Mackinac Center Legal Foundation

Protecting Business Owners’ Right to Free Speech

On February 15, 2017, the Center filed a new case on behalf of David Gersenson against the Sleeping Bear Dunes Visitors Bureau and Steve Arwood, president of the Michigan Strategic Fund. As owner of Glen Arbor’s Lakeshore Inn and the Sylvan Inn Bed & Breakfast, Gersenson must currently pay the Visitors Bureau a 2 percent tax on each room he rents. The Visitors Bureau’s board of directors has recently voted unanimously to increase that 2% to 5% — an increase that would amount to roughly 20 percent of his net income.

The Issue

“I’ve been in business for over half my life. I’m 40 years old,” Gersenson said. “I’ve become a successful businessman. … I know what I’m doing in business.”

Gersenson said the arrangement infringes on him as a human being and as an American, and that he also disagrees with the bureaus’ procedures.

The United States Supreme Court has held that a person may not be forced to subsidize speech against his or her will, regardless of the message.

“An individual’s First Amendment rights are violated when they are forced to subsidize speech they disagree with,” said Senior Attorney Derk Wilcox. “Using the power of the government to force speech violates the right to free speech.”

The Sylvan Inn Bed and Breakfast

Courts have consistently found that governments may not grant independent entities like the Sleeping Bear Dunes Visitors Bureau the power to compel business owners to subsidize commercial speech unless their industry is effectively controlled by the government through massive regulation or subsidies. The suit alleges that the state law authorizing the bureau is unconstitutional for the same reason.

The case was filed in the State of Michigan Court of Claims and names the bureau and Steve Arwood — president of the Michigan Strategic Fund, which approves actions taken under the Community Convention or Tourism Marketing Act — as defendants. The suit seeks a declaration that the tax is unconstitutional, as well as nominal damages.

In 2016, the Mackinac Center filed a similar lawsuit on behalf of resort owner George Galbraith against Arwood and the Indian River Area Tourist Bureau. It dismissed the suit in the fall after he sold his property.