December 01

1st Amendment Challenge to Discounted Alcohol Advertising Ban Finally Has Oral Argument

There are statutes and regulations in many states prohibiting different forms of advertising for beer wine and spirits.  Many of these alcohol advertising bans involve content specific restrictions on promotions of discounted alcohol or the manner in which different tiers of the industry are jointly involved in an advertisement, such as:

  • Barring wholesalers, wineries, distilleries or breweries from advertising sales at a single retailer as opposed to promoting two or more (worries about tied house favoritism?)
  • Barring media companies, radio stations, television stations and newspapers from running ads promoting bar specials or liquor store specials where alcohol is sold at a discount (the first rule of happy hour is don’t talk about happy hour?)
  • Barring retailers from promoting or advertising sales of alcohol at a discount to move aging stock, especially if the sale is at a level below the price the retailer paid for the alcohol from a wholesaler.

In general, many of these statutes were enacted or evolve from ideas of people who looked like this:

womens-temperance-union-alcohol-and-food-and-beverage-law-copy

And while they may be long since passed, their puritanical ideas and the desire to control how the rest of us behave, or what we read or are told, lives on in these types of paternalistic regulations that seek to control advertising content because some people have a problem with the product advertised.

In the recent trend of extending the protections afforded by Central Hudson Gas & Electric v. Public Services Commission of New York, and expand the reach of the first amendment to protect more forms of commercial speech, many of these regulations are falling to the good judgment of a judiciary that understands regulatory excess and the threat it imposes to civil liberties where paternalistic legislature seeks to limit the information available to the public simply because the legislature fears what the public may do with that information.

One of these suits is taking place in Missouri.  Missouri has some regulations and a statute that cover the examples listed above:

Missouri regulation 11 C.S.R. 70-2.240(5)(G) (the “Discount Advertising Prohibition Regulation”) prohibits any statement offering a coupon or discount as an inducement to purchase alcohol;

Missouri regulation 11 C.S.R. 70-2.240(5)(I) (the “Below Cost Advertising Prohibition Regulation”) prohibits any advertisement of alcohol at a price below the retailer’s actual cost; and

Missouri statute RSMo. § 311.070.4(10) (the “Single Retailer Advertising Prohibition Statute”) prohibits advertisements of alcohol by wholesalers and others referring to only one retail business or two affiliated retailers, and additionally prohibits the inclusion of the product’s retail price in any advertisement listing the names of retailers.

A broadcaster’s association, a retailer and a winery brought this case challenging the Missouri advertising bans.  The case is up on appeal right now from the District Court’s grant of a motion to dismiss after denying summary judgment in favor of the broadcasters, wineries and retailers that brought the challenge to Missouri’s statutes and regulations.  The Missouri district court that heard the case (here is the amended complaint) undertook consideration of the motion for summary judgment against these statutes.

In addition to commercial speech issues implicated in the content ban, the complaint also points out that in the internet age, there is inconsistent and unfair enforcement of these statutes and regulations citing to Groupon promotions and other online advertisements and offerings of third-parties alcohol discounts like this one which appear to not trigger the ire or enforcement of the statutes the same way that brick and mortar manufacturers, bars, retailers and broadcasters in Missouri do:

discount-alcohol-groupon-missouri

The challenge hasn’t succeeded though.  Both on the as applied rationale and with regard to the first amendment arguments.  After briefing on the matter, the district court denied the Plaintiff’s motion for summary judgment finding that the law was properly tailored to achieve a substantial interest (the ubiquitous “orderly marketplace”) and then revived the State’s motion to dismiss and dismissed the case the Broadcasters, Manufacturers and Retailers appealed.

One of the sad points to the entire justification was the considerable back-bending that took place in the district court’s judicial decision to allow the State’s “just-so” stories about the rationale for these laws to stand as support for their claimed purpose rather than requiring empirical proof that the laws accomplished those purposes:

The Court notes, however, that empirical evidence is not always necessary under the Central Hudson test. Instead, as noted by defendant, studies and anecdotes as well as history, consensus and “simple common sense,” have been used by the Supreme Court as the rationale for limiting speech. See Lorillard, 533 U.S. at 555. In a similar alcohol advertising case, the Fourth Circuit found a common sense link between advertising and demand by considering that it would be counterintuitive for sellers to spend money on advertisements that do not increase demand for the product. Educational Media Co. v. Swecker, 602 F.3d 583, 590 (4th Cir. 2010).

There won’t be much progress in overturning unconstitutional laws and regulations if scientific evidence isn’t required to establish that the objectives a state claims to be achieving with a regulation are being met with the regulation. This form of logic allows the state to self-certify its own evidence to say that anecdotes and “common sense” can stand in the place of rigorous empirical data – which is a great way to allow an oppressive regime to maintain its authority through burdensome legislation.

The appeal was finally full briefed and was argued on November 17.

You can listen to the oral argument in the case here.  You can also find the Appellant’s Brief, the Appellee’s Brief and the Reply Brief in these links.  We will post the appellate opinion when it finally gets issued, but the questions at oral argument imply that if this gets overturned, it will probably be sent back to the district court for a potential trial on the merits… in which case one wonders what evidence the state will be allowed to present to support its contentions.

In any event, there’s hope that the case continues to a full exploration of the justifications for these restrictions because it’s likely that these content based bans do not achieve the purposes of lessening binge drinking that the state asserts.