ANNAPOLIS – The owners of a Rockville furniture store, fined when they advertised for a liquidation sale before moving across the street, will not have to pay due to a unanimous ruling Thursday from the Maryland Court of Appeals.
The Montgomery County code permits merchants to use the words “closing out,” “going out of business,” “liquidation” or any number of similar phrases only when they are actually going out of business.
Any business holding a closing out sale in the county must apply for a license and provide the dates of the sale and the store’s closing.
But the court called that section of the code an unconstitutional prior restraint over advertising that did not advance the county’s stated interest of protecting the public from deception.
In April 1995, Morton E. Jacobs and his wife, Anna Wheeler, decided to move the 15-year-old Jakanna Woodworks to a larger space so they would have more room to display their merchandise.
Unaware of the code, they advertised for a liquidation sale in the Montgomery Gazette.
In court records, the store owners said they wanted to sell their stock to minimize moving costs and damage to the furniture. They had no intention to mislead the public.
Shortly after they placed the advertisement, Jacobs received a citation from the county informing him that he could either pay a $500 fine or stand trial. He chose to stand trial.
Jacobs brought the case to Arthur Spitzer, legal director of the American Civil Liberties Union’s Washington, D.C., office. “He said, `What is this? I grew up in this country and they taught me I had freedom of speech,'” Spitzer recalled in an interview.
Spitzer brought the case to attorney James C. McKay, who agreed to help the store owners for free.
“It’s a restriction of free speech and a violation of the First Amendment,” McKay said of the code.
Although the judge reduced the fine to $100, the store owners lost in Montgomery County Circuit Court. The court found that the code did not violate First Amendment rights, instead calling it a way “to protect the public from deception.”
In their briefs for the appeal, lawyers for the store said the county never contested that all the information in the ad was true. “Perfectly legitimate advertisements have to go through hoops before they can go into the newspaper,” McKay said.
But according to Montgomery County’s response, “The deceptiveness of the advertisement is apparent on its face, which proclaims, in large print, that it is a `Public Notice’ of a `Furniture Liquidation.'”
Attorneys for the county contended that the language and style of the ad, particularly the word “public,” gave the impression of a sale conducted due to bankruptcy or foreclosure.
But the Court of Appeals ruled that the code infringes upon truthful commercial speech and is unconstitutional. The appeals court reversed the circuit court’s decision.
“The Director [of the county’s Office of Consumer Affairs] confirmed … that a citation was issued to [Jakanna Woodworks] solely because the word `liquidation’ appeared in its advertisement and not because she knew or suspected the advertisement was false or misleading,” wrote Judge Howard S. Chasanow in the opinion.
Even after the Court of Appeals’ ruling, Charles W. Thompson Jr., Montgomery’s county attorney, remained firm in his belief that the law helped consumers in his jurisdiction.
“What Montgomery County’s law attempted to do was protect the consumer before they were defrauded,” Thompson said. Thompson, pointing to the words, “Selling out to the bare walls. Nothing held back,” said after reading Jakanna Woodworks’ advertisement, consumers might think they were getting better bargains than they were. -30-