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MATTER JOSEPH FIGARI ET AL. v. NEW YORK TELEPHONE COMPANY (07/25/69)

SUPREME COURT OF NEW YORK, APPELLATE DIVISION, SECOND DEPARTMENT 1969.NY.42699 <http://www.versuslaw.com>; 303 N.Y.S.2d 245; 32 A.D.2d 434 July 25, 1969 IN THE MATTER OF JOSEPH FIGARI ET AL., APPELLANTS,v.NEW YORK TELEPHONE COMPANY, RESPONDENT Appeal from a judgment of the Supreme Court at Special Term (Paul J. Widlitz, J.), entered December 9, 1968 in Nassau County, dismissing a petition in a proceeding under article 78 of the CPLR for a judgment compelling respondent to restore telephone service to petitioners. Alfred J. Skidmore for appellants. G. Wallace Bates (James R. Billingsley and Gerald E. Murray of counsel), for respondent. Brennan, Acting P. J. Rabin, Hopkins, Munder and Martuscello, JJ., concur. Author: Brennan


Appeal from a judgment of the Supreme Court at Special Term (Paul J. Widlitz, J.), entered December 9, 1968 in Nassau County, dismissing a petition in a proceeding under article 78 of the CPLR for a judgment compelling respondent to restore telephone service to petitioners.

Brennan, Acting P. J. Rabin, Hopkins, Munder and Martuscello, JJ., concur.

Author: Brennan

 This appeal presents an important question concerning the constitutionality of a tariff filed by the respondent and approved by the Public Service Commission (hereinafter referred to as the Commission). The petitioners commenced this proceeding pursuant to article 78 of the CPLR to compel the respondent to restore their telephone service which had been terminated for their failure to comply with the tariff in question.

The individual petitioners are representatives of the corporate petitioner, Let Freedom Ring, Incorporated, which is a nonprofit corporation organized under the laws of the State of Florida. The corporate petitioner was established purportedly "to disseminate anti-communist, anti-socialist and pro-American information, through the use of telephone tape recordings." Each of the individual petitioners subscribed to the respondent's Sponsored Recorded Announcement Service, using telephone lines and numbers supplied by the respondent. Every week the corporate petitioner would distribute a two and one-half minute tape recording to the individual petitioners which could be heard by any person who dialed the telephone number advertised for that purpose.

In 1965 the respondent, which is a member of the Bell Telephone System, received complaints concerning anonymous recording announcements. The complaints originally were directed to the Federal Communications Commission which referred them to the respondent. The gist of the complaints was that the respondent was transmitting libelous messages and that, in order to enable those libeled to ascertain the sponsor, the respondent should enact a rule which would require the sponsors to identify themselves on the recordings. Prior to November 1, 1965 the respondent revised its tariffs to permit it to identify the sponsor on request. At that time, proposed Federal legislation, which was never enacted, was pending. The respondent claims that that disclosure requirement became too burdensome and it therefore enacted the tariff in question (No. 800) which became effective on January 1, 1966 and, as of , was in effect in similar form in 46 States. The tariff requires the individual subscriber to state his name and address on the recording. The individual petitioners refused to comply and, after notice from the respondent, their recording service was terminated, Feist's in July, 1968 and Figari's in September, 1968.

Prior thereto, on December 29, 1965, the New York Civil Liberties Union filed a complaint with the Public Service Commission, seeking to prevent the tariff from becoming effective. On March 1, 1966 the Commission dismissed the complaint and held that the tariff does not violate the Public Service Law. Thereafter, on June 9, 1966, the Commission "denied" a petition for reconsideration. In an opinion, the Commission concluded that the tariff was reasonable but refused to pass upon the constitutional question, on the ground that that was solely within the "province" of the courts.

In the instant proceeding the petitioners allege that the tariff is unconstitutional, "unjustly and unreasonably arbitrary and discriminatory" and in violation of the Public Service Law. Special Term dismissed the petition on the ground that all administrative remedies had not been exhausted and that the court could not treat the proceeding as an action for declaratory judgment since the Commission had not been made a party.

Generally, before a proceeding attacking a rule or regulation of an administrative agency will be heard in a State court, the petitioners must first exhaust their administrative remedies (CPLR 7801, subd. 1). The Commission is empowered to hold hearings concerning rules and regulations promulgated by telephone companies and may determine whether they are "unjust, unreasonable or unjustly discriminatory" (Public Service Law, § 97, subds. 1, 2; Freedom Finance Co. v. New York Tel. Co., 29 A.D.2d 545). All rules enacted by the respondent must be filed with the Commission and cannot be modified until "legally changed" (16 NYCRR 630.3, 630.5). The respondent contends that before the constitutional question may be adjudicated in court the other issues raised in the petition must be passed upon by the Commission. However, in the matter of the complaint by the New York Civil Liberties Union the Commission unequivocally held that the tariff provision was reasonable and did not violate the Public Service Law. Since the Commission has already expressed itself on those issues, its technical expertise on such matters is no longer required. Consequently, the only new question, other than constitutionality, upon which the Commission could express itself, is whether the tariff is unjustly discriminatory as applied to these petitioners. Nevertheless, the cases uniformly hold that, where an attack is concentrated upon the discriminatory application of a rule promulgated by a public utility, the courts may exercise jurisdiction in the first instance and mandamus is a proper remedy (Matter of Leitner v. New York Tel. Co., 277 N. Y. 180; Murray v. New York Tel. Co., 170 App. Div. 17, affd. 226 N. Y. 590; Lemoyne Arms v. Central N. Y. Power Corp., 191 Misc. 709). Furthermore, initial resort to the courts is clearly proper where only questions of law are raised (Kovarsky v. Brooklyn Union Gas Co., 279 N. Y. 304); and, in our opinion, the issue of the constitutionality of a rule approved by the regulatory agency presents such a question (1, 4 Davis, Administrative Law, §§ 2.13, 30.09; see Dombrowski v. Pfister, 380 U.S. 479). Support for this view is found in those cases concerning the constitutionality of a zoning ordinance which hold that relief may initially be sought in the courts (Vernon Park Realty v. City of Mount Vernon, 307 N. Y. 493; Levitt v. Incorporated Vil. of Sands Point, 6 N.Y.2d 269).

Consequently, Special Term had jurisdiction in the first instance to consider the constitutional question and, in the exercise of discretion, should have taken jurisdiction of the discrimination claim; and, since the issue of reasonableness has been passed upon by the Commission, the court should have considered that claim de novo (see Annual Survey of American Law, 1968, Schwartz, pp. 91-92). Furthermore, the learned Justice could have directed that notice be given to the Attorney-General (CPLR 1012, subd. [b]) and permitted him to intervene on behalf of the Commission (CPLR 1012, subd. [a], par. 1; CPLR 7802, subd. [d]; Lemoyne Arms v. Central N. Y. Power Corp., 191 Misc. 709, supra) or ordered a severance and separate trial of the issues (CPLR 407, 1003).

While the respondent did not urge non-joinder below, and has not urged it on this appeal (CPLR 3211, subd. [a], par. 10; CPLR 3211, subd. [e]; cf. Fed. Rules Civ. Pro., rules 19, 21, 12, subd. [b], par. [7]; rule 12, subd. [h], par. [2]), the court may raise the point at any stage of the proceedings (First Nat. Bank of Amsterdam v. Shuler, 153 N. Y. 163, 170; CPLR 1003; 2 Weinstein-Korn-Miller, N. Y. Civ. Prac., par. 1001.03). Hence, we shall now consider whether the Commission is a necessary party (CPLR 1001, subd. [a]). The primary reasons for compulsory joinder of parties are to prevent multiplicity of suits and to protect absentees who ought not to be jeopardized if they have a "material interest in the subject matter" (Steinbach v. Prudential Ins. Co., 172 N. Y. 471, 478; First Nat. Bank of Amsterdam v. Shuler, supra; Mahr v. Norwich Union Fire Ins. Soc., 127 N. Y. 452; 2 Weinstein-Korn-Miller, N. Y. Civ. Prac., pars. 1001.01, 1001.05). However, where complete relief may be accorded between the parties and the absent party will not be inequitably affected, the absentee is not a necessary party (CPLR 1001, subd. [a]).

In Kovarsky v. Brooklyn Union Gas Co. (279 N. Y. 304, supra), the plaintiff sued for an injunction, declaratory judgment concerning a question of law, and an accounting. The Commission was not a party and the Court of Appeals held that the matter should not be remanded to it. Moreover, in Matter of Shillitani v. Valentine (296 N. Y. 161) our highest court held that the Police Commissioner was not a necessary or proper party in an article 78 proceeding to restore telephone service which had been terminated because of alleged unlawful use. There the court said (p. 164): "Approval of the commissioner is not a statutory condition precedent to the granting of the relief sought * * *.

"Whether or no service should be terminated or discontinued, is a decision that must be made by the telephone company. That power -- as well as duty -- rests with the public utility, and it may not delegate the one or avoid the other. * * * But whether the action is justified or warranted must be determined by the telephone company upon the facts presented. That being so, the telephone company is the only indispensable, necessary or proper party in a proceeding such as that before us."

The instant proceeding is not unlike Matter of Castaways Motel v. Schuyler (24 N.Y.2d 120), which presented a far stronger case for finding the nonparty regulatory agency a necessary party. There the regulatory agency's consent was required by statute and the agency had rendered a decision in the matter and consented to the transaction in question, subject to certain conditions. The petitioner refused to comply with the decision and commenced a proceeding pursuant to article 78 against the Commissioner of General Services. The Court of Appeals, after first observing that it is the general policy of the CPLR "to limit the scope of indispensable parties" (p. 125), held that the New York State Power Authority was not a necessary party, since its interest was not "inequitably" affected (CPLR 1001) because it could have made no determination in law other than to give its unqualified consent. At bar the same rationale applies. Any interest that the Commission may have in supporting the constitutionality of a rule approved by it clearly is not inequitably affected, because the Commission could not even pass upon the constitutional question. Furthermore, the Commission has no interest in the subject matter involved herein. Since there is no "order, direction or requirement of the commission" outstanding which the respondent would violate were the petitioner to prevail herein, it is doubtful that the Commission could even successfully commence an enforcement proceeding against the respondent to terminate the petitioners' service (Public Service Law, § 103; People ex rel. Public Serv. Comm. v. New York Tel. Co., 174 Misc. 517, 175 Misc. 128, affd. 262 App. Div. 440, affd. 287 N. Y. 803). Moreover, the Commission has not been a party in proceedings to compel the telephone company to furnish service or to restore service denied or terminated for alleged illegal use (Matter of Shillitani v. Valentine, 296 N. Y. 161, supra; Matter of Montario v. New York Tel. Co., 181 App. Div. 893; People ex rel. Restmeyer v. New York Tel. Co., 173 App. Div. 132; Matter of Cullen v. New York Tel. Co., 106 App. Div. 250; Matter of Goldman v. New York Tel. Co., 50 Misc. 2d 309; Matter of Rosenthal v. New York Tel. Co., 141 N. Y. S. 2d 459; Matter of Di Benedetto, 83 N. Y. S. 2d 920; Whyte v. New York Tel. Co., 73 N. Y. S. 2d 138; Salter v. New York Tel. Co., 67 N. Y. S. 2d 396).

In our opinion, under the peculiar circumstances presented, the Commission is not a necessary party to the instant proceeding. Discretion as to whether service is warranted lies solely with the respondent (Matter of Shillitani v. Valentine, supra). Complete relief herein may be accorded the parties which in no way could inequitably affect or prejudice the Commission, since it has no material interest in the subject matter (Steinbach v. Prudential Ins. Co., 172 N. Y. 471, 478, supra). Its consent or advice concerning the restoration of service is not essential and it has expressly declined to pass upon the constitutional issue (cf. Matter of Castaways Motel v. Schuyler, 24 N.Y.2d 120, supra). Of course, once the issue of the constitutionality of the rule is judicially adjudicated, multiplicity of suits will be obviated.

Before reaching the latter problem, two other points touching upon jurisdiction require mention. Initially, it is axiomatic that the tariff of a public utility regulated by a governmental agency is efficacious only by virtue of State action (Public Utilities Comm. v. Pollak, 343 U.S. 451, 462-463; Tinker v. Des Moines Ind. Community School Dist., 393 U.S. 503; Powe v. Miles, 407 F. 2d 73). Nevertheless, the appeal is properly before this court and not the Court of Appeals because the order is non-final, questions other than the constitutionality have been raised, and a rule of a public utility rather than a State statute is sought to be adjudged unconstitutional (cf. CPLR 5601, subd. [b], par. 2; N. Y. Const. art. VI, § 3, subd. b, par. [2]; People ex rel. Hirschberg v. McNeill, 303 N. Y. 464; 11 Carmody-Wait 2d, New York Practice, Appeals to the Court of Appeals, §§ 71:24-71:26).

Secondly, implicit in the ruling below is the confusion attendant when one sues to test the constitutionality of administrative action -- which remedy, a proceeding under article 78 of the CPLR or an action for a declaratory judgment, is proper or preferable? (See Matter of Di Maggio v. Brown, 19 N.Y.2d 283; Matter of Roosevelt Raceway v. County of Nassau, 18 N.Y.2d 30; Matter of Diocese of Rochester v. Planning Bd. of Town of Brighton, 1 N.Y.2d 508, 520; Matter of Strippoli v. Bickal, 21 A.D.2d 365, affd. 16 N.Y.2d 652; Matter of Romig v. Weld, 276 App. Div. 514, 517; Matter of Levin v. Haber, 28 Misc. 2d 529; Hotel Armstrong v. Temporary State Housing Rent Comm., 25 Misc. 2d 87, affd. 12 A.D.2d 476; 24 Carmody-Wait 2d, New York Practice, Proceeding Against a Body Or Officer, § 145:298.)

As far as the relief requested by the petitioners is concerned, it is immaterial what the proceeding is denominated, since even in actions for declaratory judgment (CPLR 3001) the court may grant affirmative relief (Great Riv. Realty Corp. v. Rector, Churchwardens & Vestrymen of Emanuel Church, 284 App. Div. 977, affd. 308 N. Y. 973; 24 Carmody-Wait 2d, New York Practice Declaratory Judgments, § 147:32). It is not necessary to our determination herein to characterize the proceeding, since it is error to dismiss the petition, even if the petitioners have chosen the wrong remedy, as long as a cause of action is stated (CPLR 103, subd. [c]; Matter of Lakeland Water Dist. v. Onondaga County Water Auth., 24 N.Y.2d 400; Matter of Mandis v. Gorski, 24 A.D.2d 181). Accordingly, we shall take the case as we find it and treat the proceeding as in the nature of mandamus (see cases cited, supra, concerning alleged unlawful use of telephone facilities).

We shall now consider whether the tariff violates the freedom of speech and association guarantees contained in the First Amendment (and the comparable provisions in our State Constitution [art. I, §§ 8, 9]). It is well settled that freedom of speech embodies the right to receive information and ideas, regardless of their social worth; the right to utter, print and distribute (Stanley v. Georgia, 394 U.S. 557; Griswold v. Connecticut, 381 U.S. 479; Kingsley Int. Pictures Corp. v. Regents, 360 U.S. 684). Freedom of association "includes the right to express one's attitudes or philosophies by membership in a group or by affiliation with it" and is within the penumbra of the First Amendment (Griswold v. Connecticut, supra, p. 483-484; Gibson v. Florida Legis. Investigation Committee, 372 U.S. 539; Louisiana v. National Assn. for Advancement of Colored People, 366 U.S. 293; Bates v. Little Rock, 361 U.S. 516; National Assn. for Advancement of Colored People v. Alabama, 357 U.S. 449). "Ceaseless vigilance is the watchword to prevent * * * erosion [of First Amendment rights]" (Roth v. United States, 354 U.S. 476, 488) and these rights are to be maintained "in a preferred position" (Saia v. New York, 334 U.S. 558, 562). Of course, "pure speech" and rights closely akin thereto are entitled to the greatest protection (Street v. New York, 394 U.S. 576; Shuttlesworth v. Birmingham, 394 U.S. 147; Gregory v. Chicago, 394 U.S. 111; Tinker v. Des Moines School Dist., 393 U.S. 503, supra) and the fact that tape recordings are involved herein is of no moment, since the "First Amendment draws no distinction between the various methods of communicating ideas" (Superior Films v. Department of Educ., 346 U.S. 587, 589 [concurring opn.]). Hence, it is incumbent upon the respondent to show a compelling State interest that justifies any permissible infringement upon the petitioners' First Amendment rights (Pickering v. Board of Educ., 391 U.S. 563; Sherbert v. Verner, 374 U.S. 398; Gibson v. Florida Legis. Investigation Committee, 372 U.S. 539, supra ; Schneider v. State, 308 U.S. 147; People v. Sprowal, 49 Misc. 2d 806, affd. 17 N.Y.2d 884, app. dsmd. 385 U.S. 649).

The Supreme Court has consistently held unconstitutional, in their application, statutes, ordinances and court directives requiring associations to disclose their membership lists where threats of reprisals or harassment were apparent and no vital national interest would be served by disclosure (Lamont v. Postmaster General, 381 U.S. 301; Gibson v. Florida Legis. Investigation Committee, supra ; Louisiana v. National Assn. for Advancement of Colored People, 366 U.S. 293, supra ; Bates v. Little Rock, 361 U.S. 516, supra ; National Assn. for Advancement of Colored People v. Alabama, 357 U.S. 449, supra ; cf. Civil Rights Law, §§ 53-57; Bryant v. Zimmerman, 278 U.S. 63). These cases recognize that to compel disclosure of affiliation with groups engaged in advocacy, particularly where they espouse dissident beliefs, may constitute an effective restraint on freedom of association and that anonymity may be necessary to preserve that freedom (see, also, Lovell v. City of Griffin, 303 U.S. 444). Accordingly, in determining whether disclosure ought to be required in a given case, the court must consider possible reprisals to the author, potential social ostracism and economic pressure, and his desire to remain outside the limelight (see 70 Yale L. J. 1084, 1106-1107, Note: The Constitutional Right to Anonymity: Free Speech, Disclosure and the Devil).

While anonymity is not accorded absolute constitutional protection (see, eg., State of Oregon v. Buchanan, 436 P. 2d 729 [Ore.], cert. den. 392 U.S. 905; Garland v. Torre, 259 F. 2d 545, cert. den. 358 U.S. 910; 82 Harv. L. Rev. 1384; 70 Yale L. J. 1084, 1124), the Supreme Court in Talley v. California (362 U.S. 60) recognized that the governmental interest requiring disclosure must be substantial. There, the court held unconstitutional a Los Angeles city ordinance which prohibited distribution of handbills that did not contain the name of the printer and the person who had caused them to be distributed. California had urged that the ordinance was "aimed at providing a way to identify those responsible for fraud, false advertising and libel" (p. 64). The court said (p. 64): "Yet the ordinance is in no manner so limited, nor have we been referred to any legislative history indicating such a purpose. Therefore we do not pass on the validity of an ordinance limited to prevent these or any other supposed evils. * * *

"There can be no doubt that such an identification requirement would tend to restrict freedom to distribute information and thereby freedom of expression."

Recently, in Zwickler v. Koota (290 F. Supp. 244, revd. as moot sub nom. Golden v. Zwickler, 394 U.S. 103), a special three-Judge court sitting in New York declared former section 781-b of the Penal Law (now Election Law, § 457) unconstitutional. That section made it a misdemeanor to distribute handbills concerning a candidate for public office unless printed thereon were the names and addresses of the printer and the person at whose instance the bills were distributed. The court relied primarily on Talley (supra) and observed that the threat of civil damages may deter free speech. Especially appropriate to the matter at bar was this comment: "Government assistance to a public figure, however, in ferreting out a 'traducer' whom he may the more readily identify and from whom he may seek civil damages as balm for his individual smart at criticism * * * weighs in the balance as too high a toll to be exacted from First Amendment freedom of expression for all" (p. 252-253).

Our brethren in the First Department have had occasion to pass upon a statute similar to the ordinance involved in Talley (People v. Mishkin, 17 A.D.2d 243, affd. 15 N.Y.2d 671, affd. 383 U.S. 502). Mishkin was convicted for possession and publication of obscene books. Some of the counts were predicated on a violation of subdivision 2 of section 330 of the General Business Law, which required "every publication" to state the name of the printer. The court held the statute unconstitutional and rejected the argument of the Attorney-General that it be interpreted narrowly so as to require the name of the printer on only obscene publications. (The section has since been amended to so provide.)

While the association and disclosure cases are instructive, none are dispositive of this appeal. However, California recently passed upon a tariff similar to the one enacted in this State (Huntley v. Public Utilities Comm., 69 Cal. 2d 67). One of the petitioners in Huntley was a representative of Let Freedom Ring and the tariff in California had been promulgated by a member of the Bell Telephone System and approved by the appropriate State agency. The tariff there was less stringent, since it did not require a subscriber to state his address if it could be found in a current telephone directory. Arguments similar to those at bar favoring constitutionality were presented to and rejected by the highest court in California. The court relied primarily on the association cases and Talley (supra).

Two of the arguments for sustaining constitutionality presented here were adequately answered in Huntley. There, the respondent asserted that the tariff was required to protect the interests of the public. The court held that the contention lacked merit and said (pp. 75-76): "The commission does not set forth what interests of the subscribers [general public] require the abridgment of First Amendment rights. Nothing in the record indicates that the regulation was based on a fear of defamation. Moreover, a person libeled by a recording can readily ascertain the identity of his defamer from * * * [the company's] records. If the interests of the subscribers are to identify the author of 'irresponsible' messages, then, the tariff is still an unwarranted invasion of freedom of speech. Too often the test of ...


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