Supreme Court Ruling in FCC v. Fox Television Stations Undermines Vague Regulations at SEC, EEOC, and NLRB

In its ruling yesterday in FCC v. Fox Television Stations, the Supreme Court overturned the FCC’s finding that Fox Television was guilty of “indecency,” ruling that Fox wasn’t on notice that it could be held liable for “indecency” over isolated instances of vulgarity or nudity, because prior FCC policy punished only “deliberate and repetitive” instances. In doing so, the Justices made clear that the Constitution protects against vague laws, especially vague laws that regulate speech, even when those laws don’t contain any criminal penalties.  “When speech is involved,” the Court said, rules must be clear, and provide fair notice of what speech is prohibited, “to ensure that ambiguity does not chill protected speech.” That ruling has potentially broad ramifications for businesses subject to civil penalties under federal and state regulations — and for many federal and state agencies that regulate speech in the workplace (like the EEOC or the NLRB) or by businesses (such as the SEC, whose securities regulations restrict corporate communications and other speech with investors and the public).

Earlier, I discussed a vague and overly broad restriction on speech by hedge funds to investors, at this link.  That restriction, enforced by Massachusetts securities regulators, effectively gagged a hedge fund from making publicly available information that would have been useful to financial journalists, researchers and academics, and investors in companies that the hedge fund also invested in.  The Massachusetts Supreme Judicial Court upheld an extremely expansive application of that speech restriction in Bulldog Investors General Partnership v. Galvin. I explained earlier why that speech restriction was unconstitutionally overbroad and based on invalid pretextual rationalizations at this link.  The Supreme Court’s decision yesterday in the Fox Television case provides an additional constitutional argument against such vague rules, whose nebulous outer reaches can be traps for the unwary businessman.  (In the Bulldog Investors case, the hedge fund was fined $25,000 by Massachusetts state regulators, even though federal regulators charged with enforcing a similar rule were untroubled by the hedge fund’s perfectly legitimate speech, and even Massachusetts admitted that the speech was truthful and not misleading in any way).