Hate Speech

Delaware Government Refusing to Allow "Illegal Pete's" as Corporate Name

Seems like a pretty clear First Amendment violation, even if the name is viewed as an offensive reference to illegal aliens (which the corporate owners apparently don't intend).

|The Volokh Conspiracy |

Illegal Pete's is a Colorado-based Mexican restaurant chain; starting several years ago, the name has drawn controversy because some view it as an insulting reference to illegal aliens. (The restaurant owners disagree, and say the name was chosen "to convey the unique, countercultural atmosphere [the founder] wanted to foster" and was an homage to the founder's father, who was "a bit of a good-natured hell-raiser.")

The owners of Illegal Pete's wanted to make it a Delaware limited liability company, but the Delaware Secretary of State's office rejected the application, allegedly on the grounds that the name "has a negative connotation," and that

Title 8 [of the Delaware Code] permits this office to reject a filing if the use of a corporate name by a corporation "might cause harm to the interests of the public or the State as determined by the Division of Corporations in the Department of State". As it stands, the document will be rejected unless a modification is made to the name of the corporation in the certificate of conversation [sic] and in its certificate of incorporation.

Yesterday, Illegal Pete's sued the Secretary of State, arguing that the denial was unjustified by statute—which on its face applies only to names containing the word "bank"—and violates the Due Process Clause and the First Amendment.

And indeed, given the Supreme Court's decision in the Slants case (Matal v. Tam), the denial does violate the First Amendment. Matal holds that the government can't deny trademark registration to allegedly racially offensive marks. It follows that the government likewise can't deny certificates of incorporation (or LLC status) to business names that allegedly offensively refer to illegal aliens (or, for that matter, to marks that seem to praise illegal conduct, if that's the Secretary of State's objection).

The case reminds me of Kalman v. Cortes (E.D. Pa. 2010), which struck down a Pennsylvania ban on corporate names that contain "[w]ords that constitute blasphemy, profane cursing or swearing or that profane the Lord's name" (applied in that case to the name "I Choose Hell Productions"). But following Matal, the matter is even clearer.

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21 responses to “Delaware Government Refusing to Allow "Illegal Pete's" as Corporate Name

  1. provided, however, that this section shall not be construed to prevent the use of the word “bank,” or any variation thereof, in a context clearly not purporting to refer to a banking business or otherwise likely to mislead the public about the nature of the business of the corporation or to lead to a pattern and practice of abuse that might cause harm to the interests of the public or the State as determined by the Division of Corporations in the Department of State

    Even better, the section not only applies only to the word “bank”, but applies to exceptions to the prohibition of the word “bank” for non-banking companies.

    Did the State really think nobody was going to notice they have no legal authority here, as well as it being a blatant First Amendment problem?

    1. “Did the State really think nobody was going to notice they have no legal authority here, as well as it being a blatant First Amendment problem?”

      Yes

  2. If “Illegal Pete’s” necessarily refers to illegal immigration, will we next see the claim that “Legal Seafood” is a white supremacist dog whistle? People really need to get a life.

    1. Oh my G*d! I can’t eat there anymore!

  3. I think the case was wrongly decided, but I suspect they’ll argue that a corporate name is more like a license plate, and thus “government speech” that can be regulated under Sons of Confederate (or whatever it’s called).

    1. How can that be reconciled with Matal v. Tam? Whatever the line might be between license plate designs (Sons of Confederate Veterans) and trademarks (Matal), company names seem much closer to trademarks: They have long been chosen by private businesses (even if lightly policed by the state), and are likely to be seen as the businesses’ own speech, not the government’s.

      1. Ha, I didn’t say it would be a good argument, but if I was the lawyer tasked with defending this rule, that’s the one I’d go with. I guess my answer would be that a trademark is a name used to market one’s product, whereas an LLC itself is a government registration, while a DBA name (which can be different than the LLC name itself) is more akin to the trademark.

        1. Exactly. The company has already trademarked Illegal Pete’s and can use it as a business name , they just can’t put it on that government form. Their public speech isn’t burdened, only their speech to the government.

          1. Trademark is a noun, not a verb.

            Also, your argument undermines itself: their speech to the government. It’s **their** speech, not government speech. Unlike SCV (which I think was wrongly decided, but that’s a separate issue), for which you have to apply for a plate and ask the government to issue it, a business name is simply something you pick and then notify the government.

            1. David, everyone knows the verbification of trademark is modernly vernaculared.
              Any time you fill out a government form the government may impose content-based requirements on the information you provide, and reject the form (or worse) if you don’t meet those requirements, e.g. that a name you choose not already be in use for a similar purpose. If the restriction here doesn’t burden public speech at all, only the filling out of a form, is this form different from the others?
              The flip side of course is that the government interest to protect the public by regulating speech that nobody sees can’t be very compelling.

              1. My comment about trademark being a noun rather than a verb is not grammatical, but legal. One does not trademark marks. One uses them in certain ways (in commerce, as source identifiers) and they become trademarks. (Yes, I realize that most people using “trademark” as a verb are really referring to registering a trademark. But that’s affirmatively misleading because one need not register a mark for it to be a trademark.)

                1. All true, but now I’m afraid to tell you about all the patenting of inventions and copyrighting of books that is going on.

  4. “The case reminds me of Kalman v. Cortes (E.D. Pa. 2010). . .”

    Or, for the old timers, Sambo’s Restaurant v. City of Ann Arbor, 663 F.2d 686 (6th Cir. 1981) (holding that use of name “Sambo’s” was protected by the First Amendment).

  5. Interesting case. Maybe it’s time I incorporate my business “Illegal Massages, L.P.,” of which Illegal Services Corp. will be the general partner, for which a sister company Illegal Recruiting Services, LLC will provide staffing.

    Thank you Jesus for the First Amendment.

    1. Well, if you actually offer illegal massages, then you can be prosecuted for that. And indeed maybe your name will draw police attention to your business model. But if your corporation’s business is perfectly legal, then, no, there doesn’t seem to be any basis for the government to refuse to let you call the corporation “Illegal.” And I doubt that “Illegal Pete’s” specializes in illegal food, no?

  6. “The case reminds me of Kalman v. Cortes (E.D. Pa. 2010), which struck down a Pennsylvania ban on corporate names that contain “[w]ords that constitute blasphemy, profane cursing or swearing or that profane the Lord’s name” (applied in that case to the name “I Choose Hell Productions”).”

    Corporations are of the devil, anyway.

  7. He should just do with “ill eagle pete’s. Tell the government he sees himself as one sick bird!

      1. prices, princes, it’s the UK

  8. IP Holdings LLC, dba Illegal Pete’s. Problem solved.

  9. I wonder what Delaware would say about the Washington Redskins?

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