Feed The Children beats Nashville solicitation ordinance. (News Line).

A federal court injunction has blocked the Metropolitan Government of Nashville and Davidson County in Tennessee from enforcing its charitable solicitations ordinance against Feed The Children (FTC).

While the decision directly impacts FTC, the ruling of Judge Robert L. Echols, sitting in the United States District Court for the Middle District of Tennessee, may impact fundraising regulation cases across the nation.

The judge ruled that the ordinance "affects substantially more speech than is necessary to achieve its interest in preventing fraud" in granting the First Amendment decision. He left open, however, arguments regarding content-neutral and content-based distinctions on enforcement.

Larry Jones, president of the Oklahoma City-based charity, said the decision was a big win for the sector as a whole. "Local governments have every right to regulate door-to-door solicitation, but when local governments duplicate the efforts of state regulators in areas protected by the First Amendment, they have to be very careful," said Jones. "The charitable solicitations board was acting in very arbitrary ways and was passing judgment on whether a charity could communicate with their donors by the U.S. mail. We thought that was unconstitutional, and it looks like the court agrees with us."

FTC was facing fines of up to $50 for each solicitation it made in the locality. FTC's permit to solicit had expired and the charity was before the local board for relicensing when it was apprised that it would be fined for the solicitations made while unlicensed.

According to court papers, the relicensing was held up because the charity voluntarily reported that previous financial statements given to the local board were not correct. Late in 2000, FTC fired its chief financial officer for allegedly forging the signature of external auditors on the organization's financial statements and providing management with inaccurate documents.

According to the motion for a preliminary injunction filed by FTC, the charity cited six causes of action: violation of the First and 14th Amendments of the U.S. Constitution; vagueness and overbreadth violation of those amendments; violation of the Commerce Clause; federal preemption; deprivation of constitutional rights; and injunctive relief.

An injunction is phase one of a legal action, which may or may not proceed to trial. A trial has been scheduled for February, 2003.

Judge Echols found in granting the injunction the likelihood that the party seeking the injunction, in this case FTC, would win at trial. Karl Dean, director of law for the Metropolitan Government of Nashville and Davidson County, said the decision is still under review but amending the local ordinance, which has been rewritten six times since 1983, is a possibility for the elected and appointed officials to decide.

"Obviously, we have a great deal of respect for Judge Echols and his decision and will proceed with caution," Dean said. Officials will have to examine the law because of the judge's findings regarding the infringement of First Amendment rights, he said.

FTC's attorney J. Richard Lodge Jr., a partner with the law firm Bass, Berry & Sims in Nashville, said that he believes the order, because of the First Amendment issues, enjoins the government from enforcing the law against any charity. Dean doesn't see it that way. "We are looking at that language. The order says enjoined from taking action against the plaintiff. It doesn't say we are enjoined from enforcing it" against orders, Dean said.

The decision may have an impact on the pending anti-regulation litigation in Pinellas County, Florida.

"This will be a good case to cite to the federal court in the Pinellas II litigation brought by a group of plaintiffs including American Charities for Reasonable Fundraising Regulation (ACRFR)," said Geoff Peters, pro-bono general counsel of ACRFR in Washington, D.C."Perhaps a few more victories like this for the nonprofit community and the local politicians will conclude that they should just enforce their laws against fraud and misrepresentation and not charge honest charities and their donors to support collecting and filing meaningless paperwork."

Said Peters, "In Nashville, they had apparently approved all but four applications of 1,661 in a five-year period, but they charged $50 or $100 per application. I'm not famillar with all of the facts but it doesn't appear any of the registrations led to a prosecution for fraud."