Here’s why you couldn’t list the ABV content of your beer on the label before 1995, and how Coors and the First Amendment changed that.

Next week we’re going to be writing about the First Amendment, alcohol advertising, and some old and current cases that have shaped, and are looking to shape, some archaic, ill-conceived, and very much unfounded liquor advertising laws.

In the run-up to addressing the ongoing fights for boozy free expression, we thought it would be interesting to take a look back at how brewers, distillers, vintners, and even importers, have stood up for their rights and accomplished change in advertising and marketing restrictions where most people thought it futile.

So, we start with the 1995 Supreme Court case that gave you the right to put the ABV on your beer, despite an unfounded, non-scientifically assessed, and completely hooey theory that the government advanced at the time: that putting the alcohol content on a beer would lead brewers to compete in “strength wars” (that’s right, the best argument against providing consumers truthful information about the substance they were imbibing was that everyone would start making Tactical Nuclear Penguin). We’ve embedded the full opinion in Rubin v. Coors Brewing Company at the end of this post (for those of you as excited about the First Amendment and beer as we are, you can even find a link to listen to the oral argument in this case here).

Here’s what the case was about and what happened:

Section 205(e)(2) of the Federal Alcohol Administration Act states that beer labels can’t display alcohol content unless required by state law:

It shall be unlawful for any person engaged in business as a distiller, brewer, rectifier, blender, or other producer, or as an importer or wholesaler, of distilled spirits, wine, or malt beverages, or as a bottler, or warehouseman and bottler, of distilled spirits, directly or indirectly or through an affiliate:

…

(e)Labeling

To sell or ship or deliver for sale or shipment, or otherwise introduce in interstate or foreign commerce, or to receive therein, or to remove from customs custody for consumption, any distilled spirits, wine, or malt beverages in bottles, unless such products are bottled, packaged, and labeled in conformity with such regulations, to be prescribed by the Secretary of the Treasury, with respect to packaging, marking, branding, and labeling and size and fill of container … (2) as will provide the consumer with adequate information as to the identity and quality of the products, the alcoholic content thereof (except that statements of, or statements likely to be considered as statements of, alcoholic content of malt beverages are prohibited unless required by State law …

Coors Brewing Company applied to the TTB’s predecessor (the Bureau of Alcohol Tobacco and Firearms (“BATF”)) for approval of some proposed labels and advertisements that disclosed the alcohol content of its beer. The BATF rejected the application on the grounds that the federal alcohol Administration act prohibited disclosure of alcohol content of beer on labels or advertising.

Coors brought suit in the Federal District Court in Colorado seeking a declaratory judgment that those portions of the Federal Alcohol Administration Act violated the First Amendment. Coors also sought an injunction to keep the BATF from enforcing those provisions.

What did the government think of that? Well, we can’t make this stuff up, so we’ll just quote from the opinion:

The government took the position that the ban was necessary to suppress the threat of “Strength Wars” among brewers who, without regulation, would seek to compete in the marketplace based on the potency of their beer.

The District Court found for Coors on the issue of stating ABV on the label after an initial remand (it went up once on appeal and got sent back once by the appellate court before going up to the appellate court and then the Supreme Court), applying the proper test for advertising restrictions challenged under the First Amendment (this is important because it’s still the standard used and you’ll see it again and again in First Amendment commercial speech cases):

“For commercial speech to come within [the First Amendment], it at least must concern lawful activity and not be misleading. Next, we ask whether the asserted governmental interest is substantial. If both inquiries yield positive answers, we must determine whether the regulation directly advances the governmental interest asserted, and whether it is not more extensive than is necessary to serve that interest.” Central Hudson v. Public Serv. Comm’n, 447 U.S. 557 (1980).

Which is to say that the District Court, and then the Tenth Circuit Court of Appeals, both thought that after presenting its evidence, the government had failed to prove that the prohibition on stating the alcohol content of a beer on its label in any way prevented strength wars. Finding that there was no evidence of a relation between the publication of factual information regarding alcohol content and competition on the basis of such content.

The Supreme Court took the case to determine if the restriction in the FAA infringed on the brewer’s freedom of speech – and finding that it did, had this to say about the arguments made by the parties and their relative merits:

Characterizing the lower court decisions and the Government’s argument, it wrote:

Both the lower courts and the parties agree that respondent seeks to disclose only truthful, verifiable, and nonmisleading factual information about alcohol content on its beer labels. Thus, our analysis focuses on the substantiality of the interest behind § 205(e)(2) and on whether the labeling ban bears an acceptable fit with the Government’s goal. A careful consideration of these factors indicates that § 205(e)(2) violates the First Amendment’s protection of commercial speech.

…

the Government contends that § 205(e)(2) advances Congress’ goal of curbing “strength wars” by beer brewers who might seek to compete for customers on the basis of alcohol content. According to the Government, the FAAA’s restriction prevents a particular type of beer drinker-one who selects a beverage because of its high potency-from choosing beers solely for their alcohol content. In the Government’s view, restricting disclosure of information regarding a particular product characteristic will decrease the extent to which consumers will select the product on the basis of that characteristic.

The Court identified what the Government was required to prove under the law and discussed how the Government had gone about accomplishing that goal:

[T]he Government carries the burden of showing that the challenged regulation advances the Government’s interest “in a direct and material way.” That burden “is not satisfied by mere speculation or conjecture; rather, a governmental body seeking to sustain a restriction on commercial speech must demonstrate that the harms it recites are real and that its restriction will in fact alleviate them to a material degree.” … We cautioned that this requirement was critical; otherwise, “a State could with ease restrict commercial speech in the service of other objectives that could not themselves justify a burden on commercial expression.”

The Government attempts to meet its burden by pointing to current developments in the consumer market. It claims that beer producers are already competing and advertising on the basis of alcohol strength in the “malt liquor” segment of the beer market.3 The Government attempts to show that this competition threatens to spread to the rest of the market by directing our attention to respondent’s motives in bringing this litigation. Respondent allegedly suffers from consumer misperceptions that its beers contain less alcohol than other brands. According to the Government, once respondent gains relief from § 205(e)(2), it will use its labels to overcome this handicap.

Ultimately, the Court found the Government did not meet its burden of showing how the restriction in the FAA materially advanced its interests given the erratic and contravening nature of the restrictions in the FAA:

We conclude that § 205(e)(2) cannot directly and materially advance its asserted interest because of the overall irrationality of the Government’s regulatory scheme. While the laws governing labeling prohibit the disclosure of alcohol content unless required by state law, federal regulations apply a contrary policy to beer advertising. 27 U.S.C. § 205(f)(2); 27 CFR § 7.50 (1994). Like § 205(e)(2), these restrictions prohibit statements of alcohol content in advertising, but, unlike § 205(e)(2), they apply only in States that affirmatively prohibit such advertisements. As only 18 States at best prohibit disclosure of content in advertisements, App. to Brief for Respondent 1a-12a, brewers remain free to disclose alcohol content in advertisements, but not on labels, in much of the country. The failure to prohibit the disclosure of alcohol content in advertising, which would seem to constitute a more influential weapon in any strength war than labels, makes no rational sense if the Government’s true aim is to suppress strength wars.

Other provisions of the FAAA and its regulations similarly undermine § 205(e)(2)’s efforts to prevent strength wars. While § 205(e)(2) bans the disclosure of alcohol content on beer labels, it allows the exact opposite in the case of wines and spirits. Thus, distilled spirits may contain statements of alcohol content, 27 CFR § 5.37 (1994), and such disclosures are required for wines with more than 14 percent alcohol, 27 CFR § 4.36 (1994). If combating strength wars were the goal, we would assume that Congress would regulate disclosure of alcohol content for the strongest beverages as well as for the weakest ones. Further, the Government permits brewers to signal high alcohol content through use of the term “malt liquor.” Although the Secretary has proscribed the use of various colorful terms suggesting high alcohol levels, 27 CFR § 7.29(f) (1994), manufacturers still can distinguish a class of stronger malt beverages by identifying them as malt liquors. One would think that if the Government sought to suppress strength wars by prohibiting numerical disclosures of alcohol content, it also would preclude brewers from indicating higher alcohol beverages by using descriptive terms.

While we are mindful that respondent only appealed the constitutionality of § 205(e)(2), these exemptions and inconsistencies bring into question the purpose of the labeling ban. To be sure, the Government’s interest in combating strength wars remains a valid goal. But the irrationality of this unique and puzzling regulatory framework ensures that the labeling ban will fail to achieve that end. There is little chance that § 205(e)(2) can directly and materially advance its aim, while other provisions of the same Act directly undermine and counteract its effects.

The Court also noted that the findings of fact based on actual testimony in the District Court completely discredited the assertions of the Government – in essence, the story advanced had no scientific foundation and no credible support:

This conclusion explains the findings of the courts below. Both the District Court and the Court of Appeals found that the Government had failed to present any credible evidence showing that the disclosure of alcohol content would promote strength wars. In the District Court’s words, “none of the witnesses, none of the depositions that I have read, no credible evidence that I have heard, lead[s] me to believe that giving alcoholic content on labels will in any way promote … strength wars.” App. to Pet. for Cert. A-38. See also Bentsen, 2 F.3d, at 359. Indeed, the District Court concluded that “[p]rohibiting the alcoholic content disclosure of malt beverages on labels has little, if anything, to do with the type of advertising that promotes strength wars.” App. to Pet. for Cert. A-36.4 As the FAAA’s exceptions and regulations would have counteracted any effect the labeling ban had exerted, it is not surprising that the lower courts did not find any evidence that § 205(e)(2) had suppressed strength wars.

This is demonstrated even further by the fact that the Court took the Government to task for providing merely anecdotal evidence – characterizing this form of support as an educated guess:

The Government’s brief submits anecdotal evidence and educated guesses to suggest that competition on the basis of alcohol content is occurring today and that § 205(e)(2)’s ban has constrained strength wars that otherwise would burst out of control. These various tidbits, however, cannot overcome the irrationality of the regulatory scheme and the weight of the record. The Government did not offer any convincing evidence that the labeling ban has inhibited strength wars. Indeed, it could not, in light of the effect of the FAAA’s other provisions. The absence of strength wars over the past six decades may have resulted from any number of factors.

The Court also noted that the law wasn’t narrowly tailored as Coors had offered several options which would accomplish the same purported goals as the ban – avoiding a strength war – that did not involve restricting the brewery’s freedom of speech:

Even if § 205(e)(2) did meet the Edenfield standard, it would still not survive First Amendment scrutiny because the Government’s regulation of speech is not sufficiently tailored to its goal. The Government argues that a sufficient “fit” exists here because the labeling ban applies to only one product characteristic and because the ban does not prohibit all disclosures of alcohol content-it applies only to those involving labeling and advertising. In response, respondent suggests several alternatives, such as directly limiting the alcohol content of beers, prohibiting marketing efforts emphasizing high alcohol strength (which is apparently the policy in some other western nations), or limiting the labeling ban only to malt liquors, which is the segment of the market that allegedly is threatened with a strength war. We agree that the availability of these options, all of which could advance the Government’s asserted interest in a manner less intrusive to respondent’s First Amendment rights, indicates that § 205(e)(2) is more extensive than necessary.

Concluding the matter eloquently and briefly, the opinion held:

In sum, although the Government may have a substantial interest in suppressing strength wars in the beer market, the FAAA’s countervailing provisions prevent § 205(e)(2) from furthering that purpose in a direct and material fashion. The FAAA’s defects are further highlighted by the availability of alternatives that would prove less intrusive to the First Amendment’s protections for commercial speech. Because we find that § 205(e)(2) fails the Central Hudson test, we affirm the decision of the court below.

Note: – Central Hudson is still the test applied for challenged restrictions to speech labeled as “commercial” but you should check out Justice Stevens’ concurring opinion in this case to read a compelling argument for not differentiating “commercial” speech from other speech – especially when the content is “truthful” information like the ABV of a beer.

And that, dear reader, is how Coors Brewing fought for and won you the right to read on each beer you buy, what is potentially the most important piece of information on the entire label.

Skewering the Government’s arguments because they were based on unfounded Just-So-Stories, the kind of Just-So-Stories that today are still being utilized by the federal and state governments to justify a host of restrictions on content for commercially related speech regarding beer, wine and liquor – such as:

• restrictions on where and when Brewers can advertise,
• restrictions on the use of certain symbols seals crests, flags, insignias on labels and in advertising,
• the use of terms that the TTB may find disparaging, inappropriate, obscene,
• requiring or compelling speech such as adding a set number of retailers to particular advertisements; or
• limiting the type of information you can offer about retailers in your advertisements.

Over the next week we’ll be bringing you other historic cases that address some of these concerns as well as posting on currently pending cases that are challenging the status quo in an effort to bring common-sense and allow truth-in-advertising for alcoholic beverages.