states in part, a person who has lawfully obtained the right to use a copy of a computer program may circumvent a technological measure that effectively controls access to a particular portion of that program for the sole purpose of identifying and analyzing those elements of the program that are necessary to achieve interoperability of an independently created computer program with other programs.76 The court rejected this contention based on a lack of evidence and on the legislative history of the DMCA that suggested the reverse engineering provision was intended for copyrighted computer programs only and [did] not authorize circumvention of technological systems that control access to other copyrighted works, such as movies.77 Next, defendants asserted that their conduct was proper under either the provisions for good faith encryption research78 or security testing.79 In

both instances, the court refused to find the requisite element of good faith, citing particularly the obvious lack of authorization by plaintiffs.80 Finally, defendants made a broadside attack on the DMCA, challenging its constitutionality on First Amendment grounds.81 To decide this issue, the court implemented a balancing test, setting the public interest in the type of speech (computer programs) against the importance of government regulation.82 The critical concern in striking this balance, and ultimately in granting the injunction, might just as well have come from the mouth of MPAA President Jack Valenti himself: The dissemination and use of circumvention technologies such as DeCSS would permit anyone to make flawless copies of DVDs at little expense. Without effective limits on these technologies, copyright protection in the contents of DVDs would become meaningless and the continued marketing of DVDs impractical. This obviously would discourage artistic progress and undermine the goals of copyright.83 Not everyone shares the MPAAs delight with the outcome of the DeCSS case. Private, nonprofit entities such as the Electronic Frontier Foundation (EFF)84 and the Global Internet Liberty Campaign (GILC)85 challenge the validity of not only the injunction, but also the whole of the DMCAs Chapter 12. High-tech brethren of the ACLU, such organizations disagree with the New York district courts appraisal of the equities and constitutional stakes involved in the MPAAs crusade to protect its copyrights. According to a statement issued by GILC, intellectual property owners should not be allowed to expand their property rights at the expense of free speech, legal reverse-engineering of software programs for interoperability reasons, and discussions of technical and scientific issues on the Internet.86 Whether the DMCA will continue to weather these assaults remains to be seen. Even if the Act survives further scrutiny, the MPAA might well wonder if it can safely entrust the future viability of its entire business model to controversial, exception-ridden legislation.

alternatives to existing avenues of enforcement

Of course, legislative solutions are hardly pointless endeavors. Attempts to solve the problems posed by piracy through traditional legal avenues must, and certainly

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will, continue to be pursued. But if even the most comprehensive attempts at legislation still miss the mark in key respects, the movie industry cant afford to abandon the quest for better solutions. Where should filmmakers turn if lawmakers cannot adequately protect Hollywood and its intellectual property rights? One possibility lies in the sort of self-help the industry has conducted since its inception. The MPAA and its member studios are no strangers to the tenets of selfdefense. Proactive strategies aimed at thwarting pirates activities, as demonstrated by George Lucas aggressive defense of The Phantom Menace, both secure immediate protection and simultaneously signal to would-be copiers a strong and determined legal presence behind a copyrighted work. Unfortunately, the end result still relies heavily on the adequacy of the law. Moreover, even the best plans can backfiresome writers have argued that Lucas efforts merely intensified the piracy by creating a stir around what had been a relatively quiet underground phenomenon.87 A second, and likewise familiar, alternative involves utilizing evolving technology to stay one step ahead of the pirates. DVD represented a significant technological advance; CSS, on the other hand, did not. Roundly criticized by experts as inferior encryption, CSS begged to be cracked.88 An enhanced system of protection is the next logical step for DVD, but a broader perspective might suggest that Hollywood needs to explore other technologies as wellsuch as delivering content online directly instead of being beaten to the punch by pirates. Already, several companies have begun to explore the possibilities of offering properly licensed video content straight to consumers over the Internet. For instance, Sightsound.com allows users to download numerous feature-length films89 for a small fee,90 then watch them on their PCs in much the same way that a pirated film would be viewed, but with the benefit of higher quality. Another company, Tranz-send, operates a site called Clickmovie.com, where it eventually plans to enable users to view virtually any movie ever made on demand.91 According to the sites operators, broadband connections and emerging compression technology will soon allow Clickmovie.com to deliver full-length, DVDquality feature films to users in a mere 15 minutes.92 While the extent to which Hollywood will utilize such avenues of distribution remains unclear, they certainly represent a more desirable, and more profitable, alternative than that offered by the pirates.

Perhaps the best path to curtailing the damage caused by piracy lies in realizing its primary cause is overwhelming demand. It goes without saying that pirates would not act without an audience, but the point here is more subtle. Since 1990, Hollywoods box-office gross has increased 55 percent, with successively larger annual increases occurring every year since 1995.93 Theater ticket sales have increased dramatically as well in the last five years,94 even though annual admission prices have consistently outpaced the growth of the Consumer Price Index (CPI) over that same period.95 Meanwhile, studios are releasing roughly the same number of films as in years past in response to the increased public appetite for their products.96 Also, it is significant that the countries where piracy has been the most rampant are those that must wait the longest for Hollywood films to arrive.97 While the market volume filled by pirated films may exceed the true gap between the supply of and demand for movies, Hollywood may well be inviting some degree of piracy through its own inflexibility. In other words, when ticket prices steadily rise, global releases lag behind North American releases by weeks or months, and a popular movie takes anywhere from three months to a year to find its way from theaters to the home video market, is it any wonder that pirated copies of those very films find such eager audiences? An alternative presents itself in same place where alternatives to Hollywood always present themselves independent film. Independent filmmakers have not only begun to embrace the opportunities that the Internet provides, but they have also shown a willingness to experiment with changes to the tried-and-true Hollywood business model. One of the more celebrated films of recent years, The Blair Witch Project, lends a good example of this trend. What was initially a modest effort by two graduates of the film program at the University of Central Florida became the most profitable film ever produced by means of a simple, yet revolutionary strategy. The films distributor, Artisan Entertainment, embraced the Internet, creating a marketing phenomenon based almost entirely around the operation of a single website. There was no grant of immunity from the pirates; The Blair Witch Project went on the list of conquests as well. But so successful was the use of the Internet that when the pirated copies merely created more buzz about the film, critics and fans wondered aloud if the filmmakers themselves had intentionally leaked the copies.98 Artisan wasnt finished. Even

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while its film was still enjoying a successful theater run, it organized and executed a highly profitable video release to coincide with the Halloween season. This early introduction to the video market not only capitalized on the lingering effects of the original advertising campaign, but also preempted much of the interim demand traditionally filled by pirates. Artisan and the two young filmmakers had, in a sense, pirated their own filmand turned an incredible profit by doing so.

the end
Make no mistake: Hollywood will survive the digital onslaught just as it and its industry compatriots have survived the many precursors. As one commentator has remarked, During the past twenty five years, copyright holders have repeatedly preached the coming of the Apocalypse as new technologies for copying and distributing works became available. VCR spells doom for movie producers. Photocopiers will ruin academic publishers. Digital audio tape means the end of the music industry. And so on.99 Industries founded on creativity arent likely to roll over in the face of competition. Arguably, the film industrys responses to the digital threat dont even require the ingenuity that responses

from similarly afflicted industries, such as music or software, do. Because of the unique attributes of film and the social aspects of a night at the movies, even a perfect copy of a DVD doesnt replace the full scope of what Hollywood provides. If only because of the big-screen allure of theaters, the basic Hollywood model is bound to remain viable no matter how rampant digital piracy becomes. Nevertheless, the dangers posed by the Internet and the emergence of new technologies have made digital pirates more than just a phantom menace. Free, illegal copies of films available to anyone with Internet access create a serious threat to intellectual property holders that cannot be denied. Hollywood must respond strongly, but carefully. It must use the laws available to it, while realizing that it cannot afford to wager its entire future on the illusion that legislation can keep pace with technology. It must continue to use the self-help remedies it has developed over years of battling similar threats, while recognizing the ways in which this threat differs and tailoring its actions accordingly. Finally, it must work to ensure the continued viability of its existing technologies, while never allowing itself to become trapped in the inflexible confines of a business model that may ignore emerging trends in the marketplace. N

1 See Valenti Warns the Dangers of Internet Piracy Before Congressional Subcommittee (visited on Oct. 28, 1999) <http://www.mpaa.org/jack/99/99_10_28a.htm>. 2 Id. 3 Id. 4 See MPA Anti-piracy (last modified June 15, 1998) <http://www.mpaa.org/anti-piracy/index.htm>. 5 See id. 6 See MPA Anti-piracy Contact/Reward Program (last modified November 19, 1999) <http://www.mpaa.org/anti-piracy/contact/ index.htm>. The MPAA maintains an informant reward system, whereby individuals are encouraged to call a toll-free number (1-800NO-COPYS) or send e-mail with tips concerning suspected piracy. Informants may remain anonymous and are compensated for their information based on its utility (e.g., only information leading to an arrest is rewarded; tips on pirate labs carry a higher reward). 7 See MPA Anti-piracy, supra note 4. 8 See id. 9 See id. 10 See id.

11 The International Organization for Standardization (ISO) is a nongovernmental entity comprised of roughly 130 member states that develops and implements uniform technological standards. Through subsidiary groups such as MPEG, it provides worldwide standard specifications for everything from paper sizes to credit card formats to film speeds. See Introduction to ISO (last modified May 11, 1999) <http://www.iso.ch/infoe/intro.htm>. 12 See Leonardo Chiariglione, About MPEG (last modified May 29, 1999) <http://drogo.cselt.stet.it/mpeg/ about_mpeg.htm>. 13 Obviously, MP3 file sizes vary according to the length of the original audio recording. In general, however, sizes can be estimated based on the fact that one minute of CD-quality audio requires roughly 1Mb of data. Given that the average pop song (the source of most of the MP3 controversy) ranges from three to six minutes, the average MP3 file will range from 3Mb to 6Mb. Similarly, depending on the connection used, download times for such files will generally range from 10 to 20 minutes for phone modems to mere seconds for broadband. 14 Mark J. Plotkin, The Times They are a Changin: The Digital Performance Right in the Sound Recordings Act of 1995 and The Digitial Millennium Copyright Act of 1998, 1 VAND. J. ENT. L. & PRAC. 46, 48 (1999). 15 Pirates Paradise, ECONOMIST, Oct. 16, 1999.

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16 Special VCD players that operated much like normal VCRs were also (and continue to be) available and quite popular in other countries. 17 One of the limitations of the VCD format, however, is finite storage space. Just as audio CDs are limited to around 74 minutes of audio recordings, VCDs can hold no more than 70 minutes of video. As a result, feature-length films require at least two, and sometimes three, VCDs. Besides giving the desired improvements in audio-visual quality, the advanced compression technology used for DVDs provides the solution for the double disc problem. 18 See Valenti Warns the Dangers of Internet Piracy Before Congressional Subcommittee, supra note 1. Valenti notes, The 1000th copy of a digitized movie is as pure as the original, whereas in analog each copy is degraded in quality. 19 The goal of the MPEG-1 standard was to maintain a video quality comparable to that of VHS videotape. However, once the compromises in sound and picture that accompany most bootlegged originals are added in, most films available over the Internet do bear a marked loss in quality over their videotape counterparts. 20 Once known as Zorro because of the signature Z left at the bottom corner of the screen in its bootlegs, the newly re-handled EviliSO group has drawn considerable attention due to its prolific efforts to spread digital piracy. Assigning a number to such efforts would be mere speculation, but seemingly few of Hollywoods 1999 blockbusters like The Phantom Menace and Austin Powers: The Spy Who Shagged Me have eluded EviliSO. 21 Internet Pirates Bootleg New Bond Movie, DVDs, TORONTO STAR, Nov. 10, 1999. 22 Benny Evangelista, Digital Dupes, S.F. CHRON., Jan. 31, 2000, at B1. 23 See Universal City Studios, Inc. v. Reimerdes, 82 F. Supp. 2d 211, 214 (S.D.N.Y. 2000). 24 See U.S. CONST. art. I, 8, cl. 8.

35 See id. at 434. 36 See Meredith A. Harper, International Protection of Intellectual Property Rights in the 1990s: Will Trade Barriers and Pirating Practices in the Audiovisual Industry Continue?, 25 CAL. W. INTL L.J. 153, 161 (1994). 37 See CCIPS: What Does CCIPS Do? (last modified February 28, 2000) <http://www.usdoj.gov/criminal/ cybercrime>. 38 See id. 39 See Justice Department, FBI Release First Results of Nationwide Crack Down on Criminal Trademark and Copyright Fraud (May 8, 1997) <http://www.usdoj.gov/criminal/cybercrime/195_ag.htm>. 40 See id. 41 See Justice Department, FBI and Customs Service to Combat Intellectual Property Crime (July 23, 1999) <http://www.usdoj.gov/ criminal/cybercrime/ipinitia.htm>. 42 See id. 43 See Steve Wilson, Online Piracy Turns From Music to Movies, N.Y. TIMES, July 29, 1999, at 1. 44 See Wu, supra note 29, at 528. For a look at exactly how the NET Act amended Title 17, see The No Electronic Theft (NET) Act (last modified March 30, 1998) <http://www.usdoj.gov/criminal/cybercrime/17-18red.htm>. 45 See 17 U.S.C. 506, prior to 1997 amendment. 46 See United States v. LaMacchia, 871 F. Supp. 535, 536 (D. Mass. 1994). 47 See id. at 545. 48 See Wilson, supra note 43 at 1. 49 See 17 U.S.C. 506(a)(2).

25 See Sony Corp. v. Universal Studios, Inc., 464 U.S. 417, 429 (1984). 50 See 17 U.S.C. 506(a)(1). 26 See id. 51 See 17 U.S.C. 101. 27 Id. 28 See 17 U.S.C. 106. 29 See Ting Ting Wu, The New Criminal Copyright Sanctions: A Toothless Tiger?, 39 J.L. & TECH. 527, 529 (1999). 30 See id. 31 See 17 U.S.C. 506. 32 See 18 U.S.C. 2319. 33 See generally United States v. Larracuente, 952 F.2d 672 (2d Cir. 1992) (affirming defendants copyright conviction for making unauthorized copies of videotapes). 34 See United States v. Cohen, 946 F.2d 430, 435 (6th Cir. 1991). 52 See Sean B. Hoar, First Criminal Copyright Conviction Under the No Electronic Theft (NET) Act for Unlawful Distribution of Software on the Internet (visited on August 20, 1999) <http://www.usdoj.gov/ criminal/cybercrime/ netconv.htm>. 53 See Pub. L. No. 105-304, 112 Stat. 2860 (1998, amending sections of Title 17). 54 Software and Information Industry Association. This new trade association was formed on January 1, 1999, when the Software Publishers Association and the Information Industry Association joined forces. See SIIA Online (last modified March 22, 2000) <http://www.siia.net>. 55 See 17 U.S.C. 512. 56 See 17 U.S.C. 111(a)(3). 159

57 See Gershwin Publ. Corp. v. Columbia Artists Mgmt., 443 F.2d 1159, 1162 (2d Cir. 1971). 58 See generally Sega Enterprises, Ltd. v. MAPHIA, 857 F. Supp. 679 (N.D. Cal. 1994). 59 See generally Playboy Enterprises, Inc. v. Frena, 839 F. Supp. 1552 (M.D. Fla. 1993). 60 Under OCILLA, the definition of an OSP varies according to the safe harbor limitation being considered. For the first limitation, the definition appears quite narrow and may not include new Internet entities such as website hosting services. In the case of the remaining limitations, indications suggest that the definition has been left intentionally broad, so as to offer protection to any online entity that fulfills the remaining requirements of the Act. For the text of the definitions, see 17 U.S.C. 512(k)(1)(A) and 512(k)(1)(B). 61 See 17 U.S.C. 512. 62 See 17 U.S.C. 512(a). 63 See 17 U.S.C. 512(b). 64 See 17 U.S.C. 512(c). 65 See 17 U.S.C. 512(d). 66 See 17 U.S.C. 512(l). 67 See 17 U.S.C. 512(c)(2). 68 See 17 U.S.C. 512(c)(3). 69 See 17 U.S.C. 512(h). 70 See 17 U.S.C. 512(c)(1)(A)(i) and 512(d)(1)(A). 71 See 17 U.S.C. 512(c)(1)(A)(ii) and 512(d)(1)(B). 72 See 17 U.S.C. 1201(a)(2)(A). 73 See generally Universal City Studios, 82 F. Supp. 2d 211. 74 See id. at 214. 75 See id. at 215. 76 See 17 U.S.C. 1201(f). 77 Universal City Studios, 82 F. Supp. 2d at 218. 78 See 17 U.S.C. 1201(g). 79 See 17 U.S.C 1201(j). 80 See Universal City Studios, 82 F. Supp. 2d at 218-19. 81 See id. at 219. 82 See id. at 221. 83 See id. at 222-23. 84 See About EFF (last modified April 2, 1999) <http://www.eff.org/

EFFdocs/about_eff.html>. 85 See Global Internet Liberty Campaign Principles (last modified July 17, 1998) <http://www.gilc.org/ about/principles.html>. 86 Global Internet Liberty Campaign Member Statement In Defense of Free Speech on the Internet (visited on January 14, 2000) <http://www.gilc.org/speech/DVD-CSS.html>. 87 See Wilson, supra note 43 at 1. 88 See Scott Brader, DVD and the Digital Copyright Act (visited on February 4, 2000) <http://www.cnn.com/2000/TECH/computing/ 02/04/dvd.law.idg/index.html>. 89 Though few popular Hollywood movies appear at Sightsound, the site gained widespread exposure by offering Darren Aronofskys indie hit, (Pi), for downloading. See About Us (visited March 30, 2000) <http://www.sightsound.com/corporate/aboutus.asp>. 90 SightSound.coms prices vary depending on the title and length of license, ranging anywhere from $3 for a five-day rental to $20 for a permanent copy of some films. 91 See Doug Bedell, Coming to a PC Near You: first-run movies begin to roll into homes, raising chills in Hollywood, DALLAS MORNING NEWS, Aug. 17, 1999, at 1F, available in 1999 WL 24152985. 92 See id. 93 See 1999 US Economic Review: US Box Office (last modified March 7, 2000) <http://www.mpaa.org/ useconomicreview/1999Economic/ sld001.htm>. 94 See US Economic Review: US Box Office (last modified March 7, 2000) <http://www.mpaa.org/ useconomicreview/1999Economic/ sld005.htm>. 95 See 1998 US Economic Review: US Box Office (last modified March 7, 2000) <http://www.mpaa.org/ useconomicreview/1999Economic/ sld007.htm>. 96 See US Economic Review: Films Released (last modified March 7, 2000) <http://www.mpaa.org/ useconomicreview/1999Economic/ sld009.htm>. 97 For instance, The Phantom Menace was released in the United States on May 19, 1999. Though pirated versions began to appear in Europe and Asia within days, the film was not officially released in many of those markets for weeks. China found itself near the end of the release schedule and didnt see its first authorized glimpse of the film until November 5th, nearly seven months after the U.S. release. See Release Dates for Star Wars: Episode I - The Phantom Menace (1999) (visited April 2, 2000) <http://us.imdb.com/ReleaseDates? 0120915>. 98 Both the filmmakers and Artisan Studios, the eventual distributor, denied that this was the case. 99 Michael J. Meurer, Price Discrimination, Personal Use and Piracy: Copyright Protection of Digital Works, 45 BUFFALO L. REV. 845, 846 (1997).

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music

B nds
IF
OPPOSITES ATTRACT, THEN PERHAPS

The Pullman Groups Securitization of the Music Industry

By Hews o n Chen

Dont Sell

O ut, Sell

there is an explanation for the unlikely marriage between rock n roll and the bond market. One can only wonder what strange magnetism is powerful enough to wed the youthful, wild and unpredictable rock culture with the world of dry, cautious, and mind-numbingly technical investment finance.1 Indeed,

An Interview with David Pullman

some strange voodoo magic has luminaries like David Bowie, James Brown, and Holland-Dozier-Holland all singing the same tune, and securitization is its name.2

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Securitization is the selling of debt to investors.3 In general, securitization converts future income streams like credit card receivables or auto loan payments to present in-pocket cash. Notably, this transformation from future income to current wealth gives the issuer of the security immediate access to cash at less cost than other financing methods such as bank loans.4 In the 1970s, this technique was applied to the housing industry,5 and since then, securitization has evolved into greater varieties of income streams, including medical insurance,6 typhoon insurance, and unused airline tickets.7 The application of securitization in the entertainment industry, however, remains largely untested. Is securitization a viable model for financing intellectual properties in the music industry? David Pullman, Founder, Chairman, and CEO of The Pullman Group, LLC, thinks so. In 1997, Pullman, as managing director of Fahnestock & Companys Structured Asset Sales Group, successfully orchestrated the issuance of $55 million in bonds backed by singer David Bowies royalty and publishing income.8 To date, Pullman has proven the viability of this concept by issuing similar bonds for legendary artists like James Brown,9 Holland-DozierHolland,10 and Ashford & Simpson.11 These music legends are interested in securitizing because these deals promise several benefits to the established artist.12 The securitization deal is more attractive than a traditional royalty/advance agreement because the artist retains 100 percent of the copyright, generates an immediate monetary windfall, and saves money on taxes because the sale of the bonds is not treated as a taxable event.13 Securitization deals are more attractive than bank loans. Unlike bank loans, which are short-term in nature and involve a floating rate, Pullmans securities are fixed rate, non-recourse, and long-term in nature, translating into less risk for the artist.14 Also, bank loans typically only yield about one-tenth what the artist can get through securitization.15 According to the Pullman Group, the benefits of securitization translate into at least 20 percent extra income for the artist.16 This increased amount of money up-front can result in additional indirect advantages. By gaining control of the net sum of future royalties today, the artist can reinvest and diversify,17 making the artists wealth less dependent on the success or failure of any specific market. Moreover, the ability to control the net value of future royalties today facilitates estate planning, so the artists heirs will have money available to pay taxes with-

out being forced to sell off the artists catalog.18 As the innovator who first married securitization to star power, David Pullman is one of few financiers who can successfully structure such deals, and, in fact, such bonds bear his name in industry vernacular. The overall idea behind a Pullman Bond is that the artist makes money up front by selling bonds to investors. The interest on these bonds is then paid with the income stream resulting from certain assets, typically a catalog of songs. A number of steps ensures that risks to the investor are minimized. The income producing assets are insulated from possible bankruptcy proceedings by transferring the assets temporarily from the artist to a special purpose vehicle (SPV).19 Credit enhancements such as cash reserve accounts, financial guarantees, letters of credit, or default insurance may be used to reduce the risk of default of payment on the bonds.20 Finally, an artists works may be pooled with the works of other artists to diversify the risk that a particular artists popularity may decrease and affect future royalty payments negatively.21 However, there are many critics who remain skeptical of entertainment securitization. Some of the banks that have tried to enter the entertainment securitization market now dismiss the deals to be more about hype than value.22 Pullman regards these criticisms as grumblings from disgruntled competitors.23 When I did the Bowie deal people thought I was crazy, he notes. Three months after I started it, other people tried to copy me. Six months later, it was everyone elses idea. We keep going at it. Other people have tried and failed.24 His failed competition only underscores the complexity and expertise required in the field. Well-known Nomura Capital Entertainment announced that it was going to form a music securitization team with industry veterans Irving Azoff, Irene Romero, and Casey Wasserman in 1997.25 In 1998, they expected to use the artist-pooling concept to issue $1 billion a year in loans.26 By March 1998, however, Nomura had not produced one asset-backed security.27 By the beginning of 1999, Nomura fired its top bond executive, Ethan Penner, and closed its entertainment bonds division with only one small entertainment loan to show for it.28 The only other competitor in this field, CAK Universal Credit Corp., was formed in 1998 as an alliance between Prudential Securities and Charles Koppelman, former chairman of the EMI Capitol Music Group.29 While the group claimed to have made $300 million in fixed loans

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to unidentified artists, its attempt to securitize Michael Jacksons catalog of Beatles classics has encountered delays and may well be scrapped due to the complexity of the ownership structure.30 Rivalry in this field has a personal side as well. CAK and Prudential were Pullmans business partners in the 1997 Bowie bond offering. He is now suing both for, among other things, violating fiduciary duties and the misappropriation of trade secrets, claiming damages in excess of $2 billion.31 While some analysts have noted that such legal wrangling may make artists uneasy about doing securitization deals, Pullman does not believe the lawsuit will hurt his business: People love the fact that all were trying to do is protect intellectual property, whether it be ours or the artists.32 The main reason behind Pullmans heavy market share of the music bonds industry is that the assets are complex.33 As he observes, it is a world-wide industry with world-wide cash flows.34 For example, the Bowie

average record company. [We deal with] people who are already successful and are legends with a steady income stream, and, in general, the majority of artists in a record companys roster dont fit that example. Were dealing with a select few, the cream of the crop, in terms of artists that have longevity.38 This focus on artists of legendary stature also allows Pullman to avoid the uncertainty of predicting the popularity of entertainers in a fickle market. With regard to songs that have achieved classic status, income streams are relatively stable. For example, with Ziggy Stardust its nearly 30 years later and we know if its still producing income 30 years later--remember with artists, 90 percent of the income comes in the first 6 months after release--so if this songs producing this 30 years out, thats what it should do going forward.39 But with business limited to artists of legendary status, some think that the real money to be made from

BY GAINING CONTROL OF THE NET SUM OF FUTURE ROYALTIES TODAY, THE ARTIST CAN REINVEST AND DIVERSIFY, MAKING THE ARTISTS WEALTH LESS DEPENDENT ON THE SUCCESS OR FAILURE OF ANY SPECIFIC MARKET.
deal took months to devise, cost over a million dollars, and resulted in a thousand pages of documentation.35 But even with the experience of numerous music securitization deals, Pullman notes that these transactions are still difficult to orchestrate: I thought that after doing a series of these deals, things would get easier, and they havent. So thats whats amazing about it all--that they dont become cookie cutter.36 Indeed, the difficulty of creating deals and the few successes of music securitization may well limit music bonds to the fringes of the industry. Some commentators have said that music securities are lousy investments, where the seller is smarter than the buyer.37 This potential information asymmetry also raises policy concerns. Securitization shifts the risk of success or failure from the record company and publisher onto the investor, who is in arguably the worst position to assess the odds. Instead, the risk of a particular catalog is perhaps most efficiently allocated to record companies and publishers, who have ready access to income stream histories and industry tracking data. Pullman counters this criticism by pointing out that his focus is different from that of the intellectual property securitization lies outside of the music industry.40 In 1997, an attorney who worked with Pullman on the Bowie Bond deal observed that the music business is a limited market. But if you can get to the software companies, then this could be a huge business.41 However, Pullman remains optimistic about the future of music bonds. Despite the music industrys focus on short-term artists with one- to three-record careers and the implication that the pool of viable securitization candidates is dwindling, Pullman maintains: Were just at the beginning of [music securitization]. What [the increasing focus on shortterm artists] is really doing is making catalogs like James Brown, David Bowie, Ashford and Simpson, or Holland-Dozier-Holland more valuable, because there are fewer people creating catalogs that have standards, or that have long careers or that have created a new sound. So we think thats better, that we have these gems that dont really have to compete with a lot of the different artists that are out there. James Brown doesnt compete against a new

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artist. In fact, James Brown, the Isley Brothers, these guys are sampled over and over again by [new artists]. So is Ashford and Simpson.42 Furthermore, the slow adoption of music securitization should be no surprise. Pullman points out that traditional securities markets also encountered hesitation and skepticism in their infancy: I started when there was not one auto loan or credit card security. Asset-backed securities were brand new, [but] it kept evolving. Newer and newer asset classes. Around 1990, not all banks did securitization, and a lot of banks questioned it. In the year 2000, theres not one bank that doesnt securitize its assets. They were all naysayers about securitization, the

deal than sell [their works]. And with the consolidation of the industry, artists want the flexibility to go where they can.45 One of the reasons why securitization will likely be viewed with greater acceptance is that securitization provides a potential win-win opportunity for record companies as well. Specifically, as a result of securitization, [record companies] have more money in their coffers to offer other artists, as opposed to all of their money going out to one artist So if were talking about a $30 million James Brown deal or a $55 million David Bowie deal, [obtaining that money from the sale of bonds instead of from record company advances] gives these companies more money to put out

[I]N TERMS OF THE FIRST DEAL WITH BOWIE, PEOPLE SAID THAT WE COULDNT REPEAT IT. NOW WERE ABLE TO OBTAIN RATINGS ON DEALS THAT ARE JUST BASED ON THE WRITERS SHARE.
banks, just the way that they are about entertainment royalty securitization.43 Over time, Pullman predicts, music securitization will become more commonplace, and there is some indication that Pullman has successfully raised awareness and acceptance about these more progressive bonds. Though the Bowie deal was partially guaranteed by EMI Records, the later Holland-Dozier-Holland deal was struck without any similar guarantee.44 I think that each year we move further and further down the line. So in terms of the first deal with Bowie, people said that we couldnt repeat it that it was a one-time event, and that it was unique, that he had his record masters and publishing and the writers share. And now were able to obtain ratings on deals that are just based on the writers share, probably something that most artists still retain. So, therefore, I think that each year well go further and further out on the curve. And then at some point in time meet with what the record companies and publishers have traditionally done as a business. Right now I think [record companies and entertainment bond firms] complement each other more. But the future is that, what I hear in terms of feedback, is that artists would much rather do this for new artists. Think of it this way: 55 million is the equivalent of 55 one million dollar advances, 550 hundred thousand dollar advances, and 5500 ten thousand dollar advances. So you can sign on more new artists46 At least for now, the proponents of music securitization are in a dilemma. Securitization promises to revolutionize the music industry, yet it is still so obscure that only one firm, the Pullman Group, has been able to make it work. Even so, the pro-artist values advanced by music securitization should be encouraged in an industry where record companies of increasing size flex overwhelming bargaining power over artists. Securitization remains intensely specialized and somewhat untested in the music business. But does it also promote democracy and diversity in the recording industry? Definitely,47 says David Pullman, the only man who, so far, seems to be able to make the bonds sing.
The author would like to thank David Pullman for his kind assistance.

164

A Conversation with

D vid Pullman
Founder, Chairman, and CE

JELP

Youd already had a bit of experience securitizing exotic income sources by the time the Bowie Bond deal came about. Had you been planning to do this for quite some time prior to your discussions with Zysblatt [Bowies business manager] or Bowie?

P:

Right. Well those are the generic, but then after that, each time everything was new, like credit cards were new, autos were new, and then it kept on going down the line. From a policy standpoint, securitization shifts all of the risk from success or failure from the record company to the artist and then some of that to the investor. But couldnt we argue that the record company, with all of its expertise, is in the best position to accurately calculate and deal with this risk, or would you disagree with that?

In terms of the Bowie deal, I had been thinkPullman ing about doing things in entertainment and intellectual property. In my mind, thats the direction I wanted to go. I always had an interest in the entertainment business, in terms of whether Id be reading BILLBOARD, HOLLYWOOD REPORTER, or VARIETY, somehow I would connect what Im doing with that.

J:

J:So it was more of a personal interest? P:Yes. J: Youve said in television interviews that, had you
tried to offer Pullman Bonds maybe ten years ago, it never would have worked. What changed in the marketplace that suddenly made this Bowie deal possible?

P: Could you ask me that question again? J: The risk of success or failure of the underlying assets that are paying the interest on these bonds . . . thats being shifted to the investor through the artist, right? So the traditional model is where the record company gives you an advance, promises to pay you royalties, but theres a risk involved: that the record company will never make back that advance. So all of the risk of failure is pretty much on the record company. But now, through securitization, were shifting the risk from the record company to the artist. And of course, with the risk theres also the increased potential for return because the artist gets more of the upside. But do you think that record companies are more able to predict the success, failure, or worth of an artists catalog than the average investor or institutional investor?

O of the Pullman Group, LLC

P: Well what happened in this market was evolutionary, in the fact that, when I began, I started in mortgage-backed securities which were new at the time. At the time I started there was not one auto loan security, not one credit card security. Asset-backed securities were brand new. So thats what I mean. It kept evolving. Newer and newer asset classes. It would have been difficult to do this at the time when mortgagebacked securities first started, because you have to keep breaking the ground to new arenas first. Timing is everything and so are rating agencies and the investors. But even though this was very difficult to do, I thought it was possible, not impossible.

J:

So it was kind of like the industry had to get more used to these exotic income streams like credit receivables and such.
165

P:

Well, these are already people who are successful and are legends so its an income stream, and in general, the majority of artists

in a record companys roster dont fit that example. So were dealing with a select few, the cream of the crop, in terms of the artists that have longevity.

ruptcy laws . . .

P:

J:

We move the assets into a special purpose bankruptcy remote vehicle.

One concern of people in the music industry is that ideal candidates for securitization such as David Bowie or James Brown are decreasing in number because consumer tastes are growing more fickle and there are more short term artists with just one- to three-record careers. Do you think that the number of viable music securitization deals is likely to decrease over time, or do you think that that wont really be an issue?

J: Right. And that transaction has to be treated as a P: As a true sale. Whats unique about securitization
is you can get a true sale opinion and at the same time be able to retain the equity residuals. Only in securitization can you do that, and also be able to deduct the interest. One treatment for taxes and financing, and on the other side youre getting an opinion thats a true sale.

P:

Were just at the beginning of it. What its really doing is making catalogs like James Brown, David Bowie, Ashford and Simpson, or Holland-Dozier-Holland more valuable, because there are fewer people creating catalogs that have standards, or that have long careers or creating a sound. So we think that thats better, that we have these gems that dont really have to compete with a lot of the different artists that are out there.

J:

So you can be treated as a loan while at the same time, for bankruptcy purposes, have a true sale. What about the possibility that the IRS may change its regulations?

P:

J: So that makes the existing catalogs even stronger. P: Theyre more valuable. I mean James Brown doesnt compete against a new artist. In fact, James Brown, the Isley Brothers, theyre sampled by anyone. So is Ashford and Simpson.

No, its based on Code. Its like a mortgage. If they try to turn around the code and say if youve got a mortgage on your house, its a sale, people would be up in arms. That makes sense. What about the true sale doctrine? Is that firm enough for entertainment securitization to become more mainstream? Is there a need for Congress or the SEC to make more firm guidelines to really shield these assets?

J:

J:

The two main financial advantages of securitization are, one, the artist gets to retain all the upside, and two, significant tax advantages. How do these tax advantages work out? Where does the benefit come from?

P:

P:

From the fact that its not a taxable event when you receive the money.

Its the same way in the other securitization deals. Theres 200 billion done a year, so the same rules that protect those and the two and half trillion outstanding protect the individual deals we do. They would have to change the rules for everything else and theyre not going to because its a large market. What makes entertainment securitization different than the ABS [Asset Backed Securities] market in general?

J: Is this a benefit to the investor or to the artist? P: To the artist. J: So youre talking about the up-front cash. P: Exactly. And then when the moneys invested, for J:
business purposes, whether it be in stocks and bonds or buying catalogs, the interest is deductible. But in order for the assets to be shielded from bank-

J:

P:

The assets are intangible, thats a big difference. And the difference is not that the structures are so much more complexand they arebut the assets are so complex. And I thought that after a doing a series of these deals things would get easier, and they havent. So thats whats amazing about it all, that they dont

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become cookie cutter.

P:

J:

Id read somewhere that in the ABS market there was a trend of really destructive competition, that competition for borrowers was making the payoff of these deals worse. But since entertainment securitization is so complex, is this not an issue?

P:

It hasnt been. People have tried to compete with us, or bait and switch. And then it turns out that its so complex that they can never deliver what they say. So whatever we say we stuck to, and you have to stick with certain guidelines in terms of what your fees and interests are going to be on deals, especially as you get to doing smaller deals. As you go down in terms of the size of the deal, they become just as difficult as doing a large deal, so you have to make sure you have the right pricing model so that you make sure that youre making money and not losing money on the deal.

No, I wasnt expecting that someone would try to steal our stuff and try to get away with it, and that we would file a $2.5 billion lawsuit against CAK and Prudential. Imitation is the highest form of flattery, thats how we feel about competitionexcept when someone tries to steal our stuff, and then we sue them. So thats what we did, and its kept them busy. People love the fact that all were trying to do is protect intellectual property whether it be ours or the artists. So what steps do you think you could take to protect yourself from similar problems like this in the future?

J:

P:

The first thing I did which was smart was that I didnt do any public deals. They were all done as private deals. So we got a thousand requests for our documents, which we never gave out, and each deals been a derivation of the last. Is the main reason behind limiting these deals to institutional investors because you want to avoid an SEC filing or

BUSINESS WEEK wrote about the destabilizing effect that the ABS market had on the economy. It mentioned specifically that the market has tended towards excess: Too much liquidity in good times, too little in bad. Does this affect entertainment securitization?

J:

J:

P:

P:

Well, these are fixed income instruments, so its a little different, its based on the ratings, and were being given single A ratings.

J: So liquidity isnt much of a concern at all. P: Right. Its typically tremendous liquidity, people
leave equities and they go into debt instruments, bonds. And they want to get the highest possible yield on bonds, so were in good shape. The aspect market has ridden a huge wave, even through the recession. The issuance in 85 was about 5 billion, and the issuance in the last year was about 200 billion.

No, we dont mind. The main thing is we want the privacy and we want people to not be able to reverse engineer our deals. Down the road, as we continue to build the brand, the Pullman Bonds, we could go to the public market. Because thats traditionally what happens once youre a market leader and you build a brand, even in other asset-backed securities. For example, Pru Securities, theyre known for home equity loans, First Boston might be known for autos and credit cards, and thats it. And Conti Financial, before they went out of business, was known for time shares. Ive noticed that the film and sports industries have seen a diversity of players entering the securitization arena: Dreamworks, Polygram, Englands Newcastle sports team, and Ascent Entertainment are all offering their own bonds. But in music securitization, specifically, its really only in the hands of just one group, your Pullman group. So why is music securitization different?

J:

J:

Some have noted that CAK Universal Credit Corp. is a strong competitor, because they have Kopplemans years of experience as former chairman of EMI, and the nearly unlimited resources that Prudential can funnel into a venture. Additionally, CAK has access to the details of the Bowie Bond deal. Were you expecting that this might happen at some point?

P:

Because stadium financing for a team is more akin to the combination of municipal bond financing and securitzation. So its more of a relationship with the

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investment bank.

J:

So those things are more comfortable with existing financing models? What about film securitization?

P:

Film is another example where youve seen its diversified. Its more of a banking function. Its short term, which is the opposite of our deals, which are long term. Its floating rate, which is the opposite of our deals, which are fixed rate. So because of that, youd see very few that would be able to do deals because you need studio credit. So for instance, Disney traditionally had a relationship with First Boston, so you see First Boston do a deal. Or someone has a relationship with Citibank, so they make a deal, thats what happens. These studios are already linked to banks, so its a comfortable move.

J:

and theres more upside for the record company on that side of the business than there is on the side of the established artist. For the established artist, its more of a banking functionpeople say thats why its a better fit, whether it be for the royalty streams or for the publishing income. Music is a better fit than TV and film for right now because in some cases, in music the copyrights are owned by the artist, whereas in almost all cases in film and TV, the work is owned or copyrighted by the studio and is a work for hire. So the artists may have a percentage interest but they wont have ownership or control. So thats why music is better. Better assets, more diversified, its a world-wide industry, world-wide cash flows, theyre more evergreen titles. The great music goes up in value overtime, whereas, for film, they traditionally drop in value over time.

J:

P: Exactly. J: Youve mentioned that securitization doesnt just

benefit the artist, it benefits the record company as well, creating a win-win deal. Whats the benefit for the record company?

The interesting thing is that people question the values promoted by commercializing intellectual property, but it turns out that the values promoted by securitization are likely the things that weve always wanted to promote: democracy and diversity. Definitely. N

P:

P:

They have more money in their coffers to offer other artists, as opposed to all of their money going out to one artist So you can sign on more new artists, Benefits of Music & Entertainment Future Royalties Securitization vs. Bank Loan or Publisher s Advance 1

FUTURE SECURITIZATION Non-recourse Fixed rate for life of deal Self-liquidating2 Long-term deal 10 year average life 15 year maturity Non-taxable self liquidating event, artist pays taxes as earned over years and interest is deductible Artist keeps 100 percent of copyright Audits done every year on sources of income Artist has all upside in the event of extraordinary new income If catalogue is worth twice as much in 10 years, it belongs to the artist Lower cost for administration Artist gets all black box income in the deal3 Artist picks up minimum of approximately 20 percent additional annual income Record royalties and publishing put in special purpose vehicle Corporations can do this transaction off balance sheet Liquidity and diversity Estate planning enables the artists heirs to have cash available for taxes so they wont have to sell catalogue

BANK LOAN Floating rate, if prime rate goes to 20 percent as in 1980, artist pays 20 percent plus spread over prime (i.e., 20 percent + 3 pts = 23 percent) All assets of artist at risk Bank lines typically limited to one year Longest banks go out is 1-5 years PUBLISHERS ADVANCE 5-year range Taxable event Publishers want to buy copyright Higher administrative cost, i.e., split higher to publishers for administration when they advance millions of dollars Publishers keep majority of black box in deal
1 Adapted from THE PULLMAN GROUP, LLC, BENEFITS OF MUSIC AND ENTERTAINMENT FUTURE ROYALTIES SECURITIZATION VS. BANK LOAN OR PUBLISHERS ADVANCE (1998) 2 [C]ollections are periodically paid out to holders of interests rather than reinvested in new receivables. Sam Adler, Using a Musicians Assets to Structure a Bond Offering, 13 No. 5 ENT. L. & FIN. 1 (1997). 3 Black box income is an entertainment industry term that is meant to express the income the record company is able to gain from activities other than direct sales of the artists recordings. The black box obscures the source of the income and eliminates the income by allocating expenses to the artist. John Jackson, Note, Royalty Securitization: Taking CABS to Bankruptcy Court, 209 THOMAS JEFFERSON L. REV. 209, 218 n. 51. In a securitization deal, black box income is minimized because the artist is now indirectly administrating. See Adler, 13 No. 5 ENT. L. & FIN. at 6.

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1 Phil Leggiere, Rebel Rebel: Rocking the Bond Market, SUCCESS, Jan. 1999, at 58. 2 See Daniel Kadlec, The Real Price of Fame, TIME, Aug. 17, 1998, at 39; Gregory Zuckerman, James Browns Got a Brand New Bag: Issuing Bowie Bonds, WALL ST. J., May 3, 1999, at C21. 3 See generally Nicole Chu, Note, Bowie Bonds: A Key to Unlocking, the Wealth of Intellectual Property, 21 HASTINGS COMM. & ENT. L.J. 469 (1999); Lisa M. Fairfax, When You Wish Upon a Star: Explaining the Cautious Growth of Royalty Backed Securitization, 1999 COLUM. BUS. L. REV. 441 (1999). 4 Fairfax, 1999 COLUM. BUS. L. REV. at 441, 452. 5 See id. 6 See id. 7 See Leslie Eaton, You Too Can Be Rated AAA, N.Y. TIMES, June 7, 1998, at 5. 8 See Jennifer Burke Sylva, Comment, Bowie Bonds Sold for Far More than a Song: The Securitization of Intellectual Property as a Super-Charged Vehicle for High Technology Financing, 15 SANTA CLARA COMPUTER & HIGH TECH. L.J. 195, 197, 203 (1999). 9 See Zuckerman, supra note 2. 10 See Alice Rawsthorn and Jeremy Grant, Bonds Have More Fun as Banks RocknRoll: Alice Rawsthorn and Jeremy Grant on Moves to Get Investors to Gamble on Rock, FIN. TIMES, Aug. 10, 1998, at 18. 11 See Irv Lichtman, Deals, Deals, Deals: Music & Media and League Firms Sign Em Up, BILLBOARD, Jan. 23, 1999, at 43. 12 See generally THE PULLMAN GROUP, LLC, BENEFITS OF MUSIC AND ENTERTAINMENT FUTURE ROYALTIES SECURITIZATION VS. BANK LOAN OR PUBLISHERS ADVANCE (1998) [hereinafter BENEFITS OF SECURITIZATION]. 13 See id. Specifically, the money received up-front by the artist from the sale of bonds is treated as a loan for tax purposes. See Chu, supra note 3, at 485. 14 See id. 15 See John Jackson, Note, Royalty Securitization: Taking CABS to Bankruptcy Court, 21 THOMAS JEFFERSON L. REV. 209, 218 (1999). 16 See id. 17 Jackson, supra note 15, at 218. 18 See BENEFITS
OF

Mar. 5, 1999, at C6. 23 See id. 24 Id. 25 See Bruce Orwall, Wall Street Bets on Entertainment Idols Earning Power, WALL ST. J., Sept. 26, 1997, at B1. 26 See id. 27 Instead, Nomura had only managed to make one asset backed loan to Rod Stewart, after considerable delay. See Jackson, supra note 15, at 222. 28 See Michael A. Hiltzik, Despite Hype, Royalty-Backed Bonds Havent Gone Platinum, L.A. TIMES, Jan. 8, 1999, at C1. 29 See David Bauder, Its Only Rock n Roll, but I Like It . . . as an Investment Finances, L.A. TIMES, Nov. 18, 1999, at C2. 30 See Dueling Dailies Clash on Jacko Bond, BONDWEEK, Dec. 21, 1998, at 2; Paul Tharp, Celeb-Bond Financiers Battle for Limelight, N.Y. POST, Dec. 17, 1998, at 46; Phyllis Furman, Deal Gone Bust: Jackos Music Bond Offering, DAILY NEWS, Dec. 16, 1998, at 36. 31 See Pullman Group files $2bn Suit Against Prudential Companies, ASSET FIN. INTL, Dec. 1, 1999, at 9. 32 Telephone Interview with David Pullman, Founder, Chairman, and CEO of the Pullman Group, LLC (April 2, 2000). 33 Id. 34 Id. 35 See David Pullman: 55 Million Dollar Man, MUSIC COPYRIGHT MATTERS, Oct. 1998, at 6. 36 Telephone Interview, supra note 32. 37 Phyllis Furman, Rock solid investment? David Pullman has a big new deal brewing for musicians, N.Y. DAILY NEWS, Oct. 26, 1998, at 28. 38 Telephone Interview, supra note 32. 39 Furman, supra note 37. 40 See Jon Birger, Will Bowie Banker Avoid Fall to Earth?: Pullman Gets His Calls to Stars Returned, but He Needs Deals to Fend Off the Critics, CRAINS N.Y. BUSINESS, Jul. 28, 1997, at 3. 41 Id. 42 Telephone Interview, supra note 32. 43 Id. 44 See Ross A. Snel, New Bowie Bonds Bank on Royalties From Motown Trio, WALL ST. J., Apr. 29, 1998, at C24. 45 Telephone Interview, supra note 32. 46 Id. 47 Id. 169

SECURITIZATION, supra note 12.

19 The SPV handles all of the copyright licensing issues, and then establishes a bankruptcy remote trust to issue the bonds. This complex two-tiered structure is what insulates the investor from the artists possible insolvency. See Jackson, supra note 15, at 212. Such a structure makes the underlying assets bankruptcy remote as opposed to bankruptcy proof. See Sylva, supra note 8, at 217. 20 See Jackson, supra note 15, at 227-28. 21 Fairfax, supra note 3, at 484. 22 Brenda Bouw, Bowie Banker Sees No Dip For Bonds, FIN. POST,

music

R
T

Concerts:

Rated or Raided?
hirty years ago, during a Doors concert, Jim Morrison pulled down his pants to reveal the bands fifth member.1 Twenty years ago, Mick Jagger straddled a giant inflatable penis on stage at a Rolling Stones concert.2 Lou Reed used to shoot up drugs on stage.3 These examples illustrate how rock n roll has a long past of pushing the norms of accepted behavior. Despite this history, many states have recently raced to propose concert-rating regulations in their legislatures. To some, the spark that lighted the fires was a year-long tour by the cross-dressing hard-rock group Marilyn Manson that ended in fall 1997.4

This conc er t h with as be THEM en ra likely , but ted R THEY taller by TH than are s EM. you. mar t e Don t wor r, older, r y, TH EY

First Amendment Implications of Concert-Rating

By Deborah Cazan

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Upon learning Mansons concerts featured the destruction of Bibles, the use of the American flag as toilet paper, and the screaming of obscenities as part of the groups tour, some state lawmakers felt compelled to take action.5 After attending Marilyn Mansons concert, Michigan State Senator Dale Shugars stated he found the performance obscene, gratuitous and completely lacking in social value.6 Shugars claimed Mansons sacrilegious antics, vulgar lan-

they violate the First Amendment.11 According to Nina Crowley, executive director of the Massachusetts Music Industry Coalition, a community cant take away free speech when they feel like it thats whats at stake here.12 As a result, Nina Crowley doesnt think a rating system on a government level would stand a constitutional challenge its censorship based on content.13 This Note examines the constitutionality as well as practicality of two different concert-rating statutes. San Antonio ordinance 61,850, the first attempt at concert-rating, has never been challenged c o n s t i t u t i o n a l l y. This Note asserts that if the ordinance were challenged, the Court would find it constitutionally valid on its face, despite the possibility of unconstitutional applications. However, some unconstitutional consequences remain. The second statute examined is one recently proposed by Senator Shugars in the Michigan state legislature. Like the San Antonio ordinance, this Note concludes that Senate Bill 239 would also withstand a constitutional challenge. This Note examines the history and structure of concert-rating bills. Next, it describes general First Amendment doctrine. Then it relates how the First Amendment affects the bills. Finally, it explores practical problems with and alternatives to regulated concert rating.

certain songs and musical artists.14 Recent attempts to regulate the music industry began in 1984 when the National Parent Teachers Association of America (NPTA) requested that the Recording Industry Association of America (RIAA) require record ratings.15 At that time, the RIAA ignored requests for a mandatory labeling system.16 However, the RIAA began to consider these labeling requests when a powerful citizens group, the Parents Music Resource Center (PMRC), formed and began to take action.17 Headed by Tipper Gore and containing ten other members who were the wives of either senators or other cabinet members, the PMRC disapproved of the way many of todays artists advocate aggressive and hostile rebellion, the abuse of drugs and alcohol, irresponsible sexuality, sexual perversions, violence and involvement in the occult.18 In a letter to the RIAA dated May 31, 1985, the PMRC made its own request for mandatory record ratings.19 The letter implored the RIAA to exercise voluntary self-restraint perhaps by developing guidelines and/or a rating system, such as that of the movie industry.20 An additional memorandum asked the RIAA, among other requests, to print lyrics on the album covers, devise a rating system to inform parents of which albums are suitable for children, place the rating marks on the covers of the albums, and rate music concerts.21 As a result of the PMRCs requests, the RIAA announced that its member companies such as BMG Music, Geffen Records, Motown, Elektra, and Arista would attach generic warning stickers, suggesting parental guidance, on some of their records.22 However, the PMRC was

You m more ay disag ree m o r a say i ts fo l, and r the best.

guage, sexual gestures, drug promotion, and portrayal of Adolf Hitler urging the audience on in chants of heil and we hate love; we love hate, offered very little quality.7 Subsequently, Shugars proposed a Michigan bill that could be the first volley of a long fight in state legislatures and, ultimately, on Capitol Hill.8 Opponents of concert-rating bills, however, stress that the government lacks the power to assume a guardianship of the public mind by regulating speech.9 As the United States Supreme Court has explained, the forefathers did not trust any government to separate the true from the false for us.10 Several music industry groups, including the Recording Industry Association of America (RIAA), are strongly opposed to the measures, believing

Context of Concert Rating

Since the dawn of rock n roll, people have asserted the immorality of
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Today, concert-rating bills are again circulating in several state legislatures. Michigan is at the forefront of this trend. The proposed Michigan bill does not proscribe a G, History and Structure of Concert- PG, PG-13, R, NC-17 rating system Rating Bills like the one used by the movie industry. Instead, it imposes notification Attempts at concert rating first standards on concerts of adult nature. began at a local level on November In 1997, Michigan State Senator 14, 1985, in San Antonio, Texas, Dale Shugars proposed Senate Bill when ordinance 61,850 was 239 to allow Michigan 33 passed. According to the ordicities and towns to l nance, it is illegal designate certain loca a t a for a music performances San egan b A t as harmful to s fir 5. s 8 g i n 9 i o t 1 h a minors. To attend, ild w er t r exas, in h c c l n a o a g concert-goers bill introat c io, T llegal for or le s n t t o n p t e n i r under eighteen duced in the d Attem a pa an A dere de it i t a S s u n m o n Pennsylvania o c ith ce r would have to n s w e el i i v a v d e n e t i l n n a d be accompastate legislaio or e of 14 a ncer t th nce has n e o t n n o o g nied by an ture, which was A no a c rdina he a e d o t s n r u e e e t a h adult.38 representative of T at ec . und b o s t r d o e n in g ia other regulatory However, the to m y challen uard g s . t a i l efforts, required opposition to this bill nder cene titutional u s b d o e labels on all records from venue operators, the music ecut cons s o n r e p c h i l d industry, and the American Civil containing lyrics that be been t e y who is under the Liberties Union forced Shugars to explicitly describe, has age of 14 and without a parent revise its original form.39 advocate or encourage The or legal guardian to attend a concert revised bill required, instead, that suicide, incest, bestiality, sadomasochism, rape or involun- that is considered obscene as to the warning, harmful to minors be tary deviate sexual intercourse or minors.34 In addition, if the concert printed on all tickets and advertising advocate or encourage murder, eth- is considered obscene for children, for concerts of adult nature.40 This nic intimidation, the use of illegal the ordinance requires that all revised bill, however, also failed to drugs or the excessive or illegal use advertising contain a parental advi- pass.41 of alcohol.29 Eleven other states sory and warning that no child under The newest version of the bill is a 30 introduced similar legislation. In the age of 14 will be admitted with- milder version of the original. It response to legislative threats of out a parent or legal guardian.35 In requires that if an artists record has governmentally mandated warning order to determine whether a concert a parental advisory notice printed on labels, the RIAA agreed to a new uni- is obscene, the ordinance sets forth the label, then the advertising and form warning sticker, which would an obscenity standard, discussed tickets to that artists concerts must be easier for casual consumers to later in the Note, that mirrors the also have the same warning label.42 identify.31 After the announcement Supreme Courts current standard Although Senate Bill 239 does not of the new warning label, most legis- for obscenity.36 Although the San attempt to restrict minors attenlatures dropped pending bills, Antonio ordinance is still good law, dance at concerts, it still raises conalthough a few states waited to drop its constitutionality has never been stitutional concerns because the
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not satisfied with this generic warning system,23 especially since some record companies initially refused to comply with the rating system.24 One month after the RIAA imposed the labeling system, the Senate Commerce Committee, five of whom were married to PMRC members, held hearings on the subject of record labeling systems.25 Due to concerns about violating the First Amendment,26 however, the hearings did not prompt any federal regulation of the RIAA or its members.27 Although the federal government was unwilling to impose regulations on the music industry at that time, state and local governments were not so restrained.28 A

the bills until certain of industry compliance.32 Although no state legislature has passed a record labeling law since, some are now considering concert labeling/rating laws.

challenged because no one has yet been prosecuted under it.37

state government is attempting to place restrictions on speech. Whereas the warning on the artists album originates from the record industrys self-regulation, Michigan Senate Bill 239 proposes governmentally imposed regulations on speech. Therefore, the proposed bill is subject to First Amendment scrutiny. The question now is whether the San Antonio ordinance and the proposed Michigan Senate Bill are constitutional. In other words, can the government, in accordance with the First Amendment, restrict minors attendance at obscene concerts, as per the San Antonio ordinance? And can the government, in accordance with the First Amendment, require warning labels on tickets and advertising of concerts of adult nature, as per both the San Antonio ordinance and Senate Bill 239?

individual dignity, a capable citizenry, and each individuals right to make his or her own political decisions.47 Freedom of speech might best serve these societal goals when it induces a condition of unrest, creates dissatisfaction with conditions as they are or even stirs people to anger.48 If there is a bedrock principle underlying the First Amendment, it is that the government may not prohibit the expression of an idea simply because society finds the idea itself offensive or disagreeable.49 After all, one mans vulgarity is another mans lyric.50 The constitution leaves matters of taste and style largely to the individual.51

that allowed customers to view a live nude dancer.57 The owners were subsequently convicted under a zoning ordinance prohibiting live entertainment.58 Reversing the convictions, the Court held that nude dancing was a form of expression protected by the First Amendment.59 Musical lyrics and concerts are entitled to First Amendment protection both because they constitute political speech and because music is a form of entertainment.60 In Ward, the Supreme Court explicitly stated that music is one of the oldest forms of human expression.61 In that case, the Court upheld New York Citys sound amplification guideline for live music performances.62 The Court stated that throughout history, rulers have known [musics] capacity to appeal to the intellect and to the emotions, and have censored musical compositions; [however] the Constitution prohibits any like attempts in our own legal order.63 Therefore, as an entertaining form of expression and communication, music is covered under the First Amendments blanket of protection.64

Extent of First Amendment Protection

The Supreme Court has held that protected expression is not limited to the spoken word.52 For instance, conduct such as nude dancing53 and flag burning54 has been held to be expressive. In deciding whether conduct contains sufficient expressive elements to warrant First Amendment protection, a court must conclude that the actor intends to convey a particular message and that the likelihood [is] great that the message [will] be understood by those who [view] it.55 The Supreme Court has acknowledged that First Amendment protection extends not only to political speech but also to entertainment in the form of movies, radio and television broadcasts, live entertainment, and musical as well as dramatic works.56 For instance, in Schad v. Borough of Mount Ephraim, the operators of an adult bookstore installed a coin-operated machine
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General Purpose of the First Amendment

The First Amendment states that Congress shall make no law abridging the freedom of speech.43 As the Supreme Court observed, the very purpose of the First Amendment is to foreclose public authority from assuming a guardianship of the public mind through regulating the press, speech, and religion.44 In fact, an important difference between a democratic society and a totalitarian government is that American people have an absolute right to propagate political opinions the government finds wrong or even hateful.45 A principal function of free speech under our system of government is to invite dispute.46 Freedom of expression and public discussion lends itself to Americas societal goals of

First Amendment Implications for Government Regulation

The First Amendment limits the governments power to restrict expression because of its message, its ideas, its subject matter, or its content.65 It is a central tenet of the First Amendment that the government must remain neutral in the marketplace of ideas.66 However, the government may still impose reasonable restrictions on the time, manner, or place of protected speech, provided the restrictions are justified without reference to the content of the regulated speech, that they are

pr amplification guideline for live music performances.70 This regulation was not aimed at the content or the message of the music, but solely at the manner in which it was conveyed.71 The city sought to control noise levels at bandshell events by ensuring that the volume was loud enough to satisfy the audience without being so loud as to intrude upon the neighboring residents.72 The court found the citys guideline was narrowly tailored to serve the substantial and content-neutral governmental interests of avoiding excessive sound volume and providing sufficient amplification within the bandshell concert ground, and the guideline leaves open ample channels of communication.73 Therefore, the regulation was a valid time, place, or manner regulation under the First Amendment.74
Although the general premise of

narrowly tailored to serve a signifi- the First Amendment is that the gov- speech to any person who is in a pubcant interest, and that they leave ernment cannot restrict the ideas or lic place or calling that person by an open ample alternative channels for content of speech,75 this protection is offensive name.85 The Supreme communication of the informa- not absolute at all times and under Court upheld his conviction based on tion.67 Otherwise, government reg- all circumstances.76 There are cer- the fighting words doctrine.86 ulation of speech on the basis of its tain categories of speech that can be Although Chaplinsky has never been subject matter slip[s] from the neu- criminalized or silenced without rais- overruled, the Supreme Court has trality of time, place, and circum- ing any Constitutional problem. not sustained a conviction based on stance into a concern about con- Content-based restrictions can apply the fighting words doctrine since. tent.68 These types of permissible to obscenity,77 fighting words,78 Along with fightregulations are also known as con- speech that incites illegal coning words, speech 79 y tent neutral restrictions. duct, and defamathat advocates h ma c e 8 0 e p In Ward v. Rock Against Racism, t i o n . the use of force me s ntext a o s c the Supreme Court upheld a regulaor of law violae , th one e b c n a i t n s tion of material, protected tion . . . [and] is audie rotection is well-e e l h i t by the First directed to at ch g on ent p ically, it n d i m e d t d n c n Amendment, inciting or if e Depe irst Ame ment Spec ech is dir d n . r e finding the restricp r o d u c i n g e F Am d pe rit oth e t s e n t s a c r n m i i e F tion to be contentimminent ot in hen cer ta d less is dir n h c t 69 e u e neutral. lawless action As b spe hat w e af ford e t m d a e and is likely to incite or described above, the lish ay b the s m n e t i h produce such action, is excluded Court upheld New nw a ren, h d t York Citys sound These cate- from First Amendment protection.87 ction

ote

gories of speech find no shelter under the protective wing of the First Amendment because they do not contribute to the marketplace of ideas.81 In fact, any benefit that can be derived from words of such slight social value . . . is clearly outweighed by the social interest in order and morality.82 The fighting words doctrine excludes from First Amendment protection speech which by its very utterance . . . tend[s] to incite an immediate breach of the peace.83 For instance, in Chaplinsky v. State of New Hampshire, a Jehovahs Witness told the Rochester City Marshall he was a god damned racketeer and a damned Fascist and the whole government of Rochester are Fascists or agents of Fascists.84 The Jehovahs Witness was subsequently convicted of violating a New Hampshire statute that prohibited addressing offensive
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The Supreme Court first articulated this standard in Bradenburg v. Ohio.88 There, the Court found that a speaker at a Ku Klux Klan rally was merely advocating an abstract teaching rather than preparing a group for violent action and steeling it to such action.89 Therefore, the speech was not directed to inciting or producing lawless action, nor is it likely to incite or produce such action.90 Since the standard articulated by the Court was not met, the speech was not advocacy of illegal conduct and was consequently protected by the First Amendment. Malicious false statements of fact are also excluded from First Amendment protection.91 New York Times Co. v. Sullivan dictates that a false statement of fact about a public figure on a public issue is not protected by the First Amendment if the statement was made with actual malice.92 A statement is made with

actual malice if it was made with knowledge that it was false or with reckless disregard of whether it was false or not.93 In that case, the police commissioner of Montgomery, Alabama, sued the NEW YORK TIMES because it reported that he had arrested Dr. Martin Luther King Jr. seven times, when actually he arrested him fewer than seven times.94 The Court found the speech was protected by the First Amendment because the statement was not made with actual malice.95

also to be determined under contemporary community standards.102 A few examples of patently offensive sexual conduct include descriptions of ultimate sexual acts, normal or perverted, actual or simulated representation or descriptions of masturbation, excretory functions, and lewd exhibition of the genitals.103 The final inquiry is whether the speech, taken as a whole, has serious literary, artistic, political, or scientific value.104 Unlike the first two obscenity criteria, this third factor is judged not by individual community standards, but by whether a reasonable person would find such value in the material, taken as a whole.105 The danger in using the community standard here is that a jury member could feel obligated to follow prevailing local views on value instead of considering whether a reasonable person would value the work.106 In other words, the value of a work should not vary from community to community based on the local degree of acceptance.107 The materials will only be deemed obscene, and the state will only be permitted to regulate the materials, if all three elements are present.108

established that when certain speech is directed at children, it may be afforded less First Amendment protection than when the same speech is directed at adults.113 One example of that phenomenon is that some speech, which is merely indecent when directed at adults, and thus constitutionally protected, is deemed obscene when directed at minors. Unlike obscenity, indecency does not have to appeal to the prurient interest.114 With respect to minors, however, indecent speech may qualify as obscene. In order to determine whether indecent material is obscene as to minors, the same three-step test set forth in Miller115 is applied, with one small change.116 The first step becomes whether the average person, applying contemporary community standards would find that the work, taken as a whole,117 appeals to the sexual interests . . . of . . . minors.118 In Ginsberg v. State of New York, the Supreme Court held that states have the power to adjust the definition of obscenity by permitting the appeal of this type of material to be assessed in terms of [what might appeal to] the sexual interests . . . of . . . minors.119 States have that ability to adjust the definition of obscenity because the power of the state to control the conduct of children reaches beyond the scope of its authority Thus, identical over adults.120 speech may be afforded First Amendment protection when directed at adults but denied protection when directed at minors.121

Regulation of Obscenity
Attempts to regulate music lyrics and concerts are based mainly on the theory that some music lyrics are obscene, and obscenity is not protected by the First Amendment of the Constitution. The Supreme Court has set out a three-step approach in order to determine whether certain speech is obscene.96 The first issue the trier of fact must determine is whether the average person [rather than a particularly sensitive or particularly insensitive person], applying contemporary community standards would find that the work, taken as a whole, appeals to the prurient interest in sex.97 In determining whether the material is erotic or sexually stimulating,98 the Court mandated reliance on community standards, believing people in different states vary in their tastes and attitudes.99 The Court wanted to make certain that diversity was not strangled by the absolutism of imposed uniformity.100 The second obscenity inquiry is whether the speech portray[s] sexual conduct [specifically defined by applicable state law] in a patently offensive way.101 This inquiry is

Obscenity Depends on Context

Words vary in meaning based on context.109 Therefore, First Amendment protection of arguably obscene speech depends heavily on the context in which it is said.110 Often, the medium and the audience are important considerations when determining whether arguably obscene speech is constitutionally protected.111 Depending on the audience, the same speech may merit First Amendment protection in one context but not in another.112 Specifically, it is well175

Regulating Speech Deemed to be Obscene When Directed at Minors

States are afforded greater power

to regulate obscene speech available to minors than if the speech were available only to adults.122 However, the mere fact that a statutory regulation of speech was enacted for the important purpose of protecting children from exposure to sexually explicit material does not foreclose inquiry into its validity.123 Courts have held that a state has a compelling interest in regulating material that is obscene to minors but the means of regulation must be narrowly tailored to accomplish that state purpose without unduly interfering with adult access to protected material.124 The state has a compelling interest in regulating obscenity as to minors when it finds that exposure to obscene material might be physically or psychologically harmful.125 The Court does not require that the state produce scientific proof of the effects of obscenity on minors.126 Ginsberg found the state had a compelling interest in regulating material which was obscene as to minors.127 In that case, the Court upheld a statute that prohibited the sale to minors of material which was deemed obscene with respect to them.128 Specifically, the Court held that the state has an interest to protect the welfare of children and to see that they are safeguarded from abuses which might prevent their growth into free and independent well-developed men and citizens.129 After deciding a state has a compelling interest in regulating obscenity as to minors, a court will determine whether the regulation was narrowly tailored to accomplish its purpose without interfering with adult access to protected material. The Court in Ginsberg found the regulation was narrowly tailored to

accomplish its purpose of protecting minors welfare.130 The regulation was narrowly tailored because the state regulated material that was obscene to minors, but did it in such a way so as not to interfere with adults access to material that was merely indecent as to them.131 By protecting children from potentially harmful material without preventing adult access, the state accomplished its goal of narrowly tailoring the regulation.132 In Butler v. Michigan, on the other hand, the state criminalized distribution of materials to the general public that were found to have potentially harmful influence on minors.133 The Court found the law to be insufficiently tailored since it denied adults their free speech rights by allowing them to read only what was acceptable for children.134 Justice Frankfurter described the situation at hand using the frequently quoted statement, [s]urely this is to burn the house to roast the pig.135 In other words, the Court did not allow the government to reduce the adult population . . . to . . . only what [was] fit for children.136 Similarly, in Reno v. American Civil Liberties Union, the Supreme Court decided that two provisions of the Communications Decency Act of 1996 (CDA) violated the First 137 Amendment. The Court based this decision, in part, on the CDAs suppression of material that adults have a constitutional right to send and receive.138 Aside from unconstitutional interference with protected adult material, a regulation can also be struck down if it is overbroad. The First Amendment overbreadth doctrine is based on the theory that a person whose expression is constitutionally
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protected may well refrain from exercising [his or her] rights for fear of criminal sanctions by a statute susceptible of application to protected expression.139 However, a court will only invalidate a statute based on overbreadth if it inhibits a real and substantial amount of protected material.140 In other words, even if there are a few situations where a statute might infringe on legitimately protected First Amendment speech and conduct, a court will not invalidate it if the remainder of the statute covers a whole range of easily identifiable and constitutionally proscribable . . . conduct.141 Moreover, a statute should not be held facially invalid unless the court is unable to limit its construction.142 In Erznoznik, the Supreme Court held that a statute which prohibited drive-in theaters from showing films containing nudity when its screen was visible from a public street or place was unconstitutional.143 The state passed the first part of the twopart test in that it had an interest in protecting the well-being of its youth, but in this case the regulation was held to be unconstitutional because it was not narrowly tailored to accomplish its goals.144 The regulation was overbroad because instead of being directed against sexually explicit nudity, it forbade display of all films containing any uncovered buttocks or breasts, irrespective of context or pervasiveness.145 The implication of the ordinance was such that minors would be prohibited from viewing a babys buttocks, newsreel scenes from art exhibits, nude bodies of war, and so forth.146 Not all nudity is obscene with respect to minors, and speech cannot be suppressed solely to protect the young from ideas or images that a legislative

police reports, or accounts of criminal obscenity as to minors. As with body thinks is unsuitable.147 In New York v. Ferber, the deeds, or pictures, or stories of deeds material obscene for minors, any appellee claimed a statute prohibit- of bloodshed, lust or crime; is guilty interference with adult access is ing persons from knowingly promot- of a misdemeanor.155 The Court purely accidental and can therefore ing a sexual performance by a child found this specification of publica- be justified under a time, place, manunder the age of 16 by distributing tions too uncertain and indefinite to ner analysis. In other words, conmaterial which depicted such a per- justify the conviction of [the] peti- tent-based regulation imposed on formance was overbroad because, in tioner.156 For instance, descriptions childrens access to certain material addition to pornography, it would bar of war horrors, which are otherwise is actually subject to a content-neudistribution of material with serious unexceptionable, might be found to tral time, place, manner analysis in literary, scientific, [or] educational be vehicles for inciting violent and the context of adults since any intervalue.148 The Court concluded the depraved crimes.157 Due to the ference with adult access is purely statute was not substantially over- vagueness of this regulation, a dis- accidental. Under the time, place, broad.149 Its legitimate reach, which tributor of publications could not rea- manner analysis, the court will balis hard core child pornography, sonably be expected to foresee and ance the extent of the accidental guard against violations.158 As a interference with adult access to dwarfs its arguably result, materials that would material with the states in preventimpermissible appliA s tate otherwise be ing access by minors. Three cases cations.150 So, must e xpres that demonstrate this analysis are although a miniensu s r i e o n FCC v. Pacifica, Sable Communiany l mal amount of that is no imita t l i m t o cations of Cal. v. FCC, i protected expreso vag ts fr tion notic e o u e n e d e of and Reno v. sion such as what om of ex or indefin freedom ACLU.162 of material in medite. A pres acts s w ion m st ill be In Pacifica, ical textbooks or NATIONAL ust g atute punis the Court found i GEOGRAPHIC could arguably fall withve fa hed. i r George Carlins in the reach of the statute, the Court a c c e p t a b l e 12-minute comedy found this to be a statute that could under 1141 risk cenmonologue entitled easily be limited by the lower sorship by a bookdealer who is 151 unsure where to draw the line Filthy Words could courts. In other words, any danger of overbreadth could be cured on between the allowable and the be regulated when broadcast on the forbidden material. 159 radio.163 Although the Court found a case-by-case analysis.152 the broadcast was not obscene, even In following the overbreadth docContent-Based Regulation is to minors, regulation was still pertrine, a state must ensure any limimissible because the state had an tation on freedom of expression is not Permissible as to Minors 153 interest in limiting minors access too vague or indefinite. A statute Even if Speech is Not Deemed vulgar and offensive material.164 that limits freedom of expression Obscene as to Minors The states interest focused on promust give fair notice of what acts will The First Amendment does not tecting minors from potentially be punished.154 In Winters v. People of State of New York, a bookdealer prohibit all governmental regulation harmful material, especially considwas convicted of possessing and that depends on the content of the ering that broadcast is a uniquely intending to sell magazines whose speech.160 Specifically, vulgar and pervasive presence that confronts content violated 1141 of the New offensive speech that is not obscene people in the privacy of the home, York Penal Law. Section 1141 stated even as to minors can be unprotected and that broadcasting is uniquely that anyone who intend[s] to sell depending on its context.161 In this accessible to children.165 In addiany book, pamphlet, magazine, line of cases, the Court states that tion, the state had an interest in regnewspaper or other printed paper material relating to sex or dirty ulating this broadcast because the devoted to the publication, and prin- words can be regulated based on its broadcast spectrum is a scarce cipally made up of criminal news, content even without a finding of expressive commodity.166 The Court
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then balanced these state interests with the extent of the accidental interference with adult access to material, which was not great because the regulation did not involve a complete ban on the material, and found that the regulation was constitutional.167 However, in its conclusion, the Court emphasized the narrowness of its holding in light of the limited context of broadcasting.168 In Sable, a company that was engaged in the phone sex business challenged an amendment to the Communications Act that prohibited all indecent and obscene interstate commercial messages.169 This case was distinguished from Pacifica because the material in Pacifica was not completely banned, unlike the dial-a-porn in this case. Another distinction between Sable and Pacifica is that here, in contrast to the radio broadcast, the listeners were required to take affirmative steps to receive communication.170 Placing a telephone call is not the same as turning on a radio and being taken by surprise.171 Nonetheless, the Court agreed the state did have a interest in protecting minors from potential harm.172 With respect to regulation of indecent speech, the government relied on Pacifica to find that the state objective was to limit minors access to the material, and that any interference with adult access was purely accidental. Because the interference with adult access was accidental, the Court performed a time, place, manner analysis. Since the regulation effected a complete ban, the extent of the interference with adult access outweighed any government interest. The Court concluded that the regulation was unconstitutional.173

Most recently, the Court decided Reno v. ACLU.174 In that case, the Communications Decency Act of 1996 made criminal the knowing transmission of obscene or indecent material via the Internet to anyone under 18.175 This Court was also willing to use a time, place, manner analysis because although the regulation was content-based, its intent was to protect children, not limit adult access to the material. Although the government has an interest in protecting children from potentially psychologically harmful material, the Court found the regulation to be unconstitutional.176 The Court did not uphold the regulation because the governments interest was not enough to justify the extent of the accidental interference with adult access to the material.177 The Court found that there were other, less restrictive means available to protect minors from potentially harmful material on the Internet.178 In addition, the Internet provides unlimited capacity for low-cost communication, so the state lacks the same interest in regulating a scarce expressive commodity like the radio spectrum in Pacifica.179

neutral time, place, or manner restrictions such as those in Ward v. Rock Against Racism.182 These regulations are based on the actual subject matter or the content of the message. Therefore, in order for the statute and ordinance to be upheld, they must narrowly regulate only a certain type of speech that has been removed from First Amendment protection.

As Both a Political and Entertaining Form of Speech, Music is Protected by the First Amendment
To say that music does not classify as political speech is to ignore folk music from the 1960s, rap music of today, and many other genres in between.183 Music during the 1960s and early 1970s teemed with politically charged messages about civil rights and war.184 Another example where political messages are embodied in music lyrics is urban rap music.185 Controversial rappers are some of the most ardently political musicians. Many drive home a message of social justice and racial equality. 186 Since music is clearly a form of political speech, it enjoys First Amendment protection.187 In addition, as stated above, music finds constitutional protection as an entertaining form of expression and communication.188

First Amendment and State Legislation

As an entertaining, artistic, and political combination of both conduct and speech, music concerts are protected by the First Amendment.180 Because music concerts are protected by the Free Speech Clause of the First Amendment, the government is limited in the restrictions it can place on them.181 The restrictions placed on music concerts by the San Antonio ordinance and the proposed Michigan statute are not content178

Government Attempts to Regulate Music Have Been Based on the Lack of Constitutional Protection Afforded to Obscenity
Attempts to regulate music lyrics and concerts are based primarily on the theory that some music lyrics are

obscene, and obscenity is arguably recognizes rap as a valid artistic value.202 In a noteworthy dictum, not protected by the First achievement.196 Therefore, the the appellate court stated, we tend Amendment of the Constitution. experts concluded 2 Live Crews to agree with the appellants conThus, an obscene song or obscene music did possess serious artistic tention that because music posmusic concert would not warrant value.197 Finally, Carlton Long, a sesses inherent artistic value, no protection under the First Rhodes scholar with a Ph.D. in polit- work of music alone may be Amendment and could be regulated ical science, testified that 2 Live declared obscene.203 by the government. In practice, Crews lyrics contained political sigthough, no work of nificance [and] exemplified numer- Constitutionality of music alone has yet ous literary conventions, such as San Antonio Ordinance Attem been held to be alliteration, allusion, p t s obscene even for metaphor, to re The San Antonio ordinance is base g u d l 189 a minors. Using probably constitutional on its face lyrics primarily te music the Miller threelyr since its test for obscenity on th a e the ics and c pr ote re obsce part obscenity mirrors the once ne, a or y t cted r nd o test, federal obscenity test Cons by t bsce hat som ts are t i h t u e e nity courts have tion set forth in musi Fi musi c c alo . In pra rst Ame is ar gua considered Miller with the bly n ne ha ctice ot , tho ndment whether a parvarying obscenity s yet ugh, of t been ticular recording was language set forth he no held w t o obscene, but ultimately found that ork in Ginsberg.204 In be ob o f scen the state failed to prove the recording rhyme, and Ginsberg, the Court e eve 190 198 n was obscene. personification. upheld a New York Skyywalker Records, Inc. v. Navarro was decided on June 6, 1990, and was the first time a federal court ever considered whether a musical composition was obscene.191 Focusing solely on the lyrics and not the instrumental music that accompanied the lyrics, the judge determined that As Nasty As They Wanna Be, a record by 2 Live Crew, was obscene under the Miller test for obscenity.192 The plaintiffs, 2 Live Crew and their record company, produced several expert witnesses.193 Dr. Mary Haber, a psychologist testified the recording did not appeal to the average persons prurient interest.194 Two additional expert witnesses, who were familiar with the origins of rap music, discussed 2 Live Crews innovations within the rape genre.195 In addition they noted that a Grammy Award for rap music had recently been introduced, which indicated that the recording industry On the other hand, the defendant produced no expert witnesses as to the prurient interest nor did he produce expert witnesses as to the literary, artistic, or political value of the music.199 In fact, defendants only evidence was a tape recording of the music itself. Nonetheless, relying solely on his own expertise, the judge determined that the average person, applying contemporary community standards would find that As Nasty As They Wanna Be appealed to the prurient interest and as a whole lacked serious literary, artistic, political, and scientific value.200 On appeal, the federal district courts obscenity determination was reversed.201 The appellate court reversed because it found the record was insufficient to assume the trial court judge had the artistic or literary knowledge or skills to determine whether a work lacks serious artistic, scientific, literary or political
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statute prohibiting the sale of obscene material to minors under 17.205 Similarly, the San Antonio ordinance attempts to regulate minors exposure to obscene material that could have potentially harmful effects.206 A court would probably find that San Antonio has a compelling interest in protecting the physical and psychological well-being of its youth and can therefore regulate obscenity207 as long as the means of regulation are narrowly drawn to accomplish that state purpose. Thus if the San Antonio concert-rating regulation were challenged, the state would merely have to show that it was rational to conclude that material depicting sadistic, masochistic or violent sexual relationships,208 for instance, might be harmful to the psychological well-being of children. A court will give great deference to this determination without

requiring any scientifically certain evidence linking obscenity and moral development.209 In addition, the regulation must be narrowly tailored to serve that interest if it is to withstand a constitutional challenge. With this requirement in mind, a state government must consider the possible consequences on constitutionally protected speech when it adopts regulations and procedures for dealing with obscenity.210 The court must consider whether the regulation of unprotected obscene as to minors speech would have a chilling effect on other protected and valuable speech.211

deemed harmful to them, the law also limited adults access to material that was protected in the context of adults. On its face, the San Antonio ordinance allows material obscene as to minors to be limited from minors while still remaining available to adults. However, there is speculation that a regulation such as this, if enforced, would have unconstitutional consequences by eventually limiting adults access to protected material. One source for this speculation is that on December 2, 1998, Pearl Jam announced the band would not

State regulation of obscenity must conform to procedures that will ensure against the curt ing c n An te are co t tailment of test to concerts a n are S e s m t e u e r h t l t e a p t c f i s m n constitutionalwould fail to i co G th an i P k ven g i w c a E h o s s c R ly protected result in a findtone d Mi l problem l. S e a p r s e a e o h h n p t expression, ing of obscenity ted ctica in ge give a a r r d s l p X n u o o i which is often is that it would are thing gulat ng; you c e e r m o g separated from be extremely difficult to s ngi d a ratin n h a c , obscenity only by a show that a musical concert does not d and ening i v u l e f institutes a have serious literary, political, or dim and uncertain one g n i 212 t concert-rating sys- artistic value.220 As one commentaline. In fact, ra tem.215 Nina Crowley argues that tor has defined the term, a work obscenity laws often run the risk of suppressing protected expression by allowing the hand of the censor to become unduly heavy.213 In the case of the San Antonio concert-rating regulation, where the state government is regulating material that is obscene to minors, it is important that the regulation be narrowly tailored so as not to interfere with adults access to protected material. For instance, the material in Ginsberg, which was only judged obscene as to minors, was still available to adults.214 On the other hand, the law in Butler was held unconstitutional because while limiting minors access to material that was if concert-ratings happen on a wide scale, some music will disappear. If Marilyn Manson cant play live, his record company cant make any money.216 However, none of these regulations suggests that Marilyn Manson cannot play live. Even if a court finds the San Antonio ordinance to be constitutional on its face, a constitutional application of the three-part Miller test should result in the conclusion that almost no imaginable concert could be deemed obscene, even as to minors. In accordance with the first part of the test, the fact finder must determine whether the material appeals to the prurient interest of a
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minor, meaning that it [is] intended to cause sexual stimulation.217 One way to determine whether material is intended to cause sexual stimulation is to examine the manner in which the materials are marketed.218 Just as rock and rap albums are marketed and sold as musical entertainment, rather than adult material, so are rock, rap, and other musical concerts.219 If the concerts were truly intended to cause sexually stimulation, it is inconsistent that they be marketed as musical entertainment rather than as adult mateplay in any state rial. proe h t w h i c h A second reason e and r e e h c t that applying the inan nal, d o r i t o t r u t e Miller obscenity onio nsti onc

has serious value if the intent is to convey a literary, artistic, political, or scientific idea, or to advocate a position.221 It is a relatively safe assumption that musicians who perform in concert do intend to convey an artistic idea.222 In addition, experts can testify that even vulgar lyrics can contain political significance [and] exemplified numerous literary conventions, such as alliteration, allusion, metaphor, rhyme, and personification.223 Another reason San Antonio would not be able to show that a music concert is obscene, even as to minors, is that it would be almost impossible to determine that a con-

cert taken as a whole appeals to the prurient interest of a minor or that the concert taken as a whole lacks serious literary, artistic, [or]political . . . value. Even if the fact-finder decides certain lyrics to a song appeal to the prurient interest of a minor, a song as a whole might not since its vocal presentation and melody [also] contribute to its meaning.224 Likewise, just as magazines comprised of separate articles are considered whole works, an album made up of distinct songs might also be considered as a whole.225 It follows that it will be very difficult to determine that a concert with multiple lyrics, multiple melodies, multiple vocal presentations, and multiple actors each performing in their own way, taken as a whole, appeals to the sexual interests of minors, and lacks serious literary, artistic, [or] political . . . value. 226 Under the Miller test for obscenity, it is very difficult to imagine any concert that could be classified as obscene. This is theory is supported by the fact that since the ordinance was enacted in 1985, no one has ever been prosecuted under it. As discussed above, it is unlikely that a concert would fit the definition of even one of the Miller prongs. It is even more unlikely that a concert would meet the requirements of all three of the Miller prongs, which would be absolutely necessary before a court could say the concert was obscene. Thus, if San Antonio were to ever prosecute a party under this ordinance, and if that party were found to have violated the ordinance, it would most likely mean there was an unconstitutional application of San Antonio ordinance 61,850. A successful prosecution using a Miller analysis is highly unlikely. If

San Antonio wanted to successfully regulate minors attendance at certain concerts, the city should have written an ordinance that did not require the application of the Miller obscenity test. For instance, San Antonio could have written an ordinance that limited minors access to concerts that are vulgar and offensive, and that ordinance would then be subject to the same time, place, manner-type analysis that was used in Pacifica. The time, place, manner analysis appropriate because although the regulation would be content based with respect to childrens access, it would only be an accidental interference with adults access to the material. The city would argue that the purpose behind the ordinance is not to limit adult access to the concerts, but simply to limit minors access to concerts that contain potentially harmful material. A party challenging the new ordinance would, of course, argue that Pacifica has a narrow holding limited to the context of broadcasting. However, courts are likely to be sympathetic to a regulation whose purpose is to protect minors. That being the case, the court would use the same time, place, manner analysis as used in Pacifica. The states interest in its minors would be balanced against the extent of the accidental interference with protected adult material. Assuming adults still had access to the concerts, a court would find that the ordinance is only a slight interference. Finally, the court will determine that the citys interest in protecting the children does justify the slight interference to adult access. In sum then, as written, the San Antonio ordinance is constitutional on its face because the city would
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have a compelling interest in regulating obscenity and the ordinance is narrowly tailored so as to not interfere with adults access to protected material. However, the ordinance really has no practical use if analyzed using the Miller test for obscenity. When Miller is applied in the context of musical performances, there are almost no imaginable concerts that could, under a constitutional analysis, ever be found obscene. The only way San Antonio could constitutionally regulate minors access to certain concerts is if the city wrote an ordinance that could be analyzed under a time, place, manner analysis similar to that in Pacifica.

The Constitutionality of the Proposed Michigan Senate Bill 239

Senate Bill 239 appears less intrusive than the San Antonio ordinance since it is regulating material that was judged by the music industry itself, rather than by a government official. It almost seems logical to extend the self-imposed warning labels placed on records to the tickets and advertising for concerts performed by those artists. However, a statutes constitutionality must be based on something more substantial. To reiterate, music concerts are protected by the Free Speech Clause of the First Amendment, and the government is limited in the restrictions that can be placed on them.227 Since the proposed Michigan statute is not a content-neutral restriction, it must regulate only speech that has been removed from First Amend-ment protection.228 At first glance, there appears to be a problem with the proposed statute

because it is content-based regulation, yet it does not restrain material deemed to be obscene even as to minors. Instead, Senate Bill 239 places restrictions on material on which the RIAA has already placed parental warnings. However, material deemed to have explicit content by the RIAA is not necessarily the same as the Courts definition of obscenity; therefore the proposed statute is in danger of regulating material that is protected by the First Amendment. However, as in the Pacifica, Sable, Reno v. ACLU line of cases, contentbased regulation of material, otherwise protected by the First Amendment, is possible. In the case of Senate Bill 239, the government would argue that the purpose behind the statute is not to limit adult access to the concerts, but simply to limit minors access to concerts that contain material potentially harmful to minors. Therefore, this statute only accidentally interferes with adult access to material and should be analyzed using a time, place, manner analysis. A party opposed to the statute would try to distinguish it from Pacifica, which is a case where the content-based regulation of constitutionally protected material was upheld. Unlike the broadcast spectrum, concert halls and arenas are not such a scarce expressive commodity. In addition, the medium of communication is more similar to that in Sable than in Pacifica because concert-goers have to take affirmative steps to attend a concert; this medium of expression is not thrust upon unwilling listeners in the privacy of their home. Even so, a court using a time, place, manner analysis would proba-

bly conclude that this regulation is constitutional by balancing the states interest in its minors with the extent of the accidental interference with adults access to protected material. Unlike Sable, this statute does not completely ban the material; the warning labels on the advertisements and tickets are only a slight interference with adult access. Therefore, a Court would probably find the states interest in protecting the children does justify the slight interference to adult access. In sum, then, under the Pacifica, Sable, Reno v. ACLU line of cases, Senate Bill 239 would probably withstand a constitutional challenge.

particular, is that simply verifying the age of concert-goers at an adult performance could take up to eight hours.233 Finally, there is a question to the practicality of putting the warning on the ticket, as proposed in the Senate Bill 239, since it wouldnt be seen until after it was purchased.234

Alternatives to Government Regulation

Alternatives to government regulation of concerts do exist. Hilary Rosen, president and CEO of the RIAA, said she would oppose any attempts to restrict minors from attending rock concerts but would not object to an efficient [selfimposed] parental warning system similar to the one her organization established for albums 12 years ago.235 Mark Michaelson, aide to Senator Shugars, agreed that if the industry comes up with something that works and will be observed, that will be a great thing too.236 Since at least 1997, people in the concert industry have been evaluating concert-rating proposals in an attempt to avoid restrictive legislation.237 The proposals range from an industry-wide self-imposed obscenity warning labels to self-imposed imposing ratings that mirror current movie ratings.238 November 1, 1968, marked the beginning of the voluntary film rating system of the motion picture industry.239 Before that date, the Motion Picture Association of America (MPAA) only went so far as approving or disapproving of the content of film.240 In 1968, however, the MPAA decided to give movies letter ratings based on theme, language, nudity and sex, violence, and how each element was treated in each

Practical Problems Associated With Concert Rating

Even if the San Antonio ordinance and the proposed Michigan statute are constitutional, there are practical problems with implementing concert-rating regulations in general. Gary Bongiovanni, editor of the American music-trade magazine POLLSTAR, doubts there is any way to implement such regulations.229 He reasons that rock concerts are fluid and changing; you could give the Stones a PG rating one evening, and something X-rated happens the next.230 Bands often change their set lists and onstage routines, and there is concern as to whether a ratings system could respond to such variables.231 A crucial difference between concerts and movies, which are currently subject to private regulation, is that [concerts] are live, so a band could change its act to get a PG rating and then, when onstage, give the fans an R-rated version.232 Another difficulty with implementing the San Antonio ordinance, in
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individual film.241 Jack Valenti, president of the MPAA at the time, explained that the ratings provide advance information to enable parents to make judgments on movies they wanted their children to see or not to see.242 There are other industries that have also implemented successful self-imposed rating systems. For instance, the computer industry rates its games.243 E indicates a game that is appropriate for anyone to play.244 A T rating means the game is appropriate for teenagers and older due to bad language and bloodshed in the game.245 TA is the rating placed on computer games recommended for teen-adult audiences due to material with some sexual content.246 Finally, an M rating demonstrates the game is only appropriate for mature audiences, which means anything goes including hunting nuns and orphans with a flame-thrower.247 Some book clubs also have symbols indicating potentially offensive or inappropriate material.248 For instance, one book club uses a star for material with a sexually explicit theme.249 Finally, if government-imposed concert-rating systems do not gain popularity, and even if the concert industry does not impose a rating system on itself, there are other safeguards for minors. One major safeguard is consumer power. If an artist wants to be invited to perform, he or she may have to market to what the audience wants. For instance, protests surrounding Manson performances have been common in cities nationwide. And there is evidence that his reputation is already costing him concert dates.250 In South Carolina, for example, Manson was booked last year to play the

Carolina Coliseum Arena in Columbia. But that aroused the ire of so many in town that he was asked and paid well to go away, according to venue director John Bolan.251 In fact, numerous scheduled performances by Manson have been canceled because of the bands controversial performances.252 This is not a chilling effect resulting from a specific governmental regulation yet. It is simply the effect of consumer power. Theres also the argument that by the time a performer is popular enough to play an arena, theres more than enough information about him or her available (including stickers on CDs, music videos and articles in the press) for parents to make an informed decision about a child attending a show.253 Many promoters are sensitive to the needs of the parents because they know that ultimately, most parents still buy the tickets.254 For example, some concert halls and arenas even provide quiet rooms for parents who want to accompany their teenage children to concerts.255 These quiet rooms usually provide complimentary coffee, blessed silence, and an opportunity for parents to be involved in their childs concert experience.256

And the Band Played On For Now

Concert-rating statutes are an upand-coming phenomena. Logically, they seem like the next step after record warning labels and in light of other ratings being implemented across the entertainment industry. However, unlike warning labels and other rating systems in the entertainment industry that are selfimposed, concert-rating statutes may
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be products of government regulation, and some teeter on the border of violating the First Amendment. One of the concert-rating statutes that would withstand a constitutional challenge is San Antonio ordinance 61,850, which attempts to regulate access to concerts that are obscene in the context of minors. This ordinance is constitutionally valid on its face because it mirrors the Miller/Ginsburg test for obscenity. However, as written, the ordinance with its obscenity standard has no practical application to concerts. San Antonio should have considered wording the ordinance so that it could be analyzed using a time, place, manner analysis. The other concert-rating attempt discussed in this Note is proposed Michigan Bill 239. Like the San Antonio ordinance, this proposed bill would probably also withstand a constitutional challenge. Although the regulation is content based with respect to childrens access, it only an accidentally interferes with adult access to the material. The states interest of protecting children from vulgar and possibly harmful material, balanced against the very slight interference on adult access to the material, would justify the regulation. Even if a concert-rating statute is constitutional, there are inherent practical problems with its implementation. In light of these practical problems, it is worthwhile for governments and the concert industry to explore the many alternatives to concert-rating statutes. N

1 Elizabeth Renzetti, Guess Whos Escorting Their Kids to Concerts, THE GLOBE AND MAIL, Jan. 3, 1998, at A1. 2 See id. 3 See id. 4 Neil Strauss, Concert-ratings: Salvation or Show-Stopper, PORTLAND PRESS HERALD, December 14, 1997. 5 See id. 6 Ray Waddell, Senator Steps Up Push for Concert-ratings, AMUSEMENT BUSINESS, May 3, 1999. 7 Id. 8 Dave Ferman, Should Lewd, Rude Concert Acts be Rated X, BUFFALO NEWS, October 4, 1998. 9 Thomas v. Collins, 323 U.S. 516, 545 (1945). 10 Id. 11 See id. 12 Id. 13 Id. 14 In 1954 attacks on rock n rolls obscene lyrics began when white teenagers started listening to rhythm and blues records made by African-American performers. Anne L. Clark, As Nasty As They Wanna Be: Popular Music on Trial, 65 N.Y.U.L. REV. N3 (1990) (citing L. Martin & K. Segrave, Anti-Rock: The Opposition to Rock n Roll 15 (1988)). Then, in 1965, a NEWSWEEK article asserted that rock n roll had reached a new low. Some of the controversial songs inciting the NEWSWEEK and similar opinions included: the Doors The End containing the lyrics, Father I want to kill you Mother I want to fuck you; the Rolling Stones King Bee containing the lyrics, Buzzin round your hive Together we can make honey Let me come inside; and the Rolling Stones Midnight Rambler containing the lyrics, Im gonna stick my knife right down your throat. Anne L. Clark, As Nasty As They Wanna Be: Popular Music on Trial, 65 N.Y.U.L. REV. N5 (1990) (citing L. Martin & K. Segrave, Anti-Rock: The Opposition to Rock n Roll 15 (1988)); see also Jeffrey B. Kahan, Bach, Beethoven and the (Home) Boys: Censoring Violent Rap Music in America, 66 S. CAL. L. REV. 2583, 2587 September, (1983). 15 See Clark, supra note 14, at 1485. 16 See id. 17 See id. 18 See Clark, supra note 14, at 1484 (quoting Parents Music Resource Center, Rock Music Report 1 (June 1985)); see also Jim McCormick, Protecting the Children from Music Lyrics: Sound Recordings and Harmful to Minors Statutes, 23 GOLDEN GATE U.L. REV. 679, 686 (Spring 1993). 19 See Clark, supra note 14, at 1486 (citing Letter from PMRC to

Stanley Gortikov, Pres. Of RIAA (May 31, 1985) (on file at New York University Law Review)). 20 See id. at 1487. 21 See Clark, supra note 14, at 1487 (citing Memorandum from PMRC to Stanley Gortikov, Pres. Of RIAA (undated) (on file at New York University Law Review)). 22 See Clark, supra note 14, at 1487-88. 23 See id. at 1488. 24 David Geffen of Geffen Records said, I have no intention of carrying a warning label on my records. Its censorship. Theyd have to pass a law before Id do it. See Clark, supra note 14, at N64 (quoting Cocks, Rock is a Four Letter Word, TIME, September 30, 1985, at 71). 25 See Clark, supra note 14, at 1488 (citing Hearings on Record Labeling Before the Subcomm. on Communication of the Senate Comm. On Commerce, Science and Transp. 9926 Cong., 1st Sess. 11 (1985)); see also McCormick, supra note 18, at 686). 26 See Clark, supra note 14, at N67 (quoting Hearings on Record Labeling Before the Subcomm. On Communication of the Senate Comm. On Commerce, Science and Transp. 99th Cong., 1st Sess. 11 (1985) The PMRC has said clearly it does not want censorship, but I fear that the only acceptable translation of the wishes of the PMRC will somehow constitute a de facto first stage form of censorship). 27 See Clark, supra note 14, at 1488-89 (citing Hearings on Record Labeling Before the Subcomm. On Communication of the Senate Comm. On Commerce, Science and Transp. 99th Cong., 1st Sess. 11 (1985)). 28 See Clark, supra note 14, at 1493-94 (citing Harrington, The New Wave of Lyrics Laws; Listening to Both Sides of the Record Labeling Debate, WASH. POST, Jan 28, 1990, at G4). 29 Clark, supra note 14, at 1494 (quoting S. 938, 173d Leg., 3 (1989)). 30 The other states included Arizona, Delaware, Florida, Illinois, Iowa, Kansas, Maryland, Missouri, New Mexico, Oklahoma, and Virginia. See Clark, supra note 14, at 1494 (citing Harrington, supra note 28, at G1). 31 The new warning label reads Explicit Lyrics Parental Advisory, and appeared printed in black and white and placed in a uniform position on all records, cassettes, and compact discs. Pareles, States Drop Recording Labeling Bills, N.Y. TIMES, Apr. 6, 1990, at C36; see also McCormick, supra note 18, at 686. 32 See Clark, supra note 14, at 1494-95 (citing Pareles, States Drop Recording Labeling Bills, N.Y. Times, Apr. 6, 1990, at C36). 33 SAN ANTONIO, TEX. Ordinance 61,850 (Nov. 14, 1985). Sec. 21-91. DEFINITIONS. As used in this article the following words and terms shall have the meanings respectively ascribed: Aid or assist shall mean intentionally or knowingly concealing, disguising or misrepresenting the age of a child. 184

Control over city-owned facilities shall mean any person, or employee of such person, authorized by lease to produce, direct, participate in or perform any musical, dramatic or theatrical performance at a cityowned facility. This term shall not include peace officers in performance of their official duties. Direct shall mean commanding movement of any actor, performer, stage equipment or stage props. Explicit reference shall mean the use of words which have a readily recognizable meaning describing or depicting conduct proscribed hereby, but shall not include words which are merely suggestive or have meanings which are equally consistent with actions not proscribed hereby. Intentionally, knowingly, recklessly shall have those meanings as defined in the Texas Penal Code. Leased area shall mean that area of a city-owned facility identified by lease providing for performance of a musical, dramatic or theatrical production. Participate shall mean placing or moving equipment or props used in a musical, dramatic or theatrical production. Perform shall mean acting or performing a musical, dramatic or theatrical production. Performance shall mean any musical, dramatic or theatrical production performed by any individual or identifiable group whether or not the production includes more than one individual or identifiable group staged in a city-owned facility. - Performance obscene as to a child shall mean a performance which contains a description of or explicit reference to: (a) Anal copulation; (b) Bestial sexual relations; (c) Sadistic, masochistic or violent sexual relationships; (d) Sexual relations with a child; (e) Sexual relations with a corpse; (f) Exhibition of male or female genitals; (g) Rape or incest; or (h) A vulgar or indecent reference to sexual intercourse, excreto ry functions of the body, or male or female genitals; and which, taken as a whole: (1) Appeals to the prurient interest of a child under the age of fourteen (14) years in sex; and (2) violates generally prevailing standards in the adult community as to the suitability of such performances for observation of a child under the age of fourteen (14) years; and (3) lacks any serious, artistic, literary, political or scientific merit as to a child under the age of fourteen (14) years. Person shall mean any individual, partnership, corporation or other legal entity of any kind. Produce shall mean contractual responsibility for advertising, staging or setting up a musical, dramatic or theatrical production. Sec. 21-92.ADMISSION OF CHILDREN. No person having control over a city-owned facility shall intentionally, knowingly, or recklessly allow or permit a child under the age of fourteen (14) years to enter or to remain within a leased area in a cityowned facility within one hour before or at any time during a performance is scheduled, if such person (1) knows, or (2) has knowledge of sufficient facts and circumstances from which a reasonable person would know that the performance is or will be a performance obscene as to a child, unless such child is admitted with a parent or legal guardian. Sec. 21-93. PRODUCING, PERFORMING, DIRECTING OR PARTICIPATING IN A PERFORMANCE.

No person shall intentionally, knowingly, or recklessly produce, perform, direct, or participate in a performance within the leased area if such person: (1) Knows; or (2) Has knowledge of sufficient facts and circumstances from which a reasonable person would know that: (a) A child under the age of fourteen (14) years of age is present without a parent or legal guardian; and (b) The performance is or will be a performance obscene as to a child. Sec. 21-94. ADVERTISING AND NOTIFICATION. Any person who shall produce or direct a performance, and who (1) knows, or (2) has knowledge of such facts and circumstances from which a reasonable person would know that the performance is or will be a performance obscene as to a child shall cause and provide by contract or otherwise for inclusion in any advertising for such performance the following notice: This performance may contain material not suitable for children without supervision. Parental discretion is advised. No child under the age of fourteen (14) years of age will be admitted without a parent or legal guardian. No person shall intentionally, knowingly, or recklessly contract for or obtain any advertising for a performance which is obscene as to a child, without providing for the notice required by the foregoing sentence to be included therein. Sec. 21-95. AIDING OR ASSISTING A CHILD IN ATTENDANCE. No person shall intentionally or knowingly aid or assist a child under the age of fourteen (14) years not accompanied by a parent or legal guardian in gaining admission to, or in remaining present during a performance which the actor (1) knows, or (2) knows such facts and circumstances from which a reasonable person would know that the performance is or will be a performance obscene as to a child. Sec. 21-96. DEFENSES. It shall be an affirmative defense to any prosecution under Section 21-92 above if the person having control over a city-owned facility attempts to ascertain the true age of a child seeking entrance to a performance obscene as to a child by requiring production of a birth certificate, school record, including identification showing the childs age or other school record indicating the child to be enrolled in eighth (8th) grade or higher, and not relying solely on oral allegations or apparent age of the child. Sec. 21-97. PENALTIES Each act or failure to act as required herein shall be punishable by a fine of not less than fifty dollars ($50.00) nor more than two hundred dollars ($200.00). Sec. 21-98. SEVERABILITY. If, for any reason, any one or more sections, sentences, clauses or parts of this article are held legally invalid, such judgment shall not prejudice, affect, impair or invalidate the remaining sections, sen-

185

tences, clauses or parts of this article. Sec. 21-99. APPLICABLE EFFECTIVE DATE. The requirements of this article shall apply only to leases providing for performances of musical, theatrical or dramatic productions in City-owned facilities executed after the effective date of this article [Ordinance Number 61850]. 34 See id. 35 See id. 36 A performance obscene to a child is defined as a performance which contains a description of or explicit reference to: (a) Anal copulation; (b) Bestial sexual relations; (c) Sadistic, masochistic or violent sexual relationships; (d) Sexual relations with a child; (e) Sexual relations with a corpse; (f) Exhibition of male or female genitals; (g) Rape or incest; or (h) A vulgar or indecent reference to sexual intercourse, excretory functions of the body, or male or female genitals; and which, taken as a whole: (1) Appeals to the prurient interest of a child under the age of fourteen (14) years in sex; and (2) violates generally prevailing standards in the adult community as to the suitability of such performances for observation of a child under the age of fourteen (14) years; and (3) lacks any serious, artistic, literary, political or scientific merit as to a child under the age of fourteen (14) years. See SAN ANTONIO, TEX. Ordinance 61,850 (Nov. 14, 1985); for the Supreme Courts obscenity standard, see Miller v. California, 413 U.S. 15 (1973). 37 See Clark, supra note 14, at 1492. 38 Phillip Taylor, Michigan State Lawmaker Takes Concert-Rating Proposal on the Road (last modified March 31, 1999) <http://www.freedomforum.org/speech/1999/3/31miconcert.asp>. 39 See id. 40 See id. 41 See id. 42 1999 Bill Text MI S.B. 239. As of May 25, 1999, Senate Bill 239 read as follows: Sec. 1. (1) If a performers recorded music will be performed at a music venue and if during the 5 years prior to the date of the performance, the performer released recorded music containing a parental advisory label issued by the recording industry as to the explicit content of the recorded music, the owner or operator of the music venue or the promoter of the performance shall comply with at least 1 of the following: Tickets that are sold for the performance at the music venue shall contain, in boldfaced print not smaller than 9-point type, an advisory stating: PARENTAL ADVISORY WARNING : EXPLICIT CONTENT.

Print advertisements for the performance at the music venue shall contain, in boldfaced print not smaller than 9-point type, an advisory stating: PARENTAL ADVISORY WARNING : EXPLICIT CONTENT. Television, radio, or other electronic advertisements for the performance at the music venue shall contain the following: If spoken, and advisory that states: This artists music has received the recording industrys parental advisory due to explicit content. If written, the advertisement shall contain, in bold faced print not smaller than 9-point type, and advisory stating: PARENTAL ADVISORY WARNING: EXPLICIT CONTENT. This section does not apply to a performance at a music venue by a performer whose appearance has not been advertised or promoted. As used in this section, music venue means a commercial venue where live music performances are held. Sec. 2. A person who violates this act is guilty of a misdemeanor punishable by a fine of not more than $5,000.00. Enacting section 1. This act takes effect upon the expiration of 60 days after the date of its enactment. 43 U.S. CONST. amend. I. 44 Thomas v. Collins, 323 U.S. 516, 545 (1945). 45 American Booksellers Assn v. Hudnut, 475 U.S. 1001 (1986). 46 Texas v. Johnson, 491 U.S. 397, 408-409 (1989) (quoting Terminiello v. Chicago, 337 U.S. 1, 4 (1949)). 47 Cohen v. California, 403 U.S. 15, 24 (1971). 48 Texas v. Johnson, 491 U.S. at 408-409 (quoting Terminiello, 337 U.S. at 4). 49 Texas v. Johnson, 491 U.S. at 414. 50 Cohen, 403 U.S. at 25. 51 Id. 52 See Texas v. Johnson, 491 U.S. 397 (1989); Barnes v. Glen Theater Inc., 501 U.S. 560, 565-66 (1991). 53 See Schad v. Mount Ephriam, 452 U.S. 61 (1981). 54 See Texas v. Johnson, 491 U.S. 397 (1989). 55 Id. at 404. 56 See Schad, 491U.S. at 65-66; see also Joseph Burstyn, Inc. v. Wilson et al. 343 U.S. 495, 501 (1952); Ward et al. v. Rock Against Racism, 491 U.S. 781, 790 (1989); McCollum ET AL. v. CBS Inc., 202 Cal. App. 3d 989, 998 (Cal. 1988). 57 452 U.S. at 61-64.

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58 See id. 59 See id. at 65. 60 See id. 61 Ward et al. v. Rock Against Racism, 491 U.S. 781, 790 (1989). 62 See id. 63 Id. 64 See id. 65 Police Dept of Chicago v. Mosley, 408 U.S. 92, 95 (1972). 66 See FCC v. Pacifica Found. et al., 438 U.S. 726, 745-46 (1978). 67 Ward, 491 U.S. at 791 (quoting Clark v. Community for Creative Non-Violence, 468 U.S. 288, 293 (1984)); see also Heffron v. Intl Socy for Krishna Consciousness, Inc., 452 U.S. 640, 648 (1981) (quoting Virginia State Bd. of Pharm. v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748, 771 (1976)). 68 Consolidated Edison Co. of New York, Inc. v. Pub. Serv. Commn of New York, 447 U.S. 530, 536 (1980) (quoting Mosley, 408 U.S. at 99). 69 See Ward, 491 U.S. at 791.

83 Chaplinsky, 315 U.S. at 572. 84 Id. at 569. 85 See id. at 569. 86 See id. at 574. 87 Bradenburg, 395 U.S. at 447. 88 Id. 89 Id. at 448. 90 Id. at 447. 91 See New York Times Co., 376 U.S. at 279-80. 92 Id. 93 Id. at 280. 94 See id. at 258. 95 See id. at 287. 96 See Miller, 413 U.S. at 15. 97 See id.

70 See id. 98 See Cohen, 403 U.S. at 20. 71 See id. at 792. 99 Miller, 413 U.S. at 33. 72 See id. at 784. 100 Id. 73 Id. at 803. 101 Id. at 15. 74 See id. 102 See Pope v. Illinois, 481 U.S. 497, 501 (1987). 75 See Mosley, 408 U.S. at 95. 103 Miller, 413 U.S. at 25. 76 Chaplinsky v. New Hampshire, 315 U.S. 568, 571 (1942); see also McCormick, supra note 18, at 680. 77 See Miller, 413 U.S. at 23; see also Roth v. United States, 354 U.S. 476, 485 (1957); New York v. Ferber, 458 U.S. 747, 754 (1982); McCormick, supra note 18, at 680. 78 See Chaplinsky, 315 U.S. at 571-72; see also McCormick, supra note 18, at 680. 79 See Bradenburg v. Ohio, 395 U.S. 444, 447 (1969); see also McCormick, supra note 18, at 680. 80 See New York Times Co. v. Sullivan, 376 U.S. 254, 301-302 (1964). 81 See Chaplinsky, 315 U.S. at 572; see also McCormick, supra note 18, at 680. 82 Chaplinsky, 315 U.S. at 572; see also McCormick, supra note 18, at 680. 104 Id. at 24. 105 Pope, 481 U.S. at 501. 106 See id. at 501 n.3. 107 See id. at 500. 108 See Miller, 413 U.S. at 24. 109 See Schenck v. United States, 249 U.S. 47, 52 (1919). 110 [T]he constitutional protection accorded to a communication containing such patently offensive sexual and excretory language need not be the same in every context. It is a characteristic of speech such as this that both its capacity to offend and its social value vary with the circumstances. See Pacifica, 438 U.S. at, 747. 111 See id.

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112 See Ginsberg, 390 U.S. at 636. 113 See e.g. Ginsberg, 390 U.S. at 636; Erznoznik v. City of Jacksonville, 422 U.S. 205, 212 (1975); Ferber, 458 U.S. at 756 (1982). 114 See Cohen, 403 U.S. at 20. 143 See id. at 217-218. 115 See Miller, 413 U.S. at 15. 144 See id. at 216-17. 116 See Ginsberg, 390 U.S. at 638. 145 Id. at 213. 117 Miller, 413 U.S. at 15. 146 See id. at 213. 118 Ginsberg, 390 U.S. at 638. 147 Id. at 213-14. 119 Id. 120 Id. at 639 (quoting Prince v.Massachusetts, 321 U.S. 158, 170 (1944)). 121 See Ginsberg, 390 U.S. at 638. 122 See, e.g., Erznoznik, 422 U.S. at 212. 123 Reno v. ACLU, 512 U.S. 844, 875 (1997). 124 See e.g. Consolidated Edison Company of New York, Inc., 447 U.S. at 534; Schad, 452 U.S. at 68; Sable Communications of California, Inc., 492 U.S. at 126. 125 See Ginsberg, 390 U.S. at 639; Ferber, 458 U.S. at 756-57. 155 Id. at 508. 126 See Ginsberg, 390 U.S. at 642-43 (1968). 156 Id. at 519. 127 See e.g. Ginsberg, 390 U.S at 639; Ferber, 458 U.S. at 756-57; Sable Communications of California, Inc, 492 U.S. at 126. 128 See Ginsberg, 390 U.S. at 637. 129 Id. at 640-41 (quoting Prince, 321 U.S. at 165). 130 See Ginsberg, 390 U.S. at 643-45. 131 See id. 132 See id. at 634-36. 133 Butler v Michigan, 352 U.S. 380 (1957). 163 438 U.S. 726 (1978). 134 Id. 164 See id. at 746-47. 135 Id. at 383. 165 Id. at 748-49. 136 Id. 166 See id. at 748. 137 See Reno v. ACLU, 521 U.S. 844 (1997). 167 See id. at 750. 138 See id. 168 See id. 139 Ferber, 458 U.S. at 768 (1982) (quoting Village of Schaumburg v. Citizens for a Better Environment, 444 U.S.620, 634 (1980). 140 See Erznoznik, 422 U.S. at 216; Ferber, 458 U.S. at 770. 169 492 U.S. 115 (1989). 157 Id. 158 See id. 159 See id. 160 See Reno 521 U.S. at 868 (citing Pacifica 438 U.S. at 742-743). 161 See id. (citing Pacifica 438 U.S. at 744-748). 162 Reno, 521 U.S. 844 (1997); Sable Communications of California, Inc., 492 U.S. 115 (1989); Pacifica, 438 U.S. 726 (1978). 148 458 U.S. at 766 . 149 See id. at 773-74 . 150 Id. at 773. 151 See id. 152 See id. at 773-74. 153 See Winters v. People of State of New York, 333 U.S. 507, 509-510 (1948). 154 Id. 141 Ferber, 458 U.S. at 770 (quoting CSC v. Letter Carriers, 413 U.S. 548, 580-81 (1973)). 142 See Erznoznik, 422 U.S. 205, 216 (1975).

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170 Id. at 127. 171 Id. at 127-28. 172 See id. at 126. 173 See id. at 131. 174 521 U.S. 844 (1997). 175 See id. at 859. 176 See id. at 885. 177 See id. 178 See id. at 877.

197 See id. at 136-37. 198 Id. at 137. 199 See id. at 136. 200 See Skyywalker Records, 739 F. Supp. at 591. 201 See Luke Records, Inc., 960 F.2d at 139. 202 Id. at 138. 203 Id. at 135. 204 See Miller v. California, 413 U.S. 15 (1973); Ginsberg v. State of New York, 390 U.S. 629 (1968). 205 See Ginsberg, 390 U.S. 629 (1968).

179 See id. at 868. 206 SAN ANTONIO TEX. Ordinance 61,850 (Nov. 14, 1985). 180 See U.S. CONST. amend. I.; see also Joseph Burstyn, Inc. v. Wilson et al. 343 U.S. 495, 501 (1952); Schad, 451 U.S. 61 (1981); Texas v. Johnson, 491 U.S. 397 (1989); Ward, 491 U.S. at 790; McCollum et al. v. CBS Inc., 202 Cal. App. 3d 989, 998 (1988). 181 Ward, 491 U.S. at 790. 182 491 U.S. 781 (1989). 183 See Kahan, supra note 14, at 2583-87. 184 See Kahan, supra note 14, at 2586. 185 See generally Kahan, supra note 14, at 2583. 186 Kahan, supra note 14, at 2589 (citing Sally B. Donnelly, The Fire Around the Ice, TIME, June 22, 1992, at 66; Richard Harrington, KRSOnes Hard-Hitting Attack on Injustice, WASH. POST, Sept. 21, 1989, at C1; David Mills, Pop Recordings; Public Enemy as Icon; Setting the Standard for Afro-Centric Rap, WASH. POST, Sept. 29, 1991, at G1. 187 See generally Kahan, supra note 14, at 2583. 216 Ferman, supra note 8. 188 See Ward, 491 U.S. at 790. 217 Clark, supra note 14, at 1516-17 (citing Cohen, 403 U.S. at 20). 189 Soundgarden v. Eikenberry, 871 P.2d 1050, 1055 (1994). 218 Id. 190 See id. 219 See id. 191 Skywalker Records, Inc. v. Navarro, 739 F. Supp. 578 (S.D. Fla., 1990). 192 See id. at 591. 193 See Luke Records, Inc. v. Navarro, 960 F.2d 134, 136-37 (11th Cir. 1992). 194 See id. at 136. 224 Clark, supra note 14, at 1516-17. 195 See id. 196 Id. at 137. 225 Id. at N286 (citing Penthouse Intl, Ltd. v. McAuliffe, 610 F.2d 1353, 1367-68 (5th Cir. 1980)). 189 220 But see Skyywalker Records, 739 F. Supp. at 594-96. 221 Clark, supra note 14, at 1519. 222 See id. 223 See Luke Records, Inc., 960 F.2d at 137. 211 Geoffrey R. Stone, Content Regulation and the First Amendment, 25 WM. & MARY L. REV. 189, 195 (1983). 212 Bantam Books, Inc. v. Sullivan et al., 372 U.S. 58, 66 (1963). 213 Ferber, 458 U.S. at 756. 214 See Clark, supra note 14, at N286. 215 See Mas M.I.C., Censors ask for Concert Ratings (last visited April 14, 2000) <http://www.ultranet.com/~crowleyn/conratings.html>. 207 Ginsberg, 390 U.S. at 639. 208 SAN ANTONIO TEX. Ordinance 61,850 (Nov. 14, 1985). 209 See Ginsberg, 390 U.S. at 639. 210 Bantam Books, Inc., et al. v. Sullivan et al., 372 U.S. 58, 66 (1963).

226 Ginsberg, 390 U.S. at 638. 227 See Ward, 491 U.S. at 790. 228 See 1999 Bill Text MI S.B. 239. 229 Renzetti, supra note 1, at A1 230 Id. 231 Tony Morton, Let Parents Rate Concerts, OMAHA WORLD-HERALD, August 30, 1998. 232 Id. 233 See Sarah Hollander, Concert-rating Legislation doesnt Play Under the Proposal, Local Governments Could Require Parents to Escort Children Under 18 to Concerts Deemed Indecent, THE GRAND RAPIDS PRESS, June 9, 1998. 234 See Linda Deckard, Mich. Senators Fight for Concert-rating System Topic At Conference, AMUSEMENT BUSINESS, October 5, 1998. 235 Neil Strauss, New York Times News Service, Concert-ratings: Salvations or Show-stopper, PORTLAND PRESS HERALD, December 14, 1997, at 1E. 236 Ed Golder, Van Adel Bashes Concert Ratings Bill; A Letter Written by the Local Arenas Namesake Urges the Government to Avoid Sweeping, Knee-jerk Regulation, THE GRAND RAPIDS PRESS, June 18, 1998. 237 See Strauss, supra note 235, at 1E. 238 See id. 239 See Swope v. Lubbers, 560 F. Supp. 1328, Appendix 1 (Mich. Dist. Ct. 1983). 240 See id. 241 See id. 242 Id. 243 Robert Kirby, Warning: This Column Has Not Been Rated, THE SALT LAKE TRIBUNE, July 29, 1999, at B1. 244 See id. 245 See id. 246 See id. 247 Id. 248 See id. 249 See id.

250 Ferman, supra note 8. 251 Id. 252 See Morton, supra note 231. 253 Ferman, supra note 8 254 See Renzetti, supra note 1, at A1. 255 See id. 256 See id.

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internet

theWRONGtool
for

itle III of the Americans with Disabilities Act of

1990 (ADA) requires that places of public accommodation provide equal access to both able-bodied and disabled customers.1 Commercial places of sales, service, and entertainment qualify as places of public accommodation.2 A movie theater therefore must take reasonable efforts to ensure its facility is accessible to the disabled.3 But what if a theater owner creates a separate company to offer entertainment content exclusively over a website? Can the website contain barriers to access by the disabled? Issues of online accessibility are becoming increasingly dramatic. A recent suit filed against America Online,4 hearings before the House Judiciary Committee,5 and an opinion by Judge Posner of the Seventh Circuit6 all aim to extend accessibility requirements to the Internet by including websites within Title IIIs definition of places of public accommodation.

byPATRICKmaroney

Are Commercial Websites Places of Public Accomodation Under the Americans with Diasabilities Act of 1990?

theRIGHTjob
191

The text of the ADA does not support such an extension. The interpretative canons of noscitur a sociis 7 and ejusdem generis8 dictate that places of public accommodation refer exclusively to physical facilities. The canons also sufficiently resolve any possible statutory ambiguities, thereby foreclosing the opportunity for contrary agency interpretations.9 Although the intentionally broad purpose and design of the ADA make the statute an attractive avenue for advocates of online expansion, that same purpose and design limit the ADA to physical facilities. This note addresses the issues in two parts. First, it presents the arguments just listed. Second, it recognizes the need for alternate accessibility regulation and then advances a case for seeking legislative solutions. Online accessibility is a critical issue. The existing ADA is just the wrong tool for the right job.

vert them into translatable text. When a screen reader comes to a graphic, it says only the word graphic or icon. Users are aware of the graphics presence but are unable to assess its meaning.13 Graphics do not just include the photographs and art on a web page. They can include functional tools such as menu bars, arrows used to represent the next page of a document, and icons indicating the home page or a link to another site. Moreover, just because a word appears on a page does not mean a translator can decipher it. Web designers commonly embed words in pictures, layer them over images, or otherwise artistically render text. All these design choices can make words unrecognizable to access software.14 Similar design problems also affect individuals with other disabilities. The deaf are unable to utilize web pages which provide primary information in the form of sounds, and individuals with mobility restrictions are often excluded from navigating websites which require exceptionally precise mouse or wand movement.15 In the face of these access barriers, it may seem surprising that 76 percent of disabled Americans are online compared to only 50 percent of the general population.16 The difference though critically captures both the unique importance of the Internet to the disabled and the truly tragic harm of discrimination in website accessibility. First, one qualifier. Not all real-world disabilities are online disabilities. Those confined to a wheelchair but with the full use of their upper body can just as easily utilize a mouse, keyboard and monitor as an able-bodied person. When this article hereafter speaks of dis192

abilities, the intent is to cover those individuals with disabilities that affect their online experience. This clarification, however, does not explain the 66% difference in adoption.17 That difference is likely rooted in a second critical factor. The Internet offers especially valuable opportunities to all disabled Americans, even those with online disabilities, and the disabled have accordingly been quick to adopt the Internet. For instance, despite the difficulties of using a wand to navigate websites with precise navigation links, paraplegics can visit online museums, stores, or discussion boards much easier than visiting the real-world equivalents. For blind and deaf individuals, the social stigma that can accompany their disability makes online identification by IP address or avatar,18 and not by physical appearance and actions, a liberating place. The Internet truly has the potential to offer the disabled a sense of independence and community that otherwise might be unavailable. Access barriers, moreover, did not always litter the Internet.19 Before the World Wide Web, the Internet was a largely text-based world.20 Bandwidth and personal computer power could not support graphic and sound transfers. This simplicity uniquely empowered the disabled. Text recognition software enabled blind users to explore the full network without the same barriers of access that prevented them from exploring elements of the real world.21 They could engage in online chats without their disability being apparent and freely navigate early websites through text-based links.22 On a simpler Internet, the deaf could navigate cyberspace without

Disabilities and the Web

Ninety-eight percent of websites are inaccessible to the disabled.10 This inaccessibility is not inherent to the Internet but the result of strategic choices in design. When developers use graphics, sound, rich media, and complex page layout for a web pages navigation, they render sites inaccessible to individuals with particular disabilities.11 Screen access programs for the blind, for instance, work by converting the text on a site into an auditory signal or braille the user receives over a specially designed keypad.12 Despite recent advances in these assistance programs, they continue to have limitations. Screen access programs can not recognize most graphics and con-

encountering sound elements and media streaming.23 Web page architecture has since changed. Increases in bandwidth have allowed web designers to build and deliver pages with graphic rich environments and embedded media displays such as Java applets, Shockwave displays, and video streaming.24 These additional features can include information that websites once would have presented in a pure textual format as well as additional information unavailable in translatable formats. Consequently, an increasing percentage of information contained on web pages is inaccessible to the disabled. As Crista L. Earl of the American Foundation for the Blind notes, all that glitz causes a lot of trouble.25 What once was an architecture that fostered equality has become an architecture of inaccessibility. Leading Internet scholar Lawrence Lessig has observed that, when graphics entered the Netthe blind became blind again. As sound files or speech in Avatar space have been created, the deaf have become deaf again.26 There is a genuine sense of possibility denied. Many disabled individuals experienced a unique sense of freedom on the early Net only to have it taken away by advances in web page content and progress in web page construction. The issue of accessibility is becoming increasingly dramatic. Bandwidth increases drive website development, and the issues of disabled access are likely to become more apparent as high-speed access becomes more popular.27 While the public migration from dial-up to high-speed cable and DSL28 connections offers web designers the opportunity to create more attractive,

entertaining, and feature rich sites, it threatens to exclude individuals with online disabilities from a growing part of society and the economy. As the architecture of the Net becomes increasingly concrete, now is the time to decide how the value of equal access should shape the structure of the Net. Inaccessibility is not the inherent nature of the Internet but the result of our deliberate choices in website design.29

Player. Information conveyed over these players does not offer anything similar to the closed captioning found on TV. Yet, even the simpler sites present accessibility barriers. A test conducted for this note revealed that all ten of the most popular websites were inaccessible to the disabled. 33 The increasing inaccessibility of commercial Internet sites has prompted several excluded individuals to seek relief via the ADA.34 The ADA has provided a vehicle for achieving access to brick and mortar businesses and facilities, and it remains the most comprehensive federal regulation on disability access.35 The Act requires employers, state and local governments, and private places of public accommodation to offer reasonable services or measures to insure people are not discriminated against based on their disabilities.36 The ADA was enacted to make strides in eradicating the exclusion of the disabled from social, commercial, and labor settings.37 The text of the statute does not mention electronic space, however, and the challenge of statutory interpretation is to determine whether the ADAs greater purpose warrants treating commercial websites as places of public accommodations despite their lack of the physical facilities common to all the examples of public accommodations listed in the statute.

The Limited Accessibility of Commercial Websites

Accessibility problems particularly plague commercial websites. Distinguishing a website from the millions of other .coms requires crafting a unique user experience, and commercial sites have adopted highly stylized icons and graphics to design a memorable and recognizable customer interface. In a market were revenue is often generated from catching eyeballs, pages increasingly can contain little text that is not stylized in the form of a colorful graphic or scrolled across the screen in a Java applets or Shockwave sequence.30 The trend is particularly evident in entertainment sites. Entertainment sites tend to use cutting edge technology and offer a glimpse of where web design is heading. The homepage for the feature movie The X-Men contains few words that are not in the form of a graphic, entirely unintelligible to access software.31 Entertainment oriented sites like MP3.com also rely heavily on streaming media.32 This includes movies and audio files transmitted over players such as Apples Quicktime, Real Medias Real Player, and Microsofts Windows Media
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Public Accommodations and the ADA

The ADA consists of five titles.38 Title III covers public accommodations39 and public transportation services operated by private 40 entities. Section 12182(a) of Title III prohibits discrimination on the

basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation by any person who owns. . . or operates a place of public accommodation.41 The ADA does not specifically define places of public accommodation. It only states places of public accommodation must be operated by a private entity, affect commerce, and fall within 12 categories of places.42 Among the categories, three include business models frequently replicated on the web. The text of 12182(7) includes the following relevant examples of places of public accommodation: (C) a motion picture house, theater, concert hall, stadium, or other place of exhibition or entertainment; (E) a bakery, grocery store, clothing store, hardware store, shopping center, or other sales. . .establishment; (F) a laundromat, dry-cleaner, bank, . . .travel service, shoe repair service, . . . office of an accountant or lawyer, pharmacy, insurance office, professional office of a health care provider, hospital, or other service establishment.43 Commercial websites operated by private entities offer entertainment, sales, and professional services similar to those listed in (C), (E), and (F). There are online pharmacies, clothing stores, and music sites.44 Yet in one essential respect, websites differ dramatically from the theaters, shopping centers, and stadiums listed in the statute. websites do not have tangible facilities. While their designers, owners, and servers are

physically housed in the real world, customers do not actually enter or visit these places. Interaction is limited to cyberspace and the use of services provided by the web page.45 In contrast, all the examples of public accommodation listed in the ADA are real-world, brick and mortar businesses.46 Still, the Internet is often

There is a very fundamental issue at stake: whether the same disability laws, which regulate the real world, extend to electronic space.

a recent complaint filed against America Online. Baran v. AOL alleges AOL violated the ADA by failing to make reasonable accommodations for users lack of sight.51 In particular, the complaint alleges the program required to gain access to America Onlines services is incompatible with the assistance programs blind individuals use to translate web pages. The plaintiffs contend that AOL has particularly designed its AOL service so that it is incompatible with screen access software programs for the blind...and has failed to remove communications barriers presented by its designs thus denying the blind independent access to this service.52 Of particular note to website operators, AOLs alleged role as an electronic place of entertainment, commerce and saleswithin the meaning of public accommodationis an essential premise of the complaint.53 AOL does differ from most website operators in that it provides not only content but access software. The user must install a version of America Online software in order to log in and access AOLs exclusive content or use its servers to access the outside web.54 Baran alleges it is this software that is blocking disabled access.55 Most websites, in contrast, do not provide access software and instead rely on access by the users choice of web browser and Internet Service Provider (ISP). Still, the implications of Baran should not be uniquely limited to AOLs partial role as a software company. Every website has access elements. These include the links that connect the user to the available content on the subdirectory pages of the

described in tangible brick and mortar terms. We now commonly speak of chat rooms, an information superhighway, Internet architectures, and web pages being under construction.47 All of these real-world metaphors draw on the parallels between electronic space and the tangible worldeach capturing how similar e-space and real space can be. The obvious textual question, therefore, is whether the real-world examples of Title III limit the application of the ADA, or whether the catch-all phrases found in each of the sectionsor other place of . . . entertainment,48 or other sales . . . establishment,49 or other service establishment50extend beyond real-world facilities. The National Federation for the Blind has already raised this issue in
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site56 as well as the layout of the material presented on the screen. ADA regulation of the Internet, therefore, would not be limited to ISPs and portal sites like Yahoo!, Northernlights, and Excite. There is a very fundamental issue at stake, whether the same disability laws, which regulate the real world, extend to electronic space. There are now approximately 1 billion web pages57 and the implications of demanding accessibility in the large number of those sites that might fall under the purview of the ADA present issues demanding serious consideration. The determination of the issue requires examining statutory text, legislative purpose, and common law precedent. In the end, their resolution ultimately offers testimony that even the most important laws and policies in the real world do not always translate to effective regulation on the Internet.

Automotive Wholesalers Assn of New England.60 Carparts is one of several relevant cases involving employer-offered insurance plans. Each case considers whether places of public accommodation include insurance plans without physical places of client interaction.61 The analogy to websites is apparent. A number of circuits have severely criticized Carparts, however, with the Sixths Circuits holding in Parker v. Metropolitan Life Insurance representing the most critical attack on the First Circuits textual analysis.62 Although the circuit split undermines each cases precedential value, Carparts and Parker offer a framework for comparing the competing textual interpretations of Title III. The First Circuit has read the ADAs general use of the term service establishment expansively, 63 while the Sixth Circuit contends the canon of noscitur a sociis requires places of public accommodation to have physical structures.64

A.I.D.S. related illnesses discriminated based on disability.67 Critically, the employer distributed the self-funded plan, and the association collected all claims over the telephone or through the mail.68 There was not a physical office where insured clients brought their claims or a place were they interacted with the associations insurance staff. The district court found this absence of a connection between a physical place of public accommodation and the alleged discrimination invalidated Carpartss Title III claim.69 On review, the First Circuit Court of Appeals reversed. The court held that ADA public accommodations were not so limited and an insurer who provides services on the job or over the telephone can qualify as a provider of a place of public accommodation.70 The courts textual support drew on 12181(7)(F)s use of the terms travel service and other service establishments to define places of public accommodation. Section 12181(7)(F) includes a travel service, shoe repair service, funeral parlor, gas station, office of an accountant or lawyer, pharmacy, insurance office, professional office of a health care provider, hospital, or other service establishment.71 The First Circuit reasoned that by including travel service among the list of services considered public accommodations, Congress clearly contemplated that other service establishments include providers of services which do not require a person to physically enter an actual physical structure.72 Many travel services conduct business by telephone or correspondence, the court noted, and do not require their customers to enter an office in order to obtain their services.73 The ambi-

Textual Interpretations Advanced in Precedential Authority

As the Supreme Court has observed the starting point, as always, is the language of the statute.58 To understand the language of 12181(7), it is helpful to explore the competing judicial interpretations of its text. No court has yet directly ruled whether Title IIIs text includes commercial websites. The only case on point addressed the issue in dicta, with Judge Posner of the Seventh Circuit Court of Appeals stating websites were indeed ADA places of public accommodation.59 Posner unfortunately did not explain his conclusion and instead simply cited the First Circuits holding in Carparts Distrib. Ctr., Inc. v.

Service Without Physical Accommodation

First and Seventh Circuit precedent read the text of 42 U.S.C. 12181(a) to support the application of the ADA to commercial insurance plans lacking physical places of public accommodation. In Carparts Distrib. Ctr., Inc. v. Automotive Wholesalers Assn of New England, the First Circuit found places of public accommodation were not limited to physical structures.65 Carparts and its sole employee sued a trade association from which the company obtained medical insurance for its employee.66 The complaint alleged the associations cap on benefits for
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guity apparently justified extending similar coverage to the insurance policy in Carparts, despite 12181(7)(F)s specific mention of an insurance office. As the court noted, this ambiguity, considered together with agency regulations and public policy concerns, persuades us that the phrase is not limited to actual physical structures.74 Judge Torruellas opinion determined that it would be irrational and absurdto conclude that persons who enter an office to purchase services are protected by the ADA, but persons who purchase the same services over the telephone or by mail are not.75 Such a conclusion would run afoul of the ADA and would severely frustrate Congresss intent that individuals with disabilities fully enjoy the goods, services, privileges, and advantages available indiscriminately to other members of the general public.76 Torruellas reading of the term travel service created enough alleged ambiguity to draw in these purposive and intentionalist arguments. The First Circuits textual reasoning has garnered support in other circuits. Judge Richard Posner has not only embraced critical aspects of the Carparts holding but also specifically extended them to websites. As part of his majority opinion in Doe v. Mutual Omaha Insurance Co.,77 Posner stated, The core meaning of this provision, plainly enough, is that the owner or operator of a store, hotel, restaurant, dentists office, travel agency, theater, website, (whether in physical space or electronic space) that is open to the public cannot exclude dis-

abled persons from entering the facility and once inside from using the facility in the same way the non-disabled do.78 Posners citation to Carparts suggests the Seventh Circuit, at least via dicta, has joined the First Circuit and several district courts in recognizing the legitimate extension of Title III to places which do not provide physical accommodations.79 Posners opinion also appears to go beyond Carparts. Carparts dealt exclusively with 12181(7)(F) and service establishments. Websites not only provide commercial services, but also commercial sales, entertainment and other 12181(7) accommodations. Carparts did not consider these categories, and none of them include terms as ambiguous as travel service. Any direct application of First Circuit precedent to websites, therefore, is limited to websites offering 12181(7)(F) services. However, the other 11 categories of places of public accommodation do include catchalls similar to the phrase other service establishments.80 Both Posners statement and the Baran complaint seek to include websites offering non-service accommodations within these catchalls. Carparts does not directly comment on such an extension, but the First Circuits strong desire to support a broad interpretation of the ADAs purpose does offer support.81 Purposive arguments indeed loom large in this area. For the moment, however, it is first important to continue examining the competing interpretations of places of public accommodation and the text of 42 U.S.C. 12181(7), for legislative purpose is expressed by the ordinary meaning of the words used.82
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Noscitur a Sociis: Judicial Responses to Carparts

There are competing analyses of the 42 U.S.C. 12181(7). The Sixth Circuit has consistently applied the canon of noscitur a sociis to reject the ADAs extension to intangible places of public accommodation.83 Parker v. Metropolitan Life Insurance involved an employee who sued his employer and its medical plan for failing to cover certain long-term illnesses.84 Similar to Carparts, the employer administered the health plan and the employee did not visit MetLifes offices.85 Unlike Carparts, however, the Sixth Circuit refused to find the health plan maintained a place of public accommodation. The opinion was particularly critical of the First Circuits textual analysis. Parker accused the First Circuit of disregard[ing] the statutory canon of construction, noscitur a sociis.86 The canon of noscitur a sociis instructs that a term is interpreted within the context of the accompanying words to avoid the giving of unintended breadth to the Acts of Congress.87 Courts should ascertain the meaning of questionable or doubtful words or phrases in a statute by reference to the meaning of other words or phrases associated with it.88 Applying noscitur a sociis, the Sixth Circuit noted that every term listed in 12181(7) and subsection (F) is a physical place open to public access.89 The terms used in the sectionauditorium, movie theater, museum, park, nursery, food bank, and gymnasium,all refer to places with resources utilized by physical access.90 The court concluded the ADA thus only covered similar physical places of public

accommodation.91 Yet the First Circuits reading relied on the very same text. Carparts held that while the ADA only listed physical examples, the general term travel service when coupled with the phrase other establishments of service was intended to cover both tangible and intangible places.92 The Sixth Circuit disputed this textual interpretation. It found that rather than suggesting that Title III includes within its purview entities other than physical places, it is likely that Congress simply had no better term than service to describe an office where travel agents provide travel services and a place where shoes are repaired.93 Contrary to the First Circuit, the Sixth Circuit concluded that noscitur a sociis required a travel service be a physical place. Other circuits have adopted this interpretation. In Ford v. RingPlough, the Third Circuit Court of Appeals aligned itself with Parker.94 The court noted that the First Circuit failed to read the examples of public accommodations and pursuant to the doctrine of noscitur a sociis, the terms that the First Circuit finds ambiguous should be interpreted by reference to the accompanying words of the statute...to avoid the giving of unintended breadth to the Acts of Congress.95 The Third Circuit found neither the term public accommodation nor any of the terms in 42 U.S.C. 12181(7) refer to non-physical access or even suggest any ambiguity as to their meaning.96 As this split indicates, the circuits advance contrary textual arguments. The Sixth and Third Circuits rely on noscitur a sociis to limit ADA extension while the First, Seventh, and

Eighth suggest the inclusion of catchalls warrant extending the definition of public accommodation to intangible places.

Seeking a Resolution
The Sixth and Third Circuits textual arguments offer the more convincing reading. The term travel service and the various catchall phrases are best defined in light of the immediately surrounding text. Websites are intangible places. Title III requires physical structures. And while the text of the ADA also includes a broad statement of purpose, that purpose must be read in light of the surrounding sections. Finally, regardless of whether a court agrees with a restrictive textual analysis, efforts to extend the ADA to websites through the interpretation of the existing statute risk wasting political energy. The Supreme Court has become increasing hostile to expansive applications of the ADA, and Sutton v. United Airlines, in particular, demonstrates the Courts growing reliance on strict textualism, even amidst strong purposive arguments, to deny ADA extensions.97

parlor, and office of an accountant or lawyer are all physical places. Section 12181(7)(F), moreover, mentions a shoe repair service along side the travel service.99 Shoe repair services are offered through physical places of public accommodation and generally not over the telephone or outside a connection to a physical place of public accommodation. The Sixth Circuit thus plausibly concluded, Congress simply had no better term than service to describe an office where travel agents provide travel services and a place where shoes are repaired.100 Furthermore, a separate ADA Title covers many of the concerns the First Circuit had with travel services sold exclusively over the phone. 101 Title VI amends Title II of the Communications Act of 1934 to mandate common communications carriers support telephone relay 102 systems. These systems enable people with hearing and speech impairments to communicate by telephone with persons who may or may not have such disabilities. This includes conversations with travel agents.103 Expanding the text of 12181(7)(F) is unnecessary to fulfill the purpose of the ADA. Outside the definition of public accommodation, Title III speaks in purely physical terms. Parker noted that a place, as defined by the applicable regulations, is a facility, operated by a private entity, whose operations affect commerce and fall within at least one of the twelve public accommodation categories.104 Facility, in turn, is defined as all or any portion of buildings, structures, sites, complexes, equipment, rolling stock or other conveyances, roads, walks, passageways, parking lots, or other real or personal property,

Noscitur a Sociis and Ejusdem Generis: Textual Resolutions

The Sixth Circuits reading of public accommodation better fits the plain meaning of the text. The service in travel service simply does not create ambiguity when read in the context of the surrounding words. As Parker noted, Every term listed in 12181(7) and (F) is a physical place open to public access.98 An insurance office, laundromat, barber shop, gas station, funeral
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including the site where the building, property, structure or equipment is located.105 The enforcement mechanisms also speak exclusively in physical terms. The Architectural Barriers Compliance Board is charged with setting minimum guidelines for Title III compliance in order to ensure that buildings, facilities, rail passenger cars, and vehicles are accessible, in terms of architecture and design, transportation, and communication, to individuals with disabilities.106 These surrounding sections all address issues and remedies that are ill fitted for travel services exclusively conducted over the telephone or mail. Yet, noscitur a sociis only addresses the first step in the First Circuits logic. The First Circuit does not suggest employer-insurance policies are travel services, but that because travel service can refer to a service without a physical place of public accommodation, the catchall phrase other service establishments can also include intangible places like the Carparts insurance program. While noscitur a sociis limits travel services to physical places, a separate canon applies to catchall phrases like other service establishments. Ejusdem generis instructs that when general words follow an enumeration of specific words, the general words are to be read as applying only to the same general kind or class as the specific words.107 Every term listed in 12181(7)(F) is a physical place open to public access.108 Reading the phrase or other service establishments to justify including public accommodations lacking a physical structure runs contrary to the plain meaning of the text. Commercial website are not other service establishment[s]. But

can they fall into any of the eleven other categories of places of public accommodation? Ejusdem generis also resolves questions pertaining to public accommodations outside commercial services. The eleven other 12181(7) categories include their own 109 catchalls. The phrases are all similarly proceeded exclusively by physical examples of sales establishments, places of entertainment, etc. Ejusdem generis thus denies their application to intangible places. Posners and Barans attempts to draw on the catchalls to include websites offering commercial sales, entertainment, recreation, etc., run contrary to the plain meaning of the text and the clarity of this textual interpretation suggests there may be an alternate way of interpreting the Carparts holding. Although the First Circuit attempted to offer textual support for its decision, the true rationale for Carparts appears to lie not in strict textual integrity but in the courts previously mentioned expansive view of the ADAs purpose and legislative history.110 The opinion repeatedly refers to the ADAs purpose and intent,111 and Judge Torruellas opinion appears to explode, then exploit, alleged ambiguities in the text to reach the purposive arguments necessary to justify its holding. The text of the statute, however, leaves little room for such maneuvering. Noscitur a sociis and ejusdem generis clearly show that the terms travel service and other places of should be limited to physical places, and an analysis of the entire statute shows the text speaks in purely physical terms. Carpartss examination of the purpose of the statute is justified. But while the text itself contains a
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broad statement of purpose, the enumerated purpose must be read in the context of the surrounding statute.

ADAs Attraction as a Cure-All: JudgeMade Law

Exploding the text in order to achieve an expansive perception of the ADAs purpose is a tempting option. There are compelling arguments of expansive purpose and legislative history surrounding the ADA, and they provide numerous straws for supporters of purpose-based interpretations to grasp. However, the actions of Congress in addressing website accessibility in other statutes, as well as the limitations of the current ADA, demonstrate that even if the text of 42 U.S.C. 12181 were ambiguous, the current ADA should not be extended to commercial websites based on perceived statutory purposes and notions of legislative history. The Supreme Court has recognized it is a familiar canon of statutory construction that remedial legislation should be construed broadly to effectuate its purpose.112 Congress codified the ADAs purpose in the statutes text. Section 12101(b) states the ADAs express purpose is to invoke the sweep of congressional authority . . . in order to address the major areas of discrimination faced day-to-day by people with disabilities;113 to provide a clear and comprehensive national mandate for the elimination of discrimination,114 and to provide clear, strong, consistent enforceable standards addressing discrimination against individuals with disabilities.115 When President Bush signed the ADA in 1990, he stated the legislation

embodied the full flowering of our democratic principles and promised to open up all aspects of American life to individuals with disabilities.116 Both Congress and the President adopted an Act that they intended to be broad in scope and reach all areas of existing society.117 Yet nowhere does the ADAs statement of purpose mention the Internet or intangible places of public accommodation. While Congressional reports repeatedly state the ADA was intended to bring the disabled into the mainstream of American life,118 the Internet was simply not a part of mainstream life in 1990. Its rapid growth was unforeseen by lawmakers even a decade ago. The Internets absence from the original debate over the ADA thus raises serious issues of statutory interpretation. In the absence of a conscious exclusion (the now pervasive nature of the Internet was unrealized at the time), does the statutes general purpose warrant overlooking the absence of electronic space from the list of places of public accommodation? An extension is tempting. In fact, the next four paragraphs could easily convince a reader enamored of purposivism of an extensions necessity and viability. Online inaccessibility is quickly becoming a major area of discrimination faced day-today by people with disabilities119 as commerce and community rapidly move to the Internet.120 Businesses now exist that exclusively provide services via the web and do not maintain any physical facilities for public accommodation. Companies such as CDNOW and Amazon.com sell music CDs, videos, and books exclusively online.121 Beyond entertainment, pharmacies, general stores, and

almost every aspect of the commercial market are migrating to the Internet. Combined, these ventures represent an increasing chunk of the marketplace that, wrapped in complex graphics and minimal text commands, could exclude many disabled Americans. The ADA would surely cover these ventures if they existed in the real world,122 and thus the general shift to e-business threatens to dilute the ADAs effectiveness. Chief Judge Martins dissent in Parker correctly predicted that [a]s the modern economy increases the percentage of goods and services available through a marketplace that does not consist of physical structures, the protections of Title III will become increasingly diluted.123 The legislative history of the ADA reflects consistent efforts to keep the definition of public accommodation broad and inclusive. In its first incarnation before the 100th Congress, the precursor to the ADA limited the definition of public accommodations to those types of businesses covered by Title II of the Civil Rights Act of 1964.124 That bill faded, and a second version reemerged in May of 1989.125 It carried a much broader notion of public accommodations and defined the term in the example format found in the final Act.126 The expansion was the product of political bargaining. The Bush administration supported the expansion of public accommodations beyond those in Title II of the Civil Rights Act only on the condition the Senate delete a provision which would have allowed plaintiffs to recover compensatory and punitive damages for intentional discrimination in employment.127 Even this definition of public accommodation was not in its final
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form. The bill included the phrases other similar places of retail sales and other similar places of service establishment.128 The House deleted the word similar in each of the 12 categories.129 The Committee on the Judiciarys intent was to insure a person alleging discrimination does not have to prove that the entity being charged with discrimination is similar to the examples listed in the definition. Rather, the person must show that the entity falls within the overall category. For example, it is not necessary to show that a jewelry store is like a clothing store. It is sufficient to show that the jewelry store sells items to the public.130 The committees intent may suggest Congress desired the act of selling to the public to be the determining factor and not necessarily sharing other similar characteristics with the places listed in the statute. This Note addresses the flaws in this reasoning below, but for the moment it is sufficient to concede the drafting committees intended even the other similar places terminology should be construed liberally.131 Finally, advocates for purposebased ADA extension are sure to point to the similar purpose of the Rehabilitation Act of 1973.132 In 1998, Congress through the Work Force Investment Act amended 508 of the Rehabilitation Act to require disabled accessibility in all federal websites built after August 7, 2000.133 The Federal Rehabilitation Act of 1973 requires the federal government, federal contractors, and other recipients of federal funds to provide equal access to disabled Americans in employment opportunities and facilities.134 The ADA and the Rehabilitation Act are sister statutes: Congress drew heavily

from the Rehabilitation Act in fashioning the ADA and many of the principles embodied in the ADA are based on the Rehabilitation Act of 1973.135 In many ways, the ADA was intended to be more aggressive in insuring accessibility and to build on the experience of 17 years of Rehabilitation Act enforcement.136 The 1998 amendments to the Rehabilitation Act provoke two competing interpretations. On one hand, the shared purposes of the ADA and Rehabilitation Act might suggest Congress has recognized the need for accessibility across the Internet. The two statutes share a similar purpose of limiting the obstacles to the disabled, and Congress did intend the ADA to offer more aggressive protection in the private sector.137 The Rehabilitation Acts extension of accessibility requirements to federal websites may suggest online access is part of the same purpose the ADA was fashioned to address. A judicial extension of the ADA therefore would arguably align with the shared purpose of the two statutes. On the other hand, the decision to amend the Rehabilitation Act suggests that indeed the two acts do share a common purposeand like the Rehabilitation Act of 1973, any extension of the ADA to require website accessibility should come by legislative amendment, not judicial policy making. While the relevant text of the Rehabilitative Act was more constricting in interpretation than the relevant sections of the ADA, and thus more apt to extension via amendment, the issue of online accessibility was clearly addressed in the federal government context without similar efforts being made to

remedy the problems of disability access in online commercial contexts. Several classic critiques of purposive arguments and intentionalism also ring particularly true. First, the ADA is a statute with an express purpose explicitly contained in its text.138 Citations to notions of purpose expressed by individual lawmakers, the Acts drafters, or President Bush have limited value. This includes the House committees explanation of the decision to drop the word similar from the

The ADAs purpose is to address a broad range of situationsbut every situation in that broad range envisions a physical facility or place of accommodation.
12181(7) catchalls. Unlike the statement of purpose actually contained in the text of the ADA, none of these comments was subject to vote by other members of Congress and none received official bicameral support. Each simply lacks presentation or bicameral validity. The primary focus should be on the statement of purpose enumerated in the text itself. The statement of purpose does state the ADA is intended to invoke the sweep of congressional authority . . . in order to address the major areas of discrimination faced day-to-day by people
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with disabilities.139 However, this purpose must be read in the context of the entire statute. The entire statute implements the statement of purpose concerning public accommodations in purely physical terms. Thus, the purpose should be read to extend comprehensively[sic]140 to major areas of discrimination found in physical facilities or public accommodations. The legislative history of the ADA supports this conclusion. While both the comments of individual congressmen and the ADAs redesign to cover more places of public accommodation than the Civil Rights Act suggest Congress intended for public accommodations to be interpreted broadly, even the expansionist First Circuit admitted, one who simply reads the committee report describing the operations of Title III could easily come away with the impression that it is primarily concerned with access in the sense ofphysical access.141 Other portions of the legislative history, moreover, clearly show that the lack of physical access to facilities was intended to be one of the areas Title III should remedy.142 Finally, the use of the 12 categories of examples of public accommodation in 12181(7) was the result of a harshly fought political compromise between the Bush administration and the congressional majority. As a result, exploding the meaning of 12181(7) to cover websites is a dangerous task which seems to assume the example-based definition of public accommodation was the result of cohesive policy goals and a singular purpose, which clearly was not the case. Finally, the broad notions

advanced in the legislative history are consistent with the denial of ADA application to websites. The ADAs purpose is to address a broad range of situationsbut every situation in that broad range envisions a physical facility or place of accommodation. The most expansive notions of the ADAs purpose come not from the text but from the individual comments of congressmen or President Bush. The problems with relying on the comments and interpretations of a single representative, senator, or political actor when interpreting a statute passed in both congressional bodies and approved by the executive branch are thoroughly developed earlier and elsewhere.143 Suffice it to say, there are serious issues of presentment, special interest lobbying, and legislative influence on the cheap to warrant according the comments any weight.

In this capacity, the Department of Justice (DOJ) supports the extension of the ADA to commercial websites. A 1996 advice letter from the Civil Rights Division suggests places of public accommodation, which communicate through websites, must ensure their online information is accessible under the ADA.148 The letter does not suggest websites themselves are places of public accommodation, and because the online information provided by public accommodations is usually available through other accessible means, the letters approach to website accessibility is severely limited.149 Agency decisions, which further extend coverage to websites without a physical place of public accommodation, however, deserve consideration and anticipation.150 Chevron scrutiny governs administrative statutory interpreta151 tions. The first motion in a Chevron analysis is to determine whether Congress directly spoke on the issue at hand.152 If so, agency and judicial interpretations must yield to the unambiguous congressional intent.153 If the text is ambiguous, courts must defer to agency interpretations that permissibly apply the statute.154 The justification for agency deference rests on two grounds. If the text is intentionally vague, Congress likely intended for the appointed agency to work out the details. If the text is unintentionally vague, the appointed agency deserves deference because of its expertise. Chevron establishes an assumption that, in either case, agency discretion prevails.155 Agency discretion is not absolute, however. If a court, employing traditional tools of statutory construction, ascertains that Congress had an
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intention on the precise question at issue, that intention is the law and must be given effect.156 For instance, if a court employs a traditional tool of statutory interpretation like noscitur a sociis or ejusdem generis to resolve alleged ambiguities in the text, an agency can not proceed to take actions regarding the section if those actions run contrary to the canon-based interpretation. Ejusdem generis and noscitur a sociis both resolve any alleged ambiguities in the definition of public accommodation. Each canon indicates that public accommodations are physical places and do not include cyberspace. A DOJ conclusion to the contrary is thus unfounded and limited in authority.157

Growing Backlash Against ADA Expansion

Regardless of whether disability advocates agree with a restrictive analysis of 12181(7), efforts centered on extending the existing ADA to websites risk wasting political energy. As the final section of this Note will indicate, that energy is better spent on alternate avenues for addressing online accessibility. Recent Supreme Court cases have signaled a growing backlash against expansive ADA interpretations. The restrictive approach in Sutton v. United Airlines, Inc. perhaps best captures this movement.158 The case admittedly deals with a different Title of the ADA and is not direct precedent.159 Nonetheless, Sutton illustrates the Courts increasing reliance on strict textualism to reject the expansive arguments of statutory purpose, legislative history, and agency deference

Agencies Agendas
The ADA grants authority to the Attorney General to issue regulations necessary to carry out the provisions of Title III.144 Section 12186(b) states the Attorney General shall issue regulations in an accessible format to carry out the provisions of this Titlethat include standards applicable to facilities.145 The Attorney Generals standards must be consistent with the minimum guidelines established by the Architectural Barriers Compliance Board.146 Section 12204 directs the Board to establish minimum guidelines to ensure that buildings, facilities, rail passenger cars, and vehicles are accessible in terms of architecture and design transportation and communication to individuals with disabilities.147

that would likely be raised by the treatment of websites as places of public accommodation. Karen Sutton and her twin sister filed disability discrimination charges against United Airlines when the company denied their pilot applications because each suffered severe myopia.160 Lenses could fully correct their myopia, and thus the central issue of statutory interpretation was whether these corrective and mitigating measures should be considered when determining whether the sisters were substantially disabled.161 The text of the ADA defines a qualifying disability as a physical or mental impairment that substantially limits one or moremajor life activities162 and estimates 43 million individuals have qualifying disabilities. Despite pleas to the broad remedial purpose of the ADA, as well as supporting comments in the legislative history, the Court adopted a restrictive textualist reading to conclude that the sisters myopia was not a qualifying disability. Verb tense and plain meaning won out over general purpose and favorable legislative history. First, the Court noted the ADAs definition of an eligible disability is written in the present indicative verb formsubstantially limits.163 Thus, we think the language is properly read as requiring that a person be presentlynot potentially or hypotheticallysubstantially limited in order to demonstrate a disability.164 When the sisters wore their lenses, the court reasoned their vision was corrected and hence it no longer substantially limited a major life activity.165 Second, the Court noted the text of the ADA states some 43,000,000 Americans have one or more physical or mental dis-

This number was far below the number of disabled Americans who would qualify if the Court extended the term to include disabilities for which corrective or mitigating measures were available. In each instance, Justice OConnor focused on the ADAs exact wording, although Justice Stevens dissent repeatedly offered examples of legislative history that appeared to support a more expansive definition of disability. Justice Stevens pointed out that, in order to be faithful to the remedial purpose of the Act, we should give it a generous rather than a miserly, construction;167 that the Senate Report specifically stated disability should be assessed without regard to mitigating measures;168 and that each of the three executive agencies charged with implementing the Act had consistently interpreted the ADA to mandate disability status be determined without regard to mitigating measures.169 Though they arise in a clearly different context, these are the same general types of arguments that advocates for extending the ADA to websites are likely to makepurpose, legislative history, and agency deference. Described as a hypertexualist reading by one commentator,170 Sutton embodies an increasing use of textualism at all levels of ADA interpretation to deny expansive applications of the statute.171 In sum, the text of Title III does not include websites as places of public accommodation. Noscitur a sociis and ejusdem generis dictate places of public accommodation must be physical facilities. The canons also sufficiently resolve any alleged statutory ambiguities, thereby foreclosing the opportunity for contrary agency interpretations. Although the intentionally broad purpose and design of
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abilities.166

the ADA encourage advocates of online expansion, the same purpose and design limit Title III exclusively to physical facilities.

Proposed Solution
This Note in no way discourages efforts to increase website accessibility. In fact, quite the contrary. Instead, it has only tried to demonstrate that the current ADA is just the wrong tool for the right job. Regulation of website design is both possible and likely necessary in light of the markets failure to address the needs of the disabled, the value of including the disabled in the commercial Internet community, and the realistic limits on compliance costs. First and foremost, the Internets architecture is not inherently inaccessible.172 Its inaccessibility reflects a choice in values.173 Web firms have chosen to exclude the disabled in favor of technological advances and profit. They have chosen to use complex graphics and applets to attract users over accessible features to ensure disabled access. Through the efforts of the World Wide Consortium (W3C) and other accessibility groups,174 most major commercial web designers are likely aware of the needs of the disabled. They simply choose to overlook them.175 For instance, CNET.com recently posted a special report on the need for accessible web design.176 The report included numerous suggestions and requirements to make a web page accessible. Unfortunately, the report itself was not accessible.177 This same phenomenon has occurred on several other sites.178 The market forces that refused to make real-world accommodations for the disabled

until the passage of the ADA likely will continue to present the same opposition online. Until Congress takes legislative action, commercial websites will continue to exclude the disabled. Greater accessibility, however, cannot come at any price. The cost must be reasonable in light of the potential impact on online businesses and the promotion of open discourse on the Internet. There ultimately must be some concrete valuation of the competing goals. A necessary element of this valuation is determining the cost of increasing online accessibility and ensuring website compliance. Such a study is beyond the abilities of this Note. Although the following paragraphs will suggest that the cost is likely lower than expected and offset by benefits to both the disabled and the able-bodied, discovering the true price tag of accessibility is a fundamental element of designing accessibility policies which optimize market and societal values. Compared to building accessible real-world facilities, it is much harder to calculate cost estimates for website redesigns. Wheelchair ramps and accessible counters are one-time costs, built into or attached to the physical structure of a facility. Web pages, on the other hand, are often built and rebuilt every day. Graphics and icons are constantly added and pages redesigned to remain competitive and up to date. Incorporating accessibility thus becomes a recurring cost over the life of a website. As the site adds new pages, additional textual references must be made to ensure the site remains universally navigable. Add to this the millions of existing, popular, and rarely visited, commercial web pages ADA style reg-

ulation would force into compliance. One of the Internets greatest strengths is its ability to archive millions of old pages and bits of information because of the low cost of data storage. If these archived pages were required to comply with accessibility requirements, several website operators have testified they would drop them due to the cost.179 Four factors mitigate these costs, however. The actual process of tagging an individual graphic with text is not program-intensive. One option is to provide pop-up text that gives a description of the graphics and can be read aloud by devices for the visually impaired.180 The technology for such tagging is a common aspect of HTML called Alt.tag. Simply programming a text tag into the HTML would take limited time and provide a valuable benefit. The second technique is to provide parallel web pages which include the same content without graphics or disability barriers.181 Web designers often fear accommodating the disabled requires restricting the aesthetic nature of their websites; inserting pop-up texts or using parallel pages could greatly resolve this problem. To quote Tim Berners-Lee, inventor of the Internet and director of the W3C, The Web excels as a medium in which accessibility can be addressed. On the Web, a computer can automatically and cost-effectively represent the same information in a variety of ways according to the needs of users. Within the neutral forum of W3C, industry leaders, disability representatives, and others convened to develop accessibility solutions that
203

are reasonable, practical, and effective. Websites designed using very simple tools naturally tend to be accessible. Even sophisticated sites, designed with major effort, can be kept accessible with only a small proportion of that effort.182 Second, ADA styled accessibility regulation does not require that the content be accessible or in braille, only that a disabled individual be able to enter and navigate the site. In the context of brick and mortar entertainment service providers, The purpose of the ADAs public accommodations requirements is to ensure accessibility to the goods offered by a public accommodation, not to alter the nature or mix of goods that the public accommodation has typically provided. In other words, a bookstore, for example, must make its facilities and sales operations accessible to individuals with disabilities, but is not required to stock brailled or large print books. Similarly, a video store must make its facilities and rental operations accessible, but is not required to stock closed-captioned videotapes.183 In order to insure compliance with the First Amendment, web page accessibility regulation must follow a similar course.184 Regulation must be limited to access elements and not content. Such tailoring limits the number of web page elements requiring alteration and therefore limits the cost of compliance. Moreover, the navigational links and core site map

for a website often remain constant over the life span of a site, and other than the addition of links to new pages, require less redesign than the content they display. Third, increases in business from certain disabled customers could offset some costs. According to the 1996 U.S. Census, the collective purchasing power of disabled Americans should reach $1 trillion by 2001.185 This number does not even reflect the potential for increases in the productivity of the disabled. Moreover, investments in accessibility can benefit the able-bodied. Text equivalents for graphics and sound can help all users search websites based on their graphical content. Current search engines are limited to using a web pages text and the information contained in the metatag of the site. Tagging graphics would allow search engines to also use the text cues to index graphics and media content. Furthermore, the screen sizes of personal digital assistants (PDAs) and Internet ready wireless telephones limit the ability to display graphic content. Text-based navigation of websites would enable these devices to provide the majority of information in an accessible medium rather than relying on separate sites designed for PDAs and wireless phones. Accessibility guidelines could work with Wireless Application Protocols (WAP) as possible substitutes. In several technologies, very real and tangible innovations can arise from developing technology and accessible designs that benefit the disabled.186 Fourth, the increasing focus on voice recognition software requires text availability. In order to have a computer read the days news and interpret a users voice commands, the web page must express

its core elements in text. Finally, arguments that regulating inaccessibility will also stifle innovation on the Internet miss the bigger point. The blind rush to innovation and the fervent embrace of new media displays are what caused us to leave out the disabled in the first place. The W3C has already released a set of guidelines intended to establish clear requirements for making websites accessible.187 The EEOC has adopted the guidelines to implement the amended Rehabilitation Act of 1973. The guidelines emphasize the importance of text equivalents for non-text content. As the W3C notes, The power of text equivalents lies in their capacity to be rendered in ways that are accessible to people from various disability groups using a variety of technologies.188 Text can be readily output to speech synthesizers and braille displays and can be presented visually (in a variety of sizes) on computer displays and paper. According to the W3C, Synthesized speech is critical for individuals who are blind and for many people with the reading difficulties that often accompany cognitive disabilities, learning disabilities, and deafness.189 The guidelines also encourage using text and graphics that are understandable when viewed without color, controlling the use of style sheets, and using tables for truly tabular information and not merely page layout. Finally, the guidelines aim to have the user interfaces of websites follow principles of accessible design: device-independent access to functionality, keyboard operability, self-voicing, etc.190 Device-independent access means that the user may interact with the user agent or document with a preferred input (or output) device
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mouse, keyboard, voice, head wand, or other.191 The W3C notes that if a form control can only be activated with a mouse or other pointing device, someone who is using the page without sight, with voice input, or with a keyboard or who is using some other non-pointing input device will not be able to use the form.192

The Square Peg, The Round Hole

The W3Cs guidelines demonstrate that website accessibility is technologically possible. The question is under what type of regulatory regime accessibility should be pursued. Without an accurate assessment of the cost of ensuring accessibility in commercial websites, it is difficult tell. A detailed study is needed. What is clear, however, is that Title III of the ADA is not the proper means to regulate website architecture. The interpretative canons of noscitur a sociis and ejusdem generis dictate that places of public accommodation refer exclusively to physical facilities. Although the intentionally broad purpose and design of the ADA make the statute an attractive avenue for advocates of online expansion, that same purpose and design limit Title III to physical facilities. Addressing website accessibility is a critical issue and deserves public discourse and debate. Title III of the ADA is just the wrong tool for the right job. N

1 See 42 U.S.C. 12182(a) (1999). 2 See 42 U.S.C. 12181(7)(E),(F),(C) (1999). 3 See 42 U.S.C. 12182(a). 4 The complaint is available online at the National Federation for the Blinds Hompage. See AOL Complaint (visited Mar. 30, 2000) <http://www.nfb.org/aolcompl.htm>. See also AOL Named in Disabilities Act Suit Filed By Blind Users, 17 No. 4 ANDREWS COMPUTER & ONLINE INDUS. LITIG. REP. 7, 7-8 (Nov. 1999). 5 See Testimony Presented to the Subcommittee on the Constitution (visited Mar. 5, 2000) <http://www.house.gov/judiciary/2.htm>. 6 See Doe v. Mutual of Ohama Ins. Co., 179 F.3d 557, 559 (7th Cir. 1999). 7 Noscitur a sociis is a canon of statutory interpretation. It instructs that a term should be interpreted within the context of the accompanying wordsthe term is known by its associates. 8 Ejusdem generis is a canon of statutory interpretation. It instructs that when general words follow an enumeration of specific words, the general words are to be read as applying only to the same general kind or class as those enumerated. 9 Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842 (1984). 10 See Sally McGrane, Is the Web Truly Accessible to the Disabled? (visited Jan. 18, 2000) <http://home.cnet.com/specialreports/0-6014-71530073.html>. See also Steve Lawrence, C. Lee Giles, Search is on for Better Search Engines, NATURE, Vol. 402, No. 6761, p.458 (1999). 11 See McGrane, supra note 10. 12 See Pamela Mendels, Advocates for Blind, in Suit, Say AOL Impedes Access to Internet, N.Y. TIMES ABSTRACTS 25, November 5, 1999, available in Westlaw, 1999 WL 30548065. 13 See id. 14 See id. 15 See id. 16 See McGrane, supra note 10. 17 See id.

23 See id. 24 See id. These displays allow for the presentation of moving images on otherwise static web pages. For instance, Shockwave applets are commonly used to deliver short images of scrolling text or animation. 25 See Pamela Mendels, Barriers Online for those with Disabilities (visited Feb. 10, 2000) <http://www.nytimes.com/library/tech/99/11/cyber/articles/04disability.html>. 26 LESSIG, supra note 19 at 66. 27 See S. Connolly, Compliance with the Americans with Disability Act in Cyberspace, 3 No. 10 Cyberspace Law., Jan. 1999, at 8. 28 DSL stands for digital subscriber line. DSL is a method of sending digital data over existing copper telephone lines at rates considerably faster than dialup transfers using ordinary telephone connections. 29 See LESSIG, supra note 19 at 66. 30 See generally Connolly, supra note 27. 31 See X-Men The Movie (visited Apr. 4, 2000) <http://www.x-men-themovie.com>. 32 See MP3.com (visited Feb. 18, 2000) <http://www.mp3.com>. 33The sites were tested using the Center for Applied Special Technologys (CAST) Bobby program. The Bobby program is designed to identify websites which are accessible to the disabled. Bobby evaluates sites based on the World Wide Web Consortiums Accessibility Guidelines. The guidelines insure sites provide 1) text equivalents for all non-text elements, 2) summaries of graphs and charts, 3) means to ensure all information conveyed with color is available without color, and 4) logically and clearly alternate content for inaccessible applets or plug-in features. See Welcome to Bobby 3.11 (visited Mar. 30, 2000) <http://www.cast.org/bobby>. 34 See Connolly, supra note 27 (outlining an early complaint alleging a web page of the San Francisco Metropolitan Transportation Commission violated the ADAs ban against discrimination on the basis of disability in places of public accommodation). 35 See Karen M. Volkman, The Limits of Coverage: Do Insurance Policies Obtained Through An Employer and Administered by Insurance Companies Fall Within The Scope Of Title III of the Americans with Disability Act?, 43 ST. LOUIS U. L.J. 249, 250 (1999). 36 See generally 42 U.S.C. 12101-12210.

18 An avatar is an online persona. It can include a graphical image that represents the user in online chat forums or virtual communities. The image appears on the screen of the participants to an online discussion and can be thought of as a virtual face or body. 19 See LAWRENCE LESSIG, CODE AND OTHER LAWS (1999). 20 See id.
OF

37 See 42 U.S.C. 12101(a),(b). 38 See generally 42 U.S.C. 12101. 39 See 42 U.S.C. 12182(a). 40 See 42 U.S.C. 12184(a). 41 42 U.S.C. 12182(a).

CYBERSPACE 66

21 See id. at 65. 42 See 42 U.S.C. 12181(7). 22 See id. at 66. 43 Id. The entire section includes a list of 12 categories of places of 205

public accommodation. Specifically, 12181(7) sets forth the following list of places of public accommodations: an inn, hotel, motel, or other place of lodging a restaurant, bar, or other establishment serving food or drink; a motion picture house, theater, concert hall, stadium, or other place of exhibition or entertainment; an auditorium, convention center, lecture hall, or other place of public gathering; a bakery, grocery store, clothing store, hardware store, shopping center, or other sales or rental establishment; a laundromat, dry-cleaner, bank, barber shop, beauty shop, travel service, shoe repair service, funeral parlor, gas station, office of an accountant or lawyer, pharmacy, insurance office, professional office of a health care provider, hospital, or other service establishment; a terminal, depot, or other station used for specified public transportation; a museum, library, gallery, or other place of public display or collection; a park, zoo, amusement park, or other place of recreation; a nursery, elementary, secondary, undergraduate, or postgraduate private school, or other place of education; a day care center, senior citizen center, homeless shelter, food bank, adoption agency, or other social service center establishment; and a gymnasium, health spa, bowling alley, golf course, or other place of exercise or recreation. 42 U.S.C. 12181(7). 44 See generally RX.com (visited Mar. 2, 2000) <http://www.rx.com>; BlueFly (visited Mar. 2, 2000) <http://www.bluefly.com>; CDNOW (visited Mar. 2, 2000) <http://www.cdnow.com>. 45 There obviously are unique issues posed by traditional places of public accommodation which also offer their services online. The Gap clothing stores primary revenue comes through its stores located in malls and other physical facilities across the country. Yet, the Gap also offers its clothing and goods online. The stores qualify as public accommodations under 12181(7)(E) and thus the question is whether this designation extends to the Gaps website. The likely answer is no. The websites do not offer similar physical facilities for customer interaction and sales, and thus any online discrimination on the basis of disability is not sufficiently connected to a physical place of public accommodation listed in 12181(7). Moreover, even under the logic of the Baker v. Hartford Life Ins. Co., 1995 WL 573430, 3 (N.D.Ill. 1995), the servers and support for the websites are not open to the public or housed in actual Gap stores. See note 79 for a discussion of Baker v. Hartford Life Ins. Co. 46 See 12181(7). 47 See generally PHILIP E. MARGOLIS, RANDOM HOUSE WEBSTERS COMPUTER AND INTERNET DICTIONARY, 3RD EDITION (1999). 48 See 12181(7)(C).

<http://www.nfb.org/aolcompl.htm>. 52 Id. at 1. 53 See id. at 19 ( The AOL service is a place of public accommodation as defined by Title III of the ADA, 42 U.S.C. section 12181(7), in that it is a place of exhibition and entertainment, a place of public gathering, a sales and rental establishment, a service establishment, a place of public display, a place of education, and a place of recreation). 54 Generally, this software comes preinstalled in a consumer PC or will be available via a mass mailing or upon user request. 55 See supra note 51 at 23. 56 For instance, CNN.com offers a homepage covered with links to its own articles on various topics in various sections of the online paper. See <http://www.cnn.com>. Bluefly.com similarly sells clothes through a site which contains links to pages for each of its various individual items as well as links which let the web surfer navigate to the checkout area or online customer service department. See <http://www.bluefly.com>. 57 See Lawrence, supra note 10. 58 See BankAmerica Corp. v. United States, 462 U.S. 122, 128 (1983); see also K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 291 (1988). 59 See Doe v. Mutual of Ohama Ins. Co., 179 F.3d 557, 559 (7th Cir. 1999). 60 See id. 61 See Carparts Distrib. Ctr., Inc. v. Automotive Wholesalers Assn of New England, Inc., 37 F.3d 12, 19 (1st Cir. 1994). 62 See Parker v. Metropolitan Life Ins. Co., 121 F.3d 1006, 1013 (6th Cir. 1997); see also Ford v. Shering-Plough Corp., 145 F.3d 601 (3d Cir. 1998)(following Parker and rejecting Carparts). 63 See Carparts, 37 F.3d at 19. 64 See Parker, 121 F.3d at 1013. 65 See Carparts, 37 F.3d at 19. 66 See id. at 14. 67 See id. 68 See id. 69 See Carparts Distrib. Ctr., Inc. v. Automotive Wholesalers Assn of New England, Inc., 826 F.Supp. 583, 586 (D.N.H. 1993). 70 See Carparts, 37 F.3d at 19. 71 See 42 U.S.C. 12181(7)(F).

49 See 12181(7)(E). 72 Carparts, 37 F.3d at 19. 50 See 12181(7)(F). 73 Id. 51 The complaint is available online at the National Federation for the Blinds Hompage. See AOL Complaint (visited Mar. 30, 2000) 74 Id. 206

75 See id. 76 Id. at 20. 77 See Mutual of Ohama, 179 F.3d at 559. 78 Id. (emphasis added). 79 But see Baker v. Hartford Life Ins. Co., 1995 WL 573430, *3 (N.D.Ill. 1995). Baker involved an insurance plan which customers contacted exclusively over the phone or through the mail. The Illinois district court, in Baker, reached a similar result to Carparts but under a different logic. The court found that while the term place in the definition of public accommodation does imply a physical location, the ADA does not require a plaintiff to be physically present at the place of public accommodation. According to the court, telephone calls between the plaintiff and the defendant provided a sufficient nexus to a physical place of public accommodation, because the place from which the defendants telephone communication with plaintiff s father took place was an insurance office. Insurance offices are specifically covered under 42 U.S.C. 12181(7)(F). This rationale has interesting applications to websites. A customers interactions with a website might equate to the phone calls in Baker. Even though the customer never physically enters the website or its real- world support facilities, the website originates from a physical location were its server is housed. The parallel ends there, however. All the examples cited in the statute are intended for public access, and under the canon of noscitur a sociis, the same criteria should apply to any place a plaintiff might claim is a place of public accommodation. The Baker court does not provide sufficient information to determine whether the insurance office where the calls were received and placed was intended to be open to the public. Most likely it was. Housings for website servers generally are not open to the public and definitely are not expressly mentioned in the text of 12181 like insurance offices. At best they fall under other places of sales, service, etc. language which as previously mentioned is constrained to public places under the doctrine of noscitur a sociis. 80 See 42 U.S.C. 12181(7).

84 See Parker, 121 F.3d at 1008. 85 See id. 86 See id. at 1012. 87 See Babbitt v. Sweet Home Chapter of Communities for a Great Oregon, 515 U.S. 687, 701-03 (1995). 88 See BLACKS LAW DICTIONARY (6th ed. 1988). 89 See Parker, 121 F.3d at 1012. 90 See 42 U.S.C. 12181(7)(D)-(F), (H)-(L). 91 See Parker, 121 F.3d at 1011-12. 92 See Carparts, 37 F.3d at 19. 93 See Parker, 121 F.3d at 1014. 94 See Ford v. Shering-Plough Corp., 145 F.3d 601, 605 (3d Cir. 1998). 95 Id. at 614. 96 See id. 97 See Sutton v. United Air Lines, Inc., 527 U.S. 471, 119 S. Ct. 2139 (1999). See also James P. Colgate, If You Build It, Can they Sue? Architects Liability Under Title III of the ADA, 68 FORDHAM L. REV. 137, 142 (1999) (presenting an excellent discussion of the growing restrictive trend in Supreme Court ADA opinions). 98 Parker, 121 F.3d at 1014. 99 See 42 U.S.C. 12181(7)(F). 100 Parker, 121 F.3d at 1014. 101 See Carparts, 37 F.3d at 19.

81 See Carparts, 37 F.3d at 19-20. 102 See 47 U.S.C. 225 (d). 82 See Richards v. United States, 364 U.S. 1, 9 (1962). 103 See 47 U.S.C. 225 (a)(3). 83 See Parker, 121 F.3d at 1013. See also Stoutenborough v. National Football League, Inc., 59 F.3d 580 (6th Cir. 1995). In Stoutenborough, Thomas Stoutenborough and an association for the hearing impaired sued the National Football League (NFL) and several television stations alleging the NFLs blackout rule violated Title III of the ADA. Because they were deaf and could not listen to the games over the radio, the plaintiffs alleged the NFL and TV stations had unfairly discriminated against them by not televising the games. The complaint claimed the television transmission of football games qualified as a public accommodation. In a pre-Carparts opinion, the Sixth Circuit found television transmissions did not fall into any of the 12 enumerated categories in 12181(7). The court reasoned each of the 12 categories covered places, and a place is defined as a facility, operated by a private entity, whose operations affect commerce and fall within at least one of the twelve public accommodation categories. The ADA, in turn, the court noted, defines facility as all or any portions of buildings, structures, sites, complexes, equipment, rolling stock or other conveyances, roads, walks, passageways, parking lots, or other real or personal property, including the site where the building, property, structure, or equipment is located. A place of public accommodation, the court reasoned, requires a physical structure. 104 Parker, 121 F.3d at 1011. 105 Id. 106 42 USC 12204 (b). But note the Architecture Boards Access Board now sets standards for federal websites under 508 of the Rehabilition Act of 1973 (as amended by the Work Force Investment Act of 1998). 107 See Arcadia v. Ohio Power Co., 498 U.S. 73, 78 (1990)(applying ejusdem generis to narrowly construe the phrase or any other subject matter in 318 of Federal Power Act). See also Hughey v. United States, 495 U.S. 411, 419 (1990); Breininger v. Sheet Metal Workers Intl Assn Local Union No. 6, 493 U.S. 67, 91-92 (1989). 108 Parker 121 F.3d at 1014. 109 See 42 U.S.C. 12181(7) (including other sales or rental establishment, other place of entertainment, and other places of entertainment). 207

110 See Carparts, 37 F.3d at 18. 111 See id. at 19-20.

133 See 29 U.S.C. 724d (as amended by the Workforce Investment Act of 1998). 134 See generally 29 U.S.C. 701-726.

112 See Tcherepnin v. Knight, 389 U.S. 332, 336 (1967). 135 ROTHSTEIN & LIEBMAN, supra note 117 at 44. 113 42 U.S.C. 12101(b)(4) (emphasis added). 136 See id. 114 42 U.S.C. 12101(b)(1) (emphasis added). 137 See id. 115 42 U.S.C. 12101(b)(2) (emphasis added). 138 See 42 U.S.C. 12101(b)(1)-(4). 116 BERNARD D. REAMS , PETER J. MCGOVERN, AND JON S. SCHULTZ, DISABILITY LAW IN THE UNITED STATES: A LEGISLATIVE HISTORY OF THE AMERICANS WITH DISABILITIES ACT OF 1990 PUBLIC LAW 101-336, VOL. 1 Doc. 10 (1992). See also Emily Alexander, The Americans with Disability Act and State Prisons: A Question of Statutory Interpretation, 66 FORDHAM L. REV. 2233 (1998) (general discussion of the role of the ADA statement of purpose). 117 See ROTHSTEIN & LIEBMAN, EMPLOYMENT LAW 344 (1998). 118 See H.R. REP. NO. 485, 101 Cong., 2d Sess., pt. 2, at 99 (1990). 119 See Alexander, supra note 116. 144 See 42 U.S.C. 12186(b). 120 See Reno v. ACLU, 521 U.S. 844, 853 (1997) (stating the Internet is comparable, from the readers viewpoint, to both a vast library including millions of readily available and indexed publications and a sprawling mall offering goods and services. From the publishers point of view, it constitutes a vast platform from which to address and hear from a world-wide audience of millions of readers, viewers, researchers, and buyers). 121 See CDNOW (visited Mar. 3, 2000) <http://www.cdnow.com>, Amazon.com (visited Mar. 3, 2000) <http://www.amazon.com>. 122 Assuming they met the criteria of a private entity, offering commercial services, in one of the categories of places covered in 42 U.S.C. 12181(7). 123 See Parker, 121 F.3d at 1020 (Martin, J., dissenting). 124 See THE AMERICANS WITH DISABILITIES ACT: A PRACTICAL AND LEGAL GUIDE TO IMPACT, ENFORCEMENT, AND COMPLIANCE 34 (1990) (offering an overview of the legislative history of the ADA). 125 See id. 126 See id. at 39. 127 See id. at 46 (noting that the Attorney General argued that using a definition of public accommodation other than that in Title II of the Civil Rights Act of 1964 would lead to too much litigation and a statute that was confusingly vague). 128 See S. REP. NO. 101-116, at 59 (1989). 152 See id. at 842. 129 See H.R. REP. NO. 101-486, pt. 3, at 10-11 (1990). 153 See id. at 842-43. 130 See H.R. REP. NO. 101-486, pt. 3, at 54 (1990). 154 See id. at 843. 131 See S. REP. NO. 101-116, at 59 (1989). 155 See id. at 842-43. 132 See 29 U.S.C. 701(b). 208 145 Id. 146 Id. 147 42 USC 12204 (a)-(b). 148 The letter is available at the DOJs homepage (visited Mar. 3, 2000) <http://www.usdoj.gov/crt/foia/cltr204.txt>. 149 See id. The DOJ opinion letter states,Covered entities that use the Internet for communications regarding their programs, goods, or services must be prepared to offer those communications through accessible means as well. The letter does not state websites themselves are places of public accommodation, only that places of public accommodation distributing information over websites must make the online information accessible. This notes tailored focus on websites as places of public accommodation precludes a developed discussion of these issues. It is worth noting, however, that information and services offered online by places of public accommodation are often offered at the physical place of public accommodation or through toll-free 800 numbers. The availability of these alternate accessible sources of information likely qualify as defenses under the ADA, thus excusing most instances of liability. 150 See Volkman, supra note 35 at 275-79 (providing a general discussion of the agency opinions regarding Title IIIs definition of public accommodation). 151 See Chevron, 467 U.S. at 853. 143 See ANTONIN SCALIA, A MATTER OF INTERPRETATION: FEDERAL COURTS AND THE LAW (1997); but see William N. Eskridge, Jr., Textualism the Unknown Ideal?, 96 MICH L. REV. 1509 (1998). 139 Id. (emphasis added). 140 See 42 USC 12101(b)(1)-(4) (emphasis added). 141 Carparts, 37 F.3d at 20. 142 See Volkman supra note 35 at 251 (emphasis added).

156 Id. at 845. 157 See id. at 843. 158 See Sutton, 119 S.Ct. at 2139. 159 Sutton involved charges brought under Title I of the ADA. Title I covers discrimination in employment on the basis of disability. 160 See id. at 2143. 161 See id. at 2144. 162 See 42 U.S.C. 12102(2)(a)(emphasis added). 163 See Sutton, 119 S.Ct. at 2146. 164 Id. 165 See id. 166 Id. at 2147 (quoting 42 U.S.C. 12101(a)(1)). 167 Id. at 2152 (Stevens, J., dissenting). 168 See id. at 2154. 169 See id. at 2155. 170 See James P. Colgate, supra note 97 at 142. 171 It should be noted that the Sutton majority concluded the ADAs text did not appoint an agency to interpret the term substantial disability. Thus, the contrary opinions of the three federal agencies were not accorded Chevron deference. This is not the case in Title III. Section 12186(b) clearly grants authority to the DOJ to draft and implement rules to effectuate accessibility in public accommodations. Despite this difference, Sutton remains illustrative of the Courts willingness to overlook the advice of agencies with considerable expertise in implementing the ADA in order to remain true to the Courts own textual interpretations. 172 See LESSIG, supra note 19 at 66.

180 See McGrane, supra note 10. 181 The Department of Justice and other federal agencies have adopted this approach. The DOJ homepage makes extensive use of graphic images and toolbars, but in the right hand corner provides a text hyperlink to a page which mirrors the content without the use of graphics. See DOJ Homepage, (visited Apr. 4, 2000) <http://www.usdoj.gov>; DOJ Text Based Homepage (visited Apr. 4, 2000) <http://www.usdoj.gov/index.html>. 182 See Testimony Presented to the Subcommittee on the Constitution (visited Mar. 5, 2000) <http://www.house.gov/judiciary/2.htm>. 183 Parker, 121 F.3d at 1012. 184 See Peter Blanck, Testimony before the House Subcommittee on the Constitution (visited Mar. 3, 2000) <http://www.house.gov/judiciary/blan0209.htm> (stating ADA-style regulation would not violate the First Amendment because [it] would not require changes to the subject matter or content of websites and services but only to the manner by which information is presented). 185 See TechlawJournal, supra note 178. This statistic includes all disabled individuals and not just those with online disabilities. 186 See Blanck, supra note 184 (My colleagues and I have attempted to identify emerging issues related to accessibility and ADA implementation. First, research suggests that cost-effective, economically beneficial, and fair implementation of the ADA itself is furthered by providing information in accessible formats to persons with disabilities. Second, my colleagues and I have conducted a review of economic activity in the assistive technology market (e.g., using data derived from the United States Patent and Trademark Office). The preliminary findings illustrate, but do not yet prove, that the ADA fosters future technological innovation and economic activity in the private Internet-based service industry, in many ways unanticipated at the time that the law was passed. As e-commerce markets and initiatives for goods and services expand, inventors, manufacturers, retailers, and employers are responding to meet the needs of consumers with disabilities, those who may become disabled in the future, and the elderly. The untapped accessible web-based e-commerce marketplace holds vast profit-making opportunities). 187 See Web Accessibility Initiative, supra note 175.

173 See id. 188 Id. 174 The W3C is hosted by Masschuettes Institute of Technology and seeks to shape the development of the Internet and World Wide Web. The W3Cs mission statement is available online. See About the World Wide Web Consortium (visited Mar. 3, 2000) <http://www.w3.org/Consortium/>. 175 See Web Accessibility Initiative (visited Mar. 3, 2000) <http://www.w3.org/WAI>. 176 See McGrane, supra note 10. 177 See id. 178 See TechlawJournal, Online Accessibility (visited Mar. 3, 2000) <http://www.techlawjournal.com/censor/20000210.htm>. 179 See Charles Cooper, Testimony before House Subcommittee on the Constitution, (visited Mar. 3, 2000) <http://www.house.gov/judiciary/ coop0209.htm>. 209 189 Id. 190 Id. 191 Id. 192 Id.

sports

A Journey Through

O Olympic Drug O O O

t is the spring of the year 2000, and you are looking forward to your first sum-

mer of the new Millennium. Baseball season has started, the National Basketball Association playoffs are on the horizon, and Wimbledon, the French Open, and the U.S. Open are all ahead of you. And, best of all, this is an Olympic year. During the fall, your television will be taken over by gymnastics, soccer, softball, and track & field with interesting vignettes telling the amazing stories of sacrifice and hardship leading up to Olympic glory. You even remember, with misty-eyed nostalgia, your days as a high school athlete; it is not important that it was in the sphere of intramurals. YOU WERE A CONTENDER! If you had applied yourself, you too could have been an Olympian. Now, you are a hard-working attorney looking forward to a summer of sitting on your couch and watching other great athletes. Little did you know that you would play a part in the 2000 Olympic Games in Sydney, Australia.

A Practitioners Guide To Understanding

By Jill Pilgrim and Kim Betz

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Testing Rules
Isnt life funny? A few months prior to the start of the 2000 U.S. Olympic Team Trials for track & field, Amanda, a top U.S. athlete, comes to your office seeking guidance. Like other athletes, she has been drug tested consistently throughout her career. She admits, however, that the recent media attention given to the creation of new organizations involved with drug testing,1 the new methods of drug testing, and the rise in the number of athletes that have recently tested positive are all somewhat disconcerting to her, especially since this is an Olympic year. Amanda is confident that she will make the Olympic team and compete in the U.S., Canada, and Australia before reporting to the Olympic Village in September of 2000. While she has professed to be drug free, she would like to better understand the changes that have been made in the recent months with respect to Olympic drug testing. Amanda has provided you with her training schedule to assist you in your legal analysis. (See Amandas Training Schedule, infra, p. 212.) Where do you begin your research in order to provide adequate advice to Amanda? they fully understand the jurisdictional issues that arise with respect to every sample taken, until they are caught in a crisis. This Article attempts to untangle the web of rules and regulations and provide athletes, coaches, and athlete representatives with a working knowledge of: 1) when an athlete is subject to drug testing, 2) which organizations oversee doping control, and 3) the potential problems that arise when more than one organization is involved.

Brief History of Cheating

Ever since the ancient Olympic Games, athletes have sought the glory of being crowned Olympic champions with all the attendant accolades, gifts, and awards. Over time, this quest for greatness has tempted athletes to obtain athletic prowess by dishonest means. Drug testing of athletes, to stamp out performance-enhancing drug use, began within the Olympic Movement3 in 1968. It continues today. In modern times, unscrupulous doctors have assisted athletes in gaining an edge against opponents. The most notorious and recent Olympic exposure of cheating occurred during the 1988 Olympic Games in Seoul, Korea, where Ben Johnson was exposed as a steroid user. However, not all Olympic drug infractions are the product of intentional actions on the part of athletes. Recently, several former East German athletes brought suit in Germany alleging that they were unknowingly given performance-enhancing drugs, under the guise of vitamins. These cases reinforce to the public what Olympic athletes have known for decades drugs do exist in sports.

While many top U.S. Olympic-caliber athletes have

been drug tested throughout their careers, few truly understand the drug testing process. The ever-changing rules and regulations, as well as the increase in the number of doping control programs,2 have proven to be confusing and sometimes inconsistent, despite appearing

Drug Testing Within the Olympic Movement

to assist in the fight against doping in sport. Many organizations cannot interpret their own rules, nor do

211

Necessary Tools
To begin your research and advise Amanda, you will need to obtain the following documents:

When is an Athlete Subject to Drug Testing?

Now that you have all the materials you need, you can begin your legal analysis. Amanda tells you that she does not understand why she gets tested during some International Olympic Committee Charter4 competitions and not others, and more importantly, she International Olympic Committee Medical Code5 tells you she does not understand why she is tested at home. International Amateur Athletic Federation Rules6 Based upon your exhaustive review of the relevant International Amateur Athletic Federation Procedural documents, you now understand that there are two types Guidelines for Doping Control7 of drug testing that Olympic-caliber athletes are subject Ted Stevens Olympic & Amateur Sports Act8 to in-competition and out-of-competition. Slightly United States Olympic Committee National Antidifferent rules apply to each category of testing.19 In-competition drug testing occurs during a specified Doping Program Document9 competition. Athletes are notified that they will be tested United States Olympic Committee Memorandum of upon completion of an event, during a competition. Once Agreement with USA Track & Field10 notified, athletes are required to provide a urine sample United States Olympic Committee Constitution11 & while at the competition site. The procedure by which an By-Laws12 athlete is selected for drug testing depends upon the United States Olympic Committee Code of Conduct organization that is responsible for conducting drug test13 2000 Olympic Games ing at each particular event. The selection process of United States Olympic Committee Grievance USA Track & Field (USATF) is random, based upon place-finish. Procedures for Code of Conduct and Team Out-of-competition drug testing, on the other hand, Selection - 2000 Olympic Games14 occurs outside of competition. Usually, out-of-competition United States Olympic Committee Bilateral drug tests are conducted with no advance notice to the Agreement with the Australian Drug Testing athlete and may occur at any time (i.e. home, work, or Agency15 training facility).20 Once notified, athletes are required United States Olympic Committee Bilateral to submit to the drug test, regardless of where they may Agreement with the Canadian Centre for Ethics be located at the time of notification.21 The process by which an athlete is selected for out-of-competition drug in Sports16 testing is also organization-specific. For example, 17 18 USA Track & Field Governance Handbook USATF randomly selects a specified number of athletes for testing each month. USATF selects athletes based upon their ranking in a Train for the Olympic Trials in the U.S. (April - June 2000) particular event.

Amandas

Training Schedule

Compete in the Olympic Trials (July 2000) Rest and train in the U.S. (end of July) Train and compete in Canada (August 1-7, 2000) Train and compete in the U.S. (August 8-14, 2000) Report to U.S. training camp in Brisbane, Australia (August 15-September 14, 2000) Report to Olympic Village in Sydney, Australia (September 15, 2000) Compete in Olympic Games (September 15-October 1, 2000)

Entities Responsible for Carrying Out Drug Testing

Now that Amanda understands the types of drug tests to which she is subject, it is critical

that she understands what organizations have the authority22 to carry out the drug testing process. Almost every sports organization today conducts or participates in some type of drug testing program, regardless of whether its athletes are amateur or professional. Professional sports organizations such as the National Basketball Association, Womens National Basketball Association, National Football League, Major League Baseball, and National Hockey League all conduct their own drug testing programs, have their own drug testing protocols, and coordinate their own lists of prohibited substances. An athlete competing in one of these professional leagues is subject only to its drug testing program. Unlike athletes associated with professional organizations, elite Olympic athletes are subject to drug testing by multiple organizations. Within the Olympic Movement, the International Olympic Committee (IOC), some International Federations (IFs), the United States Olympic Committee (USOC), and certain other national organizations, by agreement, all conduct drug testing programs and have the ability to drug test U.S. athletes either during competition, out-of-competition, or both. However, the likelihood that an athlete will be subject to drug testing by all four organizations is heavily dependent on the level at which the athlete competes.23

selected for drug testing by USATF, she can expect drug testing to take place by the USOC, in accordance with the NADP, as amended by the MOA. Furthermore, as the USOC is also responsible for conducting out-of-competition drug testing pursuant to the NADP and MOA, in the event that Amanda ranks among the top athletes in her event, she will be drug tested outside of competition as well.27

Internationally
Athletes competing on an international level, either domestically or abroad, also can expect to be drug tested by their respective international federation. The international federation for track & field,28 the International Amateur Athletic Federation (IAAF), is responsible for coordinating all aspects of track & field on an international level, including the implementation of a drug testing program.29 According to the rules associated with the IAAFs drug testing program, the IAAF is responsible for conducting drug testing during World Championships and World Cups, Grand Prix and Permit Meetings, and other designated competitions.30 In addition, IAAF rules authorize it to conduct out-of-competition drug testing on a member federations athletes.31 Thus, when Amanda competes abroad or in certain internationally-sanctioned competitions in the U.S.,32 the IAAF will have the authority to drug test Amanda during that competition. Furthermore, since Amanda is a world-ranked athlete, she is eligible to be drug tested outside of competition by the IAAF. Similar to the out-ofcompetition drug test conducted by the USOC, an out-ofcompetition drug test conducted by the IAAF can occur at any time and any place, with no notice to the athlete.

In the United States

Athletes who compete on a national level can expect to be drug tested by the USOC.24 The USOC, through its National Anti-Doping Program (NADP), is responsible for coordinating both in-competition and out-of-competition drug testing for each National Governing Body (NGB).25 The NADP is implemented through individual memoranda of agreement (MOA) between the USOC and each individual NGB. Each MOA establishes the terms and conditions by which the USOC is responsible for conducting drug testing for an NGB. Under the USOC/USATF MOA, USATF is responsible for selecting certain domestic competitions in which drug testing will occur, for determining the process by which athletes are selected for domestic out-of-competition drug testing, and for implementing the disciplinary process upon notice that a sample has tested positive for a prohibited substance.26 The USOC, on the other hand, is responsible for coordinating every other aspect of the drug testing process. Thus, in the event that Amanda participates in a domestic competition that has been

Special Testing Arrangements

When Amanda travels to Australia for training and/or competition prior to the U.S. Olympic Trials, she will be subject to drug testing by the Australian Sports Drug Agency (ASDA), as well as the USOC. Pursuant to a Trilateral Agreement, the ASDA, the Canadian Centre for Ethics in Sport (CCES), and the USOC all have agreed to allow each countrys respective National Olympic Committee (NOC) to drug test the other countrys athletes. This Trilateral Agreement has been implemented through individual bilateral agreements, which set forth the terms and conditions by which the drug tests must be conducted. According to the bilateral agreement between the USOC and the ASDA,33 the ASDA has the authority to

213

drug test an American athlete while he or she is residing, training, and/or competing in Australia.34 Similarly, the USOC has the authority to drug test an Australian athlete that is residing, training and/or competing in the U.S. In addition, pursuant to this agreement, the USOC also has the ability to drug test U.S. athletes while they are competing, training, or residing in Australia. Notwithstanding the ASDAs and the USOCs ability to drug test a U.S. athlete in Australia, the responsibility of conducting disciplinary procedures still rests with each athletes federation.35 Finally, in some instances, Olympic athletes may be subject to drug testing conducted by the recently-created World Anti-doping Agency (WADA). WADA was created under the auspices of the International Olympic Committee, with the goal of coordinating drug testing on a global level during the intervals between the Pan American and Olympic Games. However, WADAs limited objective for the year 2000 is to conduct out-of-competition drug testing on those athletes whose national federations, IFs, or respective NOCs do not have drug testing programs.36 In addition, WADA will have the responsibility of monitoring the procedure of drug testing by the Australian Olympic Committee during the 2000 Olympic Games. Because both the USOC and IAAF have drug testing programs, the likelihood that an American track & field athlete will be subject to drug testing by WADA is minimal.

plinary process that is implemented once an athletes urine sample reveals the presence of a prohibited substance. Pursuant to the rules of the USOCs NADP, the IAAF, and the ASDA/USOC bilateral agreement, disciplinary proceedings are to be held by the appropriate NGB.38 Thus, once an NGB is notified by one of these organizations that a urine sample has tested positive for a prohibited substance, the NGB is responsible for implementing disciplinary proceedings. For USATF, the disciplinary process begins with the implementation of USATF Regulation 10: Doping Control.39

USATF Regulation 10
USATF Regulation 10 is the provision within the USATF By-Laws that authorizes USATF to implement disciplinary proceedings against an athlete. Additionally, it sets forth the disciplinary process that USATF is required to implement once it has been notified that a urine sample has tested positive for a prohibited substance. Under Regulation 10, athletes are afforded certain rights and opportunities, which include: (1) the right to have B sample analyzed,40 (2) the right to a full hearing,41 and (3) the right to an appeal. As of January 2000, the American Arbitration Association (AAA) is responsible for adjudicating all hearings and appeals for USATF, pursuant to USATF Regulation 10.42

USOC Article IX Drug Testing at Olympic Trials Events

Each NGB has a selection process for determining which athletes will represent the United States at the Olympic Games. Some NGBs evaluate performance over a series of competitions, while other NGBs base selection on performance at a specific Olympic trials event. USATFs selection process falls into the latter category. All athletes participating in the U.S. Olympic Team Trials for track & field are eligible to be drug tested. Pursuant to its authority under the NADP, the USOC has the authority to conduct drug testing at all Olympic and Pan American trials competitions.37 Thus, Amanda should be informed that, if selected to the U.S. Olympic team, she can expect to be drug tested upon completion of her event. In addition to USATF Regulation 10, an athlete may utilize another forum designated by Article IX of the USOC Constitution and Chapter IX of the USOC ByLaws to resolve issues of eligibility. According to these provisions, an athlete who believes that he or she has been denied the opportunity to participate in a protected competition43 has the opportunity to have an expedited hearing before the AAA.44 Arbitrations that are held pursuant to this article are held in accordance with special AAA rules and regulations relating to Olympic and Pan American Games competitions. Athletes who utilize this provision are entitled to a hearing and a decision within 48 hours of delivery of the notice of the hearing.45 Thus, if one of Amandas urine samples tests positive during either an in-competition or out-of-competition drug test, she would have the opportunity to have the matter heard by an AAA panel pursuant to USATF Regulation 10. In the event that USATF denied Amanda the opportunity to compete, she could utilize the AAA

Disciplinary Procedures
Each sports organization described above has a disci-

214

arbitration in accordance with Article IX of the USOC Constitution and Chapter IX of the USOC By-Laws.

Olympic Trials: Nomination to the Olympic Team

According to the USOC Constitution and By-Laws, the USOC has exclusive jurisdiction over members of the U.S. Olympic team and all matters relating to their participation in the Olympic Games, once the Olympic team has been nominated by an NGB.46 Consistent with this authority, the USOC has established a set of procedures, known as the USOC Grievance Procedures, that set forth the appropriate process for handling any disciplinary and/or grievance matters.47 Members of the U.S. Olympic team are required to utilize these procedures for any issue that may arise regarding their eligibility and/or participation in the Olympic Games.

Australia after the Olympic trials and is selected for drug testing. Assume that her sample reveals the presence of a prohibited substance. ASDA is required to notify the USOC of the positive finding. The USOC then is required to notify USATF, pursuant to the USOC/ASDA Bilateral Agreement. Upon notification, USATF is required to notify Amanda that her sample has tested positive for a prohibited substance and inform her that certain disciplinary procedures will be implemented. However, it is unclear whether the USOC Grievance Procedures or USATF Regulation 10 applies. Because this sample was taken pursuant to the ASDAs authority, under the USOC/ASDA Bilateral Agreement, the athletes home federation is responsible for handling the disciplinary process.48 However, because Amanda is now a member of the U.S. Olympic team, the USOC also has jurisdiction over the disciplinary process.49 Which organization is responsible for resolving the matter is unclear.50 This conflict exists not only with drug testing conducted pursuant to the USOC/ASDA Bilateral Agreement, but also with drug tests that are conducted pursuant to the USOCs NADP and the IAAFs doping control program, each of which details specific procedures that must follow a positive finding.

Post-Olympic Trials Jurisdictional Issues

Immediately upon completion of the U.S. Olympic trials and an athletes return to competition/training, all of the organizations resume their authority to drug test. However, for all members of the U.S. Olympic team, the USOC simultaneously retains its authority to handle all Olympic Games: IOC Authority disciplinary matters and grievance complaints as they relate to members of the U.S. Olympic team and the As the supreme authority51 within the Olympic Olympic Games. The USOC retains this authority until Movement, the IOC is responsible for conducting drug the completion of the 2000 Olympic Games. Thus, notwithstanding the ability of any organization to conduct drug testing on an athlete and ccording to Appendix A of the new Olympic whatsoever its authority to handle any subMovement Anti-Doping Code,1 which took a fine of up to U.S. $100,000 sequent disciplinary proceedeffect on January 1, 2000, the following class suspension from any competition for a es of substances are prohibited: minimum period of two years ings, the USOC Constitution stimulants automatic invalidation of any results and By-Laws specify that the narcotics obtained during competition when doping anabolic agents, including anabolic was detected.2 USOC has authority over any androgenic steroids and Beta-2 agonists Repeat offenses carry the following sanctions: issue related to discipline diuretics a life ban on participation in any sports peptide hormones, mimetics, and event in any capacity whatsoever and/or grievance complaints. analogues a fine of up to U.S. $1,000,000 As a result, a situation of overOther substances are banned in certain cir suspension (between four years and life) cumstances, including: from all sports competition.3 lapping jurisdiction is created, alcohol 1 Olympic Movement Anti-Doping Code, Appendix A the resolution of which remains cannabinoids (last visited April 17, 2000) <http:/www.nodoping.org/ local anaesthetics unclear. prohibited_subst/prohibited_ subst_0001_e.pdf>. glucocorticosteroids Consider the following sce beta-blockers 2 Olympic Movement Anti-Doping Code at Chapter II, The possible sanctions for a first-time nario. Amanda, as indicated in Article 3 (last visited April 17, 2000) <http:/www.nodopoffense for most drugs include: ing.org/code_anti_doping/AntiDopingCode.pdf>. her event schedule, competes in a ban on participation in one or several

World Anti-Doping Code and

Drug Sanctions

sports competitions in any capacity

3 Id.

testing during the Olympic Games, pursuant to the rules and regulations established by the IOC Medical Code. The IOC Medical Code also sets forth the disciplinary process that must be followed once a drug test reveals the presence of a prohibited substance.52 According to those procedures, the IOC Medical Commission and the IOC Executive Committee have the sole authority to decide issues relating to positive drug tests.53 However, all decisions may be appealed to the Court of Arbitration for Sport (CAS).54 Thus, if an American athlete competing at the Olympic Games is drug tested and the sample tests positive, the Chef de Mission of the U.S. Olympic delegation is notified that the test has revealed the presence of a prohibited substance. According to the procedures set forth in the IOC Medical Code, the IOC Medical Commission determines whether a doping violation has taken place and refers its decision to the IOC Executive Committee for approval and the imposition of a penalty. Any decision adverse to the athlete may be appealed to the CAS for a final determination. Notwithstanding the rights of an athlete to appeal the IOCs determination, the USOC grievance procedures continue to be effective. Thus, after the IOC determines that a doping violation has occurred, an athlete could presumably invoke the American Arbitration Association arbitration process to prevent his or her removal from the U.S. Olympic team.55 As a result, it is again unclear whether the athlete is required to adhere to those procedures set forth by the IOC or whether he or she can pursue an appeal before the AAA.

by USATF Regulation 10. If USATF determines that a doping violation has occurred, Amanda would have recourse through Article IX of the USOC Constitution and Chapter IX of the USOC By-Laws to re-examine her eligibility status for the U.S. Olympic trials and the Olympic Games. Upon completion of the U.S. Olympic trials, Amanda still can expect to be drug tested by the USOC, the IAAF, the ASDA, or the WADA. However, whether USATF will be responsible for conducting disciplinary proceedings will depend on whether Amanda has been nominated to the U.S. Olympic team. If Amanda is not nominated to the U.S. Olympic team for track & field, and a sample taken after the Olympic trials reveals the presence of a prohibited substance, Amanda can expect disciplinary proceedings to be conducted by USATF, pursuant to USATF Regulation 10. However, if Amanda is nominated to the U.S. Olympic team, and a sample taken before or after the Olympic trials reveals the presence of a prohibited substance, it is unclear which organization USATF or the USOC would implement disciplinary proceedings. What is clear, however, is that Amanda would have recourse through Article IX of the USOC Constitution and Chapter IX of the USOC By-Laws, if either the USOC or USATF first denied her the opportunity to compete in the Olympic Games.

Conclusion
This Article only begins to touch on the many legal issues associated with drug testing. Ultimately, it will be up to you, the attorney, to navigate successfully the impossibly complicated body of rules and regulations associated with each organizations drug testing program, in order to adequately represent your client. Understanding the many organizations within the Olympic Movement that are involved with drug testing, as well as the different responsibilities of these organizations, will be a very challenging task. However, one thing should be apparent drug testing is certain to occur, whether it be during a competition or outside a competition. Thus, understanding the differences between the United States Olympic Committee, the International Federation, the World Anti-doping Agency, and any other organizations that may have the authority to drug test an athlete, may be the most important thing that an athlete can do to prepare for the 2000 Olympic Games. N

What Does This Mean for Amanda ?

A great deal. Prior to the start of the U.S. Olympic Team Trials for track & field, Amanda can expect to be drug tested by every one of the organizations mentioned above, both in and outside of competition. For those competitions that take place in the United States, drug testing will be conducted by the USOC.56 If Amanda travels to Australia, she should expect to be drug tested by the ASDA.57 Finally, Amanda should expect to be drug tested outside of competition in both the United States and Canada by the USOC, the IAAF, the ASDA, and/or the WADA. If any of the samples taken prior to or during the U.S. Olympic Team Trials for track & field reveals the presence of a prohibited substance, Amanda can expect to be notified by USATF of the positive finding. At such time, Amanda would be entitled to the opportunities afforded

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1 The term of art for drug testing within the Olympic Movement is doping control. These terms are interchanged throughout this Article. Drug testing is the process that has been developed over time to ensure that an athlete has not used a performance-enhancing substance or technique. It includes taking a urine sample from an athlete and analyzing that sample for both prohibited substances and techniques. While urine is the body fluid that is currently analyzed, the International Olympic Committee has indicated that blood may also be analyzed during the 2000 Sydney Games. 2 See id. 3 The term Olympic Movement stems from modern Olympism. It encompasses organizations, athletes, and other persons who agree to be bound by the Olympic Charter. Criterion for belonging to the Olympic Movement is recognition by the International Olympic Committee. See International Olympic Committee Charter 4-5, The Olympic Charter (visited April 14, 2000) <http://www.olympic.org/ ioc/e/facts/charter/charter_intro_e.html> [hereinafter IOC Charter]. 4 See id. 5 See generally, Medical Commission (visited April 14, 2000) <http://iis1.us. olympic.org/ioc/e/org/medcom/medcom%5Fintro %5Fe.html> [hereinafter IOC Medical Commission]. 6 See generally, IAAF Rules and Regulations (visited April 14, 2000) <http://archive.www.worldsport.com/worldsport/sports/athletics/rules/r ules.html> [hereinafter IAAF Rules]. 7 See generally, IAAF Division III (visited April 14, 2000) <http://archive.www.worldsport.com/worldsport/sports/athletics/ rules/32.html>. 8 Ted Stevens Olympic and Amateur Sports Act, 36 U.S.C. 2205 (1998). 9 USOC Drug Control Administration (visited April 14, 2000) <http://www.olympic-usa.org/inside/drugadmin.html> [hereinafter USOC NADP]. 10 On file with Authors. 11 USOC Constitution (visited April 14, 2000) <http://www.usoc. org/c&b/constitution.html>. 12 USOC By-Laws (visited April 14, 2000) <http://www.usoc. org/c&b/bylaws.html>. 13 On file with the United States Olympic Committee. See generally, USOC Code of Ethics (visited April 19, 2000) <http://www.usoc.org/ c&b/ethics.html>. 14 On file with the United States Olympic Committee. See generally, USOC Constitution, supra note 11, at art. VIII. 15 On file with the United States Olympic Committee. 16 Id. 17 USA Track & Field (USATF) is the recognized national governing body (NGB) for track & field, long distance running, cross country, and race-walking in the United States. As the NGB, USATF is responsible for coordinating all aspects of the sport in the United States, including nominating members to the U.S. Olympic team in

the sport of track & field. 18 USA TRACK & FIELD, GOVERNANCE HANDBOOK (2000) [hereinafter USATF Handbook]. 19 One major difference between in-competition and out-of-competition drug testing for track & field is the type of prohibited substance that may be tested for by the laboratory. In-competition drug tests are screened for stimulants, anabolic agents, amphetamines, peptides, glycoprotein, glucocorticoid hormones, and prohibited techniques. Out-of-competition drug tests are screened for anabolic agents, peptides, glycoprotein, glucocorticoid hormones, and prohibited techniques. See IAAF Procedural Guidelines For Doping Control, List of Prohibited Substances, supra note 7, at Schedule I, Part III. 20 Athletes are a given reasonable time in which to complete the activity in which they are currently engaged. See id. supra note 7, at 3.9; USOC NAPD, supra note 9, at 9. 21 Failure of an athlete to submit to drug testing is considered to be a doping violation, and he or she would be subject to the same penalties associated with failing a drug test. For more information, see IOC Medical Code; supra note 5; IAAF Rule 56, supra note 6; USOC NADP, supra note 9; USATF Regulation 10, supra note 18. 22 Authority, as used throughout this Article, is meant to include the ability to conduct drug testing. 23 For example, a U.S. athlete who is ranked number two in the world, in a particular event, has a much greater chance of being drug tested by all four organizations than a U.S. athlete who is ranked number ten in the United States. 24 The United States Olympic Committee is the United States representative the National Olympic Committee (NOC) in the International Olympic Committee. As such, the USOC is responsible for coordinating the activity of all American-based Olympic and Pan American sport organizations in the United States. 25 Each sport within the Olympic Movement has a national federation, which is responsible for coordinating the activity for that particular sport in its country. In the United States these federations are known as national governing bodies (NGB). USA Track & Field is the NGB for track & field, long distance running, cross country, and race-walking in the United States. For more information on recognition of NGBs in the United States, see Ted Stevens Olympic and Amateur Sports Act, supra note 8, at 2205. 26 See USOC NADP, supra note 9, at 9.1(b). 27 The USOC implements a No-Advance-Notice (NAN) out-of-competition drug-testing program. This means that athletes are given no notice that the out-of-competition drug test is going to occur. See id. at Attachment 6. 28 Each national federation within the Olympic Movement belongs to an international federation - the worldwide governing body for that particular sport. The international federation is responsible for all technical aspects of the sport outside the Olympic Games. 29 It is a condition of membership in the IAAF that each NGB abide by the IAAF Rules and Regulations, which provide for both in-competition and out-of-competition drug testing. See IAAF Rules, supra note 6, at Rules 2, 55-61. 217

30 See id. at Rule 58.1. 31 See id. at Rule 57.1(iii). 32 An example of an IAAF-sanctioned event held in the United States is the Prefontaine Classic, which is held every spring in Portland, Oregon, in honor of the late Steve Prefontaine. This competition is an IAAF Grand Prix event. 33 A similar bilateral agreement, between CCES and the USOC, is expected to be signed in the next few months. 34 The ability to drug test another federations athlete has a reasonableness standard built into the provisions. A party to the agreement cannot drug test an athlete more than twice during the same visit without the consent of the other party. Thus, a federation cannot abuse its authority to drug test another federations athletes. 35 Thus, if your client were to be drug tested in Australia and the drug test revealed the presence of a prohibited substance, your client would have the ability to have a hearing before USATF, the athletes home federation. For more information, see USOC/ASDA Bilateral Agreement, supra note 15, at IV, Provision 9. 36 It should be noted that within the sport of track & field, of the 200 members of the IAAF, only eight have drug-testing programs. 37 See USOC NADP, supra note 9, at 9.1. 38 See id. at 6.20; IAAF Rule 59.3, supra note 6; USOC/ASDA Bilateral Agreement, supra note 15, at 4, Provision 9. 39 USATF Handbook, supra note 18, at Regulation 10. 40 The collection of a drug test includes dividing the urine sample into two containers, respectively known as the A sample and the B sample. The A sample is always analyzed first. The B sample is only analyzed in the event the A sample reveals the presence of a prohibited substance. 41 The USOC has set forth a due process checklist with which NGBs are required to comply. The list includes notice of the specific charges, reasonable time between the receipt of notice of charges and the hearing, the right to have the hearing conducted at a convenient time and place, the right to be assisted in the presentation of ones case at the hearing, the right to a hearing before a disinterested and impartial body of fact finders, the right to call witnesses and present both written and oral evidence, the right to cross-examine, the right to a record of the hearing, the right to a written decision, and the right to written notice of appeal procedures. See USOC Constitution, supra note 11, at Article IV, 4, (C)(6). 42 USATF was the first NGB in the United States to out-source its disciplinary process. The USOC has recently indicated that it plans to follow suit. 43 Protected competition includes Olympic Games, Pan American Games, Paralympic Games, World Championships competition, or other protected competition as defined by Article I, Section 2 (H) of the USOC Constitution. See USOC Constitution, supra note 11, at Article IX, 1. 44 An NGB would first have to deny an athlete the ability to participate in a protected competition. Thus, an athlete first would have had

a hearing pursuant to USATF Guideline Regulation 10. See USATF Handbook, supra note 18, at Regulation 10. 45 See USOC Constitution, supra note 11, at Article IX. 46 See id. at Article III, 5. 47 See Grievance Procedures for Code of Conduct and Team Selection - 2000 Olympic Games, supra note 14. These Grievance Procedures specify that the American Arbitration Association (AAA) will handle any dispute that the Secretary General is unable to resolve. 48 See USOC/ASDA Bilateral Agreement, supra note 15, at IV, Provision 9. 49 See Grievance Procedures for Code of Conduct and Team Selection - 2000 Olympic Games, supra note 14. 50 An additional issue that arises, but is not discussed in this Article, is whether one organization may pursue disciplinary action after action has been taken by the first organization. 51 See IOC Olympic Charter, supra note 3, at 5. 52 See IOC Medical Code, supra note 5, at Chapter VI, Article IV, Chapter III, Article I. Athletes agree to use the Court of Arbitration for Sport (CAS) to resolve all issues relating to disciplinary action that may arise during the conduct of the Olympic Games. 53 See id. 54 See id. at Chapter III, Article I. 55 See Grievance Procedures for Code of Conduct and Team Selection - 2000 Olympic Games, supra note 14. 56 The USOC conducts testing unless the competition falls into one of the categories specified by the IAAF Rules. In such case, the IAAF would be responsible for conducting drug testing. 57 See id.

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sports

High School Recruiting and the State Actor Theory

(Amendment)

First

By David W. Dulabon

Goal
W
hen a sports team wins regularly, it inevitably becomes subject to scrutiny. It may be a reflection of cynical American society, but sports fans often question whether successful teams are winning fairly. This cynicism prevails when one high school manages to stockpile a disproportionate amount of the local talent and dominates other teams in the region. Rumors then spread through the community that the high school may have illegally recruited certain athletes on its way to yet another state championship.

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This scrutiny may be justified in certain situations. According to one national sports publication, fishy transfers and illicit recruiting are nothing new to high school sports, but they are becoming alarmingly commonplace.1 High schools are putting significant pressure on student-athletes in their pre-teen and early teen-age years. As a result, these young, innocent students are exploited by overzealous high school coaches who place a higher value on athletic prowess than on academic excellence and ethics. This behavior in high school athletic programs causes serious concern. As the District Court for Middle Tennessee stated in a recent case, High school [recruiting] is not the same as colleges recruiting high school athletes for college athletics. High school athletics exist for an entirely different reason. High school coaches should not view 12, 13, 14 year old students in the same manner as college coaches view high school seniors.2 Educators stress that the general purpose of the primary and secondary school system is to educate Americas youth, as education is compulsory at this stage in ones life.3 In turn, athletics at the high school level exist only as a part of the total educational process, whereas sports may dominate ones nonmandatory collegiate experience.4 While many studentathletes aspire to play sports in college or on a professional team, only two percent of high school students actually continue with competitive athletics beyond high school graduation.5 Therefore, athletics contribute only a single piece to a childs total experiences during the formative years. According to one school administrator, if illicit recruiting is

allowed to distract high school student-athletes from simply growing up, then these children may develop misconceptions about what life and the educational system realistically have to offer.6 In response to concerns over high school recruiting, every state has established a secondary school athletic or activity association to prescribe rules for member schools,7 often encompassing both public and private schools.8 One rule found consistently in 40 states is a recruiting rule designed to protect middle school students from being threatened, harassed, or otherwise improperly motivated to attend a particular high school.9 The recruiting rule usually extends its protection to high school students currently enrolled at other schools as well.10 Though each jurisdiction has its own specific recruiting guidelines, these rules generally prohibit a schools athletic program from talking to any students outside the school zone.11 However, critics have raised First Amendment concerns over the recruiting rules restrictions on speech.

its athletic program because of its voluntary association with the Tennessee Secondary School Athletic Association (TSSAA) a non-profit corporation that promulgates rules to regulate high school recruiting and other aspects of high school sports. Like other private schools participating in the TSSAA, Brentwood Academy may invite all students in public and private middle schools to an open house to convey the benefits of a private high school education.13 This information session allows prospective students and their parents to visit the school and learn about almost all aspects of the high school experience.14 Yet the public, independent, and parochial schools from across the state that comprise the TSSAA are restricted in what they can say about athletics by the associations rules designed to stimulate and regulate the athletic relations of the secondary schools in Tennessee.15 The current conflict arose when the TSSAA penalized Brentwood Academy for allegedly violating its recruiting rule, designed to prohibit the illicit recruiting of middle schoolers and other high schoolers. In the spring of 1997, an eighth-grade student was accepted to Brentwood Academy, and he had committed to attend in the fall as an incoming freshman. The students father requested permission for his son to participate in Brentwood Academys spring football practice.16 In turn, Brentwood Academys then-head football coach Carlton Flatt sent a letter to all incoming male students, including the eighth-grade student, informing them about the dates of the spring football practice.17 After receiving further inquiries about the practice, Coach Flatt made follow-up

High School Recruiting

Is the Recruiting Rule a Content-Based Restriction on Free Speech?
The inspiration for this Note stems from a current case in Brentwood, Tennessee a suburb of Nashville which is representative of a national problem. Brentwood Academy, a private high school, is a perennial powerhouse in football and other sports.12 However, Brentwood Academy, as well as all other public and private schools in Tennessee, is limited in what it may convey about
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telephone calls to all those who received the initial letter, which he claims was sent to only 13 students.18 While it is not a violation of the TSSAAs recruiting rule for incoming students to participate in the spring practice, the TSSAA claimed that contacting the students through a letter and a phone call before they were officially enrolled constituted a violation.19 The TSSAA cited article 2, 21 of its bylaws, which states, [t]he use of undue influence on a student ... to secure or to retain a student for athletic purposes shall be a violation of the recruiting rule (emphasis added).20 The TSSAA charged Brentwood Academy with a second recruiting rule violation under the same section of the bylaws. This problem arose when Coach Flatt provided three high school football tickets to a public middle school coach free of charge.21 Coach Flatt claimed that this public middle school coach requested tickets in order to learn more about the high school game, a typical request within the athletic community.22 Coach Flatt believed that he was merely helping a colleague.23 However, contrary to Coach Flatts admonitions,24 the middle school coach invited two students from his eighth-grade football team to accompany him to the game.25 Based on the actions of the middle school coach, the TSSAA determined that Brentwood Academy exerted undue influence on the two students, thus violating the recruiting rule.26 As a result of the two infractions, as well as a third violation unrelated to the recruiting rule,27 the TSSAA put the entire Brentwood Academy athletic program on probation for four years, suspended the football team from the

playoffs, and fined the school $3,000.28 Brentwood Academy sued to enjoin enforcement of the TSSAA penalty. It asserted that the TSSAAs recruiting rule is a content-based restriction on free speech and a violation of the First Amendment brought under 42 U.S.C. 1983, the civil action for deprivation of rights.29 Brentwood Academy claims that the current structure of the TSSAAs recruiting rule prohibits any independent school representative from initiating contact, outside the open house, with any prospective student enrolled in public school.30 Brentwood Academy argues that the current rule prohibits its administrators from participating in general discussions about the overall advantages of an independent school education, which includes athletics.31 Brentwood Academy only contests the restrictions on its coaches and administrators speech, conceding that rules prohibiting the recruitment of athletes that are unrelated to speech, such as financial inducements or other non-speech-related conduct, are not at issue.32 In response to the First Amendment claim, the TSSAA counters that the recruiting rule is, at most, a content-neutral restriction placing reasonable time, place, and manner limitations on contacts with students.33 The TSSAA argues that the recruiting rule advances substantial government interests, including protecting young studentathletes from the pressures associated with unethical recruiting.34 Finally, TSSAA Executive Director Ron Carter claims that the rule is consistent with the notion that athletics should exist only as one part of the total educational process for middle school and high school students.35
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After hearing the arguments of both sides, the District Court for Middle Tennessee held that the recruiting rule violates the First Amendment, making the sanctions imposed by the TSSAA on Brentwood Academy void and unenforceable.36 On appeal, the Sixth Circuit failed to address the First Amendment issue due to its holding that the TSSAA did not constitute a state actor for constitutional law purposes.37 The Sixth Circuit concluded that the TSSAAs actions are not fairly attributable to the state of Tennessee.38 The court

Just what is wrong with high school recruiting? High schools often put significant pressure on student-athletes in their pre-teen and early teenage years. As a result, some students are exploited by high school coaches who place a higher value on athletic prowess than on academic excellence and ethics.
also noted that Brentwood Academys purely voluntary association with the TSSAA prevented the private high school from bringing a 1983 claim.39 While the issue of state action is potentially dispositive for this First Amendment claim, this Note also will explore the very serious restrictions that the TSSAA recruiting rule places on free speech. This Note asserts that the recruiting rule is a content-based, rather than a contentneutral, restriction on speech that would violate the First Amendment, if state action is found. The rule allows a high school to present most of the potential benefits associated with that school, except the benefits associated with the athletic program.

Thus, it prevents parents and prospective students from making an informed decision about where to attend school. If the TSSAA is a state actor, its recruiting rule would violate the First Amendment because it denies schools, administrators, coaches, parents, and students the right to contribute to, or benefit from, the marketplace of ideas.40 However, as this Note explores, the TSSAA is not a state actor with respect to Brentwood Academy based

How can recruting rules help solve the problem? They curb and regulate the recruiting activities of high schools, administrators, and coaches, positivly affecting the world of high school athletics. Without an adequate policing system, zealous high school coaches and fans may go too far in enticing the best middle school talent to their high schools.
on logic gleaned from the Sixth Circuits decision.

tion, six circuits specifically have held that these types of associations constitute state actors, and numerous state courts have concurred.42 The courts have emphasized the boards responsibility for controlling virtually all aspects of interscholastic athletics or activities in public, and often private, high schools.43 Thus, the courts have found that a boards promulgation, adoption, and enforcement of rules should be considered state action for purposes of constitutional analysis.44 However, the Sixth Circuit introduced a new inquiry regarding secondary school athletic boards when it held that the TSSAA is not a state actor for constitutional law purposes.45 It focused on the voluntary nature of a schools membership in the TSSAA and on the notion that the actions of the TSSAA cannot be attributed to the state.46 This created a split in the circuits as to the state actor question. Therefore, before addressing the merits of the First Amendment claim, it is crucial to analyze the structure and source of power of the TSSAA and other similarly situated boards to determine whether they are state actors.

Circuit Split on the State Actor Issue

Before analyzing any substantive constitutional law claims brought against secondary school athletic and activities associations under 42 U.S.C. 1983, courts must first resolve the issue of whether these boards constitute state actors. Courts have looked at this issue in a number of ways, and the next section of this Note examines three model states (California, Illinois, and Texas) and shows why their secondary school athletic associations have been deemed state actors.41 In addi-

Protecting the Student- Athlete

The primary purpose behind recruiting rules is preserving the innocence of young middle school and high school athletes. The main emphasis for school administrators must be the students education, with athletics a secondary priority in a childs development. A childs formative years are short-lived and must be protected. Those athletes with the best chances of making it to the collegiate and professional ranks will
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have their share of difficult decisions to make along the way: which college to attend, whether to accept a gift from an agent and risk losing college eligibility, whether to succumb to the numerous other temptations available to talented athletes, or whether to leave one professional team for another for more money. These are decisions that must be made by mature adults. In turn, when the student is still developing as a child, he should not have to face this type of decision, albeit in a milder form, when deciding where to participate in high school athletics. Therefore, the existence of rules to curb and regulate the recruiting activities of high schools, through their administrators and coaches, has a positive impact in the world of high school athletics. Without an adequate policing system, zealous high school coaches and fans may go too far in their attempts to entice the best middle school talent to their high school. As a result, athletics would receive a disproportionate emphasis in the childs educational process.47 Furthermore, as stated by the TSSAAs Executive Director Ron Carter, children may develop a skewed view of reality if they are subjected to illicit recruiting.48 Rules protecting the child athlete, however, must not contravene the basic fundamental rights provided in the United States Constitution. For example, a parents right to send his child to a private school is protected by the Fourteenth Amendment.49 This same parent has a right to learn about the opportunities available for his child at private schools.50 However, the parent cannot exercise this right unless private high school administrators are allowed to exercise their First Amendment right of

free speech to convey the benefits of their system. Rules prohibiting this speech should be deemed unconstitutionalif the secondary school athletic association is deemed a state actor. Yet how can the right to free speech be reconciled with the legitimate state interest in protecting children from illicit high school recruiting? The answer lies in determining what is truly being regulated. Regulations forbidding non-speech conduct, such as financial inducements, should remain in effect to protect the innocence of the child.51 On the other hand, regulations forbidding a private school from merely communicating all the positive aspects of its educational experience, including athletics, should be viewed as a First Amendment violation, if the state actor requirement is met. Thus, the state-actor secondary school athletic associations responsible for drafting these rules have a delicate task of defining permissible and impermissible recruiting. However, schools challenging rules promulgated by secondary school athletic associations must overcome the formidable Supreme Court precedent relied on by the Sixth Circuit in concluding that the TSSAA is not a state actor.52 This Note examines the extent of the Sixth Circuits holding in relation to the TSSAA and secondary school athletic associations across the country, in light of the fact that the United States Supreme Court has granted Brentwood Academys petition for a writ of certiorari in this case.53 This important state actor issue will be determined by the Courts ruling, expected in the fall of 2000. This Note anticipates and explores the arguments of both sides and predicts the best resolution of

law and policy. Following the logic of the Sixth Circuit, this Note first advances the proposition that the TSSAA is not a state actor with respect to Brentwood Academy and all other private high schools. As a result, the relationship between the TSSAA and Brentwood Academy is governed by pure contract law; therefore, a First Amendment claim cannot be brought since the state actor threshold question is not met. Second, this Note examines Brentwood Academys best arguments in response to this proposition. Brentwood Academy could argue that the TSSAA is a state actor because it is a semi-monopoly; thus, a private schools decision to join is really not voluntary since it cannot conduct a fully developed interscholastic athletic program without the association. Brentwood Academy also may assert a public policy argument: the significance of the First Amendment violation in this case should prohibit a state from hiding behind the veil of a private entity while contravening the basic rights set forth in the First Amendment. If the Court denies that the TSSAA is a state actor, though, then constitutional claims brought against the association will not and cannot be heard.

shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.55 As the Supreme Court has explained, because the Fourteenth Amendment is directed at the States, it can be violated only by conduct that may be fairly characterized as state action.56 The rationale behind this requirement is that state action reflects judicial recognition of the fact that most rights secured by the Constitution are protected only against infringement by governments.57 The specific statutory provision for bringing a civil action for deprivation of rights, 42 U.S.C. 1983, provides: Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory or the District of Columbia, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress.58 Therefore, the TSSAA and similarly situated secondary school athletic boards must be deemed state actors before any constitutional claims can be brought against them.

Are High School Athletic Boards State Actors?

The fundamental right embodied in the Free Speech Clause of the First Amendment protects against invasion by state action through the Fourteenth Amendment.54 Specifically, the Fourteenth Amendment states that: No State shall make or enforce any law which
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Traditional View: Boards Constitute State Actors

Every state, as well as the District of Columbia, has established a secondary school athletic or activities board to enhance the educational experiences of high school students.59 In turn, when confronted with issues concerning these boards, state and federal courts generally have held that secondary school athletic boards constitute state actors.60 Three theories have emerged to support this conclusion. First, courts rely on a membership theory to find state action.61 Generally, public schools comprise a greater portion of the state athletic organizations constituency. Due to the role of the state in public education, courts are willing to find that the athletic organization is a state actor based on the higher percentage of members that are public schools.62 Second, courts focus on the membership of the governing board of these athletic associations.63 It is typical to find more public high school administrators serving on these governing boards than private high school administrators, since public schools contribute more to the available pool of potential board members and potential voters.64 In turn, because these boards are responsible for controlling virtually all aspects of interscholastic athletics in public and private high schools, the boards promulgation, adoption, and enforcement of rules can be considered state action for purposes of constitutional analysis.65 Finally, courts look to those states which have established these boards by statute or through a state board of education. While state creation may not be enough for state action, legislative recognition provides addi-

tional support that the association is a state actor.66 Under each of these theories, courts have demonstrated a willingness to find state action despite the fact that many of these organizations are merely voluntary.67 Since athletic associations share a common goal regarding athletic opportunities in every state, many similarities have emerged among them. This section of the Note discusses three representative states, analyzing the specific source of authority for each states athletic board. California, Illinois, and Texas serve as model states, based on the prominence of high school athletics within each state. These states also help illustrate the three most common lines of reasoning that courts use to find state action. Given the centrality of Brentwood Academy v. Tennessee Secondary School Athletic Association (TSSAA) to this discussion, the TSSAA is analyzed extensively and serves as the model to which other states are compared.

responsible for administering interscholastic athletics in all California secondary schools, state courts have found that the enforcement of its rules constitutes state action for purposes of constitutional analysis.73 Thus, both the state creation theory and the governing board theory lend support to the CIFs status as a state actor in California.

Illinois
The Illinois High School Association (IHSA) is a voluntary, not-for-profit association of public and private secondary schools.74 Public schools comprise approximately 85 percent of the membership of the IHSA; private schools comprise the remaining 15 percent.75 The IHSA promotes and supervises interscholastic athletic and activity programs, providing services to students and member schools.76 The association is governed by a Board of Directors, with members of the Illinois State Board of Education serving as liaison representatives to the IHSA board.77 Although the IHSA is a purely voluntary association, courts in Illinois have followed the membership theory and have found that the organizations overwhelmingly [85 percent] public character makes the IHSA a state actor for constitutional law purposes.78

California
The California Interscholastic Federation (CIF) is authorized by state statute.68 The CIF is a voluntary organization consisting of school and school related personnel with responsibility, generally, for administering interscholastic athletic activities in schools.69 It draws members from public, private, and parochial secondary schools.70 The governing body of the CIF is the Federalist Council, whose members are elected by representatives of the regions throughout the state.71 However, the State Department of Education has the ultimate authority over interscholastic athletics and the CIF to ensure compliance with both state and federal law.72 Since the CIF is
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Texas
The University of Texas at Austin created the University Interscholastic League (UIL) to provide leadership and guidance to public school athletic coaches and debate teachers.79 The UIL is a non-profit organization composed exclusively of public high schools that voluntarily decide whether to join.80 Furthermore, the UIL is the largest inter-

scholastic organization of its kind in the world.81 Based on the general membership theory, the UIL constitutes a state actor for constitutional law purposes.82 On the other hand, the Texas Catholic Interscholastic League (TCIL) coordinates private Catholic schools.83 Membership is voluntary with only some Catholic schools participating as members.84 For convenience, the TCIL initially adopted the rules and bylaws of the UIL.85 Whenever the UIL has amended its constitution or bylaws, the TCIL generally has adopted the same changes.86 However, despite the voluntary adoption by the TCIL (a private organization) of the rules made by the UIL (also a private organization but deemed a state agency), the TCIL is not a state actor for constitutional law purposes because of its wholly private membership and administration.87 Even though member Catholic schools hold a certificate of accreditation from the state and compete against public high schools, the TCIL has not achieved state actor status in court.88

TSSAA sends letters to all member schools regarding renewal of their memberships.93 No school is bound to renew.94 Upon acceptance to the TSSAA, however, a member school agrees to abide by all the rules of the association.95 The administrative authority of the TSSAA is vested in a Board of Control composed of nine members.96 Members of the Board are elected by popular vote, with each school given one vote. Only the principals, assistant principals, or superintendents of the member schools may sit on the Board.97 During the Brentwood Academy controversy in 1997, all nine voting members of the Board were public high school administrators.98 The State Board of Education recognizes the TSSAAs administrative rules and regulations.99 In 1972, the State Board of Education designated the TSSAA as the organization to supervise and regulate the athletic activities in which the public junior and senior high schools of Tennessee participate on an interscholastic basis.100 As a result, the State Board of Education reviewed for approval the rules and regulations of the TSSAA.101 In 1995, however, the State Board of Education amended its 1972 provision to provide that it recognizes the value of participation in interscholastic athletics and the role of the TSSAA in coordinating interscholastic athletic competition. The State Board of Education authorizes the public schools of the state to voluntarily maintain membership in the TSSAA (emphasis added).102 With this in mind, the TSSAA in Brentwood Academy advanced a strict textualist argument that the TSSAA was not a state actor based on the 1995 amend225

ment where the state simply recognized, as opposed to designated, the TSSAA as the official organization to regulate high school athletics.103 Despite this change in the wording of rule, the district court in Brentwood Academy found that the relationship between the TSSAA and the State Board of Education remained the same, and thus, rejected the textualist argument.104 Consequently, the TSSAA remained a state actor after the district courts decision, allowing Brentwood

Are athletic boards state actors? Every state, as well as the District of Columbia, has established a secondary school athletic or activities board to enhance the educational experiences of high school students. When confronted with issues concerning these boards, state and federal courts generally have held that secondary school athletic organizations constitute state actors, despite the fact that many are merely voluntary.
Academy to bring a civil action for deprivation of constitutional rights.105 However, the Sixth Circuit dismissed this analysis and overturned the district court by holding that the TSSAA is not a state actor.

Tennessee
The TSSAA, an association of public, independent, and parochial schools from across the state, is designed to stimulate and regulate the athletic relations of the secondary schools in Tennessee.89 The TSSAA is composed of 290 public schools and 55 independent and parochial schools.90 Any public or private secondary school accredited by the State Department of Education may voluntarily apply for membership to the TSSAA.91 Membership is reviewed and renewed annually.92 At the beginning of each new calendar year, the

The Sixth Circuits Analysis: TSSAA Is Not a State Actor

Even though the vast majority of state and federal courts have held that secondary school athletic associations constitute state actors, the Sixth Circuit Court of Appeals in Brentwood Academy introduced a new analysis in holding that the

TSSAA is not a state actor for constitutional purposes.106 First, the Sixth Circuit found that the TSSAA is not an arm of the government because it is a voluntary association which receives no funding from the government.107 It noted that the Tennessee code does not authorize the TSSAA,108 and it emphasized the 1995 textual change of the State Board of Educations rule from designating to merely recognizing the TSSAAs role in interscholastic athletics.109 Next, the Court of Appeals applied the reasoning from the Supreme Courts line of cases referred to as the Blum trilogy to determine what constitutes state action when dealing with nominally private parties.110 In the seminal case, Blum v. Yaretsky,111 the Supreme Court decided that a nursing home was not a state actor, stating that being subject to state regulation does not in itself convert the actions of a private organization into state action.112 However, in Lugar v. Edmondson Oil Co.,113 the Court found that a creditors conduct was state action when the private party, in joint participation with state officials, seized disFinally, in puted property.114 Rendell-Baker v. Kohn,115 the Court held that a private school, which received 90 percent of its operating budget from public funds, did not act under the color of state law when it discharged employees.116 The theory emerging from the Blum trilogy is that a private entity does not become a state actor even if it is subject to public regulations or financing, unless the state affirmatively acts in conjunction with the This undermined party.117 Brentwood Academys argument before the Sixth Circuit that the

TSSAA is a state actor because the use of this Supreme Court precedent weakens the membership and governing board theories.118 Instead, the Sixth Circuit applied three tests that have emerged from the Blum trilogy to determine state action: (1) the public function test; (2) the state compulsion test; and (3) the symbiotic relationship test.119 Each test focuses on whether the alleged state actors actions are fairly attributable to the state.120 First, under the Sixth Circuits application of the public function test, Brentwood Academy had to show that regulating high school athletics is a traditional government function that could not have been performed by a private party.121 Based on this framework, the Sixth Circuit held that the TSSAA is not a state actor because the conduct of interscholastic sports is not such a power traditionally held by government.122 Applying the state compulsion test, Brentwood Academy had to prove that Tennessee has so coerced or encouraged the TSSAA to act that a choice of the TSSAA must be regarded as the choice of the state.123 The Sixth Circuit rejected Brentwood Academys argument under this test primarily because the Tennessee code neither mentions the TSSAA nor grants it any special authority.124 Finally, under the symbiotic relationship test, Brentwood Academy had to show that any decision of the TSSAA is deemed automatically to be one of the state.125 Once again, the Sixth Circuit ruled that Brentwood Academy failed to meet this burden because neither state regulation nor state funding of a private entity is sufficient to satisfy the test.126 Thus, the Sixth Circuit dismissed Brentwood Acad226

emys claim and refused to entertain its First Amendment arguments. As a result of this holding, dissenting Circuit Judge Gilbert Merritt expressed that the Sixth Circuit has created an unnecessary conflict in the circuits on an important question of constitutional law, and in turn, the conflict will have to be remedied by the Supreme Court.127 Judge Merritt was correct in his prediction, as the Supreme Court granted Brentwood Academys petition for a writ of certiorari on February 22, 2000 to resolve the state actor issue in this case.128

Supreme Court Considerations

Brentwood Academy already has utilized language from a Supreme Court decision involving the National Collegiate Athletic Association (NCAA) which may suggest that secondary school athletic associations are state actors.129 Like many secondary school associations, the NCAA serves as a rule-making and governing body of athletics, though at the collegiate level.130 The NCAA also is comprised of both public and private schools.131 However, the NCAA differs greatly from high school athletic associations in that the NCAA is a national association, while the high school boards exist independently within each of the 50 states.132 In NCAA v. Tarkanian,133 the Supreme Court held that the NCAA was not a state actor, though it recognized that a State may delegate authority to a private party and thereby make that party a state actor.134 Furthermore, the Court stated in a footnote that the [NCAA] situation would, of course, be differ-

ent if the membership consisted entirely of institutions located within the same State, many of them public institutions created by the same sovereign.135 This first sentence of footnote 13 may be significant because the Court proceeded to cite Clark v. Arizona Interscholastic Assn136 and Louisiana High Sch. Athletic Assn (LHSAA) v. St. Augustine High Sch.137 immediately after making this statement.138 Clark and LHSAA involved challenges by students and a private high school, respectively, to rules promulgated by Arizonas and Louisianas secondary school athletic associations.139 In each case, a federal appellate court held that the state athletic board was a state actor.140 As a result, Brentwood Academy relies heavily on this Tarkanian footnote to support the notion that the TSSAA is a state actor. Brentwood Academy argues that the first sentence of footnote 13 refers to the membership theory of state action, which it believes is the central issue in its case.141 Applying the membership theory to the case, Brentwood Academy argues that since public school officials and entities control the TSSAA, then the regulatory conduct is fairly attributable to the state of Tennessee.142 While the district court in Brentwood Academy agreed with this reading of footnote 13 of Tarkanian, the Sixth Circuit dismissed this language and instead focused on the second sentence of footnote 13, which appears to remove state actor status when an organization deals with private schools.143 Specifically, the Supreme Court stated that even if an athletic association is a state actor when dealing with a public school, it was not acting under color

of state law in its relationship with private universities.144 In response to this conflicting dicta, the Sixth Circuit held that footnote 13 did not control in Brentwood Academy.145 However, the rationale behind the second sentence of footnote 13 suggests that the TSSAA is a state actor vis--vis public high schools, but not a state actor vis--vis private high schools. Brentwood Academy maintains that the Sixth Circuit misinterpreted footnote 13 of Tarkanian. Brentwood Academy asserts that the second sentence of footnote 13 refers to the joint action question; that is, whether joint action between the TSSAA and Brentwood Academy transformed the TSSAA into a state actor.146 It argues that this is not the issue of the litigation. Rather, Brentwood Academy believes that the true issue involves the membership theory, which transforms the TSSAA into a state actor because its members are primarily public schools.147 In turn, the Supreme Court will determine the actual interpretation of footnote 13 when it hears the case during the fall of 2000. While the Sixth Circuit may have misinterpreted the meaning of footnote 13, this should not necessarily undermine the Sixth Circuits ultimate holding that the TSSAA is not a state actor in relation to Brentwood Academy, because footnote 13 may stand for the proposition that while joint action between a public school and a private association might render the private association a state actor, joint action between a private school and private association would not.148

State Actor Thesis and Inferences Drawn from the Sixth Circuits Holding
While the Sixth Circuits conclusion that the TSSAA is not a state actor with respect to private schools was probably correct, its opinion in Brentwood Academy was not sufficiently nuanced to resolve this complex and important constitutional question. The proper analysis begins with the premise that the TSSAA is a private association and that when it acts in concert with a private school,

Where is the support for or against the theory that the board is a state actor? In NCAA v. Tarkanian, the Supreme Court stated in the first sentence of a footnote that the NCAA situation would be different if the membership consisted entirely of institutions located within the same State, many of them public institutions created by the same sovereign. This seems to support the notion that a boards actions can be attributed to the state. However, the second sentence of the footnote appears to remove state actor status when an organization deals with private schools.
no state action has occurred. This notion derives from the general proposition that a party can be a state actor for one set of plaintiffs, but not for another set of plaintiffs. Since Brentwood Academy is a private high school that voluntarily decided to join the TSSAA, the relationship between the TSSAA and Brentwood Academy is purely contractual in nature. However, the

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TSSAA could be considered a state actor when acting in conjunction with public entities. This rationale was suggested in Burton v. Wilmington Parking Authority, where the Supreme Court found that the exclusion of AfricanAmericans from the Eagle Coffee Shop, operating in a building owned by a state agency, constituted discriminatory state action.149 The Court emphasized that when a state leases public property in the manner and for the purpose described in the opinion, the proscriptions of the Fourteenth Amendment must be complied with by the lessee as though they were binding covenants written into the lease itself.150 The Court noted that profits earned by discrimination not only contribute to, but also are indispensable elements in, the financial success of a government agency.151 The state had ample opportunity to regulate and to prevent the discrimination conducted by the Eagle Coffee Shop, but it failed to do so. However, the Eagle Coffee Shop is a state actor only when dealing with the public at large in a public building, and not when dealing with its own private employees. For example, if the Eagle Coffee Shop fired its own employees on terms consistent with its contract rights, then the restaurant would not be considered a state actor even if its employees alleged that their discharges did not meet the equal protection or due process requirements of the [F]ourteenth [A]mendment.152 This is because the hiring of employees is a private activity, personal to the nature of the restaurant, and is governed by the agreement between employer and employee. Thus, the Eagle Coffee Shop scenario indicates how a party may be a

state actor for one set of plaintiffs, but not for another set of plaintiffs. These suppositions also are consistent with the situation in RendellBaker, from the Blum trilogy.153 In Rendell-Baker, a counselor and five teachers were discharged from a private school which received 90 percent of its operating budget from the state.154 This private school was established to educate troubled high school students who were referred by the public high schools or by a state drug rehabilitation agency.155 The plaintiffs were discharged from the private school after a dispute arose over hiring practices.156 In turn, the plaintiffs alleged First, Fifth, and Fourteenth Amendment violations in connection with the discharge.157 These claims were denied, however, because the Court held that the private school, though funded by the state, did not act under the color of state law in this situation of dealing with its employees.158 The Court concluded that the schools receipt of public funds does not make the discharge decisions acts of the State.159 The Court further noted that: The school is not fundamentally different from many private corporations whose business depends primarily on contracts to build roads, bridges, dams, ships, or submarines for the government. Acts of such private contractors do not become acts of the government by reason of their significance or even total engagement in performing public con160 tracts. As a result, the relationship between the private school and its teachers and counselors is not
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changed simply because the state pays the tuition of the students.161 However, if current or prospective students alleged a constitutional violation in this scenario, then a court probably would find that the private school is a state actor vis--vis the students, analogous to the coffee shops customers. The students, as beneficiaries of the state funding, are the ones affected by the private schools actions. Absent earmarked funding or intervention by the state, however, a private high school is not considered a state actor vis--vis its own private school students. Their relationship is once again governed by the pure contractual nature existing between the private high school and its students; thus, state action does not exist. Applying this line of reasoning to Brentwood Academy, the TSSAA should not be considered a state actor with respect to Brentwood Academy. While Tennessee recognizes the TSSAA, the state does not provide the TSSAA with any funding, unlike the private school in RendellBaker.162 Furthermore, the TSSAA is not a state actor in relation to Brentwood Academy or any other private school that voluntarily agrees to join and be subject to its rules. This is analogous to RendellBaker, where the private school was not a state actor in relation to the teachers with whom it independently contracted.163 Thus, the decision to join the TSSAA is a private activity, particular to the goals of Brentwood Academy. As a result, the relationship between the TSSAA and Brentwood Academy is governed solely by contract. TSSAA Executive Director Carter indicates that Brentwood Academy, as well as all (continued on page 230)

State Employee Doctrine

espite this Notes conclusion that the TSSAA is not a state actor vis--vis Brentwood Academy, the same analysis reveals that when the TSSAA acts in its regulatory capacity with respect to a public school, it is a state actor, exercising authority delegated to it by the public school.1 Thus, the TSSAA is a state actor, an agent of the state, when its rules restrict public school teachers. If the TSSAA recruiting rule serves to censor public school teachers, then the TSSAA could violate the First Amendment with respect to those state employees. Therefore, one might ask if the Brentwood Academy controversy is a valid First Amendment claim, just brought by the wrong plaintiff? The short answer is no, and the reasoning is found in the state employee doctrine.2 As a condition of taking a government job, just like any other job, an employee agrees to certain speech restrictions in his contract. For example, if an educator is hired to teach algebra in the public schools, then the educator is confined to teaching this subject in the classroom. If he instead espouses radical political doctrine while on the job in the classroom, then the state retains the right to discipline him. Even though this is a limitation on the teachers speech, it is justified as a legitimate restriction by the terms of the teachers contract. This rationale was explored by the Supreme Court in Snepp v. United States.3 In Snepp, the Court held that a former Central Intelligence Agency (CIA) agent, who published a book without prior approval from the agency, breached the trust clause found within his employment agreement with the CIA.4 The trust clause only required prior approval of any book the agent wished to publish, not an absolute ban on his speech,5 and the Court found that the agent entered into this contract willingly.6 The Court noted that the term of the contract restricting the agents speech advanced a significant government interest of protecting intelligence that may contribute to national security.7 When confronted with the agents claim of a First Amendment violation, the Court dismissed the plaintiff s absolute right to publish the book in light of the valid restrictions to which the agent bound himself.8 As a result, the agent remained free to convey his thoughts; however, he was subject to express limits on certain rights by virtue of his contract with the Government.9 Applying this rationale to the TSSAA, the public high school teachers and coaches are employees of the state of Tennessee. When they sign their contracts with the state, they also implicitly bind themselves to the regulations that their schools have agreed to follow, including the restrictions set forth by the TSSAA. As a result, the state, or the TSSAA as an agent of the state, retains the right to discipline any public high school teacher who contacts private middle school students regarding athletics in violation of the contractual relationship. While this is a restriction on the teachers speech, the restriction is a valid term of the contract with the state to which he voluntarily agreed to be bound.
1 This assertion is made even though the Sixth Circuit specifically stated that no 1983 claim may be brought against the TSSAA by a member school that has voluntarily associated with the private organization (emphasis added). See Brentwood Academy v. TSSAA, 180 F.3d 758, 766 (6th Cir. 1999). On its face, this statement appears to apply to both public and private schools that have voluntarily associated. However, the nuances of this case and the fact that public high school teachers are agents of the state indicate that the Sixth Circuits statement only applies to private high schools. 2 See generally Connick v. Meyers, 461 U.S. 138 (1983); Pickering v. Board of Educ., 391 U.S. 563 (1968). 3 Snepp v. United States, 444 U.S. 507 (1980). 4 See id. at 511. 5 See id. 6 See id. at 510. 7 Id. at 516. 8 See id. at 513. 9 Haig v. Agee, 453 U.S. 280, 309 (1981).

other private and public schools, is free to leave the association and not renew its membership at any time.164 However, it is important to note that the TSSAA can be considered a state actor vis--vis the public high schools. While membership of public schools in the TSSAA also is not mandatory, the very nature of their status as agents of the government provides the requisite nexus to find state actor status for the TSSAA. (See State Employee Doctrine, infra, p. 229) Finally, it is important to view the impact of this decision on the other states. First, any secondary school athletic association which is specifically authorized by state statute should constitute a state actor with respect to both public and private high schools.165 Thus, in California, the CIF will remain a state actor since it is a state regulatory agency governed by statute.166 Furthermore, where an association is not authorized by state statute, the court should differentiate the state actor status of the athletic association in relation to public and private schools. The Texas courts have applied the correct analysis by holding that the organization for public schools (UIL) is a state actor,167 while the organization governing the Catholic schools (TCIL) is not a state actor.168 The troubling situation arises in Illinois where the Seventh Circuit in Griffin v. Illinois High Sch. Assn (IHSA) held that the IHSA is a state actor, even vis--vis a private religious school.169 This decision is problematic because Griffin was decided five years after the Blum trilogy, yet the Seventh Circuit made no mention of this important line of Supreme Court precedent.170 The Seventh Circuit summarily stated, we note that the presence of state

action is not in dispute in this case.171 Therefore, courts should revisit this complex state actor issue by using existing case law and the inferences to be gleaned from the Sixth Circuits decision.

Responses to the Sixth Circuits Holding

State Monopoly Theory
The existence of the Blum trilogy and the strong inferences drawn from the Sixth Circuits decision will make it difficult for private member schools like Brentwood Academy to convince the Court that the TSSAA and similarly situated secondary school athletic boards are state actors. However, this conclusion is far from obvious, and persuasive arguments lie to the contrary. In order to advance the argument that these boards are state actors, a member school should assert a state monopoly theory, similar to the one advanced in Moose Lodge No. 107 v. Irvis.172 In Moose Lodge, a national fraternal organization refused to serve food and beverages to an African-American. The plaintiff argued that the licensing of Moose Lodge to serve liquor by the Pennsylvania Liquor Control Board amounts to such state involvement with the clubs activities as to make its discriminatory practices forbidden by the Equal Protection Clause of the Fourteenth Amendment.173 Two theories emerge from this: (1) the state had an opportunity to regulate Moose Lodges activities based on the license, similar to the situation in Burton; and (2) the state conferred a monopoly on Moose Lodge since only one retail liquor license could be issued for each 1500 citizens in the municipality.174 The Court
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rejected the plaintiff s argument, though, and held that Moose Lodge was not a state actor.175 Despite this result, the state monopoly argument is a valid theory. It is premised on the notion that where a semi-monopoly is created due to state regulation, such as from the states liquor control board in Moose Lodge, the private entity subject to the regulation begins to look and act like the state. Therefore, in order to overcome the state actor threshold, a private high school such as Brentwood Academy should assert that the TSSAA is a semi-monopoly in Tennessee in its regulation of high school athletics. As a practical matter, Brentwood Academy had to join the TSSAA in order to develop a legitimate, worthwhile athletic program; thus, the choice to join the TSSAA was not truly voluntary.176 Specifically, Coach Flatt indicated that, prior to 1991, the TSSAA did not allow member schools to play non-member schools, thereby severely limiting the teams that a nonmember school could play.177 Even though the TSSAA later changed this rule and now allows non-member schools to compete against member schools,178 Coach Flatt believes that the tremendous control the TSSAA exerts over high school athletic programs across the state makes joining the league essential for maintaining a healthy athletic program.179 Nonmember schools still are not allowed to participate in the TSSAA playoffs, and this may be the best remaining argument for the lack of voluntariness, especially to a powerhouse like Brentwood Academy which defines itself by its athletic success.180 Brentwood Academy should assert that this unequal treatment between member and non-member schools

forces them to join the TSSAA, since this private school places a great value on interscholastic athletic competition. Without the playoffs, there is no real gauge for athletic success. In short, joining the TSSAA is not truly voluntary; and without voluntary action, the contract law theory governing the relationship between the private school and the TSSAA is disrupted. Therefore, the rules promulgated by the TSSAA have the effect of state action when applied to private member schools.181 In response to this argument, TSSAA Executive Director Carter indicates that any school, public or private, may quit the association or decide not to renew its membership.182 Membership is renewed annually, and the TSSAA sends letters to all the member schools at the beginning of the calendar year for membership renewal.183 In turn, the principal or headmaster of each school is responsible for signing and submitting the renewal form, binding the school to obey the TSSAAs rules.184 If a school, public or private, decides not to enroll, Carter claims that this particular school still can have a worthwhile interscholastic athletic program, despite not being allowed to participate in TSSAA-sanctioned playoffs or tournaments.185 Since high school athletics are only a part of the entire academic experience, the playoffs should not alter the value of the athletic program in the overall context of the school. Therefore, the TSSAA believes that the mere opportunity to participate in the regular season advances the goals that high school athletics set out to attain.186

advance a public policy argument and claim that overriding considerations dictate that the TSSAA acts under the color of state law, despite the Sixth Circuits decision and the inferences drawn from the Blum trilogy. The impact of the state actor threshold question goes far beyond whether to allow Brentwood Academy to have its First Amendment claim heard. The larger issue concerns the troubling message the Sixth Circuit seems to have given that other public and private institutions may organize as private associations to regulate their fields without concern for the constitutional rights of the member[s]...187 As the Fifth Circuit has stated, it would be a strange doctrine indeed to hold that the states could avoid the restrictions placed upon them by the Constitution by banding together to form or support a private organization to which they have relinquished some portion of their power.188 Given the passionate disagreement between the District Court for Middle Tennessee and the Sixth Circuit on whether the TSSAA is a state actor, the Supreme Court may want to err on the side of state action when important First Amendment considerations are implicated. In short, while the state actor issue is one that may be very difficult to overcome for private schools after the Sixth Circuits holding in Brentwood Academy, the state monopoly theory and public policy considerations are sound arguments to attach state action to the decisions of secondary school athletic boards vis--vis private schools. The consequence of overcoming the state action prerequisite is that private schools like Brentwood Academy may raise First Amendment challenges to ath231

letic board regulations. It is to the merits of that challenge that this Note now turns.

First Amendment Claim

Doctrinal Background of the First Amendment
Assuming, arguendo, that a private high school in a state such as Tennessee can show that the secondary school athletic association is a state actor, the school then can develop its claim that the recruiting rule violates the First Amendments free speech guarantee. Before discussing the constitutional claims, though, it is important to look at the basic theoretical construct of the First

What is the First Amendment claim? Speech affecting a students decision where to attend school is very important given our societys emphasis on education. If a school is denied the opportunity to inform others about educational benefits, then both the speaker and listener will be prevented from engaging in the free exchange of ideas. Therefore, rules and regulations restricting this valuable source of information contravene the basic goals of First Amendment protection.
Amendment. Americans place a high value on the right to freedom of speech. As a result, the United States generally has given even more protection to speech than our other rights and liberties.189 Speech is placed higher than our other rights because speech occupies a systemic

Public Policy Argument

A private high school could

role in our form of government, a popular democracy, by ensuring the free flow of information in the marketplace of ideas.190 Due to the impact of speech on our government, the benefits of speech to society outweigh the personal benefits speech may have to any single person. While political speech is at the pinnacle of First Amendment protection, the Supreme Court has extended First Amendment protection to various other forms of speech.191 Regardless of the type of speech protected, all forms of expression have some impact on how we evaluate our surroundings. From paintings to music to commercials, all kinds of expression inform Americans about how society is ordered, about how we live, and about what our future may be. Specifically, speech affecting a students decision where to attend school is very important given our

information contravene the basic goals of First Amendment protection.

same First Amendment challenges as the TSSAA.

TSSAAs Recruiting Rule: Undue Influence

The specific provision of the TSSAAs recruiting rule alleged to violate the right to free speech states: The use of undue influence on a student (with or without an athletic record), the parents or guardians of a student by any person connected, or notconnected, with the school to secure or to retain a student for athletic purposes shall be a violation of the recruiting rule.192 After this provision, the TSSAA bylaws provide some guidance to understanding the rule.193 For example, undue influence should be interpreted as a person or persons exceeding what is appropriate or normal and offering an incentive or inducement to a student with or without an athletic record.194 The bylaws also state that a coach may not contact a student or his or her parents prior to his enrollment in the school.195 An example of a recruiting rule violation is any initial contact or prearranged contact by a member of the coaching staff or representative of the school and a prospective student/athlete enrolled in any member school except where there is a definite feeder pattern.196 While the language of the bylaws is tailored to fit the TSSAAs particular needs, approximately 40 states have established similar recruiting rules to deal specifically with the overreaching associated with illicit recruiting. 197 Therefore, other state boards may be subject to the
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Arguments that the Recruiting Rule is Unconstitutional

Evaluating the TSSAAs recruiting rule in light of the First Amendment, a school like Brentwood Academy first may attempt to show that the rule is a content-based restriction, subjecting it to the most exacting scrutiny under First Amendment doctrine.198 As the Court stated in R.A.V. v. City of St. Paul, contentbased regulations are presumptively invalid.199 Concern-ing contentbased restrictions generally, Professor Geoffrey Stone of the University of Chicago School of Law has stated: Any law that substantially prevents the communication of a particular idea,viewpoint, or item of information violates the [F]irst [A]mendment except, perhaps, in the most extraordinary of circumstances. This is so, not because such a law restricts a lot of speech, but because by effectively excising a specific message from public debate, it mutilates the thinking process of the community...200 Additionally, the Court has noted that the First Amendments hostility to content-based regulation extends not only to a restriction on a particular viewpoint, but also to a prohibition of public discussion of an entire topic.201 As a result, Brentwood Academy argued before the District Court for Middle Tennessee that the recruiting

When is the First Amendment implicated? Many parents and prospective students are strongly interested in the athletic program of a school. Students and parents are allowed to obtain information about the music and English departments of a school, but the recruiting rule prohibits athletic coaches from discussing the benefits of the athletic program on a one-on-one basis with students.
societys emphasis on education. If a school is denied the opportunity to inform others about educational benefits, then both the speaker and listener will be prevented from engaging in the free exchange of ideas. Therefore, rules and regulations restricting this valuable source of

rule proscribed any independent school representative from initiating discussions about athletics with any prospective student enrolled in the public schools.202 Brentwood Academy maintains that the recruiting rule deliberately interferes with a private schools athletic-related speech directed towards public school students.203 Furthermore, Brentwood Academy argues that the TSSAAs use of undue influence is overbroad and that it bans too much athleticrelated speech outside the schools zone.204 The TSSAA should only ban non-speech conduct that interferes with the development of the young student-athlete. Based on these arguments, the district court in Brentwood Academy noted that the TSSAA does not have a legitimate interest in preventing a school, public, private or parochial, from providing information in an effort to persuade potential students that the educational experience at that school is superior to that to be gained at another school.205 In conclusion, that court held that the TSSAAs recruiting rule was a content-based restriction that violated the First Amendment.206 The recruiting rule also stifles the potential listeners First Amendment right to hear speech. As the Supreme Court stated in Stanley v. Georgia, it is now well established that the Constitution protects the right to receive information and ideas.207 Thus, the First Amend-ment also is implicated when a prospective student is denied the opportunity to learn everything he can about a private high school. Many parents and prospective students are strongly interested in the athletic program of a school.208 Students and parents

are allowed to obtain information about the music and English departments of a school, but the recruiting rule prohibits athletic coaches from discussing the benefits of the athletic program on a one-on-one basis with students.209 This is particularly troubling because the rule denies a parent information about an opportunity to send a student to a high school based on its athletic program, which will often expose the student to other opportunities beyond athletics.210 Coach Flatt reports many instances when a student came to Brentwood Academy solely for athletics, and then left with an entirely different set of values, focusing on educational attainment.211 This concern also is consistent with the Courts recognition of the liberty interest of parents to guide the education of their children, which is protected by the Fourteenth Amendment.212 As a result, these parents and students are entitled to all the information regarding the educational institution, including the athletic program, that they can obtain.

if it has an incidental effect on certain messages or speakers.216 In turn, the Court uses the OBrien balancing test to weigh the importance of the states regulatory interest against the effect of the regulation on the speaker.217 If the states interest is significant enough, then the Court will uphold the regulation despite its incidental interference with free speech rights. Prior to conducting this balancing test, however, the Court first must answer the threshold question of whether the interference is accidental or deliberate.218 Only if the regulation is accidental will the Court engage in the OBrien balancing; deliberate interferences are per se illegal.219 Applying this standard to the Brentwood Academy case, the TSSAAs recruiting rule is probably a deliberate interference with speech. As previously discussed, the rule explicitly prohibits discussions concerning athletics outside the high schools feeder system, but not discussions regarding other aspects of the educational experience. Thus, the TSSAA deliberately targets messages regarding athletics with its rule, while allowing other messages. However, the TSSAA will argue that the recruiting rule is an accidental interference with speech because high schools still are afforded the opportunity to convey all information to young student-athletes, despite minimal time, place, and manner restrictions. For example, a private high school coach may contact a student about participating in athletics when the student is enrolled in the private high school; that is, when the student actually attends the school for at least three days.220 Thus, the TSSAA will assert that it was not seeking to

Arguments that the Recruiting Rule is Constitutional

A secondary school athletic board such as the TSSAA is likely to counter that the recruiting rule is merely a content-neutral restriction, providing a valid time, place, and manner regulation.213 As the Court observed in United States v. OBrien,214 a content-neutral speech restriction must demonstrate a governmental interest unrelated to the suppression of free expression.215 Furthermore, a regulation that serves the purposes unrelated to the content of the message is deemed content-neutral, even
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make communication more difficult or to promote or retard any particular viewpoint in the marketplace of ideas. 221 If the Court accepts that the recruiting rule is an accidental interference, then the secondary school association will attempt to justify the regulation. It could assert that the regulatory objective protects young student-athletes from intrusive recruiting that might hinder their education.222 By doing so, it will argue that it is justified in limiting the time, place, and manner in which a coach or administrator con-

How can recruiting rules be structured so that they do not infringe on the First Amendment? The simple answer to the problem is to create a rule designed to prevent recruiting practices unrelated to speech. State regulations that focus on non-speech acts of recruitment, such as financial inducements or other remunerations, are likely to be upheld as constitutional, advancing a valid governmental interest irrespective of speech.
tacts a student about playing sports in high school.223 It will also attempt to minimize the importance of the speech to the schools and the students: the schools still are allowed to communicate all vital aspects of the educational experience,224 and the students also can obtain information about athletics from other sources, like current Brentwood Academy students or their middle school advisors and coaches. Based on these reasons, the district court in Brentwood Academy acknowledged

that the TSSAA has a substantial interest in preventing a student from being threatened, coerced, or harassed. 225 Additionally, a secondary school association may cite the long line of cases upholding the validity of transfer rules regulations imposing a period of athletic ineligibility upon students who voluntarily transfer from one school to another.226 For example, a public high school student may be denied the opportunity to immediately participate in athletics at a private high school due to the transfer rule, despite his claim that the rule violates his right to the free exercise of religion at the private school.227 Transfer rules generally have been upheld based on the rationale that the incidental burden imposed by the rule on the free exercise of religion was constitutionally justified by the magnitude of the states interest in deterring or eliminating the recruitment of high school athletes.228 This state interest was unrelated to any intent to suppress religion, and thus the states interest in eliminating inappropriate recruitment resulted in merely an accidental interference. The constitutionality of transfer rules may provide a strong indication that recruiting rules restricting the time, place, and manner of speech also are constitutionally permissible. Since the courts have found an interest which is strong enough to deny transfer students the opportunity to participate in athletics for one full year, it seems reasonable to conclude that the courts also will restrict recruiters who pose a compelling threat to that interest. Transfer rules are distinguishable from recruiting rules, however, since they regulate the actions of a stu234

dent, while recruiting rules regulate the speech of coaches and administrators. Even though students affected by transfer rules often claim a violation of freedom of religion in their attempts to transfer to private schools, the regulation does not prohibit them from attending the school or from practicing the religion.229 The transfer rule only prevents the student from participating in athletics at the new school for one year.230 In contrast, the TSSAAs recruiting rule imposes a flat ban on the speech of coaches and administrators in their attempts to convey the positive aspects of their schools to both athletes and non-athletes. Thus, despite the compelling interest in ensuring that athletics do not interfere with a student-athletes ability to obtain a high quality education that underlies transfer rules, a secondary school athletic association cannot control school choice through censorship.231 Based on the arguments advanced by Brentwood Academy and the TSSAA, it appears that the district court in Brentwood Academy was correct in holding that the recruiting rule would violate the First Amendment, if the TSSAA is a state actor. Despite the legitimate goal of protecting the innocence of the young student-athlete, this interest should not outweigh the significance of free speech in society. Information relevant to ones choice of school should be considered of great importance in the marketplace of ideas, and thus, deserves First Amendment protection. Finally, though the Sixth Circuit in Brentwood Academy did not address the First Amendment argument because it held that the TSSAA is not a state actor, the Sixth Circuit did note that, Brentwood has made strong arguments that the

rule is vague and not well-tailored to the perceived evil sought to be avoided, which in turn may lead to arbitrary enforcement.232 Though not conclusive of a First Amendment violation, the Sixth Circuits remarks suggest a possible free speech violation had the state actor requirement been satisfied.

than any other schools program, but a school may conduct recruitment programs based on the schools overall educational and extracurricular programs.236 Thus, it is easy to see that these states may be subject to the same free speech attacks that the TSSAA has faced. From the broad term undue influence used by the CIF to the specific coach restrictions of the IHSA, these rules do not provide the TSSAA with much guidance on how to draft recruiting rules that do not violate the First Amendment. Therefore, the question remains as to how an athletic association can protect the innocence of children from overly aggressive recruiting and yet not infringe the right to free speech. The simple answer to the problem is to create a rule designed to prevent recruiting practices unrelated to speech.237 State regulations that focus on non-speech acts of recruitment, such as financial inducements or other remunerations, are likely to be upheld as constitutional, advancing a valid governmental interest irrespective of speech. For example, the IHSA prohibits special inducements such as offering money and free transportation to a student or offering reduced rent to the parents.238 Furthermore, Californias recruiting rule forbidding the use of any act, gesture, or communication which may be objectively seen as an inducement also probably would survive a First Amendment challenge, despite its limitation on communication, because the CIF is not enacting a flat ban on communication.239 Rather, the CIF prohibits only that which rises to the level of objective inducement. A coach or administrator still may advance the strengths of his or her school, but a reasonable man235

Proposed Rule that May Survive First Amendment Challenge

Given the potential of a First Amendment violation, the question remains as to what a secondary school athletic board can do to protect the innocence of the young student-athlete while operating within the parameters of the Constitution. While this Note does not attempt to engage in regulation drafting, the TSSAA and similarly situated boards will need to devise rules that are narrow enough to satisfy the First Amendment. Other states, however, will not provide much help to the TSSAA in its attempt to tailor content-neutral regulations since many follow the undue influence version of the TSSAA. Like the TSSAA, for example, Californias recruiting rule is defined by undue influence.233 Additionally, Illinois bases its recruiting rule violations on whether the student-athlete is offered remunerations of any kind that are not offered to every other prospective student.234 While this rule targets non-speech aspects of recruiting, the IHSA also forbids encouraging a prospective student to attend even when special remuneration or inducement is not given.235 For example, a school cannot make a presentation which states or implies that its athletic program is better

ner restriction is placed on that speech which rises to the level of objective inducement in order to advance the legitimate public interest of protecting students from the problems of recruiting. In any event, and particularly if the secondary school athletic board is considered a state actor, each board should revisit its recruiting rules and consider tailoring rules that do not infringe on First Amendment rights.

Fair Play, Free Speech

The case between Brentwood Academy and the TSSAA implicates issues that extend far beyond the state of Tennessee. Because education is mandatory in the United States at the middle school and high school level and because sports inspire such passions and profits, two competing views emerge. One view is that athletic associations should recognize the problems associated with illicit recruiting and be sincere in their efforts to protect the best interests of the young students by promulgating recruiting rules. The other view, as supported by Coach Flatt, argues that overbroad recruiting rules inflict more harm than good on the student parents and children should be exposed to all the information available to them, including information concerning a schools athletic program, when making a decision about where to go to school. Of course, schools cannot presume that these boards necessarily constitute state actors. A private high school like Brentwood Academy may have a difficult time convincing a court that its secondary school athletic association is a state actor if the school voluntarily joined the league.

The Sixth Circuits decision and the inferences drawn from it set forth the proper analysis: a private schools voluntary association with one of these leagues must be governed by contract law, not the provisions of the Constitution as an actor for the state. The controversy between Brentwood Academy and the TSSAA is not yet settled. The Supreme Court has granted Brentwood Academys petition for a writ of certiorari, and the Court will hear the case in the fall of 2000 to resolve the state actor issue.240 What appeared on the surface to be a local concern

about high school recruiting has developed into two complex and probing legal issues. The impact of the decision will affect each state with a secondary school athletic association and a recruiting rule. As the final outcome looms, educators, parents, and fans of high school sports must remember that while protecting the innocence of Americas youth is a noble goal, free speech in our democratic society should not be silenced to deny one the opportunity to learn everything associated with the educational system. N

The author would like to extend a special thank you to Professor Thomas R. McCoy, Professor of Law, Vanderbilt University School of Law, for his help in developing the theoretical constructs for state action theory and for First Amendment analysis. The author also wishes to thank Professor James F. Blumstein, Professor of Law, Vanderbilt University School of Law, for his firsthand insight into this fascinating case. Finally, thanks to Daniel A. Cohen and R. Adam Newton for their tremendous editorial contributions.

1 Grant Wahl and Paul Zimmerman, Traveling Violations, SPORTS ILLUSTRATED, Monday, September 21, 1998, at 27. 2 Brentwood Academy v. Tennessee High Sch. Athletic Assn (TSSAA), 13 F. Supp. 2d 670, 675 (M.D. Tenn. 1998) (quoting TSSAA By-Laws, art. II, 21). 3 Telephone Interview with Ron Carter, Executive Director of the TSSAA (Jan. 24, 2000). 4 Id. 5 See id. The NCAA also publishes statistics on a students chances of becoming a professional athlete. For example, only 2.6 percent of high school basketball players become college basketball players. From there, only 1.9 percent of college basketball players enter the NBA. In football, 6.6 percent of high-school athletes become college athletes, and 3.3 percent of college players make it to the pros. See NCAA PROFESSIONAL SPORTS LIAISON COMMITTEE, A Career in Professional Athletics: A Guide for Making the Transition (1997). 6 See id. 7 See generally, State/Province High School Association Links (visited Jan. 28, 2000) <http://www.referee.com/states.htm>. 8 See id. 9 See Brentwood Academy, 13 F. Supp. 2d at 689. 10 See id. at 674, 688. 11 See generally, Tony Green, Look Into Recruiting Allegations, Coaches Say, ST. PETERSBURG TIMES, March 13, 1993, at 1. 12 See Brentwood Academy v. Tennessee High Sch. Athletic Assn, 180 F.3d 758, 760 (6th Cir. 1999) (noting that the Brentwood Academy

football team compiled a 310-43 record over the past 28 years. The football team also has won seven TSSAA state championships and has been nationally ranked in USA TODAY). 13 See Interview with Ron Carter, supra note 3. 14 Telephone Interview with Carlton Flatt, Athletic Director of Brentwood Academy (Jan. 24, 2000). 15 Brentwood Academy, 13 F. Supp. 2d at 673 (quoting TSSAA CONST., art. I, 2). 16 Id. at 675. 17 See id. at 676. 18 Interview with Carlton Flatt, supra note 14. 19 See Brentwood Academy, 13 F. Supp. 2d at 676. 20 Id. 21 See id. at 675. 22 Interview with Carlton Flatt, supra note 14. 23 Id. 24 Id. 25 See Brentwood Academy, 13 F. Supp. 2d at 675. 26 See id. 27 See id. The TSSAA charged Brentwood Academy with a third violation, an impermissible off-season practice conducted by the basketball coach, John Patton. This violated the Off-Season Practice Rule. See id. at 675. Since this infraction did not involve the recruiting rule 236

and possible First Amendment violations, this Note will not cover the third infraction. 28 See Brentwood Academy, 13 F. Supp. 2d at 677.

49 See Pierce v. Society of Sisters, 268 U.S. 510, 534 (1925); Meyer v. Nebraska, 262 U.S. 390, 399 (1923). 50 See Pierce, 268 U.S. at 534.

29 See id. at 672. 51 See Blumstein, supra note 32. 30 See id. at 686. 31 See id. at 690. 32 James F. Blumstein, Editorial & Comment: 6th Circuit Court Split on High-School Recruiting, THE COLUMBUS DISPATCH, August 19, 1999, at 14A. 33 See Brentwood Academy, 13 F. Supp. 2d at 687. 34 See id. at 688. 35 Interview with Ron Carter, supra note 3. 36 See Brentwood Academy, 13 F. Supp. 2d at 694. 37 See Brentwood Academy, 180 F.3d at 766. 38 See id. 39 See id. 40 See Abrams v. United States, 250 U.S. 616, 630 (Holmes, J., dissenting). 41 See Griffin High Sch. v. Illinois High Sch. Assn, 822 F.2d 671, 672 (7th Cir. 1987); Kite v. University Interscholastic League, 661 F.2d 1027, 1028 (5th Cir. 1981); Steffes v. California Interscholastic Fedn, 176 Cal. App. 3d 739, 746 (Cal. Ct. App. 1986). 42 See Brentwood Academy, 180 F.3d at 706 (Merritt, J., dissenting). See also Griffin, 822 F.2d at 672; Clark v. Arizona Interscholastic Assn, 695 F.2d 1126, 1128 (9th Cir. 1982); United States, ex rel. Missouri State High Sch. Activities Assn, 682 F.2d 147, 151 (8th Cir. 1982); Kite, 661 F.2d at 1028; Moreland v. Western Penn. Interscholastic Athletic League, 572 F.2d 121, 125 (3d Cir. 1978); Oklahoma High Sch. Athletic Assn v. Bray, 321 F.2d 269, 273 (10th Cir. 1963). 43 See generally, Florida High Sch. Activities Assn v. Thomas, 434 So. 2d 306, 308 (Fla. Sup. Ct. 1983). 44 See id. 45 See Brentwood Academy, 180 F.3d at 762. See also Burrows v. Ohio High Sch. Athletic Assn, 891 F.2d 122, 125 (6th Cir. 1989) (holding that the Ohio High School Athletic Association is not a state actor due to its similar nature to the NCAA). 46 See Brentwood Academy, 180 F.3d at 766. 47 Interview with Ron Carter, supra note 3. 48 Id. 237 70 See California School Boards Association, CIF Organizational Structure (visited Jan. 28, 2000) <http://www.csba.org/admin/CIF/ p.56.htm>. 52 See Blum v. Yaretsky, 457 U.S. 991 (1982); Lugar v. Edmondson Oil Co., 457 U.S. 922 (1982); Rendell-Baker v. Kohn, 457 U.S. 830 (1982); Brentwood Academy, 180 F.3d at 758. 53 See Brentwood Academy v. Tennessee High Sch. Athletic Assn, 120 S. Ct. 1156 (2000). 54 See Chaplinsky v. New Hampshire, 315 U.S. 568, 570 (1942); De Jonge v. Oregon, 299 U.S. 353, 364 (1936); Gitlow v. New York, 268 U.S. 656, 666 (1925). 55 U.S. CONST. amend. XIV. 56 Lugar, 457 U.S. at 923. 57 Id. at 936. 58 42 U.S.C. 1983. 59 See State Province High School Association Links, supra note 7. 60 See Brentwood Academy, 180 F.3d at 706 (Merritt, J., dissenting). See also Griffin, 822 F.2d at 672; Clark , 695 F.2d at 1128; United States, ex rel. Missouri State High Sch. Activities Assn, 682 F.2d at 151; Kite, 661 F.2d at 1028; Moreland, 572 F.2d at 125; Oklahoma High Sch. Athletic Assn, 321 F.2d at 273. 61 See Griffin, 822 F.2d at 674. 62 See id. at 672. 63 See Florida High Sch. Activities Assn, 434 So. 2d at 307. 64 See Chabert v. Louisiana High Sch. Athletics Assn, 323 So. 2d 774, 777 (La. Sup. Ct. 1975). 65 See Florida High Sch. Activities Assn, 434 So. 2d at 308. 66 See CAL. EDUC. CODE 33353 (West 1993); Sandison v. Michigan High Sch. Athletic Assn, 863 F. Supp. 483, 486 (E.D. Mich. 1994); Mississippi High Sch. Activities Assn v. Coleman, 631 So. 2d 768, 774 (Miss. Sup. Ct. 1994). 67 See Griffin, 822 F.2d at 673. 68 See CAL. EDUC. CODE 33353 (West 1993). 69 Id.

71 See id. 72 See CAL. EDUC. CODE 33354. 73 See Steffes, 176 Cal. App. 3d at 746. 74 See Griffin, 822 F.2d at 672. 75 See id.

97 See id. at 2. 98 See Brentwood Academy, 13 F. Supp. 2d at 673. 99 See Tenn. Bd. of Educ. Rule, 0520-1-2-.08. 100 See Brentwood Academy, 13 F. Supp. 2d at 680 (citing Tenn. Bd. of Educ. Rule, at 0520-1-2-.26). 101 See id. at 681.

76 See Illinois High School Association, Mission Statement (visited Jan. 28, 2000) <http://www.ihsa.org/mission.htm>. 77 See id. 78 Griffin, 822 F.2d at 674.

102 See Tenn. Bd. of Educ. Rule, 0520-1-2-.08. Note that while the State Board of Education authorizes the public schools to voluntarily maintain membership with the TSSAA, it said nothing of private schools within Tennessee. 103 See Brentwood Academy, 13 F. Supp. 2d at 681.

79 See University Interscholastic League, Administration (visited Jan. 28, 2000) <http://www.utexas.edu/ftp/depts/uil/admin>. 80 See id. 81 Id. 82 See Kite, 661 F.2d at 1028. 83 See Stock v. Texas Catholic Interscholastic League, 364 F. Supp. 362, 364 (N.D. Tex. 1973). 84 See id. at 364. 85 See id. 86 See id. 87 See id. at 364-65. 88 See id. at 365.

104 See id. 105 See id. 106 See Brentwood Academy, 180 F.3d at 762. 107 See id. 108 See id. 109 See id. 110 Id. See also Blum, 457 U.S. 991; Lugar, 457 U.S. 922; RendellBaker, 457 U.S. 830. 111 Blum, 457 U.S. 991. 112 Brentwood Academy, 180 F.3d at 762 (quoting Blum, 457 U.S. at 1004). 113 Lugar, 457 U.S. 922.

89 See Brentwood Academy, 13 F. Supp. 2d at 673 (quoting TSSAA CONST. art. I, 2). Three years ago, the TSSAA slightly altered its structure by creating Division II, a separate division only for those schools that offer financial aid or scholarships to students. Brentwood Academy is not a member of Division II. See Jim Wojciechowski, TSSAA Survives Amid Many Storms, NASHVILLE SPORTS WEEKLY, Nov. 23, 1999, at 8. 90 See Brentwood Academy, 13 F. Supp. 2d at 673. 91 See TSSAA By-Laws, art. I, 1. 92 See Interview with Ron Carter, supra note 3. 93 See id. 94 Id. 95 See TSSAA By-Laws, art. I, 14. 96 See id. at 1.

114 See id. at 942. 115 Rendell-Baker, 457 U.S. 830. 116 Id. at 831. 117 See Lugar, 457 U.S. at 942. 118 Even though the governing board theory is used only as support for Brentwood Academys membership theory for state action, the governing board theory may be weakened by certain facts. If a majority of private high school administrators were elected to the TSSAAs governing board, then the governing board theory is disrupted and state actor status for the TSSAA would be repealed. Thus, if the governing board theory prevails, it is conceivable that state actor status for the TSSAA could change annually based on the outcome of the elections. 119 See Brentwood Academy, 180 F.3d at 763 (citing Wolotsky v. Hahn, 920 F.2d 1331, 1335 (6th Cir. 1992)). 120 Id.

238

121 Betty Chang, Coercion Theory and the State Action Doctrine as Applied in N.C.A.A. v. Tarkanian and N.C.A.A. v. Miller, 22 J.C. & U.L. 133, 149 (1995). 122 See Brentwood Academy, 180 F.3d at 762. 123 Id. at 764. 124 See id. But see Graham v. Tennessee High Sch. Athletic Assn, 1995 WL 115890, 115894 (E.D. Tenn. 1995). In Graham, the district court for eastern Tennessee decided that the TSSAA was a state actor, even after the Blum Trilogy. The district court found that the TSSAA was not a state actor under the public function test; however, the court found that the TSSAA was a state actor under the state compulsion test. The court emphasized the original language in the Tennessee Code, which stated that the State Board of Education designated the TSSAA as the organization to supervise and regulate athletic activities. While Graham was decided in 1995, the decision came before the 1995 amendment where the Board merely recognizes the role of the TSSAA. These facts lend further credence to the TSSAAs argument that it is not a state actor since the State Board of Education amendment changed its status. As a result, the Sixth Circuit in Brentwood Academy was willing to accept this argument and hold that the TSSAA is not a state actor. 125 See Brentwood Academy, 180 F.3d at 764. 126 See id. 127 Brentwood Academy, 190 F.3d at 707 (Merritt, J., dissenting).

141 See generally Communities For Equity v. Michigan High Sch. Athletic Assn, 80 F. Supp. 2d 729, 742 (W.D. Mich. 2000). The district court for western Michigan noted that while the central issue in Brentwood Academy was the membership issue, the essential issue in Tarkanian was the joint action question. Specifically, the issue in Tarkanian was whether the NCAAs actions were so coordinated with UNLV, a public university, that they should be considered joint actions so that the NCAA is also a state actor. See also Brief for Appellee at 5, Brentwood Academy, 190 F.3d 705 (No. 98-6113). 142 See Brief for Appellee at 9, Brentwood Academy, 190 F.3d 705 (No. 98-6113). 143 See Brentwood Academy, 180 F.3d at 766; Brentwood Academy, 13 F. Supp. 2d at 682. But see Communities For Equity, 80 F. Supp. 2d at 742. In Communities For Equity, Chief Judge Richard Alan Enslen found that the Sixth Circuits decision in Brentwood Academy was not controlling when determining whether the Michigan High School Athletic Association (MHSAA) is a state actor because the Sixth Circuit misinterpreted footnote 13 in Tarkanian. He noted that Brentwood Academy and Tarkanian dealt with two separate issues: the membership question and the joint action question, respectively. He also noted that the first sentence of footnote 13 deals with the membership theory and that the second sentence refers to the joint action theory. Finally, the court held that the MHSAA is a state actor under the state compulsion test and the symbiotic relationship test. 144 See Brentwood Academy, 180 F.3d at 766 (quoting NCAA v. Tarkanian, 488 U.S. at 193). 145 See id.

128 See Brentwood Academy, 120 S. Ct. 1156. 146 Communities For Equity, 80 F. Supp. 2d at 742. 129 See NCAA v. Tarkanian, 488 U.S. 179, 194 (1988). 147 See generally id. 130 See id. at 183. 131 See id. 132 See id. But see Burrows v. Ohio High Sch. Athletic Assn, 891 F.2d 122, 125 (6th Cir. 1989) (finding that the Ohio High School Athletic Association is clearly an analogous organization to the NCAA). 133 NCAA v. Tarkanian, 488 U.S. 179. 150 Id. at 726. 134 Id. at 195. 151 Id. at 724. 135 Id. at 194. 136 Clark, 695 F.2d 1126. 137 Louisiana High Sch. Athletic Assn v. St. Augustine High Sch., 396 F.2d 224 (5th Cir. 1968). 138 See Tarkanian, 488 U.S. at 194. 139 See Clark, 695 F.2d at 1128; Louisiana High Sch. Athletic Assn, 396 F.2d at 227. 140 See id.; id. 239 152 Thomas R. McCoy, Current State Action Theories, The Jackson Nexus Requirement, and Employee Discharges by Semi-Public and State-Aided Institutions, 31 VAND. L. REV. 785, 813 (1978). 153 See Rendell-Baker, 457 U.S. 830. 154 See id. at 832. 155 See id. 156 See id. at 834. 148 Id. Furthermore, Judge Enslen noted that while the Sixth Circuits decision in Brentwood Academy could not be reconciled with footnote 13 in Tarkanian, the Brentwood Academy situation is unique on its facts. This is because a private school is alleging that the TSSAA is a state actor when it regulates that private school. 149 See Burton v. Wilmington Parking Auth., 365 U.S. 715, 717 (1961).

157 See id. at 835. 158 See id. at 843. 159 Id. at 840. 160 Id. at 840-41. 161 See id. at 843. 162 See id. at 831. 163 See id. at 843. 164 Interview with Ron Carter, supra note 3. 165 See generally Sandison, 863 F. Supp. at 486; Mississippi High Sch. Activities Assn, 631 So. 2d at 774. 166 See CAL. EDUC. CODE 33353. 167 See Kite, 661 F.2d at 1028. 168 See Stock, 364 F. Supp. at 364. 169 Griffin, 822 F.2d at 674.

183 Id. 184 Id. 185 Id. 186 Id. 187 Chang, supra note 121, at 173. 188 Id. (quoting Parish v. NCAA, 506 F.2d 1028, 1033 (5th Cir. 1975)). 189 See generally American Booksellers Assn v. Hudnut, 771 F.2d 323, 325 (7th Cir. 1985) (finding that a balancing test is not appropriate when determining the constitutionality of an Indianapolis pornography statute because the state may not ordain preferred viewpoints under the First Amendment). 190 See generally Abrams, 250 U.S. at 630 (Holmes, J., dissenting). 191 See generally Schad v. Borough of Mount Ephraim, 452 U.S. 61 (1981) (recognizing protection for live nude dancing); Central Hudson Gas v. Public Serv. Commn, 447 U.S. 557 (1980) (recognizing protection for commercial speech); Burstyn v. Wilson, 343 U.S. 495 (1952) (recognizing First Amendment protection for motion pictures). 192 TSSAA By-Laws, art. II, 21.

170 See id. 193 See id. 171 Id. 194 Id. 172 See Moose Lodge v. Irvis, 407 U.S. 163 (1972). 195 Id. 173 Id. at 171. 174 See id. at 171-76. 175 See id. at 176-77. 176 Interview with Carlton Flatt, supra note 14. 177 Id. 198 See Brentwood Academy, 13 F. Supp. 2d at 687. 178 On March 23, 1990, the legislative council of the TSSAA passed a provision allowing non-TSSAA member schools to play member schools of the TSSAA during the regular season. Executive Director Carter indicates that this was not a unilateral action, but rather an attempt by member and non-member schools to play one another. Interview with Ron Carter, supra note 3. 179 Interview with Carlton Flatt, supra note 14. 202 See Brentwood Academy, 13 F. Supp. 2d at 687. 180 Id. 181 Private high schools in other states that voluntarily join secondary school athletic associations which are not authorized by statute also should assert the lack of voluntariness to prevail on the state actor issue. 182 Interview with Ron Carter, supra note 3. 205 Id. at 689. 240 203 See generally Tinker v. Des Moines Indep. Community Sch. Dist., 393 U.S. 503, 508 (1969) (finding that the school district deliberately set out to suppress black armbands worn in school to exhibit opposition to the Vietnam War.) 204 See Brentwood Academy, 13 F. Supp. 2d at 693. 199 R.A.V. v. City of St. Paul, 505 U.S. 377, 382 (1992). 200 Geoffrey R. Stone, Content Regulation and the First Amendment, 25 WM. & MARY L. REV. 189, 198 (1983). 201 Burson v. Freeman, 504 U.S. 191, 197 (1992). 196 Id. Furthermore, the feeder pattern generally refers to the group of public schools (elementary, middle school, junior high school) within a district that lead to enrollment in a designated public high school within that district. 197 See Bob White, Judge Bans Prep Recruiting Rules, THE LOUISVILLE CARRIER-JOURNAL, July 31, 1998, at 1C.

206 See id. 207 Stanley v. Georgia, 394 U.S. 557, 564 (1969). 208 Interview with Carlton Flatt, supra note 14. 209 Id. 210 Id. 211 Id. 212 See Pierce, 268 U.S. at 534. 213 Brentwood Academy, 13 F. Supp. 2d at 687. 214 United States v. OBrien, 391 U.S. 367 (1968). 215 Id. 216 Ward v. Rock Against Racism, 491 U.S. 781, 791 (1989). 217 See OBrien, 391 U.S. at 377. 218 See generally Tinker, 393 U.S. at 508. 219 See generally Members of City Council v. Taxpayers for Vincent, 466 U.S. 789 (1984). 220 See Brentwood Academy, 13 F. Supp. 2d at 686. 221 Thomas R. McCoy, A Coherent Methodology For First Amendment Speech and Religion Clause Cases, 48 VAND. L. REV. 1335, 1356 (1995). 222 Interview with Ron Carter, supra note 3. 223 See Brentwood Academy, 13 F. Supp. 2d at 686. 224 Interview with Ron Carter, supra note 3. 225 Brentwood Academy, 13 F. Supp. 2d at 689. 226 See generally Don F. Vaccaro, Validity of Regulation of Athletic Eligibility of Students Voluntarily Transferring From One School To Another, 15 A.L.R. 885 (1999). 227 See id. 228 Id. 229 See id. 230 See id. 231 See Brentwood Academy, 13 F. Supp. 2d. at 688. 232 See Brentwood Academy, 180 F.3d at 766. 233 The CIFs rule states: The use of undue influence by any person to secure or retain a student or to secure or retain one or both parents

or guardians of a student as residents may cause the student to be ineligible for high school athletics for a period of one year and shall jeopardize the standing of the high school in the CIF. Furthermore, the CIF defines undue influence as: Any act, gesture, or communication (including accepting material or financial inducement to attend a CIF member school for the purpose of engaging in CIF competition regardless of the source) which is performed personally, or through another, which may be objectively seen as an inducement, or part of a process of inducing a student, or his or her parent or guardian, by or on behalf of, a member school, to enroll in, transfer, or remain in, a particular school for athletic purposes. See CALIFORNIA INTERSCHOLASTIC FEDERATION CONSTITUTION, art. 5, 510. 234 The IHSAs recruiting rule specifically states: It shall be a violation of this rule for any student athlete to receive or be offered any remunerations of any kind or to receive or be offered any special inducement or any kind which is not made available to all applicants who enroll in the school or apply to the school. See Illinois High School Association By-Laws, 3. 235 See id. at 3.083. 236 See id. 237 See Blumstein, supra note 32. 238 See Illinois High School Association By-Laws, 3.082. 239 See CALIFORNIA INTERSCHOLASTIC FEDERATION CONSTITUTION, art. 5, 510. 240 See Brentwood Academy, 120 S. Ct. 1156.

241

art & industry forum

t first glance, considering the Grateful Dead as a subject of legal analysis seems counterintuitive. For anyone possessing even a marginal understanding of the bands place in American musics history, the very thought should elicit a smile. Most of the available information concerning the Dead and their 30 years of operations has the character of childrens stories or fairy tales, oral hand-me-downs from people who ate the wrong cake and took a detour through Wonderland. But for those who have caught a glimpse of the Grateful Deads experience, legally oriented suspicions about how the band carried on their business ring familiar. For one, their practice of allowing their audiences to tape their live performances is commonly known. There are tapes, still in circulation today, of concerts 10 years older than the Copyright Act of 1976.2 The Dead allowed fans to tape their shows, and even to distribute copies of these sound recordings, when no one else was3 (and, incidentally, after the rest of the recording industry had declared war on bootleggers4). Instinctat least a legal instinctsays that this practice is a very bad idea. In reality, the bands decision to allow tapers was not flirtation with disaster, but an astute business stratagem. Similarly, the Deads notion of copyrighting their compositions deviated from what the law seems to prescribe and what the mainstream recording industry follows. Obtaining a federal copyright amounted to separate endeavors of writing down the composition and then recording it (assuming one was both author and first performer) prior to the 1976 Acts implementation in 19785 and then to fixing the work in the tangible medium of a copy or phonorecord thereafter.6 The band never regarded this regime as merely a ceremonious formality. Still, they routinely played compositions in their concerts numerous times before ever recording them onto an album for sale, fiddling with arrangements and gauging audience responses for what sounded good.7 In other words, they in some instances spent years writing their material.8 This notion does not fit neatly into the spectrum of American copyright law.9 And then there is the no-holds-barred attitude with which rock musicians, such as Billy Joel and the Beatles, appear to enter the courtroom.10 For a band of the Deads success and renown, they radi-

C K U I N R S I N TYLE T
, well, I declare Have n m a you seen the like? dd o G Their walls are Uncle Johns B an d by the riverside G ot some things
242

THE GRATEFUL DEAD, Uncl

n e Johns Band, o

ate a belying nonchalance about conforming to legal ordinances. Though such a conclusion is a misperception, it appears that on only two occasions did they find it necessary to litigate against unauthorized infringers.11 Simply put, the Grateful Dead has never fit the stereotype of musicians being legally aggressive. That the Grateful Dead were different undoubtedly is true on a broad social level. But it is not so easy to ascertain how they were different in the business and legal aspects of their enterprise. The ephemeral nature of their approach stems from the fact that they conducted their affairs within and alongside the world of statutes and contracts and yet provided themselves with a great degree of independence from that world. This Note will comment on the Deads perspective on and their ultimate rejection of many of the business and legal strategies traditionally ascribed to in the industry. After a brief introduction to the ethos of the Grateful Deadessential as a frame of reference into their collective characterthis Note will provide summaries of common music

How the Grateful Dead Turned Alternative Business and Legal Strategies Into A Great American Success Story
BY BRIAN C. DROBNIK

G N T O H EA L A VENUE
nonballs, their mo n a c tto is of t l Don bui lk about here beside t t Tr h e ri a ead o t sing n Me to t i ead (Warner B de. mans D r g o n t h i er k
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industry practices involved in signing onto a recording label and getting ones material marketed, distributed, and sold. It will then examine the law that protects exposure of artists and their work. The reader should keep in mind that the law views songwriters and recording artists as separate entities.12 In practice, this distinction applies in most instances. This Note, however, will assume that these parties are one and the same, partly because the Dead both wrote and recorded their material, and partly to avoid the inconvenience and redundancy of having to draw out this distinction in passim. What this Note will not argue is that existing practices should be altered to favor artists. The system runs the way it does not so much because large corporate interests have lobbied it until lopsided, but rather because it works for the majority of its participants. Still, problems are common, and the existing structures of the music industry and United States law may be unfit or too inflexible to address them. What the Grateful Dead did so well what this Note will illustratewas to avoid the pitfalls inherent in the music business and entertainment law. They took substantial risks in choosing their particular course, risks that perhaps only a band of their nature and with their objectives could possibly embrace. As this Note explains, their success as performers resulted directly from their decision to make independence and artistic freedom a priority. There are currently a handful of musicians and bands who appear to have taken note of the Deads strategy and are profiting greatly by it.13 Ultimately, this Note will argue that more should follow suit.

UNCLE JOHNS BAND14

Grateful Dead concerts were original in our time. To their following, these events were gatherings, family reunions, ritual rites of celebration. To outsiders a vast majority of the American publicthis adoration sounds like nostalgia for a time and idealism long since passed. The band was born amidst the communal phenomenon of San Francisco in the 1960s. But what became the Summer of Love was merely a scene ripe for the exploitation-minded. Television news cameras arrived alongside tourists; merchandisers came with their lawyers; the FBI and organized crime are suspected to have been involved in the drug scene.15 The Grateful Dead, generally recognized as the only survivors of the

Haight-Ashberry counterculture,1617 emerged intact because they shunned the spotlights and ran their business on their terms alone. They left the counterculture fountainhead at the intersection of Haight and Ashberry Streets for the road at the end of the Sixties, and stayed there for another 25 years.17 During these years, the band became the most successful touring group in the industry and attracted a more devoted fan base than any other rock n roll act in history.18 The Deads concerts often resembled a cross between a carnival and a mass baptism. Mythologist Joseph Campbell, during his first encounter with the Deadheads and their leaders,19 referred to the fans at the concert as though they were a congregated tribe, proclaiming: Now Ive seen similar manifestations, but nothing as innocent as what I saw with this bunch. This was sheer innocence. And when the great beam of light would go over the crowd, youd see these marvelous young faces all in utter rapture for five hours! This is a wonderful, fervent loss of self in the larger self of a homogenous community. This is what its all about!20 This spirit is why the people came to the shows in ever-increasing numbers for 30 years. This is why they spent nomadic summers following the band from city to city, creating an American Odyssey. It explains the taping of concerts, the maniacal legions of barterers and archivists capturing for posterity American history as it occurred. This is why their music was so beloved, and yet their studio albums invariably mediocre.21 Remarkably, despite having had only a few of their songs ever receive radio play (only one of these, Touch of Grey off 1987s In The Dark album, broke the Top Ten), their popularity remains undiminished five years after the death of Jerry Garcia.22 The band itself was endowed with awareness that doing this was their raison dtre and that it could only be done by reinventing the rules that corporate America had made and its musicians followed. As drummer Mickey Hart explains, We went on a head-hunting mission for twenty-five years. We went out there and got this army in tow. And said, Okay, you guys are something; youre a thing. And they themselves recognized their own identity and grew bigger than we ever could imagine.23 In many ways, every other rock band, as well as every record label from New York to Los Angeles shares this quest, for the obvious reason that it translates into rev-

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enue. The difference why it worked for one but not for so able.36 And other than through direct fan newsletters, many otherslies in their disparate approaches to every- they did little to advertise.37 Thus, just as they played on thing from advertising and marketing to copyright and unnoticed by much of the American public, they remained trademark control. elusive and enigmatic to record company executives. In her Despite the Deads evident sense of manifest destiny, social commentary on the Dead, Carol Brightman observed little other than their actual playing was left to the that, With a ready-made audience, beholden to Grateful muses.24 Rather, they employed deliberate strategies for Dead Productions, there never was much incentive for attracting and holding a fan base that the industry often the music industry to make collateral investments.38 overlooks.25 Their modi operandi, though having the The Grateful Dead consistently sought to protect their appearance of disorder and community and their fans mismanagement, were actuthe so-called Grateful Dead The Grateful Dead employed ally well thought-out and Familyfrom corporate 26 deliberate strategies for efficiently conducted. Americas intrusions, someThey were the paragons of thing that undoubtedly conattracting and holding a fan base rock n roll debauchery and tributed to their swelling that the industry often overlooks. self-abuse, and yet they popularity during the 1980s 27 worked incessantly. And and 1990s.39 But they did although their musical outnot achieve this through the having the appearance of put was formidable, after implementation of aggres1978s Shakedown Street sive or exclusive policies. In disorder and mismanagement, album they spent little time fact, if one single element of were actually well thought-out in the studio.28 It was not the bands character can be until the 1980s that they lauded for allowing the famand efficiently conducted. began filling the larger venily mystique to flourish, it is They were the paragons of ues, despite the fact they that they and their music were constantly recycling old were accessible in ways rock n roll debauchery and material.29 They rarely proother musicians and their self-abuse, and yet they moted new albums, instead music most often are not. testing their material on the They welcomed everyone worked incessantly. road before putting it on who would come along for vinyl.30 For most bands this is an abominable concept the ride, and what happened was a phenomenon, a movenot using an album to promote a tour virtually ensures ment, that is 30 years old and counting. poor ticket receipts or, conversely, poor album sales.31 The Dead staged free concerts32 and contributed mate- PROBLEMS WITH THE INDUSTRY, rial to or played at benefits in support of everything from LOOPHOLES IN THE LAW, AND now-fashionable environmental concerns to less desir- THE WAY OF THE DEAD able interests such as the Hells Angels, the Black Panthers, and San Franciscan prostitutes.33 And yet, THE NATURE OF THE BUSINESS despite being linked to characters traversing the perimeter of social acceptance, they did not espouse anything in Dire Straits most noted song, Money For Nothing,40 the way of radical political views.34 The Grateful Dead ironically criticizes the way the music industry radiates thus never received much in the way of either media or an image of generosity to the artists who are its lifeblood. critical attention. Indeed, they sought to avoid the main- It describes the stereotypical guitarist of music video stream promotional tactics of the music business. They lore, prancing about the television screen and contorting sold a significant portion of their tickets by mailing them over his instrument melodramatically while surrounded directly to their fans, thereby avoiding promotion fees.35 by proof of the good life. The singer (Mark Knopfler) For the remainder that went to promoters and agents, comments, Now look at them yo-yos thats the way you the Dead demanded that ticket prices be kept reason- do it/ You play the guitar on the MTV/ That aint workin
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Their modi operandi, though

thats the way you do it/ Money for nothin and chicks for free.41 The songs appeal may lie in that its narrator is the man who enjoys fame because he plays guitar on the MTV, but at the same time is the satirical insider. The trappings (or rewards, depending on viewpoint) of musical fame that the song romanticizes most certainly orbit the power structure of the industry. But they are not for free. In order even to get four minutes on the MTV, one ordinarily must mortgage the very product of ones creativity early on, and then simply be lucky enoughor in the rare case, good enoughto get there. Most of them yo-yos are neither.

The Cost of Getting Signed

Most musicians and songwriters begin their careers with little in the way of notoriety or personal resources. In the world of record production, this translates into a need for outside help in everything from recording and producing ones work to advertising, marketing, and distribution.42 More importantly, it also means that the songwriter or musician has little bargaining power, other than the quality of his or her work, which, until it sells in packaged format, remains unproven.43 Thus, even though the songwriter may own first copyright to the material by virtue of being its author,44 the publisher (which is often a subsidiary of a larger production corporation) usually obtains this ownership by assignment.45 The reason behind this transfer is obvious: the publisher is the entity responsible for taking the work from its creative stages to its commercial end-goal, a process that requires a high degree of control over how the composition or recording is to be used and marketed.46 But publishers can wield their expertise-based bargaining superiority to gain control over rights for creating derivative works,47 publicity rights and biographical information,48 editing and revision rights,49 and even the assignment of third party songwriters to rewrite or retool the original composition.50 This power of publishers can be problematic for the songwriter because it leaves her with little control over what is done with her material and sometimes leads to later conflict. For a songwriter who carries an emotional attachment to her work, the fact that a publishing company may alter the works arrangement or content to better exploit it is at the very least unseemly. Moreover, should the artist eventually build a successful name for herself in the recording business, protection of earlier material may take on an even deeper importance than

initially felt. Often, this situation will give rise to royalty disputes as well.51 If a new artist contracts with a publisher for its services, he will normally receive only a minimal royalty percentage.52 Thus, if the work happens to sell well, the publisher and production companies enjoy a percentage of the profits that arguably would go to the artist had he operated independently. This situation becomes further aggravated when the publisher or producer advances monies to the artist on the condition that they be credited against future royalties, or compensated by even greater ownership control over the artists work.53 Future litigation over ownership rights and use of the songwriters material is virtually impossible since publishers tend to reserve in the original contract the right to settle in the manner [they] alone determine to be in the best interest of all parties involved.54 The corporate partner, therefore, can easily dispose of lawsuits, a practice that undoubtedly has prevented the law from evolving in the direction of protecting musical artists from unfair exploitation. The songwriter can avoid the drawback of a publishing agreement by self-publishing. This is what the Grateful Dead did. They maintained ownership of the publishing rights to every song they wrote, even before the establishment of their in-house publishing company, Ice Nine Publishing.55 Of course, one must remain mindful of the uniqueness of their situation. Most songwriters sell the publishing rights to their compositions because they are not also recording artists; they require someone to record and perform their songs if they are to earn a living in the music business. The Dead, however, played both roles.56 Thus, the band did not depend upon other performers to supply them with income from performance royalties. Conversely, they did not have to distribute any of their earnings to publishing companies since generally they refused to employ songwriters outside their own organization.57 Because the Grateful Dead began as, and remained, an act whose success resulted from the strength of its live performances, their concern for studio success was always secondary.58 Thus, they could write dozens of songs and play them for years before they made their way onto a studio album.59 Long-time manager of the Dead, Rock Scully, comments: The Grateful Dead manner of writing songs is a very haphazard, hit-or-miss business. Nothing is nailed down. First

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THE DEAD HAND

It is through litigation details that many of the underhanded business practices of the music industry have come to light. The legal issues and lawsuits that artists and their estates become involved in can have as much impact on the music we hear as do the musicians with whom the artists work or even the songs they choose to record. Often, lawsuit begets lawsuit in an ever-deepening pool of claims. STAN SOOCHER, THEY FOUGHT THE LAW: ROCK MUSIC GOES TO COURT (1999). [I]mportant . . . was the symbiosis that developed between the band and its audiencea reciprocity likely unequaled in pop history. At the heart of this connection was the Dead themselves and their self-built business organization.This model of an autonomous cooperative helped spawn what was perhaps the largest genuine alternative communion in all of rock: a sprawling coalition of fans, entrepreneurs, and homegrown media that surrounded the band, and that promoted the group as the center for a worldwide community of idealistsand that community thrived largely without the involvement or support of the established music industry or music press. JOHN PARELES, NIGHT BEAT: A SHADOW HISTORY OF ROCK & ROLL 374 (1998).

they try their songs out in front of an audience. For most groups the song gets written and arranged, then it comes out on record and gets played on the radio. Only then does the band go out on the road and back up the record, basically lip-synching their own songs. The Dead, however, like to go out onstage and play a totally new song something that theyve just written or are still writinglong before it ever appears on an album.60 For the Dead, choosing what to release on their studio albums was a simple matter; they knew what their followers appreciated, having already exposed them to the unreleased material. Amazingly, some of their most beloved and well-known songs were released only on live albums, while still others never made it off the stage. Ultimately, the Grateful Dead obtained a high level of artistic integrity by claiming the freedom to determine what they played live and, to a lesser degree, what they recorded. Quite simply, the band wanted no one else to have control over their work or their musical direction.61 The Dead were the first band to sign with a major label (Warner Brothers) with the condition that all publishing rights be kept within their own organization.62 Though the battles over this issue were furious,63 the band eventually prevailed. Unlike artists desperate to break into the business, the Grateful Dead did not care for recording an album if this would mean assigning away artistic control and copyright to their music.64 The bands nego-

tiation tactics paid off; not only did they receive a larger cut of their albums sales revenue by maintaining publishing rights, but their stubbornness also resulted indirectly in raising overall royalty percentages for recording artists.65 Contrary to industry philosophy, the risks they took did not result in failed careers.

Recording and Producing An Album

The recording artist, as opposed to the songwriter, must contend with an entirely different set of demands. The initial success of an album will depend largely upon the amount of exposure it receives.66 Because recording companies only can do so much to advertise a new artists work, radio play is an essential component (if not the primary method) in ensuring that consumers will become aware of the music.67 This reality determines not only which songs will end up being recorded onto an album, but also the number of songs that will be included, their arrangement in relation to each other, and their length and style.68 Peter Muller, in THE MUSIC BUSINESSA LEGAL PERSPECTIVE, writes that A&R executives:69 [T]end to listen for a sound that has a wide appeal, that will remain fresh album after album, and that possesses a distinctive yet recognizable quality. The winning combination often represents a commercially successful artist/record company relationship that is highly profitable for all parties connected with

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the artist and the record company.70 This description is a romanticized summary of what actually happens during an albums song selection and production phases. Because radio audiences of popular music typically do not possess either great patience or a remarkable attention span, production departments necessarily select singles that are catchy in sound and whose playing length falls between three and five minutes.71 The royalty payment system simply reinforces this design as overall sales depend heavily upon positive airplay.72 Because the recording company will normally advance production costs to the artist on the condition that they be subtracted from the artists royalty cuts in the album, recording executives reserve the final authority over what is put on an album.73 This can mean that longer, and often more serious, compositions that an artist desires to record, but that are not considered commercially attractive, will struggle to make it onto an album.74 In sum, the artists decisions and endeavors are to an alarming degree the properties of her business partner.75 Touring is also a crucial support feature to promoting an album.76 For the new artist not experiencing adequate airplay, opening for a more well known act or traveling with a high profile concert festival (H.O.R.D.E., Further, Lollapalooza, among others77) can mean exposure to large audiences.78 But when the tour is designed as a revenue engine to ride the crest of momentum created by radio play, musicians find themselves stuck in a particularly strange Catch-22. Though they may wish to demonstrate the breadth of their repertoires and talents, musicians are confronted with the reality that most concert goers pay inflated ticket prices to hear live exactly what they have been hearing on their favorite radio stations (or on the full-length album being promoted by the concert).79 Another aspect to touring that threatens artistic independence is product promotions.80 When a product manufacturer agrees with a recording company to sponsor one of its artists tours, that artist not only becomes associated with the manufacturer and its product, but also may have contractual obligations created by recording executivesto sponsor the manufacturer in return.81 Record companies also typically reserve the exclusive right to market their artist publicity interests.82 This control means that record companies effectively dictate the nature of the artists promotional enterprises beyond touring.83 Of course, the Dead were first and foremost a live

band. Until 1987s studio effort In the Dark, they neither pursued seriously nor achieved recording an album that was commercially successful by industry standards.84 Although the Dead may have been better off releasing live performances, it was difficult to convince Warner Brothers to do so. Rock Scully, longtime friend and manager to the band, remarked: The stigma against live recordings is entirely a record company thing, and needless to say it comes down to the scaly business of money. Since the songs in live concerts are usually rerecordings of material for the most part already on studio albums, there isnt a new set of songs to scoop the publishing gravy off of. And because it doesnt go through the normal channels, the producers and A&R guys dont get a cut either.85 The Dead were masters at cutting out the middlemen that artists encounter in the music business.86 However, they did not experience the same financial pressures that most other artistsespecially those with a marginal live performance reputationface in this situation. When the need arose, they could simply take to the road and generate massive revenue.87 During the bands contract with Warner Brothers, they did not possess industry clout of the same manner or to nearly the same degree as many of their contemporaries, such as the Rolling Stones. So perhaps Warner allowed the group the amount of license they did because they understood that Grateful Dead albums would never sell in tremendous numbers, and that therefore the Warner Brothers label would not sacrifice a great deal of money by giving the band the control it wanted. Whatever the case, Scully claims that the Dead managed to raise royalty rates for recording artists generally.88 Because the Dead had a tendency (especially in concert) to play extended jams in the middle of their songs, or to segue one song to the next via lengthy improvisational experimentation, they stood to receive lesser royalties for only recording two or three songs per album side. The answer to their problem came from the jazz world, where longer improvisational pieces are far more common. For years, jazz musicians royalties were computed by the minute, not per song. The Dead took heed and convinced Warner Brothers to agree.89 For most of the Grateful Deads career, touring was their primary source of income.90 What is remarkable is the fact that they did not advertise their arrival to a par-

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ticular city, or at least in the normal fashion. They began their playing career as the house band for Ken Keseys infamous acid test parties in La Honda and San Francisco.91 For these gigs and similar ones in the Bay area, they usually distributed posters.92 When they went on the road, they worked at obtaining local fan bases by self-promotion absent a large advertisement budget.93 They received substantial airplay on latenight FM radio shows, which at the time was still a fledgling medium.94 The night-time FM audience, partially comprised of college students who had come of age during the late 60s and who harbored many of that eras sentiments, were the Deads targets. When the band would play the several East Coast venues it frequented in the late 1960s and early 1970s, they often would stage numerous free concerts at local college campuses or city parks.95 In 1970, for instance, the band played around 70 shows on the East Coast.96 Scully remarks on how the Dead managed to play a number of these concerts for free as a promotional strategy, writing, Warner Brothers didnt know how to promote the band in earlier years. We convinced them to finance a series of free concerts in seven cities. They paid for the flatbed trucks and the sound system and we did the rest.97 The organizational cost of this promotional strategy was marginal compared to a real concert promoted in the ordinary manner there were no middleman promoter fees, advertisement amounted to announcing the free show the night before at a real gig, and permits were easy to come by.98 Though both Warner Brothers and the band may have lost money by not charging admission, the Dead began to build a reputation of eschewing the greed that already had permeated the counterculture music scene. People were drawn to them because of their apparent values, and then, for the most part, kept coming back for the music. Of particular significance is the length of an average Grateful Dead show. At the time (and still today), most artists would play for no longer than two hours, having written a performance limitation into their contracts with local promoters.99 But the Dead insisted that they be given at least four hours of stage time (many of their shows extended well beyond five hours in length).100 Furthermore, when major concert tour ticket prices began to skyrocket, the band refused to allow promoters to charge more than $30 a ticket.101 Their concerns over delivering quality are no better illustrated than in how they treated their road crews and managers, and their commitment to developing state-of-

the-art sound equipment. Whereas most bands hire independent crews for each tour, the Grateful Dead kept their employees on the payroll year-round.102 During the height of the bands success, crewmembers earned sixfigure salaries, were entitled to profit sharing, health benefit and retirement plans, and even were provided backstage daycare for their families.103 The loyalty that such treatment inspired undoubtedly resulted in high performance by their crew. But it may have been the Deads legendary Wall of Sound that set the quality of their concerts apart from those of their competitors.104 The Dead were notorious for their fascination with technology. In response to the acoustic problems presented by playing larger outdoor venues and drafty indoor sporting arenas, the bands personnel developed the Wall of Sound system (later mimicked by other bands), a configuration which could deliver their loudest jams or Garcias most subtle notes to anyone in the audience.105 The bands unorthodox communal approachunique in the industrymade for good business sense.106 Mikal Gilmore documented the results of this philosophy some 20 years after the Dead formed: The Grateful Dead and their audience function and thrive almost entirely outside the conventions of the mainstream pop world. Consequently, the Deada band rooted in the ferment and romanticism of the 1960ssomehow epitomize the two most prominently contradictory ideals of 1980s pop culture: they are not just a raging cult fave but also a smashing mass success.107 To call the Grateful Dead a mass success may obscure what it is they accomplished. They were not successful with a large audience so much as they were extremely successful with a particular core audience. As Sam Hill and Glenn Rifkin note in RADICAL MARKETING, By never going mainstream, [the Dead] earned larger sales and profits than many groups that went big-time.108 In other words, they did not saturate the airwaves, enter licensing contracts with large merchandisers, or engage in overpriced, low quality tours. Instead, the Dead created a strong relationship with a particular audience, and provided a product cheaply enough and of high enough quality to inspire relianceand ultimately unheard of devotionfrom that audience.109

Career Development in the Image and Likeness of Success

If an upcoming artist exhibits signs of potential com-

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more than 14 million copies worldwide.117 Faith was the most popular album in the United States that year, establishing Michael as a commercial and musical force in the most important pop culture market.118 That same year, Sony purchased CBS in what was part of a global consolidation trend in the music industry.119 Many in the business were concerned that the concentration of the recording industry into a handful of mega-labels would homogenize the industry and sterilize it of variety.120 Michael apparently detested the teen image of Wham! and worried that his solo efforts would never receive serious consideration.121 Beginning with Faith, and continuing with 1990s release, Listen Without Prejudice Vol. 1, Michael initiated an artistic metamorphosis.122 But he became convinced that Sony had sabotaged his efforts to tap American audiences with Listen Without Prejudice Vol. I (whose style and content broke sharply from that Glenn Rifkin of 14 million seller Faith) in apparent retaliation for his As collective refusal to appear in promoCEOs of the business, [the Nevertheless, artists pay for tional videos for the album. the recording of their albums Thus, Michael sought Dead] owned the marketing out of their future royalty release from his recording function themselves. They earnings, in effect selling contract.123 Claiming that future bonds in their uncrehis recording contract constinever handed it off to a ated work.113 A group whose tuted an unreasonable publicity firm or pushed it music is not embraced by the restraint on trade,124 he public may simply end up in down into layers of a filed suit in England, where perpetual debt to its label the law was more sympabureaucratic organization. while still under an excluthetic to his profession.125 114 sive contract. He lost the suit and then setEven for artists who are enormously successful, the tled with Sony after indicating his intention to appeal the pressure to maintain their level of success can put them case.126 Michaels concerns, as unabashedly economic as at the mercy of a prominent label. The winning formula they were artistically noble, are not uncommon for initially struck by an artist and a recording company recording artists and songwriters. His litigation had two often fades as time passes. In other words, the sound far-reaching results in the industry: it showed every that caused one album to sell may not be well-received artist rooting for Michael how costly such moves would album after album. Nor may it represent the artists be, and it effectively warned recording labels to be more evolving concept of what his or her identity should be. An careful in how they contracted with their talent.127 exclusive contract arrangement can make it difficult to The Grateful Deads initial recording contract with escape this quandary. Warner Brothers was successful by all accounts. The highly publicized litigation brought by George Nevertheless, friction existed from the start,128 and their Michael against Sony illustrates the predicament of long fundamental differences about how to succeed in the term exclusive contracts.115 In 1984, Michael signed music business eventually led the band to seek alternawith CBS Records British affiliate when he was a mem- tive production and distribution channels.129 They fulber of the teen-pop duo Wham!116 Four years later, his filled their initial recording contracts obligations in first solo effort for CBS, an album entitled Faith, sold November, 1972, with the release of Europe 72, an album mercial success, record companies will be eager to sign that artist to a long-term recording contract. Such an arrangement is attractive to both parties, albeit for different reasons. The artist receives long-term financial security in the form of corporate patronage, and in many cases is ensured the prestige and publicity value of being signed to a major label.110 Conversely, the record company binds a predicted moneymaker for a certain number of albums. Furthermore, the record company will have the opportunity to exploit that artists growing popularity and even mold the musicians image and product in response to market trends.111 A primary concern, at least for the recording artist, is the royalty percentages paid on later albums: success should yield higher percentages, improving on the minimum wage cuts normally offered for a young acts first album. A sliding royalty scale therefore is normally provided in the conSam Hill and tract, which is fair to both parties since it rewards each comment that, partners efforts.112
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comprised mostly of live recordings from their European tour of the preceding spring and summer.130 Since the album contained many songs that they had been playing but had not released on vinyl, it technically constituted new material, fulfilling their contract.131 The following spring, the band launched their own recording company, Grateful Dead Records, and a satellite company called Round Records for producing individual band members solo projects.132 The notion to start up independent record labels had its genesis in the difficulty the band experienced in working with producers, studio technicians, and executives.133 Though this project yielded some of their more memorable material, it folded after several albums.134 One can only imagine the pressures self-management imposed upon a group of people who were diametrically opposed to getting up for work in the morning.135 Their later recording contract was with Arista. It mirrored the contract they had entered into with Warner Brothers, but was more relaxed in its demands. This flexibility may have been the result of several factors. For one, the band focused not so much on the production of new material, but instead on touring and solo projects. It would seem that Arista acknowledged that pushing industry norms upon the Dead simply would stifle the production process for everyone involved. The recording executives recognized the bands incredible drawing power, with or without new releases. In turn, the Dead understood the benefits of having some structure imposed upon them from an established organization in the industry. In effect, this loose imposition allowed them the breathing room to pursue many of the concepts surrounding independent promotion and distribution channels that they had envisioned while under contract with Warner Brothers, but were unable to develop on their own.136 The band incorporated in 1973, the same year they launched Grateful Dead Productions and Round Records (which in itself was a radical decision for the time).137 Each band member became a CEO and obtained a seat on their board of directors, owning an equal share in profits and an equal vote in all decisions.138 Sam Hill and Glenn Rifkin comment that, As collective CEOs of the business, [the Dead] owned the marketing function themselves. They never handed it off to a publicity firm or pushed it down into layers of a bureaucratic organization.139 In order to ensure that the band would continue to enjoy the benefits of artistic freedom and total con-

trol over its business direction and decisions, the Dead agreed that upon the death of any member, that persons shares would be reabsorbed by the organization and redistributed among the remaining CEOs.140 This prescience has paid dividends in recent years, as Grateful Dead Productions conducts all licensing negotiations for Jerry Garcias estate,141 while ex-wives and acquaintances have emerged from the woodwork to feud over his personal estate.142 The Dead began this entire process of own(ing) the marketing function themselves in 1971, when the band inserted a notice in its Grateful Dead album, signed by Garcia and reading DEAD FREAKS UNITE: Who are you? Where are you? How are you? Send us your name and address and well keep you informed.143 What followed were thousands of responses, leading later that year to the publication of a fan newsletter providing information on tour dates and requesting feedback about various quality concerns.144 In essence, the band adopted database marketing long before mainstream marketers took notice of this technique.145 They further tapped the willingness of their fans to communicate directly with them by incorporating a promotion booth into their 1974 tour.146 In the last 25 years, this grass roots style of self-promotion has blossomed into an enormous merchandising and distribution system, one that currently generates more than $60 million a year.147

THE ENIGMA OF OWNERSHIP AND PROTECTING ONES PUBLICITY

The law supplies artists with an extensive arsenal designed to prevent others from profiting from their labor. Through federal trademark and copyright laws, as well as an array of state common law doctrines, artists may attempt to secure royalties from the use of their work and maintain a high degree of control over how record companies market both their product and their image. Their concern is legitimate, especially in a society such as ours. But since many artists relinquish both publishing rights and copyright control over their work during its production stages,148 the legal safeguards whose purpose it is to protect actually do more to protect legal ownership than artistic origin. Little sympathy exists either in the corporate music arena or in the courtroom for the many songwriters and musicians who seek to salvage their rights from corporate exploitation. In recent years, several high profile artists have suc-

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cessfully sued to reclaim rights they had previously signed away. In addition, artists (or their estates) have pushed forward state common law claims and remedies to obtain more comprehensive protection for themselves. Nevertheless, the problem remains that this area of the law traditionally has responded more favorably to the economic realities of the business. Thus, even when artists do obtain the industry clout to secure control over their material, reliance on legal remedies to do so often means that they will use these remedies as instruments for excluding other artists and fans from incorporating the material into their own work.149 It is a vicious circle once entered, and in the end artistic integrity amounts to an amorphous legal term at best. Because the Grateful Deads primary focus always has been artistic integrity, they necessarily have avoided adopting such a policy of legal exclusion. They well understood that their success was intricately linked to their accessibility. As bassist Phil Lesh has remarked, The relationship between the band and the Deadheads needs to be nurtured because they are us and we are them.150 This is not to say that the Dead allowed others to trample their efforts; they vigorously enforced what policies they did erect. But even in their enforcement of policy, they adopted a philosophy of inclusion, something to the effect that the more people they had working for the propagation of their product, the more powerful a marketing mechanism they had at their fingertips. They simply required that others not take advantage of their generosity. In return, they never pushed the exploitation of themselves to the point where it became the exploitation of their audiences. Intellectual property law in the United States purports to maintain a balance between the interests of authors and those of the public. Necessarily, this objective implies that there is a barrier between the two. But since intellectual property is by its nature intangible property, the legal barriers defining its parameters are shifty at best.151 The Grateful Deads philosophy was to eliminate many of these barriers, or at least to minimize their intrusiveness into the relationship the band shared with its fans. They accomplished this by first maintaining control over their legal rights in their property, and then by allowing near-complete access to it for those who wanted access. Although this decision ran contrary to the dogma materializing in the industry during the Deads formative years, it made the band one of the most successfuland enigmaticthe business has seen.

Trademark Dilution Theory and the Lanham Act

Trademark law has two primary functions. The first is to protect the legal owner of a product or an idea from unfair competition in her efforts at marketing and selling the product or idea.152 Its second function is to minimize consumer confusion.153 Consumers frequently associate goods and services with certain symbols and words, often to the point where the trademark itself will serve as a primary quality assurance.154 Trademark enforcement thus protects both the sellers economic advantage and her reputation, plus the buyers reliance that he in fact is getting what he pays for. Although the traditional standard for trademark infringement is the likelihood of confusion analysis developed by the Second Circuit in Polaroid Corp. v. Polaroid Electronics Corp.,155 courts have extended this area of the law. For example, in Kentucky Fried Chicken Corp. v. Diversified Packaging Corp., the Fifth Circuit prohibited unauthorized trademark uses that created the illusion of endorsement or sponsorship.156 But, though seller and consumer protection is an important policy concern, fears that courts are unwilling to limit trademark laws scope are well founded.157 Obviously, the greater control trademark law affords existing sellers over their markets diversification, the harder it becomes for the sellers of new goods or services to gain entry into these markets. But these concerns tend to reflect trademark laws focus on market arenas for highly competitive products and services, where the function of a good of generic origin substitutes easily for that of a name brand commodity. Furthermore, trademark law and its critics often have failed to look beyond a markets immediate bottom line. The Lanham Act,158 designed to codify common law trademark doctrine (which, unlike patent and copyright law, has no explicit anchor in the United States Constitution159), became a prominent judicial tool for expanding trademarks reach.160 Section 43(a) of the statute forbids any false or misleading description of fact, or false or misleading representation of fact, which... in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another persons goods, services, or commercial activities.161 Courts have interpreted this prohibition to protect against infringement of trademarks both registered162 and unregistered,163 patently false advertisement,164 and even misleading statements that create false impressions.165 Section 43(a) is thus a flexible weapon in defending ones economic or business

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interests. Unfortunately, because strength of a plaintiff s his career, shunned commercial self-exploitation through trademark is the touchstone for determining whether product endorsement. Since his claim did not neatly fit infringement may have occurred, 43(a) works far better into existing categories of tort law concerning damage to reputation, the Ninth Circuit read the Lanham Act for the established and the successful.166 Illustrative of this point is a recent case involving a broadly. The court hinted at the possibility that damage musicians claim of false advertisement. In Waits v. to Waits reputation as an artist of high integrity and lofty, Frito-Lay, Inc., singer-songwriter Tom Waits sued the anti-establishment ideals could have translated into loss of makers of SalsaRio Doritos tortilla chips for both misap- future revenue by offending loyal fans.174 propriation of his voice and for false endorsement under There certainly is merit to this rationale and to the Lanham Act.167 After the Ninth Circuit found that extending the Lanham Acts coverage to such claims the quality of ones voice can where it is likely (in this be sufficiently distinctive to case, actual) that consumers The curious aspect to the constitute an unregistered will mistakenly assume commercial trademark,168 it sponsorship by a celebriDeads trademarks is that determined that Waits had ty.175 But, even though the they never have evoked standing to sue under 43(a) Ninth Circuit decided this because the interest assertcase correctly, it is nonethejust the band or their music. ed . . . [was] a commercial less problematic. Under the Images such as the Dancing interest protected by the Ninth Circuits substitution169 Lanham Act. al analysis, courts may have The court Bears, the Skull and Roses, difficulty distinguishing declared, Standing... does or Steal Your Face, have between meritorious claims not require actual competiand ones that are frivolous tion in the traditional sense; come to identify the fans or belligerent. An artist it extends to a purported just as much as the band, and, could use this blind spot to endorser who has an ecoultimately, the ethos surrounding block the development of nomic interest akin to that of alternative products. Such a a trademark holder in controlboth. The Dead came to prediction is not immediateling the commercial exploita170 understand the value inherent ly evident when the litigation of his or her identity. tion is between an artist and The difficulty with the in these images, and that it a food manufacturer. But Ninth Circuits ruling in derived first from their music. substitute another musician favor of Waits is that the for Frito-Lay, and estabopinion applies traditional trademark principles (the court invokes many of the lished artists or corporate producers in the music indussame infringement factors listed in Polaroid Corp.)171 in try have an effective means of stifling artistic developa situation where there is no competition between plain- ments that seek to incorporate aspects of other artists tiff s and defendants products, direct or otherwise. The identity or material.176 Recent legislation and litigation Ninth Circuit discusses two reasons for its holding. The first is obvious: it simply would be inequitable for a seller of a product to profit by associating a celebritys identity with that product without consent.172 But the court adds that Waits has an interest in not being injured commercially.173 What the Ninth Circuit meant by this, since the opinion readily admits the absence of formal economic competition, is that Waits commercial integrity as an artist stood to suffer. Tom Waits was really bringing suitunder the guise of 43(a) of the Lanham Act for injury to his reputation as an artist who, throughout in the area of digital sampling illustrates the depth of this concern.177 Roughly three months prior to the Ninth Circuits decision in Waits v. Frito-Lay, Inc.,178 the same court decided a case involving the teen group, The New Kids On The Block.179 The musical act brought ten trademark claims against the newspaper USA TODAY and THE STAR MAGAZINE.180 The essence of these claims revolved around the fact that both publications had posted 900 number telephone hotlines whereby readers could participate in polls.181 The group insisted that USA TODAY and

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THE EVOLUTION OF GROOVE

Consider the blues song In the Pines, a traditional whose modern arrangement is attributed to Huddie Ledbetter (a.k.a., Lead Belly).1 The song has been performed and recorded for decades by various artists whom Lead Belly has inspired, ranging from bluegrass to punk rock musicians. But when one listens to Nirvanas rendition2 after hearing Lead Belly sing it, one realizes how songs mutate over time through the performances and interpretations of later artists drawing inspiration from the original recording. For the teenager who follows the angst-driven, hard-played sounds of early 90s grunge rockan audience with probably little awareness or interest in early blues artistsNirvanas recording actually may introduce them to an entirely new world of music. What they will find is a genre that quite frankly perfected guitar incantations of anger, sorrow, and isolation long before Kurt Cobain was born.
1

LEAD BELLY, In the Pines, on Where Did You Sleep Last Night? (TRO-Folkways Music, Inc., BMI, 1996).
2

Id. perfd. by NIRVANA on MTV: UNPLUGGED IN NEW YORK (Geffen Records, Inc., 1994).

THE STAR MAGAZINE were capitalizing on their popularity by associating their publications with The New Kids trademarked name and by drawing young fans to the 900 number polls (and thus away from the groups own 900 number information hotline).182 The Ninth Circuit found that neither publication was liable under the Act since the 900 number constituted a fair use183 and consumer confusion was highly unlikely.184 Although the court held that the publications did not create consumer confusion to the result of usurping The New Kids potential fan revenues, the case raises several questions. The combined monetary intake for both polls was $1,900, $300 of which USA TODAY donated to the Berklee College of Music.185 Furthermore, the polls, rather than robbing The New Kids of crucial income, indirectly heightened the groups exposure, and consequently their publicity value. Why, then, did the plaintiffs seek legal redress for something that actually may have served their ends, expending the resources necessary to push the litigation into the Court of Appeals for the Ninth Circuit? The answer to this question may lie in the theory behind trademark dilution doctrine.186 Consider The New Kids fears in terms set forth in Allied Maintenance Corp. v. Allied Mechanical Trades, Inc.187 In this case, a New York court said dilution is not public confusion caused by similar products or services sold by competitors, but a cancer-like growth of dissimilar products or services which feeds upon the business reputation of an established distinctive trade-mark (sic) or name.188 In an industry where publishing and production conglomerates normally own the rights to phonorecords, sound recordings and musical compositions, an artists reputationwhich is embodied in a trademarked nameis

often the only marketable commodity he possesses in the long run.189 Trademark manipulation is therefore central to preventing others from siphoning off a musicians source of revenue. Thus, for artists, and for tribunals adjudicating these claims on a case-by-case basis, doctrines such as tarnishment and blurring are instrumental in protecting the artists long term economic positions.190 But it may be that these doctrines are detrimental to artists interests, both economic and artistic ones.191 When trademarks are incorporated into subsequent creative designs, the level of secondary meaning they take on further enriches the primary meaning assigned to them at their inception.192 Moreover, this process often attracts consumer attention to the original work that otherwise may have channeled itself to other, more recent and more visible substitutes.193 The Grateful Dead understood this concept. Though various organizations seeking sponsorship or access to their fan databases often approached the band, the Dead were not a marketable sponsor in the same way most celebrities are. For one, their audience has never been a mainstream segment of the American populace, nor a coveted group of consumers. Furthermore, the band probably has had far too many associations with drug use or political subversiveness to appeal to corporate America. However, if ever there has been a rock group ripe for trademark infringement, they are it. No other band has been surrounded by such a wealth of trademarked images. And no other bands trademarks have the ability to summon such an array of metaphors. The curious aspect to the Deads trademarks is that they never have evoked just the band or their music.

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During the bands formative years, when they resided at 710 Ashberry Street in San Francisco, local poster artists created a small array of imagery playing off of the bands name.194 But instead of these early ciphers merely serving to announce an upcoming concert, fans of the group found that, by placing them in windows of houses or cars, they could identify each other.195 They became the banners of an emerging community. Thus, what began as a confined group of symbols would later spawn a distinct genre of imagery that shaped the lexicon of thousands. Images such as the Dancing Bears, the Skull and Roses, or Steal Your Face, have come to identify the fans just as much as the band, and ultimately, the ethos surrounding both. The band did establish trademark protection over these designs, though originally they had wanted all credit to be given to the graphic artists.196 But they came to understand the value inherent in these images, and that it derived first from their music.197 The level of protection that the Dead traditionally has exerted over their trademarked images, however, differs greatly from standard trademark principle. Anyone familiar with a Grateful Dead concert has seen the spectacle that existed outside the venues they played. A virtual carnival of merchants, magicians, and acrobats would congregate in fields and parking lots, selling homemade T-shirts, stickers, and other items bearing the bands many logos. For years, the group paid little attention or concern to this subculture. After all, it indirectly supported them.198 After realizing that they were losing over a quarter of a million dollars a show in licensing revenue, however, the band decided to take action.199 But instead of excluding these merchants from producing band-oriented itemsinstead of suing them for trademark infringement, tarnishment or dilutionthe Grateful Dead made such entrepreneurs licensing offers which in effect brought them into the bands fold. Ultimately, this decision resulted in further garnering fan respect. It also dispelled possible worries that the Grateful Dead were selling out to financial temptations (plus, they avoided a substantial amount in potential legal fees).200 Despite how apparent the fan reaction became, the music industry and critics of the band simply dismissed it as a nostalgic attachment to 60s idealism.

more immediate economic potential the author should enjoy from his work, made possible through protective policy, and the long-term social benefits produced by public access to his work after he has had an appropriate opportunity to exploit it.201 The Register of Copyrights announced: The enactment of copyright legislation by Congress under the terms of the Constitution is not based upon any natural right that the author has in his writings . . . but upon the ground that the welfare of the public will be served and progress of science and useful arts will be promoted by securing to authors for limited periods the exclusive rights to their writings.202 The result of this philosophy has been that copyright law conceives of the creative processand thus its scope of protectionin terms of economic realization whose beneficiary is determined by the passage of time. Moreover, copyright law tends to view creation or composition as a singular moment or an isolated process, whose result is a static representation of the completed process, fixed in a tangible medium.203 This notion of artistic creation ignores a musical artists interest in sound recordings204 and live renditions or performances,205 as well as her interest in having others interpret her work through performance.206 It also confines the notion of style to the composition or original phonorecording.207 But for many performers, style is often the genius of the musician. After all, would Elvis Aaron Presleys songs have been the music of Elvis without pelvis gyrations and sequined capes and jumpsuits? The Grateful Deadwhose musical roots lay in traditional American blues, R&B, folk, and bluegrass music understood this concept. Their focus was thus always centered upon the evolution of what they played. Of course, they copyrighted every song they wrote, and they paid royalties for covers. But the fact remains that a song the Dead first wrote and played in 1968Saint Stephen, for examplehad become a much different composition by the late 70s (furthermore, some of the songs they covered did not resemble their original renditions in the least, Noah Lewis Viola Lee Blues for example208). Copyright law entertains this possibility by granting protection for revisions and subsequent reinterpretations of ones work.209 But the Deads manner of revision was to improvise before a live audience. This automatically threatens problems with the Copyright Acts fixation requirement. The Dead may have pre-

Copyright Protection: Too Little, Or Too Much?

Copyright law in the United States borrows primarily from an economic cost-benefit analysis in assessing what protection to give intellectual property. It balances the

255

empted any such problems by recording their own concerts (though this was done, at least in their early years, for posteritys sake). Nevertheless, audience members taped their shows from the start, and, until recently, copyright law has had little to say about bootleggers.210 But while other artists sought to sue bootleggers out of business under causes such as unfair competition,211 the Dead began to welcome them. Understanding that their bootleg albums were commanding a price on the market, the Dead opened their doors to every bootlegger who wanted to tape them, provided only that the tapes be bartered for other tapes.212 Sam Hill and Glenn Rifkin comment that those with the most extensive tape collections became masters of their universe, and thus the open-taping decision fueled ticket sales.213 More than this, by flooding the market with their live product, the Dead eliminated the market in which for-profit bootleggers thrived. Furthermore, such an extension of trust magnified fan devotion, while the presence of countless bootlegs on the market created greater demand for touring. The Grateful Deads creed has always been, When we are done with the music, [the fans] can have it.214 The extreme of this philosophy was the fact that the Dead often broadcast their concerts. Contrary to popular industry wisdom, the Dead customarily sent their live shows over empty airwaves. On any given night, audiences ranging in size from the people in the parking lot who could not get tickets to 20 million northern Europeans could hear what they were not able to see.215 The bands inclusion of their entire audience into the history of their performances, through both their taping policy and live broadcasting, merely amused the music industry. Ironically, the Deads perspective on copyright law and bootleggingwhich to an extent neglected bothhas been adopted by other artists who have witnessed the success of their strategy.216 They have begun to adopt it.

The right of publicity first was recognized in a courtroom in 1953.218 Another 24 years passed until the Supreme Court considered any claim under it.219 After Elvis Presley died a pauper in 1977, his estate sought to recapture the impressive merchandising revenue his name commanded but which had been scattered among various private entrepreneurs through financial mismanagement during his lifetime.220 His estate did much to advance the common law in the realm of publicity rights, culminating in a successful lobbying effort that prompted the Tennessee Legislature to pass The Personal Rights Protection Act in 1984. The statute provides that the right of publicity is descendible.221 But critics have accused Presleys estate of being too aggressive in its quest to control its merchandising operations.222 Two cases in particular illustrate the plausibility of this criticism. In Estate of Presley v. Russen,223 the United States District Court for the District of New Jersey entertained a suit for, among other things,224 infringement on the right of publicity that the estate had inherited from Presley.225 After Presleys death, the number of Elvis tribute shows increased more than tenfold, from 300 to over 3,000 nationwide.226 The defendant Russen was a promoter of an Elvis impersonator (one Larry Seth) who would dress like Presley and sing covers of Elvis songs in imitation of his style.227 The performance toured primarily in New Jersey and Eastern Pennsylvania, selling memorabilia and records that depicted the impersonators visage (a close resemblance to the King at the height of performing career).228 Worried by the growth of the Elvis-impersonation business, the estate targeted Russens operation (which grossed around $300,00 in 1978229) with an negative injunction against continued performance as the self-titled Big El Show.230 The court presented the right of publicity issue in these terms: In essence, we confront the question of whether the use of the likeness of a famous deceased entertainer in a performance mainly designed to imitate that famous entertainers own past stage performances is to be considered primarily as a commercial appropriation by the imitator or shows producer of the famous entertainers likeness or as a valuable contribution of information or culture.231 The district court found that the defendants use of Presleys image was almost explicitly for his own financial benefit, potentially appropriat[ing] and dimin-

The States Play Catch-Up: Alternative Remedies, The Right of Publicity, and the Legacy of Elvis
Copyright law has always been highly protective of the more traditional economic aspects and results of artistic creativity, but indifferent to traditionally ignored aspects such as voice and public identity. In response, many states have developed alternative remedies through common law doctrine and legislation to patch Congressional gaps and oversights.217

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Capece,239 the Fifth Circuit decided a lawsuit against the owner of a Houston nightclub called The Velvet Elvis. The Velvet Elvis was a concept bar whose decor reflected the tawdry self-indulgence sometimes associated with the 1970s.240 Soon after deciding to relocate the establishment in 1994, the clubs owner, Barry Capece, received a cease and desist letter from the Presley Estate.241 Capece ignored the threat and the Presley estate sued two years later.242 In considering the plaintiff s claims (unfair competition, trademark infringement and trademark dilution under the Lanham Act; infringement of its right of publicity under Texas law243), the district court found that the Velvet Elvis did nothing to damage or infringe upon the estates interests.244 Relying on the Supreme Courts reasoning in Campbell v. Acuff-Rose Music,245 the court declared that the nightclubs use of Elvis name and likeness amounted to nothing more than parody or societal commentary, cates that the court held which has the beneficial By flooding the market with deeper reservations about function of recoding social their live product, the Dead elevating New Jerseys right metaphors into new conof publicity to such a stature. texts.246 This principle eliminated the market in which Lurking throughout the remains the foundation of for-profit bootleggers thrived. opinion is the awareness intellectual property law.247 that, despite the Presley Such an extension of trust The court found no likeliEstates interest in controlhood of consumer confusion magnified fan devotion, ling the use of its personality as to the purpose of the parwhile the presence of rights in Elvis, there was no ody, or as to endorsement or actual competition between sponsorship by the Presley countless bootlegs on it and Russens enterprise.236 Estate.248 The prevailing the market created greater If anything, the Big El analyses of both trademark Show was merely part of the dilution and infringement of demand for touring. larger cultural phenomenon the right of publicity comsurrounding Elvis legend. pare a plaintiff s and a And it is entirely likely that the widespread existence of defendants products and imagery to each other. Elvis impersonators has simply added to that myth, Accordingly, the court made quick work of the Presley attracting even more attention to the deceased artist Estates claims under these analyses. It observed that from members of his own generation and subsequent the name the Velvet Elvis and the display of various ones.238 By seeking to isolate the Elvis personality from Presley memorabilia served not so much to attract custhe general public through protectionist measures, it is tomers via name and likeness appropriation, but rather possible that the singers heirs threatened to cut off the to recreate the atmosphere of an era in American histovery lifeblood that supported the passion for the deceased ry.249 On appeal, however, the Fifth Circuit reversed the star. It is also possible that the estates increased rev- district courts rulings. It found that Capeces use of enue has resulted as much from the propagation of Presleys name and likeness both competed unfairly with Presleys myth as from the their reclamation of merchan- the financial and publicity interests of the estate, and dising revenue via publicity rights litigation. that it constituted trademark infringement.250 Similarly, in Elvis Presley Enterprises, Inc. v. It is remarkable that the Presley Estate decided to ish[ing] the commercial rewards that are under the legal auspice of Elvis estate.232 The Presley Estates fears and the district courts parallel findings are entirely justified3,000 plus Elvis impersonation shows a year233 would represent a substantial amount of concert attendance revenue. But the court was uneasy with the notion that this revenue necessarily would have returned to the estate if not for the imitators.234 After all, Elvis had left the building for good four years prior; he was no longer competing for concert goers. The district court granted a preliminary injunction. But it added that, absent a showing of actual economic harm to Presleys heirs by Russens promotion, the Big El Show would be allowed to continue.235 This result, perhaps in part a reaction to the Presley Estates aggressive attempts to run an independent promoter out of business (the Big El Show was the single source of income for both Russen and Seth)235, indi257

take legal action against Capece. As in Estate of Presley v. Russen,251 it is unlikely that the Velvet Elvis directly competed with the estates interests, and, even if so, that it harmed the estate financially. And as in Russen, it is probable that the attention the nightclub brought to Elvis name would have translated into merchandising revenue for the Estate. Though the Dead certainly have not overlooked their publicity interests, their stance is as relaxed and open as it is in regard to copyright and trademark control. Again, they function within the paradox of being in control of their affairs, and yet allowing outsiders to determine to a great degree the course of these. The band members have allowed their pictures to grace everything from Tshirts to ice cream. Aside from negotiating a licensing agreement and retaining rights to quality approval, they have allowed their fans to conduct the bulk of their publicity work. Currently, they have begun appointing trustees to assume control over their stock, but with the notion being business as usual.252 The band plans to open an interactive museum in San Francisco during 2000 that will reconstruct various elements of their concert experience, provide a research facility for studying grass roots and world music, display live acts, and provide public access to their business and legal files.253 Unlike Gracelandessentially a tourist attractionthe Deads vision includes everyone in their continuing enterprise.

DEAD-ON
The Grateful Dead were a record company executives nightmare. Though they followed few rules traditionally relied upon by artists in the music business, the vision they had of alternative strategies proved to be incredibly successful. By maintaining control over each element of their business, they were able to offer a superior product at a lower cost. Additionally, by erecting fewer legal barriers between themselves and their audience, they fostered a long-term relationship with their customers. Perhaps the greatest irony about their success is that they appeared to so many as the antithesis of what they really were: tremendous musicians, unique entertainers, astute and legal savvy business people. Most of America took little heed of these middle-aged hippies who seemed to keep coming around. But recently, other artists have begun to.254 What they have realized is that, of all people, The Grateful Dead were redefining the business as it was defining itself. N
The author would like to thank Gretchen Victoria for the idea, Californias oldest juveniles for their music, and The Villager for lessons on patience. Thanks also to Mark Plotkin for all the good advice.

1 THE GRATEFUL DEAD, Cosmic Charley, on Aozamazoa (Warner Brothers Records, 1969). 2 17 U.S.C. 101 et seq. (1976) (Supp. 1998). 3 See SAM HILL AND GLENN RIFKIN, RADICAL MARKETING 44 (1999) [hereinafter RADICAL MARKETING] (discussing how the Dead adopted a taping-friendly policy toward their audiences during the 1980s, though the band had not previously opposed taping). 4 See, e.g., David Schwartz, Note, Strange Fixation: Bootleg Sound Recordings Enjoy the Benefits of Improving Technology, 47 FED. COMM. L.J. 611 (1995); HOT WACKS BOOK XV: THE LAST WACKS (Bob Walker ed., 1992) (a comprehensive catalogue of circulating bootleg recordings designed to assist the collector). Statutory copyright protection for live performances (which were not both recorded and transmitted contemporaneously) did not exist at this time, so artists seeking to legal redress had to bring claims under state common law doctrines. 5 Under prior Federal Copyright Law, protection did not manifest until the composition had been fixed in a visible (i.e., readable) medium, such as sheet music. Recording a song was a different matter entirely, though courts intuitively extended protection to cover sound recordings. 17 U.S.C. 302-304 resolved this statutory inconsistency.

6 Phonorecords are material objects in which sounds, other than those accompanying a motion picture or other audiovisual work, are fixed by any method now known or later developed, and from which the sounds can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. The term phonorecords includes the material object in which the sounds are first fixed. 17 U.S.C. 101 7 See ROCK SCULLY WITH DAVID DALTON, LIVING WITH (1996) [hereinafter LIVING WITH THE DEAD]. 8 See id. 9 Though the Deads style of playing and the unique character of their songs certainly distinguished their work from every other rock band, and despite the fact that they recorded all of their own shows, the copyright laws statutory concept of creation and fixation does not easily lend itself to incorporating such a loose definition of an evolving work. It would seem that their notion of songwriting is not the same as a writer producing multiple drafts and revisions of a book. For one, their songs never reached a point of absolute completion to be considered created or fixed in the sense that a book is fixed by the time it is ready for publication. Though the many live recordings of their material may be analogous to an authors various drafts, arguing this point would require a stretch of the imagination. See 17 U.S.C. 101 (for definitions of fixation and sound recordings). 258
THE

DEAD 45

10 See generally STAN SOOCHER, THEY FOUGHT THE LAW: ROCK MUSIC GOES TO COURT (Schirmer Books, 1999) [hereinafter THEY FOUGHT THE LAW]. 11 See Grateful Dead Productions v. Come N Get It, 88 Civ. 4471 (S.D.N.Y. 1993); Grateful Dead Productions v. Auditory Odyssey, 76 F.3d 386 (Table), 1996 WL 19210 (9th Cir. (Cal.)). This is not to say that the Dead did not pursue profit-seeking bootleggers with legal threats. See RADICAL MARKETING, supra note 3, at 44. 12 See generally DONALD E. BIEDERMAN ET AL., LAW AND BUSINESS OF ENTERTAINMENT INDUSTRIES (3rd ed. 1996) [hereinafter LAW AND BUSINESS OF THE ENTERTAINMENT INDUSTRIES]
THE

efforts usually fell flat on their faces. 22 THE GRATEFUL DEAD, A Touch Of Grey, on In the Dark (Arista Records 1987). Due to the songs popularity with non-Deadheads, the album went platinum, and the bands revenues skyrocketed. See Victoria Slind-Flor, What A Long, Strange Trip, THE NATIONAL LAW JOURNAL, July 19, 1999 at A1. Ironically, the band had been playing A Touch Of Grey in concert regularly for close to six years before its commercial release and subsequent discovery by the American public. See LIVING WITH THE DEAD, supra note 7, at 310. 23 See SWEET CHAOS, supra note 14, at 253. Despite the ever-present financial impetus for the Deads constant touring, the band members appear to have genuinely believed they were engaged in a sort of crusade, replete with its own gospel. Phil Lesh, the bassist, is known to reflect, Every place we play is a church. When we play, were prayin....And then you have to hope that the dove descends. Id. at 8. 24 Apparently, the bands first decision of legal import was resolved by an appeal to higher powers. After having decided that they would be called the Warlocks, they were told that they had to change their name due to the fact that another Bay area band had already adopted their choice and that they would be committing trademark infringement. The author does not know the extent to which the band debated the issue, but it is claimed that Jerry Garcia announced that he was going to open a copy of the Oxford English Dictionary to a random page and select the first word or phrase his eyes fell upon. The Grateful Dead is a term for an archetypal character out of British folklore, whose role it is to die without a proper burial. The hero of the story comes across the corpse during his journeys, and buries it. Sometime later, when the hero finds himself at an impasse, a stranger assists him. The stranger is the man the hero had buried, resurrected in order to return the favor out of gratitude for his burial. See ??!! Dead Heads Unite !!?? DEAD HEADS NEWSLETTER, Fall 1971, (last modified Dec. 15, 1998) <http://www.dead.net/cavenweb/deadfile /index.html>; SWEET CHAOS, supra note 14, at 80-81. 25 See generally RADICAL MARKETING, supra note 3. 26 See id at 36. 27 See generally LIVING 28 Id. 29 See supra note 22. Touch of Greys unanticipated success attracted a sizeable, youthful audience and dramatically increased revenue. This realization is in opposition to the main thesis of this Note. However, the fact that the Dead achieved vast commercial success so late in the story by participating in industry practices which they always had shunned does not discredit the fact that they were already commercially successful, if only in the frame of their particular niche. Furthermore, their decision did little to alter the formula of success they had developed on their own, or their allegiance to it. Part III of this Note, infra, discusses this point in greater detail. See also MIKAL GILMORE, NIGHT BEAT: A SHADOW HISTORY OF ROCK & ROLL 368 (1998). 30 See LIVING
WITH THE WITH THE

13 See RADICAL MARKETING, supra note 3, at 34 (Grateful Dead Productions created another business unit to sell its marketing services and expertise in concession sales, tour operations, and concert promotion to spin-off groups initiated by individual band members, as well to other artists like Bonnie Raitt, the Gypsy Kings, and Maxwell. The unit is even handling sports franchises, like the Oakland Raiders football team.). 14 THE GRATEFUL DEAD, Uncle Johns Band, on Workingmans Dead (Warner Brothers Records, 1970). Robert Hunter clearly wrote this song with the Deads leader, Jerome John Garcia, in mind. See CAROL BRIGHTMAN, SWEET CHAOS: THE GRATEFUL DEADS AMERICAN ADVENTURE at 188 (1998) [hereinafter SWEET CHAOS]. 15 See LIVING WITH THE DEAD, supra note 7, at 97-99 (1996) (discussing the advent of neighborhood tour buses to introduce the thousands of curious sightseers, flocking from across the globe to catch a glimpse of the summer of love, and the arrival of national news media to bring it home to everyone who failed to make the trip); SWEET CHAOS supra note 14, at 105-106, 167-73 (detailing the evolution of Haight-Ashberry from a hippie community into one destroyed by the arrival of hard drugs). 16 See SWEET CHAOS, supra note 14, at 3 ([I]t was this former jug band from Palo Alto, alone among the collapsing stars of the 60s, that gathered unto itself the free-floating energy of a disenchanted generation, and carried it through three decades. Nobody else did it. No other bands; no communes, peace groups, political factions or tendencies, art movements or experimental film groups...). 17 For a description of the bands need for perpetual touring. Because the Dead earned much of their revenue from live performances, touring became a self-perpetuating endeavor see State of the Changes: How the Dragon Urobouros (Giga Exponentia) Makes Us Go Round and Round, DEAD HEADS NEWSLETTER, Summer 1973, (last modified Dec. 15, 1998) <http://www.dead.net/cavenweb/deadfile/index.html>. Larger and more sophisticated equipment (800 pounds worth in 1965, as compared to fifteen tons by 1973) and a longer payroll demanded an ever-increasing influx of money, which in turn necessitated playing more often or at larger venues, which then required more and better equipment, and so on. 18 See generally RADICAL MARKETING, supra note 3. 19 See JERILYN LEE BRANDELIUS, GRATEFUL DEAD FAMILY ALBUM 234 (1989). 20 Id. 21 See generally LIVING WITH THE DEAD, supra note 7, for frequent comments by band members admitting, with humor, that their studio

DEAD, supra note 7.

DEAD, supra note 7, at 310-11.

31 The industry wisdom seems to go something like this: a band records a new album, then saturates the airwaves with the tracks tailored to radio play. After substantial promotion in this manner, the band launches a tour to support the album. This is considered necessary; in order to convince people they are not going to see two hours of the same show they saw the last time the particular band came 259

through town, new material must be promised, and it must be well received. If done the other way around, the albums are not thought to be marketable because everyone has already seen what it is the musicians are asking them to buy. Because the Dead were the consummate live-performance rock band, their studio recordings were always separate entities from their live cuts. Moreover, because their commercial audience was small and cross-generational, they did not market themselves to traditional target groups (in fact, the Dead were compiling a consumer database about their particular type of customer long before this became an industry practice). The Dead remained isolated from evolutions in the music America was listening to, and they never produced one of the anthems of their own generation which could induce respect from newer audiences. New fans, it seems, normally were drawn into the fold by word of mouth. 32 For an amusing description of how the Monterey Pop Festival materialized, and the Deads participation in the event see LIVING WITH THE DEAD, supra note 7, at 99-111. The highlight of the festival what made it legendarywas the bands response to the festivals promoters embezzling a portion of the proceeds. The Grateful Deads equipment managers stole over one million dollars worth of sound equipment owned by Fender (CBS), moved it into San Francisco, and then proceeded to play a series of free concerts with other Monterey notables such as Eric Burdon and Jimi Hendrix. They returned the equipment in full a week later. Scully writes that the bands actions [made] us out to be Robin Hoods, stealing from the rich to give our music away to the milling throngs. We [got] more press for stealing equipment that we actually return[ed] than the promoters [did] for stealing our money. Actions such as this are not infrequent occurrences in the 30-year history of the band. They are part of the reason why fans who despised the corporate side to the music industry remained so loyal to the Grateful Dead. 33 See generally id.; ROBERT HUNTER, Hookers Ball, A BOX 100-101 (1993).
OF

44 See 17 U.S.C. 201(a). 45 See THE MUSIC BUSINESS, supra note 42, at 28 (the rights included in copyright transfer generally include a songs title, lyrics and the characters contained in the song). 46 See id at 27 (Very often, the songwriter transfers the copyright ownership of his or her created works to a publisher, [who has] the contacts with those parties that could successfully exploit the composition.); 28 (In many cases, marketing is the key to successful promotion of any song or composition. The publisher may therefore negotiate to retain as much flexibility as possible over the manner in which the song is sold, licensed, or commercially exploited. Depending on the bargaining power of the publisher in relation to the songwriter, the publisher may also negotiate to retain the sole right and authority to set and establish the price to sell or license the composition, as well as to stipulate the terms and conditions of the sale or license agreement.). 47 See id at 30-1. 48 See id at 31. 49 See id at 37-8. 50 See id at 38 (publishers will often obtain the sole right to add or alter the lyrics and music of a composition, to translate it into foreign languages, or to rearrange it for use in a different medium, e.g., television advertising or theatre). 51 See THEY FOUGHT THE LAW, supra note 10, at 85-108 (recounting the celebrated litigation the Beatles brought against EMI Music Worldwide over past royalties and exploitation rights). 52 See THE MUSIC Business, supra note 42, at 32-38 (for an outline of what uses of a composition demand royalty payments). 53 For a sad account of how a young and naive artist can be swindled out of rights whose market value amounted to a fortune see THEY FOUGHT THE LAW, supra note 10, at 1-20 (detailing how, through deceitful mismanagement, Elvis Presley died penniless). 54 See THE MUSIC BUSINESS, supra note 42, at 42. 55 See LIVING WITH THE DEAD, supra note 7, at 65 (recounting how the Dead insisted on retaining all their publishing rights from the time of their initial contract negotiations with Warner Brothers). They named their publishing company Ice Nine Publishing, which has operated under the umbrella corporation Grateful Dead Productions, formed in 1973. See State of the Changes: How the Dragon Urobouros (Giga Exponentia) Makes Us Go Round and Round, supra note 17. 56 The majority of the songs that the band wrote were written and arranged by Jerry Garcia, working in tandem with lyricist Robert Hunter. Hunter also supplied lyrics to other band members. Likewise, many of the songs Bob Weir wrote and arranged received lyrical contributions from John Barlow. The lyricists, though not performing members of the Dead, received royalties like any other songwriter would, absent losses to publishers for finders fees and administrative costs. 57 See supra notes 52-53. 58 See LIVING
WITH THE

RAIN

34 Contrary to much popular opinion surrounding the band, they were not among the legions of restless anti-war and civil rights demonstrators who set up camp in the shadow of the University of California at Berkeley during the late 60s. Garcias early song, Cream Puff War, pokes fun at the Berkeley radicals on the other side of the San Francisco Bay from the Deads crowd. See THE GRATEFUL DEAD, Cream Puff War, on The Grateful Dead (Warner Brothers Records 1967). 35 See RADICAL MARKETING, supra note 3, at 40. 36 See id. 37 See generally id. 38 See SWEET CHAOS, supra note 14, at 4. 39 See id. at 252-53. 40 DIRE STRAITS, Money For Nothing, on Brothers In Arms (Phonogram Ltd. (London), 1985). 41 Id. 42 See generally PETER MULLER, THE MUSIC BUSINESS A LEGAL PERSPECTIVE (Quorum Books, 1994) [hereinafter THE MUSIC BUSINESS]. 43 See id.

DEAD, supra note 8, at 42.

260

59 See id. 60 Id. 61 See RADICAL MARKETING, supra note 3, at 39, 42-44; LIVING THE DEAD, supra note 7, at 65. 62 See, e.g., LIVING WITH
THE WITH

76 See generally id. at 298-318. 77 Sean Piccoli, Packing Em In; Concert Goers Are Being Lured with More (and Cheaper) Multiact Fests, FORT LAUDERDALE SUN TIMES, June 24, 1998, at E3. Interview with Steve Popovich, supra note 66 (these tours, however, are nearly impossible to join if a new acts manager lacks the clout to sign her group to one). 78 In the case where these audiences tend to ignore the airplay of popular radio stations, touring with alternative festivals is a more viable exposure strategy. Interview with Steve Popovich, supra note 66. 79 See RADICAL MARKETING, supra note 3, at 48. 80 Id. at 40. 81 See THE MUSIC BUSINESS, supra note 42, at 298-306.

DEAD, supra note 7, at 65.

63 See id. at 82-85, 101-102, 208-11. 64 See id. at 64-65. 65 See id. 66 Interview with Steve Popovich, CEO, Cleveland International Records (April 3, 2000). 67 Id. With the advent of the music video, however, the importance of radio play as a mode of promotion and advertisement has diminished. Now, the trends in radio play follow those in television play. Moreover, since only a handful of national conglomerates own the major stations across the country, receiving purely local radio play is difficult (this hurdle extends into the area of organizing a tour as well, since many of these conglomerates are gaining a hand in the business of concert promotion). 68 Id. Record company executives follow what their demographics reports indicate, meaning that the primary money-making target audience for most new music is comprised of teenagers with few responsibilities and great spending power. 69 A&R executives are responsible for interpreting the demographics and sales charts, and then finding artists whose sound and style are likely to appeal to the listening tastes of targeted audiences. 70 THE MUSIC BUSINESS, supra note 42, at 79. 71 Interview with Steve Popovich, supra note 66. 72 Percentages of album receipts are not the sole method production companies have used to determine artist royalties, though this standard obviously influences what the artist writes for inclusion on an album. The practice also exists (perhaps to reflect the sale of singles and the former prominence of vinyl and tape, both of which are divided into two sides) of calculating royalties based on the number of songs included on the recording. See LIVING WITH THE DEAD, supra note 8, at 62 for a humorous description of inherent problems with this formula: The standard song length... was three minutes. Most groups made three-minute songs so that there would be twelve songs on an album and the band would get royalties for each of those cuts. But what if you have only two tracks on the whole album? Or, in the case of Quicksilver Messenger Service, one track on the whole album? Side one of their first album consisted of one long, extended jam on Bo Diddleys Who Do You Love. In order to get the royalties due they had to make up arbitrary divisions: Who Do You Love, and then, of course, Who Did You Love, Why Do You Love, When Do You Love, How Do You Love, Should You Love?... 73 See THE MUSIC BUSINESS, supra note 42, at 80-84. 74 See supra note 72. 75 See THE MUSIC BUSINESS, supra note 42, at 84-85.

82 See id. at 121. 83 See id, at 94-96. 84 See LIVING WITH THE DEAD, supra note 7, at 310; see generally Gilmore, supra note 30. 85 See LIVING
WITH THE

DEAD, supra note 7, at 128.

86 See RADICAL MARKETING, supra note 3, at 40-41. 87 See generally LIVING WITH MARKETING, supra note 3.
THE

DEAD, supra note 8; RADICAL

88 See LIVING WITH THE DEAD, supra note 7, at 65 (stating Royalty rates since time immemorial have been carved in solid vinyl. The big boys are horrified by our demandsThe issue is artistic control. The labels dont want to hear about it. We got Stanley Mouse and Alton Kelley, two San Francisco poster artists, to do the cover. The big boys never allow anyone to do that. Plus, we own the publishing, which the boys have never before given up, plus the mechanicals of the albumIn the end we raise royalty rates for musicians probably 10 points in those years. It eventually goes from 5% to 15%, and some go to 18 and up. Publishing for groups used to be 12 cents a side, and basically you had to have 6 songs to get the 12 cents. The Dead, however, are doing seven-minute songs, eighteen-minute songs, one whole side of the album). 89 See id. at 65-66; SWEET CHAOS, supra note 14, at 258. 90 See generally RADICAL MARKETING, supra note 3. 91 See, e.g., LIVING WITH THE DEAD, supra note 7; TOM WOLFE, THE ELECTRIC KOOL-AID ACID TEST (Bantam Books 1999) (1968). 92 For a stunning pictorial documentation of the evolution into an underground art form of counterculture concert posters during the 60s and early 70s see GAYLE LEMKE ET AL., THE ART OF THE FILLMORE (Acid Test Productions 1997). 93 See RADICAL MARKETING, supra note 3, at 35 (The Grateful Dead represents the best of radical marketing because it focused on a simple value proposition that was built on a devotion to a unique but consistent style of music and a carefully established, long-term relationship with its customers. Unlike successful traditional marketers, the Grateful Dead never used massive advertising or promotion; they 261

simply went deep into a niche market.). 94 See LIVING

WITH THE

120 See id. 121 See id, at 47.

WITH THE

DEAD, supra note 7, at 60. DEAD,

95 See, e.g., Brandelius, supra note 19, at 70; LIVING supra note 7, at 93-96. 96 See Brandelius, supra note 19, at 70. 97 Id. 98 Id. 99 See RADICAL MARKETING, supra note 3, at 41. 100 See id. at 41-42. 101 See id. at 40. 102 See id. 103 See id. at 40-41. 104 Id. at 41.

122 See id. at 50. 123 See id. at 52-53. 124 See id at 54. Michael challenged his contract for, among other things, paying him royalties in percentages far below market value for an artist of his stature, for not factoring into his royalty cuts certain promotional activities, for giving Sony ownership of his master recordings (though the cost of making these had been credited against his royalty payments), and for Sony reserving the right to reject any recording as being non-commercial. 125 See id, at 45. 126 See id, at 61. Michael had spent a reported $4.5 million on the litigation. On top of this, he was required, as the loser in the litigation, to pay Sonys legal fees. But his settlement deal, made in conjunction with his signing onto Dreamworks Records and Virgin Records, more than made up for his expenses. More importantly, his new contracts promised him some of the artistic freedom he desired. 127 See id. at 63. 128 See LIVING
WITH THE

105 See The Wall of Sound, GRATEFUL DEAD NEWSLETTER, Summer, 1973 (last modified Dec. 15, 1998) <http://www.dead.net/cavenweb/ deadfile/index.html>. 106 See generally RADICAL MARKETING, supra note 3. 107 See GRATEFUL DEAD FAMILY ALBUM, supra note 19, at 232. 108 RADICAL MARKETING, supra note 3, at 36. 109 See generally id. 110 Interview with Steve Popovich, supra note 66. 111 Id. The trade-off in this situation is that artists will attempt to retain their publishing rights, if any, and their publicity rights. 112 See LAW AND BUSINESS note 12, at 563-70.
OF THE

DEAD, supra note 7, at 62-63:

129 For a humorous anecdote on the collision of worlds that occurred when the Deads eventual recording company sent representatives to meet them see GRATEFUL DEAD RECORDS MAILERS, September 4, 1973, (last modified Dec. 15, 1998) <http://www.dead.net/cavenweb/deadfile/ index.html>. 130 See LIVING 131 Id. 132 See id. at 229. 133 See id.
WITH THE

DEAD, supra note 7, at 228.

ENTERTAINMENT INDUSTRIES, supra 134 See id. at 258-59. 135 See id. at 229-34. The bands general aversion to operating within, much less as part of, the corporate music world was only one problem. Around this time, the Deads original keyboardist, Ron Pigpen McKernan, died of cirrhosis of the liver. Royalty disputes arose as well. Under their contract with Warner Brothers, they had split revenue ten ways equally among each band member, their two roadies and their two managers. The inception of Grateful Dead Records created a straightforward arrangement between the band and Grateful Dead Records manager Ron Rakow (whom they had hired to direct the project). There was also a separate agreement between Rakow and Garcia for Round Records projects. This, of course, introduced jealously to utopia. However, Garcia was doing virtually all of the songwriting and arranging, with others receiving royalty cuts as arrangers. The understanding was that Grateful Dead songs really were arranged on stage, over the course of dozens of live performances. In this sense, including a drummer as an arranger may have been more than simply a political gesture, though Scully argues otherwise. 136 See generally RADICAL MARKETING, supra note 3.

113 The gist of this practice is that artists (generally established ones) will accept large money advances on the condition that repayment comes out of royalties earned from future album releases or touring. See Slind-For, supra note 22, at A1. 114 It is estimated that about 80 percent of existing commercial albums have caused their recording companies to take a loss on production costs. See LAW AND BUSINESS OF THE ENTERTAINMENT INDUSTRIES, supra note 12, at 265. 115 See generally THEY FOUGHT 116 See id. at 44. 117 See id. 118 See id. 119 See id.
THE

LAW, supra note 10, at 43-63.

262

137 See id. at 36. 138 See id. 139 Id. at 39. 140 Id at 36. 141 See id at 34. 142 See Todd Woody, Divvying Up Garcias Spoils, THE AMERICAN LAWYER, April, 1996, at 22, Bar Talk. 143 Reprinted in SWEET CHAOS, supra note 14, at 252-53. 144 See generally ??!! Dead Heads Unite !!??, GRATEFUL DEAD NEWSLETTER, supra note 24. 145 See RADICAL MARKETING, supra note 3, at 45-46. 146 See id at 46. This was the same year that the band self-released its first album. Their original plan had been to ignore traditional distributing techniques and sell their new record from ice cream trucks outside the venues they played. Instead, they set up the promotion booths. See GRATEFUL DEAD RECORDS MAILERS, September 4, 1974, supra note 107. 147 See id at 45. 148 See THE MUSIC BUSINESS, supra note 42, at 27-28. 149 See generally THEY FOUGHT THE LAW, supra note 10; supra text accompanying note 193. 150 See RADICAL MARKETING, supra note 3, at 39. 151 See J. H. Reichman, Intellectual Property in International Trade: Opportunities and Risks of a GATT Connection, 22 VAND. J. TRANSNATL L. 747, 796-805 (1989). 152 See United Drug Co. v. Theodore Rectanus Co., 248 U.S. 90, 98 (1918). 153 See id. 154 See William M. Landes & Richard Posner, Trademark Law: An Economic Perspective, 30 J. L. & ECON. 265 (1987). This article argues that consumer identification of trademarks facilitates commerce by saving the buyer from investing time researching a product or services quality and reliability. In other words, a vast amount of information concerning a commoditys reputation is communicated or signified by a familiar symbol or catchphrase. 155 See Polaroid Corp. v. Polaroid Elecs. Corp., 287 F.2d 492 (2nd Cir. 1961). The court lists nine factors whose consideration aids in determining whether consumer confusion was likely to have occurred: (1) the recognizeability or social resonance of the plaintiff s trademark; (2) the similarity between this mark and the defendants trademark; (3) how each trademark is used as a representation; (4) the similarity between the goods or services that the plaintiff and defendant sell; (5) overlap in the markets targeted by the plaintiff and the defendant; (6) the extent to which each partys customers are commercially savvy; (7) the likelihood that the parties will expand the distribution of their products or services beyond the markets they currently target; (8) evidence that consumer confusion actually has occurred; and (9) the

defendants good faith in employing a similar trademark. 156 See Kentucky Fried Chicken Corp. v. Diversified Packaging Corp., 549 F.2d 368 (5th Cir. 1977). 157 See generally Ethan Horowitz & Benjamin Levi, Fifty Years of the Lanham Act: A Retrospective of Section 43(a),7 FORDHAM INTELL. PROP. MEDIA & ENT. L. J. 59 (1996); Tara J. Goldsmith, Note, Whats Wrong with this Picture? When the Lanham Act Clashes with Artistic Expression, 7 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. 821 (1997). 158 15 U.S.C.A. 1051-1150 (1946)(West 1998 & Supp. 1998). 159 U.S. CONST. Art. I, 8, cl. 8. 160 See generally Ethan Horowitz & Benjamin Levi, Fifty Years of the Lanham Act: A Retrospective of Section 43(a), 7 FORDHAM INTELL. PROP. MEDIA & ENT. L. J. 59 (1996) (describing the inception of the Lanham Act and the evolution in scope of Section 43(a)). 161 15 U.S.C.A. 1125(a)(1). 162 See Guess? v. Mai-Tai Boutique, 7 U.S.P.Q. 2d (BNA) 1387 (S.D.N.Y. 1988). 163 See Boston Prof l Hockey Assn v. Dallas Cap & Emblem Mfg., Inc., 510 F.2d 1004 (5th Cir. 1975). 164 See Waits v. Frito-Lay, Inc., 978 F.2d 1093 (9th Cir. 1992). 165 See S.C. Johnson & Son, Inc. v. Clorox Co., 930 F. Supp. 753 (E.D.N.Y. 1996). 166 A crucial touchstone in determining whether trademark infringement has occurred is the evaluation of the strength of a plaintiff s trademark. See 15 U.S.C. 1125(c)(1) (The infringement criteria in this section closely resemble those set out in Polaroid Corp. v Polaroid Electronic Corp., 287 F.2d 492 (2nd Cir. 1961); see supra text accompanying note 155). 167 Waits, 978 F.2d at 1098. 168 See id at 1006. The court here relied on the Second Circuits rationale in the amusing case of Dallas Cowboys Cheerleaders, Inc. v. Pussycat Cinema, Ltd., 604 F.2d 200 (2nd Cir. 1979), in which the plaintiffs sued under the Lanham Act the producers of an adult film for portraying one of its actresses in a uniform whose appearance was similar enough to the Sunday garb worn by plaintiffs as to create consumer confusion about whether or not Dallas Cowboys Cheerleaders endorsed or sponsored the production. See also Midler v. Ford Motor Co., 849 F.2d 460 (9th Cir. 1988), cert. denied, 503 U.S. 951 (1992) (where the Ninth Circuit had held that voice was a marketable commodity for purposes of misappropriation under California tort law). 169 Waits, 978 F.2d at 1108. 170 Id. at 1110. 171 See Polaroid Corp, 287 F.2d at 492. 172 Waits, 978 F.2d at 1110. 173 See id. 174 See generally id.

263

175 See generally id. 176 This is the issue that many advocates of the recoding theory have been debating over. See infra note 191. 177 See id. 178 Waits, 978 F.2d at 1093. 179 See New Kids On The Block v. News America Publg., Inc., 971 F.2d 302 (9th Cir. 1992). 180 See id. at 304-05. 181 See generally id. 182 See generally id. 183 See id. at 306 (citing 15 U.S.C. 1115(b)(4) and Soweco, Inc. v. Shell Oil Co., 617 F.2d 1178, 1185 (5th Cir. 1980) (stating that the fair-use defense, in essence, forbids a trademark registrant to appropriate a descriptive term for his exclusive use and so prevent others from accurately describing a characteristic of their goods.)), 308 (where the defendant uses a trademark to describe the plaintiff s product, rather than its own, we hold that a commercial user is entitled to a nominative fair use defense provided he meets the following three requirements: First, the product or service in question must be one not readily identifiable without use of the trademark; second, only so much of the mark or marks may be used as is reasonably necessary to identify the product or service; and third, the user must do nothing that would, in conjunction with the mark, suggest sponsorship or endorsement by the trademark holder). 184 See id at 308-309. 185 See id at 304 n.1. 186 Lanham Act, 15 U.S.C. 1125(c)(1), as amended 1996. The section reads: The owner of a famous mark shall be entitled to an injunction against another persons commercial use in commerce of a mark or trade name, if such use begins after the mark has become famous and causes dilution of the distinctive quality of the mark, and to obtain such other relief as is provided in this subsection. see generally, GINSBURG ET AL, TRADEMARK AND UNFAIR COMPETITION LAW: CASES AND MATERIALS, (2nd ed. 1996); Steven M. Cordero, Note, Cocaine-Cola, The Velvet Elvis, And Anti-Barbie: Defending The Trademark And Publicity Rights To Cultural Icons, 8 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. 599, 616 (1998) (defining trademark dilution as the diminishment over of the capacity of a distinctive trademark to identify the source of goods bearing that mark. Dilution may occur even in the absence of consumer confusion, with damage manifesting itself in the harm to the mark. A weakening or reduction in the ability of a mark to effectively distinguish one source can arise either by blurring or tarnishment. Blurring occurs when a distinctive mark is associated with a plethora of different goods and services, diminishing the uniqueness and distinctiveness of the mark. Tarnishment occurs when the effect of the unauthorized use is to tarnish or degrade positive associations of the mark, thereby diluting its distinctive quality.); Eric A. Prager, The Federal Trademark Dilution Act of 1995: Substantial Likelihood of Confusion, 7 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. 121 (1996). 187 Allied Maintenance Corp. v. Allied Mechanical Trades, Inc., 42 N.Y.2d 538, 198 U.S.P.Q. (BNA) 418 (1977).

188 Id. at 544. 189 The common law, of course, has allowed for alternative causes of action to develop (such as the right of publicity) which increase the artists legal leverage in matters of protecting the economic benefits he may accrue from marketing or licensing his identity. 190 This sometimes-inconsistent method is necessary in situations involving trademark dilution and infringement claims because the legal issues are essentially determined by the facts of the case. For definitions of blurring and tarnishment, see supra text accompanying note 186. 191 The primary concern felt by many theorists is that the widespread and hard-nosed application of trademark law will ultimately stifle from above artistic evolution in media. The argument goes something to the tune of: there is a complex public discourse which wends its way through the audio and the visual arts, using creative self-reference as a catalyst for its own evolution. This process was, at some point in the argument over its merits, dubbed recoding. By curtailing the element of self-reference in the name of trademark infringement and other doctrines, the development of this public discourse will stall, eventually becoming stagnant and leaving a rather homogenous musical and visual landscape for people to survey. For poignant discussions of the recoding phenomenon see Justin Hughes, Recoding Intellectual Property And Overlooked Audience Interests, 77 TEX. L. REV. 923 (1999) (arguing that recoding is necessary for evolution in the media arts, but that the worries of many critical theorists are unfounded in that for recoding to occur at all, the status quo must be held stable enough by protectionist legal avenues so that frames of reference may exit long enough to actually be recoded, let alone to provide the necessary backdrop for the new creations to maintain a significant level of meaning in our culture); Edward T. Saadi, Sound Recordings Need Sound Protection, 5 TEX. INTELL. PROP. L.J. 333 (1997); Tara Goldsmith, Note Whats Wrong With This Picture? When The Lanham Act Clashes With Artistic Expression, 7 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. 821 (1997); Michael Madow, Private Ownership Of Public Image: Popular Culture And Publicity Rights, 81 CALIF. L. REV. 127 (1993); Christopher Pesce, Note The Likeness Monster: Should The Right Of Publicity Protect Against Imitation?, 65 N.Y.U. L. Rev. 782 (1990). 192 See generally id. 193 See generally id. 194 See generally THE ART
OF THE

FILLMORE, supra note 92.

195 See SWEET CHAOS, supra note 14, at 3. 196 See Slind-For, supra note 22. 197 See id. 198 See RADICAL MARKETING, supra note 3, at 49-50. 199 See id. 200 See id. 201 See, e.g., Sony Corp. v. Universal Studios, Inc., 464 U.S. 417, 42829 (1984) (5-4 decision) (Blackmun, J., dissenting). 202 REPORT OF THE REGISTER OF COPYRIGHTS ON THE GENERAL REVISION OF THE U.S. COPYRIGHT LAW, 87TH CONG., IST SESS. 3 (Comm.

264

Print 1961). 203 See 17 U.S.C. 102(a) (1996). 204 See 17 U.S.C. 114(a) (1996) (The exclusive rights of the owner of copyright in a sound recording are limited to the rights specified by clauses (1), (2), (3), and (6) of section 106, and do not include any right of performance under section 106(4).); EDWARD T. SAADI, SOUND RECORDINGS NEED SOUND PROTECTION, 5 Tex. Intell. Prop. L.J. 333 (1997). 205 Implicit in 106(4) of the Copyright Act (17 U.S.C. 106(4)) are the rules concerning performance licensing of ones work. But it does not comprehend that one artists interpretation of anothers song may constitute an entirely newi.e., originalmusical work. 206 See THE MUSIC BUSINESS, supra note 42, at 127-36 (discussing the licensing agreements purchased from musicians and songwriters by performing rights societies for establishing royalty extractions from the live performance of their work by other musicians). 207 See 17 U.S.C. 101 (1996) (Sound recordings are works that result from the fixation of a series of musical, spoken, or other sounds, regardless of the nature of the material objects in which they are embodied.). 208 See THE GRATEFUL DEAD, Viola Lee Blues, on The Grateful Dead (Warner Brothers Records 1967). 209 See 17 U.S.C. 101 (1996) (Where a work is prepared over a period of time, the portion of it that has been fixed at any particular time constitutes the work as of that time, and where the work has been prepared in different versions, each version constitutes a separate work). 210 In 1994one year before the death of Jerry GarciaCongress adopted the Uruguay Round Agreements Act, which now provides the copyright statute with an anti-bootlegging provision. See 17 U.S.C. 1101, codifying Pub.L. 103-465, Title V, 512(a), Dec. 8, 1994. 211 See generally David Schwartz, Note, Strange Fixation: Bootleg Sound Recordings Enjoy the Benefits of Improving Technology, 47 FED. COMM. L.J. 611 (1995). 212 See RADICAL MARKETING, supra note 3, at 44. 213 Id. 214 Randy Lewis, Record Bootleggers Tap Niche in Music Market Recordings: What They Sell Are Not Counterfeits, but Usually Live Performances Picked Up on the Sly, LOS ANGELES TIMES, November 9, 1990, Section F. 215 See Second Newsletter, DEAD HEADS NEWSLETTERS, August, 1972 (last modified Dec. 15, 1998) <http://www.dead.net/cavenweb/deadfile/index.html>. This practice also has important implications with the 1976 Copyright Act, 101, which reads, A work consisting of sounds, images, or both, that are being transmitted, is fixed for purposes of this title if a fixation of the work is being made simultaneously with its transmission. 216 See Guy Garcia, If You Cant Beat EmMusic Rip-Off Artists Go Upscale with CDs, but the Stars Fight Back with Bootleg Albums of Their Own, TIME, pg. 44, July 8, 1991.

217 The Copyright Act of 1976 contains a preemption clause which demands that On and after January 1, 1978, all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 in works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright as specified by sections 102 and 103, whether created before or after that date and whether published or unpublished, are governed exclusively by this title. Thereafter, no person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State. See 17 U.S.C. 301. Implicit in this clause are exceptions to it for state laws embodying rights or causes of action which are not equivalent to those listed. The original draft of the clause had included many of these causes of action, but their omission from the final draft of 301 does not effect their relevance. See, e.g., H.R. Rep. No. 941476, 94th Cong., 2nd Sess., reprinted in (1976) U.S.C.C.A.N. 5659, 5748: The evolving common law rights of privacy, publicity, and trade secrets and the general laws of defamation and fraud, would remain unaffected as long as the cause of action contain (sic) elements such as invasion of personal rights or a breach of trust or confidentiality, that are different in kind from copyright infringement. 218 See Haelan Laboratories v. Topps Chewing Gum, 202 F.2d 866 (2nd Cir. 1953) (determining that the right of publicity, derived from privacy rights under sections 50 and 51 of New York Civil Rights Law, is assignable), cert. denied, 346 U.S. 816 (1953). 219 See Zacchini v. Scripps-Howard Broadcasting Co., 433 U.S. 562 (1977) (upholding the Ohio Supreme Courts finding of a misappropriation of a human cannonballs right of publicity when a news station filmed his 15 second long cannonball act and then broadcast it in full, without authorization or compensation). Justice White remarked: [T]he broadcast of petitioners entire performance, unlike the unauthorized use of anothers name for purposes of trade or the incidental use of a name or picture by the press, goes to the heart of petitioners ability to earn a living as an entertainer. Thus, in this case, Ohio has recognized what may be the strongest case for a right of publicity involving, not the appropriation of an entertainers reputation to enhance the attractiveness of a commercial product, but the appropriateness of the very activity by which the entertainer acquired his reputation in the first place.... Of course, Ohios decision to protect petitioners right of publicity here rests on more than a desire to compensate the performer for the time and effort invested in his act; the protection provides an economic incentive for him to make the investment required to produce a performance of interest to the public. This same consideration underlies the patent and copyright laws long enforced by this Court. Id. at 576 (emphasis added). 220 See THEY FOUGHT THE LAW, supra note 10, at 1-20 (providing a concise account of how others have exploited Presleys image for nearly five decades, and the extent to which his heirs have gone to stymie this exploitation). 221 See TENN. CODE ANN. 47-25-1101 (West Supp. 1999). At the time, only California, Texas, and Florida had similar statutes. 222 See, e.g., Steven M. Cordero, Note, Cocaine-Cola, the Velvet Elvis, and Anti-Barbie: Defending the Trademark and Publicity Rights to Cultural Icons, 8 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. 599 (1998). 223 Estate of Presley v. Russen, 513 F. Supp. 1339 (D. N.J. 1981) [hereinafter Russen]. 224 See id. at 1344. The other causes of action in this litigation were 265

federal unfair competition under the false designation of origin cause as contained in 43(a) of the Lanham Act, 15 U.S.C. Section 1125(a), common law unfair competition, and common law trademark infringement. 225 See id. 226 See THEY FOUGHT THE LAW, supra note 10, at 11. It is not clear from the account whether these figures reflect the number of impersonators conducting such concerts, or the aggregate number of concerts, performed by a smaller number of impersonators. 227 Russen, 513 F. Supp. at 1348-49. 228 See id. at 1349-50. 229 THEY FOUGHT
THE

243 See generally id. 244 See generally id. 245 Campbell v. Acuff-Rose Music, 510 U.S. 569, 579 (1994). 246 See Capece, 950 F. Supp. at 792. 247 See 17 U.S.C. 107 (1996) (discussing the nature and scope of the fair use doctrine in copyright law). 248 See Elvis Presley Enterprises, 950 F. Supp. at 796-97. The court, however, did enjoin Capece from using photographs of Presley or direct references to the musician in any advertisements for his nightclub. Id. at 803. 249 See id at 798-800, 802-03. 250 See generally Elvis Presley Enterprises, 141 F.3d 188. 251 See Russen, 513 F. Supp. at 1339. 252 See Neil Strauss, Rock Group Lives on in Memory and Masterplan, THE NEW YORK TIMES, January 6, 1998, Arts and Leisure section. 253 See id.; Gil Kaufman, Grateful Dead Music Museums Groundbreaking Planned for 2000, May 20, 1999, (visited April 3, 2000) <http://www.sonicnet.com./news/search_res.jhtml?query=grateful+dead>. 254 See RADICAL MARKETING, supra note 3, at 34.

LAW, supra note 10, at 11.

230 See generally Russen, 513 F.Supp. at 1339. 231 Russen, 513 F. Supp. at 1359. 232 Russen at 1360-61. 233 See THEY FOUGHT
THE

LAW, supra note 10, at 11.

234 See generally Russen, 513 F. Supp. at 1339. 235 See id at 1378-79. The court merely demanded the abandonment of various catchphrases and images used in promoting the Big El Show which were likely to mislead consumers as to their origin, content or sponsorship: The close relationship in this case between the right of publicity and the societal considerations of free expression supports the position that the plaintiff in seeking relief for an infringement of its rights of publicity should demonstrate an identifiable economic harm.... [T]he defendants activity when viewed simply as a skilled, good faith imitation of an Elvis Presley performance, i.e., without the elements leading to a likelihood of confusion, is, in some measure, consistent with the goals of freedom of expression. Thus, before the harsh step of barring defendants activity is undertaken, the plaintiff should have to make a showing of immediate, irreparable harm to the commercial value of the right of publicity and should not be able to rely on an intangible potentiality. 236 See id at 1381. 237 See generally id. 238 See, e.g., Eric Zorn, Threat to Stop Elvis Show Puts Rocker in a Hard Place, CHICAGO TRIBUNE, July 8, 1987, at C1. 239 Elvis Presley Enterprises, Inc. v. Capece, 141 F.3d 188 (5th Cir. 1998). 240 See id. at 192. Though the author never visited the nightclub, it apparently possessed not only a handful of Elvis artifacts, but also lava lamps, beaded curtains, vinyl couches, and tasteless paintings of celebrities and female nudes. 241 See id. 242 Elvis Presley Enterprises, Inc. v. Capece, 950 F.Supp. 783 (S.D. Tex. 1996) [hereinafter Capece].

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