Federal Communications Commission v. American Broadcasting Company/Opinion of the Court

These cases are before us on direct appeal from the decision of a three-judge District Court in the Southern District of New York, enjoining the Federal Communications Commission from enforcing certain provisions in its rules relating to the broadcasting of so-called 'give-away' programs. The question presented is whether the enjoined provisions correctly interpret § 1304 of the United States Criminal Code, formerly § 316 of the Communications Act of 1934. This statute prohibits the broadcasting of ' * *  * any lottery, gift enterprise, or similar scheme, offering prizes dependent in whole or in part upon lot or chance *  *  * .'

The appellees are national radio and television broadcasting companies. They are, in addition, the operators of radio and television stations licensed by the Commission. Each of the appellees broadcasts, over its own and affiliated stations, certain programs popularly known as 'give-away' programs. Generally characteristic of this type of program is the distribution of prizes to home listeners, selected wholly or in part on the basis of chance, as an award for correctly solving a given problem or answering a question.

The rules challenged in this proceeding, §§ 3.192, 3.292, and 3.656 of the Commission's Rules and Regulations, were designed to prevent the broadcast of such programs. The rules are identically worded and apply, respectively, to standard radio broadcasting (AM), FM radio broadcasting, and television broadcasting. Paragraph (a) of each rule provides that 'An application for construction permit, license, renewal of license, or any other authorization for the peration of a broadcast station, will not be granted where the applicant proposes to follow or continue to follow a policy or practice of broadcasting * *  * ,' programs of a sort forbidden by § 1304. Paragraph (b) provides that a program will fall within the ban

' * *  * if in connection with such program a prize consisting      of money or thing of value is awarded to any person whose      selection is dependent in whole or in part upon lot or      chance, if as a condition of winning or competing for such      prize:

'(1) Such winner or winners are required to furnish any money     or thing of value or are required to have in their possession      any product sold, manufactured, furnished or distributed by a      sponsor of a program broadcast on the station in question; or

'(2) Such winner or winners are required to be listening to     or viewing the program in question on a radio or television      receiver; or

'(3) Such winner or winners are required to answer correctly     a question, the answer to which is given on a program      broadcast over the station in question or where aid to      answering the question correctly is given on a program      broadcast over the station in question. For the purposes of     this provision the broadcasting of the question to be      answered over the radio station on a previous program will be      considered as an aid in answering the question correctly; or

'(4) Such winner or winners are required to answer the phone     in a prescribed manner or with a prescribed phrase, or are      required to write a letter in a prescribed manner or      containing a prescribed phrase, if the prescribed manner of      answering the phone or writing the letter or the prescribed phrase to be      used over the phone or in the letter (or an aid in      ascertaining the prescribed phrase or the prescribed manner      of answering the phone or writing the letter) is, or has      been, broadcast over the station in question.'

After promulgation of the rules, the present actions were brought by the appellees. The District Court sustained the Commission's general authority to adopt such rules, and sustained subdivision (1) of paragraph (b) as a correct interpretation of § 1304. But, with one dissent, the court held that subdivisions (2), (3), and (4) were beyond the scope of § 1304 and hence invalid. The court was of the view that § 1304 applied only to contest programs requiring contestants to contribute a 'price' or 'thing of value'. We noted probable jurisdiction and consolidated the cases for argument.

Like the court below, we have no doubt that the Commission, concurrently with the Department of Justice, has power to enforce § 1304. Indeed, the Commission would be remiss in its duties if it failed, in the exercise of its licensing authority, to aid in implementing the statute, either by general rule or by individual decisions. But the Commission's power in this respect is limited by the scope of the statute. Unless the 'give-away' programs involved here are illegal under § 1304, the Commission cannot employ the statute to make them so by agency action. Thus, reduced to its simplest terms, the issue before us is whether this type of program constitutes a 'lottery, gift enterprise, or similar scheme' proscribed by § 1304.

All the parties agree that there are three essential elements of a 'lottery, gift enterprise, or similar scheme': (1) the distribution of prizes; (2) according to chance; (3) for a consideration. They also agree that prizes on the programs under review are distributed according to chance, but they fall out on the question of whether the home contestant furnishes the necessary consideration.

The Commission contends that there is such consideration; in its brief, it urges that these programs

' * *  * are nothing but age old lotteries in a slightly new      from. The new form results from the fact that the schemes     here are illicit appendages to legitimate advertising. The     classic lottery looked to advance cash payments by the      participants as the source of profit; the radio give-away      looks to the equally material benefits to stations and      advertisers from an increased radio audience to be exposed to      advertising.'

It contends that consideration in the form of money or a thing of value is not essential, and that a commercial benefit to the promoter satisfies the consideration requirement:

' * *  * Where a scheme of chance is successfully designed to      reap profits for its promoter, there will ultimately be      consideration flowing from the participants, and it is of no      consequence whether such consideration be direct or indirect. In either event, the gambling spirit-the lure of obtaining     something for nothing or almost nothing-is exploited for the      benefit of the promoter of the scheme.'

As against this claim the appellees insist that something more is required than just a benefit to the promoter; that the participation of the home audience by merely listening to a broadcast does not constitute the necessary consideration.

Section 1304 itself does not define the type of consideration needed for a 'lottery, gift enterprise, or similar scheme'. Nor do the postal lottery statutes from which this language was taken. The legislative history of § 1304 and the postal statutes is similarly unilluminating. For guidance, therefore, we must look primarily to American decisions, both judicial and administrative, construing comparable antilottery legislation.

Enforcing such legislation has long been a difficult task. Law enforcement officers, federal and state, have been plagued with as many types of lotteries as the seemingly inexhaustible ingenuity of their promoters could devise in their efforts to circumvent the law. When their schemes reached the courts, the decision, of necessity, usually turned on whether the scheme, on its own peculiar facts, constituted a lottery. So varied have been the techniques used by promoters to conceal the joint factors of prize, chance, and consideration, and so clever have they been in applying these techniques to feigned as well as legitimate business activities, that it has often been difficult to apply the decision of one case to the facts of another.

And so it is here. We find no decisions precisely in point on the facts of the cases before us. The courts have defined consideration in various ways, but so far as we are aware none has ever held that a contestant's listening at home to a radio or television program satisfies the consideration requirement. Some courts-with vigorous protest from others-have held that the requirement is satisfied by a 'raffle' scheme giving free chances to persons who go to a store to register in order to participate in the drawing of a prize, and similarly by a 'bank night' scheme giving free chances to persons who gather in front of a motion picture theatre in order to participate in a drawing held for the primary benefit of the paid patrons of the theatre. But such cases differ substantially from the cases before us. To be eligible for a prize on the 'give-away' programs involved here, not a single home contestant is required to purchase anything or pay an admission price or leave his home to visit the promoter's place of business; the only effort required for participation is listening.

We believe that it would be stretching the statute to the breaking point to give it an interpretation that would make such programs a crime. Particularly is this true when through the years the Post Office Department and the Department of Justice have consistently given the words 'lottery, gift enterprise, or similar scheme' a contrary administrative interpretation. Thus the Solicitor of the Post Office Department has repeatedly ruled that the postal lottery laws do not preclude the mailing of circulars advertising the type of 'give-away' program here under attack. Similarly, the Attorney General- charged directly with the enforcement of federal criminal laws-has refused to bring criminal action against broadcasters of such programs. And in this very action, it is noteworthy that the Department of Justice has not joined the Commission in appealing the decision below.

It is true, as contended by the Commission, that these are not criminal cases, but it is a criminal statute that we must interpret. There cannot be one construction for the Federal Communications Commission and another for the Department of Justice. If we should give § 1304 the broad construction urged by the Commission, the same construction would likewise apply in criminal cases. We do not believe this construction can be sustained. Not only does it lack support in the decided cases, judicial and administrative, but also it would do violence to the well-established principle that penal statutes are to be construed strictly.

It is apparent that these so-called 'give-away' programs have long been a matter of concern to the Federal Communications Commission; that it believes these programs to be the old lottery evil under a new guise, and that they should be struck down as illegal devices appealing to cupidity and the gambling spirit. It unsuccessfully sought to have the Department of Justice take criminal action against them. Likewise, without success, it urged Congress to amend the law to specifically prohibit them. The Commission now seeks to accomplish the same result through agency regulations. In doing so, the Commission has over-stepped the boundaries of interpretation and hence has exceeded its rule-making power. Regardless of the doubts held by the Commission and others as to the social value of the programs here under consideration, such administrative expansion of § 1304 does not provide the remedy.

Affirmed.

Mr. Justice DOUGLAS took no part in the decision of these cases.