                     United States Court of Appeals,

                              Fifth Circuit.

                                  No. 93-3288.

            JOE CONTE TOYOTA, INC., Plaintiff-Appellant,

                                       v.

LOUISIANA MOTOR VEHICLE COMMISSION, et al., Defendants-Appellees.

                                  July 5, 1994.

Appeal from the United States District Court for the Eastern
District of Louisiana.

Before ALDISERT*, REYNALDO G. GARZA and DUHÉ, Circuit Judges.

     ALDISERT, Circuit Judge:

     This appeal by Joe Conte Toyota, Inc. from a district court

judgment dismissing its suit against members of the Louisiana Motor

Vehicle   Commission    requires      us    to   decide    whether     the   court

correctly   upheld    the   constitutionality       of     a   state   regulation

prohibiting any automobile advertisements which contain the term

"invoice" on the ground that the term is inherently misleading and,

therefore, beyond First Amendment protection.                    We uphold the

constitutionality      of   the    regulation     and     we   will    affirm   the

judgment.

     Jurisdiction was proper in the trial court based on 28 U.S.C.

§ 1331.     This court has jurisdiction under 28 U.S.C. § 1291.

Appeal was timely filed under Rule 4(a) of the Federal Rules of

Appellate Procedure.

                                       I.

     *
      Circuit Judge of the Third Circuit, sitting by designation.


                                        1
       Section 20 of the Rules and Regulations promulgated by the

Commission     prohibits     the   use    of     the    term      "invoice"   in    any

advertisement for the sale of a motor vehicle.                    La.Rev.Stat.Ann. §

32:1253(E).      The    regulations      permit        an   automobile     dealer    to

advertise the actual proposed selling price of a car or an amount

above or below the "Manufacturer's Suggested Retail Price," the

standardized price set by the industry for any model car with the

same equipment.        The asserted purpose of the regulation is to

eliminate misleading advertisements.

       Appellant proposed to run the following advertisement in a

local newspaper offering automobiles for sale:

       $49.00 OVER FACTORY INVOICE *

       The advertisement copy included a disclaimer:

       * Dealer invoice may not reflect actual dealer cost.

       Appellant proposed an alternate disclaimer stating:

       * Invoice price indicates amount dealer paid distributor for
            car.   Due to various factory rebates, holdbacks and
            incentives, actual dealer cost is lower than invoice
            price.

       Challenging Section 20 of the Rules and Regulations, Joe Conte

Toyota filed a complaint in the district court seeking to enjoin

the members of the Motor Vehicle Commission from abridging its

right to free speech and seeking a declaratory judgment that the

term    "invoice,"     as   used    in    the     proposed     advertisement,        is

constitutionally protected speech.

       In dismissing the complaint, the district court concluded that

the    term   "invoice"     as   used    in     this    context      was   inherently

misleading     and,    therefore,       not     entitled     to    First    Amendment

                                          2
protection.

     The   parties   agree   that    the   proposed   advertisement   is

commercial speech and that the Supreme Court has laid out a

blueprint for determining whether certain commercial speech is

entitled to First Amendment protection:

     In commercial speech cases, then, a four-part analysis has
     developed.   At the outset, we must determine whether the
     expression is protected by the First Amendment.            For
     commercial speech to come within that provision, it at least
     must concern lawful activity and not be misleading. Next, we
     ask whether the asserted governmental interest is substantial.
     If both inquires yield positive answers, we must determine
     whether the regulation directly advances the governmental
     interest asserted, and whether it is not more extensive than
     is necessary to serve that interest.

Central Hudson Gas & Elec. Corp. v. Public Serv. Comm'n of New

York, 447 U.S. 557, 566, 100 S.Ct. 2343, 2351, 65 L.Ed.2d 341

(1980).

     Appellant contends that the district court erred in finding

the term "invoice" inherently misleading and, consequently, that it

erred in not considering the remaining prongs of the commercial

speech test.   Had it conducted a full inquiry, Appellant contends,

the court would have concluded that a wholesale ban on the term

"invoice" was more extensive than necessary to serve the state's

substantial interest in protecting the public.

                                    II.

      In cases raising First Amendment issues, we must " "make an

independent examination of the whole record.' "       New York Times Co.

v. Sullivan, 376 U.S. 254, 285, 84 S.Ct. 710, 728-29, 11 L.Ed.2d

686 (1964) (quoting Edwards v. South Carolina, 372 U.S. 229, 235,

83 S.Ct. 680, 683, 9 L.Ed.2d 697 (1963)).             This examination

                                     3
includes an independent review of the trier of fact's findings in

support of that judgment.     See, e.g., N.A.A.C.P. v. Claiborne

Hardware Co., 458 U.S. 886, 102 S.Ct. 3409, 73 L.Ed.2d 1215 (1982).

Close scrutiny by a reviewing court of certain factual findings is

necessary "in cases involving restrictions on the freedom of speech

protected by the First Amendment, particularly in those cases in

which it is contended that the communication in issue is within one

of the few classes of "unprotected' speech."             Bose Corp. v.

Consumers Union of United States, Inc., 466 U.S. 485, 503, 104

S.Ct. 1949, 1961, 80 L.Ed.2d 502 (1984).       "Independent appellate

review of such facts assures that the suppression of protected

speech—particularly   unpopular    or    controversial   speech—is   not

insulated from close scrutiny by the straightforward application of

the clearly-erroneous rule.       The rule thus reflects a special

solicitude for claims that the protections afforded by the First

Amendment have been unduly abridged."      Planned Parenthood Ass'n v.

Chicago Transit Auth., 767 F.2d 1225, 1229 (7th Cir.1985).

                                  III.

     We first must ascertain what is meant by the term "misleading"

as used by the Court in Central Hudson.       We find initial guidance

in In re R.M.J., 455 U.S. 191, 203, 102 S.Ct. 929, 937, 71 L.Ed.2d

64 (1982), a commercial speech case in which the Court recognized

different gradations of misleading commercial speech and their

effect on the Central Hudson analysis:

     Truthful advertising related to lawful activities is entitled
     to the protections of the First Amendment.       But when the
     particular content or method of the advertising suggests that
     it is inherently misleading or when experience has proved that

                                   4
      in fact such advertising is subject to abuse, the States may
      impose appropriate restrictions. Misleading advertising may
      be prohibited entirely.    But the States may not place an
      absolute prohibition on certain types of potentially
      misleading information ... if the information also may be
      presented in a way that is not deceptive.

(emphasis added).

      The    Court    in    In    re   R.M.J.      suggested      that   "inherently"

misleading advertising may be banned outright, but "potentially"

misleading advertising may not.                 In attempting to understand the

distinction, we derive additional guidance from a later commercial

speech case, Peel v. Attorney Disciplinary Commission, 496 U.S. 91,

110 S.Ct. 2281, 110 L.Ed.2d 83 (1990).

      Although there was no majority opinion in Peel, the opinions

of several justices shed some light on the hierarchy of misleading

commercial speech.          Furthermore, the Court identified a third

category of misleading commercial speech, "actually misleading."

Id. (Stevens, J.).

      Justice Stevens, in an opinion joined by Justice Brennan,

Justice Blackmun and Justice Kennedy, suggested that commercial

speech     is    "actually"       misleading      when   there     is    evidence    of

deception.       Id. at 106, 110 S.Ct. at 1694.             Justice Marshall agreed

that a statement is "actually" misleading when the record contains

evidence that recipients of commercial speech "actually ha[ve] been

misled by the statement."           Id. at 112, 110 S.Ct. at 1697 (Marshall,

J. and Brennan, J., concurring).

      A statement is "inherently" misleading when, notwithstanding

a   lack    of   evidence    of    actual       deception    in   the    record,    "the

particular method by which the information is imparted to consumers

                                            5
is inherently conducive to deception and coercion." Id. (Marshall,

J. and Brennan, J., concurring).            Included is "commercial speech

that is devoid of intrinsic meaning."                 Id. (Marshall, J. and

Brennan, J., concurring).      In her dissent, Justice O'Connor added

that "inherently misleading" means "inherently likely to deceive

the public."      Id. at 121, 110 S.Ct. at 1702 (O'Connor, J.,

Rehnquist, C.J. and Scalia, J., dissenting).            Citing In re R.M.J.,

Justice    Marshall   noted   that    states    may   prohibit     actually   or

inherently misleading commercial speech entirely.             Id. at 111, 110

S.Ct. at 1697 (Marshall, J. and Brennan, J., concurring).

      From all of this we conclude that a statement is actually or

inherently misleading when it deceives or is inherently likely to

deceive.

                                      IV.

     Ample evidence in the record supports the conclusion that the

term "invoice" as used in the proposed advertisement at a minimum

is likely to deceive and is therefore inherently misleading.

     Joe Conte, the principal of the corporate Appellant, testified

that many consumers mistakenly believed that the difference between

invoice price and the sale price constituted the dealer's profit.

     Raymond    Brandt,   a   car    dealer    with   10   years   experience,

testified that "invoice" in relation to price has no fixed meaning

among car dealers and that "invoice" price varies over time and

from dealer to dealer.

     Arthur Tait, a car dealer since 1951, testified that "$49.00

over invoice" gives no information that the consumer can use in


                                       6
judging the price of a vehicle.

     Even where the consumer is shown a manufacturer invoice, a

sample invoice from Joe Conte Toyota shows no less than four

different "invoice prices":        "[A] base vehicle price at dealer's

cost of $14,190.00, a base vehicle price with accessories at

dealer's cost of $16,407.30, a total vehicle price with advertising

expense,   inland     freight    and   handling     at   dealer's   cost   of

$16,929.30, and a net dealer invoice amount of $16,860.00."            Brief

for Appellee at 11.

     In addition, we note that the main text of the proposed

advertisement used the term "factory invoice" and the disclaimer,

"dealer invoice."      Appellant's alternative disclaimer introduced

still another expression, the "amount dealer paid distributor."

Thus, in the proposed advertisement, the invoices and amounts are

attributed to three different sources—the dealer, the factory and

the distributor.    At best this is difficult for a reader to follow,

at worst it is unrelievedly confusing.

     The   district    court     concluded   that    Appellant's    proposed

advertisement "conveys no useful information to the consumer." Joe

Conte Toyota, Inc. v. Benson, No. 92-0993, 1993 WL 114507 at *1

(E.D.La. April 6, 1993).        It also found that:

     Due to holdbacks, incentives, and rebates, the invoice amount
     bears little relation to the dealer's true cost.       To the
     extent that the term "invoice" provides any information to the
     consumer, it is misleading; its use can only be intended to
     confuse the invoice amount with the dealer's actual cost.
     Plaintiff in effect concedes this when it offers to explain in
     its proposed ads that the term "invoice" does not mean what it
     appears to mean.

Id. The court concluded that, because use of the word "invoice" is

                                       7
"calculated to confuse the consumer," it is "inherently misleading

and   not    entitled     to    protection       under     the    First     Amendment.

Accordingly,     the    state    may     constitutionally         ban     its     use   by

plaintiff in plaintiff's advertising."                  Id. (footnote omitted).

                                          V.

      The    Supreme    Court    of    New     Jersey    is   currently      the    only

appellate court to address the constitutionality of a prohibition

of the term "invoice" in automobile advertising.                        The New Jersey

Court held     that     the    terms    "dealer    invoice"       and    "invoice"      in

automobile     advertisements          were    misleading        and     beyond    First

Amendment protection.          Barry v. Arrow Pontiac, Inc., 100 N.J. 57,

494 A.2d 804 (1985).          The Court held:

      [T]he term "dealer invoice" has no fixed, ascertainable
      meaning to the average consumer.... [T]he cost as advertised
      is not the ultimate cost of the automobile to the dealer. In
      the context of the sale of new automobiles, we find that the
      terms "cost," "inventory," and "invoice" are equally
      amorphous, and hence equally misleading to the public....

           [I]t is important that consumers be protected from
      misleading information.... Hence we conclude that the term
      "dealer invoice," ... comes within the scope and intendment of
      that regulation and the Act and that the advertising is
      misleading and deceptive to the consuming public.

           Inasmuch as we find the advertisement to be misleading,
      we hold that the regulation does not infringe upon
      [advertiser's] First Amendment right to engage in commercial
      speech.

Id. at 71-72, 494 A.2d 804.

      We are persuaded by the reasoning of the New Jersey Supreme

Court.1     We are satisfied that the proposed advertising copy with

      1
      Appellant attempts to distinguish Barry and argues that
"the advertisement at issue in Barry contained absolutely no
disclaimer or explanatory language. Here, Conte proposed clearly

                                          8
the suggested alternative disclaimers is inherently misleading.

     Because there is ample evidence on the record to support the

district   court's   finding   that       use   of   the   word   "invoice"   in

automobile advertisement is inherently misleading, its conclusion

that the commercial speech in question fell beyond First Amendment

protection was not in error.     Consequently, there was no need for

the court to consider the remaining prongs of the Central Hudson

test.

                                  VI.

     The judgment of the district court is AFFIRMED.




worded disclaimers." Brief for Appellant at 9. Not only is this
disclaimer argument of questionable relevance, but Appellant's
statement in its brief is not supported by the record in Barry.
As the dissent in a lower court decision noted, Barry v. Arrow
Pontiac, Inc., 193 N.J.Super. 613, 626, 475 A.2d 632 (1984)
(Botter, J., dissenting), and as the New Jersey Supreme Court
confirmed, Barry, 100 N.J. at 77, 494 A.2d 804 (Clifford, J. and
Stein, J., dissenting):

           It is advantageous for buyers to know at least the
           amount of the dealer's invoice price. If the fear is
           that they will not avail themselves of information in
           the public domain, namely, that dealer invoice price
           does not mean actual cost, a simple remedy can be
           supplied by tailoring the regulation to meet this need.
           It is worth repeating that the invoice in evidence
           contains this notice to prospective buyers.

     (emphasis added).

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