College in Georgia Sues for Right to Post Billboard in Tennessee

When the Tennessee Higher Education Commission contacted Berry College recently and demanded money, the president of the Georgia college, Stephen R. Briggs, was taken aback.

“We were kind of stunned,” he said. “You’ve gotta be kidding?”

At issue was a single billboard Berry had rented near Nashville that features a flattering view of the campus, the slogan “26,000 acres of opportunity,” and the college’s name and Web address.

The billboard doesn’t mention that the small private college is in Rome, Ga., about 200 miles down the interstate from Nashville. But the commission told Berry that, under Tennessee law, the out-of-state college needed to register as an educational institution in Tennessee—paying a hefty fee in the process—or face stiff fines.

Berry responded on Monday with a lawsuit filed in federal court against the Tennessee Higher Education Commission. The suit argues that the commission is infringing on the college’s First Amendment rights and violating the U.S. Constitution’s commerce clause. If the suit proceeds, it promises an interesting fight and possibly a precedent-setting decision.

Tennessee’s attempt to enforce registration on Berry derives from its argument that the presence of the billboard is equivalent to operating a physical campus in the state. “It’s not uncommon to define local advertising as operating” in the state among the “dozen or more” states with similar laws, according to Gregory Ferenbach, a lawyer with Dow Lohnes who advises colleges on state-authorization issues.

Berry College's billboard, which is still on display near Nashville.

Berry College’s billboard, which is still on display near Nashville.

A lawsuit arising from such a dispute is more rare. “Usually they don’t get that far,” Mr. Ferenbach said. “They work out a settlement, or the [attorney general] office backs off, and they tweak the regulation a little bit.” But Tennessee “has always taken kind of a hard line on this, they’ve always enforced it,” he added. The state’s registration fees are “very high,” he said, “and schools have complained about this a lot.”

A news release from Berry suggests that the college could be forced to pay up to $20,000 a year to register with Tennessee, or, alternately, to pay fines of $500 a day while the billboard remains up. President Briggs said that the commission would not give the college a registration-fee figure in writing. A spokeswoman at Berry confirmed that the college has not removed the billboard or paid any fines.

Representatives of the Tennessee Higher Education Commission did not immediately respond to requests for comment.

Mr. Briggs said Tennessee’s response to the billboard was an “arbitrary” reaction to competition from an out-of-state institution. In recent years, Tennessee has become the second-biggest contributor of new undergraduates to the Georgia college’s enrollment of about 2,000, he said. Last year Berry enrolled 164 Tennesseans, a new high and up from 69 Tennessee students a decade earlier.

“It’s been a growth area for us,” Mr. Briggs said. He added that while Berry doesn’t do much advertising—some in nearby Atlanta, some in Alabama—such appeals are “important for us, and we think it’s important in principle, so we’re willing to pursue [the suit].”

Mr. Ferenbach cautioned that he had yet to read the lawsuit’s documents, only news coverage of the dispute, but he said that Berry’s case appears to argue that Tennessee is restricting the college’s commercial speech. To prevail on that score, the state would have to show a “substantial state interest” in insisting on registration, Mr. Ferenbach said, “and in this case it would be protecting consumers,” namely students.

Another, more complicated part of Berry’s argument involves the accusation that Tennessee is violating the Constitution’s clause on the regulation of interstate commerce. That aspect of the case could hinge on whether or not Tennessee’s law—or its own interpretation of it—was discriminatory or placed an undue burden on interstate commerce. “It’d be very much a factual determination,” Mr. Ferenbach said.

“There hasn’t been much case law under the commerce clause over state authorization of higher education,” he added. “If this case proceeds, it will be an important precedent.”

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