United States District Court, E. D. Wisconsin.

“ But here plaintiffs do not seek to enjoin the mere discriminatory enforcement of a valid regulation. Rather, in asking for a three-judge court they contend that the regulation must necessarily result in discriminatory enforcement, and they seek to enjoin all enforcement. Yet nothing on the face of the regulation indicates that it is more likely to result in discriminatory enforcement than any law. Enforcement of Ag 122 turns solely on whether a person has attempted to involve another in a chain distributor scheme. ”

“ The policy of protecting contracts against impairment presupposes the maintenance of a government by virtue of which contractual relations are worth while,-a government which retains adequate authority to secure the peace and good order of society. ”

“ THE FIRST AMENDMENT [1] The alleged First Amendment violation lies in prohibiting the mere "promotion" of a chain distributor scheme. Promotion alone, plaintiffs argue, may involve only speech. Consequently, the argument goes, the state may not restrict it without showing that it urges imminent lawless action of an extremely serious nature. ”

“ Section 122.03, the only prohibitive section, states that no person shall "promote, offer or grant participation in a chain distributor scheme." The words "promote, offer or grant participation in" indicate that the prohibition extends to any efforts to involve others in the scheme. The scheme itself is defined in § 122.02 (1) as "a sales device whereby a person, upon a condition that he make an investment, is granted a license or right to recruit for profit one or more additional persons who also are granted such license or right *** upon such condition." ”

“ Vagueness is not a wooden concept but a flexible one, based on a common sense evaluation of the notice given by a regulation and calling for consideration of the entire text, the subject matter dealt with, and the difficulty in being more precise. ”

“ The alleged constitutional defects in Ag 122 are that it violates freedom of speech, that it fails to give adequate notice of the conduct prohibited, that it constitutes an undue burden on interstate commerce, that it intrudes into an area pre-empted by the federal government, that it violates plaintiffs' right to work, that it impairs the obligation of contracts, that it bears no rational relation to a valid state purpose, and that it results in discriminatory enforcement. ”

“ That commercial activity takes the form of speech does not necessarily immunize it from regulation. [2] Just as solicitation of murder is regulable, though only speech is involved, so is the promotion of an unlawful commercial activity. In both cases the speech is inseparably related to the particular unlawful activity and not remotely related to the suggested purposes of the First Amendment. ”

“ To show that Ag 122 is not reasonably related to a valid state purpose, plaintiffs must overcome the presumption of the constitutionality which all regulations of commercial activity enjoy. Moreover, the ordinary presumption that the regulation bears a reasonable relation to the public interest is buttressed by the regulation's preamble, § 122.01, in which the Department set forth the facts which led it to believe that prohibiting chain distributor schemes would serve the public interest. ”

“ Many small investors lack commercial expertise and anticipate unrealistic profits through use of the chance to further perpetuate a chain of distributors, without regard to actual market conditions affecting further distribution and sale of the property purchased by them or its market acceptance by final users or consumers. Substantial economic losses to participating distributors have occurred and will inevitably occur by reason of their reliance on perpetuation of the chain distributor scheme as a source of profit. ”

“ A limitation as to the number of persons who may participate, or the presence of additional conditions affecting eligibility for the above license or right to recruit or the receipt of profits therefrom, does not change the identity of the scheme as a chain distributor scheme.
" (2) 'Investment' is any acquisition, for a consideration other than personal services, of personal property, tangible or intangible, for profit or business purposes, and includes, without limitation, franchises, business opportunities and services. ”

“ Though a state has wide-ranging authority under its police power to enact all laws furthering the interests of its citizens, it cannot enact laws which discriminate against or unduly burden interstate commerce. United States Constitution, Art. I, § 8. Plaintiffs cannot contend that Ag 122 discriminates against interstate commerce for by its terms it applied evenhandedly to all chain distributor schemes within the state, whether intrastate or interstate in character. ”

“ Methods of competition and trade practices. (1) Methods of competition in business and trade practices in business shall be fair. Unfair methods of competition in business and unfair trade practices in business are hereby prohibited. ”

“ The concern about the characteristics of products and investments is often more widespread than the concern about labor disputes; individuals will often better develop their capacity to govern themselves and influence their society by evaluating a sales pitch than by reading the crime-oriented magazines and comics granted protection in other cases. ”

“ Even if the expression of professional writers is considered noncommercial, despite the commercial purpose, on the ground that the gain arises from selling the expression itself rather than from using the expression to sell some other product, the expression of those, for example, who advertise to raise funds for a political purpose would still have to be considered commercial under the "primary purpose" test. ”

“ Ag 122.01 Unfair trade practice. The promotional use of a chain distributor scheme in connection with the solicitation of business investments from members of the public is an unfair trade practice under section 100.20, Wis.Stats. When so used the scheme serves as a lure to improvident and uneconomical investment. ”