Tied-House Challenge To Allow Alcohol Advertising Payments to Retailers Has Oral Argument In Front of En Banc 9th Circuit – Here’s a Live Link!

Officially, you can view 9th Circuit oral arguments here the day after they occur.  But that’s really not good enough, is it.  So here is a Youtube Link to be able to watch the Courtroom Session as it occurs.  The arguments are set for 1:00 p.m. Pacific Time today.

In case you’ve had your head in the sand about what is shaping up to be the most-briefed issue in alcohol regulatory law since Granholm, the current case of Retail Digital Network, LLC, v. Director of Alcoholic Control Board, Applesmith (link to the prior opinion that is being re-heard today 13-56069)

A little background.

The case is a first amendment challenge against California’s tied-house laws restricting the content of advertising for alcoholic beverages by prohibiting manufacturers from directly or indirectly (through advertising companies) paying money to retailers.  The lawsuit was brought by RDN, a display company and middleman in the advertising industry:

RDN installs liquid crystal displays, or LCDs, in retail stores for advertisements and then enters into contracts with other parties who want to advertise their products on the displays. In exchange for placing a display in a retail store, RDN pays the store a percentage of the advertising fees generated by the display. RDN states that it has attempted to enter into contracts with manufacturers to advertise their alcoholic beverages on RDN’s displays in California. According to RDN, the manufacturers have refused due to concerns that the advertising would violate [California’s Tied House Rules prohibiting money to go from brewers, vintners and distillers, to advertising companies like RDN and then from RDN to retailers for the purpose of advertising in the stores].

That law – Cal Bus. Code 25503(f)-(h)  – forbids manufacturers and wholesalers of alcoholic beverages, including their agents, from providing retail establishments with anything of value for the privilege of advertising their alcoholic products.

At the district court, RDN lost its challenge based on a prior 9th Circuit case Actmedia Inc., v. Stroh, which upheld the tied house restrictions on advertising back in 1986.  But times change, and so should laws.  Since then, the U.S. Supreme Court has issued a few persuasive opinions peeling back commercial restrictions in advertising as violative of the first amendment; the most important being the 2011 decision in Sorrell v. IMS Health Inc. – applying heightened scrutiny to laws imposing content based restrictions on non-misleading commercial speech regarding lawful products.  That’s a different standard (a higher one) than Actmedia applied.

The 9th Circuit recognized this in its original opinion and remanded the case to the district court to have the district court apply the higher standard to the law to see if it passed muster.  Then the industry got involved.  Countless beverage groups, from manufacturers to distributors to retailers as well as advertisers requested that the 9th Circuit grant the a review by full court and they did (all the judges instead of just the 3 that originally heard it (which really just means 11 of the 28 or so at the 9th Circuit).  Today is the oral argument in the matter where the parties will present their cases verbally to the Judges.  The briefing is done.

Numerous industry trade groups have filed briefs in support of the various positions on both sides.  We will post a link to the oral argument and obviously, cover the opinion when it is issued by the full circuit.  This one could be headed to SCOTUS and is important because most states have similar restrictions that will be impacted by this decision.