Court finds craft brewer’s label protected by free speech, state regulation of label content unconstitutional (yes, it’s Flying Dog… again)
Flying Dog Brewery has long been known for its Ralph Steadman label artwork. Steadman partied with Hunter S. Thompson and some of that interaction is humorously detailed in several of Thompson’s essays. Some idiots find Steadman’s artwork disturbing and worse, some try to ban labels containing that art. Flying Dog has set precedent protecting free speech on this very issue: the 6th Circuit Court of Appeals took the State of Michigan to task in 2012 for attempting to prohibit sales stating that when Michigan’s ordinance attempting to regulated the content of beer labels was passed in 2009 no regulator in their right mind could have thought it was proper conduct to regulate this type of commercial speech:
“By the time the Administrative Commissioners banned Flying Dog’s beer label in 2009, the clear line of Supreme Court commercial speech precedents, coupled with our own decision in (an unrelated case) … should have placed any reasonable state liquor commissioner on notice that banning a beer label based on its content would violate the First Amendment …,”
You could channel Thompson here: “HOW LONG OH LORD, HOW LONG UNTIL STATE REGULATORS STOP TRYING TO RESTRICT LABEL CONTENT ON DECENCY, MORALITY, AND VULGARITY GROUNDS?”
The State of North Carolina didn’t get the memo. It’s not their fault, they’ve had a regulation placing content based restrictions regarding “bad taste” on the books since 1982 (their not alone, the Federal government and many states have similar content based restrictions relating to “decency” and “obscenity” – 27 CFR 7.103 anyone?).
The state of North Carolina’s administrative code, 14B N.C. Admin Code 15B.1003(a)(2), says:
14B NCAC 15B .1003 PROHIBITED STATEMENTS IN ADVERTISING OR ON LABELS
(a) General Restrictions. An advertisement or product label on any alcoholic product sold or distributed in this State shall not contain any statement, design, device, or representation that: …
(2) depicts the use of alcoholic beverages in a scene that is determined by the Commission to be undignified, immodest, or in bad taste…
In this case, the State of North Carolina sought to bar Flying Dog’s sales of its “Freezin’ Season Winter Ale” which has label art consisting “of a nude cartoon figure standing next to a campfire.” This is it:
In 2021, the craft brewer sent samples of beer labels and keg collars to North Carolina’s Alcoholic Beverage Control Commission for approval to sell those beers in the state. NC’s ABC responded saying that Freezin’ Season would not be approved:
“In response to plaintiff’s inquiry as to why, the employee cited the challenged regulation, highlighting the words “bad taste” in yellow and stating “[a]s you can see below the image below is seen as inappropriate to many here.”
The brewer filed a First Amendment challenge to the regulation that resulted in the opinion in Flying Dog Brewery, LLC. v. North Carolina Alcoholic Beverage Control Commission which you can read here. If you follow First Amendment alcohol decisions you can guess how the Court ruled.
1. The Court held the craft brewer’s label was commercial speech – although rejecting Flying Dog’s argument that artwork by Ralph Steadman should be considered non-commercial speech – the Court found that the label, viewed in its entirety is designed to advertise and sell beer, proposing a commercial transaction, and therefore, properly considered commercial speech noting that status as an advertisement isn’t entirely dispositive, the Court nonetheless found that the proper test was met:
The “mere fact that” something is an “advertisement clearly does not compel the conclusion that [it is] commercial speech.” Bolger, 463 U.S. at 66. “From Bolger, courts of appeals have gleaned ‘three factors to consider in deciding whether speech is commercial: (1) is the speech an advertisement; (2) does the speech refer to a specific product or service; and (3) does the speaker have an economic motivation for the speech.” Greater Baltimore Ctr. for Pregnancy Concerns, Inc. v. Mayor & City Council of Baltimore, 721 F.3d 264, 285 (4th Cir. 2013).
For those of you keeping score, note the Court’s citation and parenthetical use of a statement from the 6th Circuit case:
Flying Dog Brewery, LLLP v. Michigan Liquor Control Comm’n, 597 F. App’x 342, 354 (6th Cir. 2015) (“Rubin resolved any doubt that First Amendment commercial speech principles apply to the content of beer labels.”).
2. The Court found that the label review process and the regulations and statutory foundation for that process was not a prior restraint noting that the relevant Supreme Court precedent on such regulations allows states to preview advertising materials:
“Because traditional prior restraint principles do not fully apply to commercial speech, a State may require ‘a system of previewing advertising campaigns to insure that they will not defeat’ state restrictions.” Zauderer v. Off. of Disciplinary Couns. of Supreme Ct. of Ohio, 471 U.S. 626, 668 n.13, 105 S. Ct. 2265, 85 L. Ed. 2d 652, 17 Ohio B. 315 (1985) (quoting Central Hudson, 447 U.S. at 571 n.13).
3. The Court held that the regulation failed Central Hudson test, finding that it was undisputed that the beer label concerned lawful activity and was not misleading and reading the relevant question as whether the last two prongs of Central Hudson’s four prong test were met:
“The questions which remain then are whether (a) defendants have asserted a substantial government interest which is (b) directly advanced by the challenged regulation and whether (c) the regulation is more extensive than is necessary to serve the state’s interest.”
In ruling on these last two factors, the Court made some determinations that those proceeding with future challenges to state restrictions on alcohol advertising will find interesting.
First, the Court did not actually find that the substantial government interest was unfounded, but instead agreed with the reasoning from the Second Circuit’s Bad Frog Brewery decision that the proposed regulation did not actually accomplish the stated goal of reducing children’s exposure to vulgar and profane images without making such a finding:
In Bad Frog Brewery, the Second Circuit held that a similar regulation failed to directly advance the substantial government interest of protecting minors from vulgar and profane images. That court specifically addressed the same arguments made by defendants here — that the prohibition of distasteful and immodest beer labels would keep such labels from being seen by children. In rejecting that reasoning, the Bad Frog court held that such an “approach takes too narrow a view of the third criterion.” Bad Frog Brewery, 134 F.3d at 100. The Bad Frog court further relied on its conclusion that prohibiting vulgar and profane beer labels would not materially advance any state interest because it could not “realistically be expected to reduce children’s exposure to such displays to any significant degree.” Id. at 99.
The Bad Frog court’s conclusion is persuasive, especially where the labels at issue are present on alcoholic beverages, which children are prohibited from purchasing. Defendants’ argument that, absent the challenged regulation, children will be ambushed by vulgar and sexually explicit alcoholic beverage labels while “shopping for the necessities of life” with their parents rings somewhat hollow in this day and age. However, the Court agrees with plaintiff in this case that, whatever North Carolina’s interest is in protecting minors from vulgar and profane images, as is discussed more fully below, the challenged regulation sweeps far too broadly in attempting to further that interest. Accordingly, even assuming, without deciding, that the regulation satisfies the third prong of the Central Hudson test, it plainly fails on the fourth.
Second, as promised above, the Court went on to find that the regulation of the alcohol advertising was far too extensive – more extensive than necessary, recognizing recent precedent from Matal v. Tam:
Under the fourth prong of the Central Hudson analysis, “the party defending the regulation ‘must demonstrate narrow tailoring of the challenged regulation to the asserted interest—a fit that is not necessarily perfect, but reasonable; that represents not necessarily the single best disposition but one whose scope is in proportion to the interest served.'” Insley, 731 F.3d at 300 (quoting Greater New Orleans Broad. Ass’n, 527 U.S. at 188).
The fit here is far from reasonable. The regulation prohibits speech determined by the ABC Commission to be undignified, immodest, or in bad taste, and the range of material that could be determined to violate the regulation is vast. Defendants argue that the regulation is narrowly tailored to prevent alcohol labels which would ambush shoppers with “harmful vulgarity” [DE 34 p. 11] and is sufficiently flexible to “target certain vulgar words and images of a sexual, violent, or illegal nature”. [Id. p. 3]. But the regulation is not narrowly drawn to prohibit vulgar words or images of a sexual, violent, or illegal nature. It prohibits speech determined to be immodest, undignified, and in bad taste. These words and their common meanings, see [DE 38-2 pp. 6-13], cover a broad range of words and images which could include both explicit sexual images as well as images which are merely undignified, a term that is defined as “appearing foolish and unseemly” by Oxford Dictionaries online,2 and as lacking honor or esteem by Merriam Webster. [DE 38-2 p. 6]. But to satisfy the Central Husdon test, the regulation must “be no more extensive than necessary to serve [the stated] interest.” Rubin, 514 U.S. at 486.
Plaintiffs evidence demonstrating the inconsistency of the ABC Commission’s approval and rejections of alcoholic beverage labels as immodest, undignified, and in bad taste further supports that the regulation is not sufficiently tailored. See In re Brunetti, 877 F.3d 1330, 1353 (Fed. Cir. 2017). While defendants’ briefing raises concerns about sexually explicit content, none of the labels they identified as having been previously rejected as violating the challenged regulation contain sexually explicit depictions. Rather, they contain sexualized words, violent depictions, and swear words. See [DE 32 pp. 25 (“BeerGasm” label depicting clothed woman; 38 (“Columbian Necktie” label depicting violence); 48 (“The F Bomb” label depicting clothed paratrooper dropping beer bottles). However, defendants also approved labels containing sexual words, violent depictions, and swear words, as well as plaintiffs Freezin’ Season label which defendants contend depicts a human penis. See [DE 38-2 pp. 85 (“Eff 2020” label depicting two hands with only middle fingers raised); 91 (“Orgasm” label without image); 95 (“Ling Chi” label depicting violence).
Indeed, the Supreme Court has recently reaffirmed “the bedrock First Amendment principle [that] Speech may not be banned on the ground that it expresses ideas that offend.” Matal v. Tam, 137 S. Ct. 1744, 1751, 198 L. Ed. 2d 366 (2017). There, in considering a challenge to the Lanham Act’s disparagement clause, Justice Alito noted that, even assuming using the Central Hudson test was appropriate in the context of the Lanham Act, the disparagement clause was not narrowly tailored to achieve any substantial government interest. Id at 1764-65. Specifically, Justice Alito determined that when the government’s substantial interest is framed as “preventing speech expressing ideas that offend,” such an idea “strikes at the heart of the First Amendment.” Id. at 1764. Here, defendants have framed the state’s substantial interest more narrowly than simply preventing offensive speech, focusing instead on protecting “unwitting” minors. However, the Court is mindful that “the mere presumed presence of unwitting listeners or viewers does not serve automatically to justify curtailing all speech capable of giving offense.” Cohen v. California, 403 U.S. 15, 21, 91 S. Ct. 1780, 29 L. Ed. 2d 284 (1971). In any event, the Court need only determine the question presented in this case – whether the challenged regulation prohibiting alcoholic beverage labels determined to be immodest, undignified, or in bad taste is sufficiently tailored to achieve the state’s articulated interest. It simply is not.
Plaintiff raises both a facial and as-applied challenge to the regulation. To the extent that plaintiff’s as-applied challenge to the regulation was not mooted when defendants approved plaintiff’s Freezin’ Season Winter Ale label after the commencement of this action, defendants have failed to “justify the challenged regulation with regard to its impact on the plaintiff.” Insley, 731 F.3d at 298. A facial challenge requires a plaintiff to, among other things, demonstrate that the “law lacks any legitimate sweep” or that it is “overbroad because a substantial number of its applications are unconstitutional[.]” Id. n. 5 (quotations and citations omitted).
In the end, the Court found the overly broad nature of the state’s regulation censoring content dispositive and held the regulation facially unconstitutional. This is a big step as it means the regulation cannot be enforced against anyone and the many other labels – linked above as part of the appendix, that the state has rejected over the years based on that regulation should go through. (There is a note in the case that: “Since 1993, the ABC Commission has rendered administrative denials of 318 alcoholic beverage labels. Since 2009, 19 labels have been formally rejected as being undignified, immodest, or in bad taste”).
The holding even concludes with the beautiful language from Flying Dog’s Sixth Circuit opinion – holding that no regulator can claim lack of notice about the unconstitutionality of these types of content restrictive regulations and statutes:
Plaintiff has made a sufficient showing that the challenged regulation is facially unconstitutional because it is overbroad and otherwise not narrowly tailored to achieve North Carolina’s proffered substantial interest. While the ABC Commission may regulate alcoholic beverage labeling beyond the limits of the definition of obscenity, it must do so in a manner that comports with Central Hudson. See also Flying Dog Brewery, 597 F. App’x at 355 (Supreme Court, Sixth Circuit precedent and persuasive opinion in “Bad Frog Brewery  should have placed any reasonable state liquor commissioner on notice that banning a beer label based on its content would violate the First Amendment unless the Central Hudson test was satisfied.”).