Wine & Spirits Retailers, Inc. v. Rhode Island

United States Court of Appeals
For the First Circuit

No. 05-1549

WINE AND SPIRITS RETAILERS, INC. AND JOHN HARONIAN,

Plaintiffs, Appellants,

v.

STATE OF RHODE ISLAND ET AL.,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF RHODE ISLAND

[Hon. Ernest C. Torres, U.S. District Judge]

Before

Selya, Circuit Judge,
Hill,* Senior Circuit Judge,
and Lynch, Circuit Judge.

Evan T. Lawson, with whom Robert J. Roughsedge, Michael
Williams, and Lawson & Weitzen, LLP were on brief, for appellants.
Rebecca Tedford Partington, Deputy Chief, Civil Division,
Department of Attorney General, with whom Patrick C. Lynch,
Attorney General, was on brief, for state appellees.
Joseph S. Larisa, Jr., with whom Larisa Law and Consulting,
LLC was on brief, for intervenor-appellee.

August 10, 2005

*
Of the Eleventh Circuit, sitting by designation.
 SELYA, Circuit Judge. Rhode Island, like many states,

regulates the intrastate channels through which alcoholic beverages

may be manufactured, imported, and sold. One recently enacted

piece of this regulatory mosaic prevents any franchisor or

franchisee from holding a Class A retail liquor license. See R.I.

Gen. Laws § 3-5-11.1. Another piece, enacted at the same time,

amended a related statute, which prohibits any "chain store

organization" from holding such a license, id. § 3-5-11(a), so that

it explicitly encompasses package stores that engage in certain

coordinated business activities, see id. § 3-5-11(b).

Plaintiff Wine & Spirits Retailers, Inc. (W & S), a

franchisor of package stores, brought this action against the State

seeking, inter alia, to enjoin the enforcement of those new

enactments.1 W & S premised its suit on the thesis that the two

statutes, singly and in combination, violate (i) its First

Amendment rights to speech and association and (ii) its Fourteenth

Amendment right to equal protection.

In this early chapter of the litigation, W & S appeals

from the district court's denial of its motion for a preliminary

injunction. Having weighed the considerations relevant to the

1
Posturing this action as one brought by W & S against the
State is a harmless oversimplification. In fact, W & S's
principal, John Haronian, is also a plaintiff and Jeffrey J. Greer,
in his official capacity as associate director of Rhode Island's
Department of Business Regulation, is also a defendant. Because
their presence is essentially superfluous, we opt for simplicity
and proceed as if W & S and the State were the only parties.

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preliminary injunction balance, we conclude that the district court

did not abuse its discretion in determining that W & S failed to

show a likelihood of success on the merits of its claims and,

therefore, did not demonstrate an entitlement to preliminary

injunctive relief.

I. BACKGROUND

Under Rhode Island law, any individual or entity engaged

in the manufacture, sale, or importation of alcoholic beverages

must hold a valid license issued by the Department of Business

Regulation (DBR). See R.I. Gen. Laws § 3-5-1. A Class A retail

license entitles the holder to obtain alcoholic beverages from

licensed wholesalers and to operate a retail package store, from

which the beverages may be sold in sealed containers. See id.

§§ 3-7-1, 3-7-3. Since 1933, the State has prohibited chain store

organizations from holding Class A liquor licenses. See 1933 R.I.

Pub. Laws ch. 2013, § 6 (current version at R.I. Gen. Laws § 3-5-

11). This enactment gave the DBR full discretion to determine

whether an entity fell into the "chain store" category. Id.

The ingenuity of lawyers is nearly endless and, recently,

franchised package stores began to crop up throughout Rhode Island.

In an apparent effort to block this easy evasion of the chain store

prohibition, the Rhode Island General Assembly amended section 3-5-

11 to identify a set of licensee activities that would allow the

DBR to find that an entity was in fact a chain store organization.

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The new statute, enacted July 8, 2004 and effective April 1, 2005,

expanded the term "chain store organization" to encompass:

Any group of one or more holders of Class A
liquor licenses who engage in one or more of
the following practices with respect to the
business conducted under such licenses, either
directly or indirectly, or have any direct or
indirect beneficial interest in the following
practices:
(i) Common, group, centralized or coordinated
purchases of wholesale merchandise.
(ii) Common billing or utilization of the
services of the same person or the same entity
in the management or operation of more than
one liquor licensed business.
(iii) Participation in a coordinated or common
advertisement with one or more liquor licensed
business in any advertising media.
(iv) Coordinated or common planning or
implementation of marketing strategies.
(v) Participation in agreed upon or common
pricing of products.
(vi) Any term or name identified as a chain or
common entity.

R.I. Gen. Laws § 3-5-11(b)(1). By its terms, this statute

restricts a holder of a Class A liquor license from participating

in many business activities that are typical of a franchise

relationship.

Simultaneous with the enactment of section 3-5-11(b), the

General Assembly passed what is now section 3-5-11.1. This

provision has a similar but more direct effect: it explicitly

excludes franchisees from holding Class A liquor licenses. The

amended statute reads in pertinent part:

To promote the effective and reasonable
control and regulation of the Rhode Island
alcoholic beverage industry and to help the

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 consumer by protecting their choices and
ensuring equitable pricing. Class A liquor
license[s] authorized by this title shall not
be granted, issued, renewed or transferred to
or for the use of any liquor franchisor or
franchisee. Class A liquor license holders
are expressly prohibited from utilizing the
provisions of the Franchise Investor [sic]
Act, [R.I. Gen. Laws] § 19-28-1 et seq.

Id. § 3-5-11.1(a). The latter statute also nullifies all franchise

agreements involving the retail sale of alcoholic beverages, id.

§ 3-5-11.1(b); stipulates that any franchisor or franchisee who is

a party to such an agreement must terminate it within thirty days

of the statute's effective date, id. § 3-5-11.1©); and empowers the

DBR to fine violators (including franchisors) and to revoke or

suspend a transgressor's liquor license and/or franchise

registration, id. § 3-5-11.1(d).

At the time these bills were passed, W & S had been

operating for roughly seven years as a franchisor of independently

owned Class A liquor retailers. It had a portfolio of eleven

franchise agreements in Rhode Island, all of which were registered

under the Franchise Investment Act, R.I. Gen. Laws §§ 19-28.1-1 to

19-28.1-34. These franchisees conducted business under names owned

by W & S (seven under the name "Douglas Wine & Spirits" and four

under the name "People's Liquor Warehouse").

In general, W & S's franchise agreements provided that,

for an annual fee, royalties, a commitment to maintain certain

quality standards, and a pledge to pay into a joint advertising and

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promotion fund, the franchisee would receive an exclusive franchise

territory. The franchisee also would receive the right to use

either the Douglas or People's trade name and other proprietary

marks, and would be given access to a compendium of marketing,

advertising, training, accounting, purchasing, and consulting

services. Additionally, the franchise agreements authorized W & S

to require the franchisees to carry certain products, to designate

vendors for those items, and to dictate the layout of each retail

store (including product placement).

In July of 2004 (when sections 3-5-11(b) and 3-5-11.1

were enacted), W & S was negotiating with two more potential Rhode

Island franchisees. Recognizing the relevance of the new statutes

to its operation, W & S wrote to the DBR on August 12, 2004, asking

whether it would be permissible to register those two new

franchises prior to the statutes' effective date. The DBR

responded on September 1, 2004, explaining that W & S would have to

submit applications in order for any new franchise registrations to

be considered. The DBR's letter left no doubt that this would be

an exercise in futility; the epistle declared the DBR's position to

be "that as of April 1, 2005, all store franchise agreements as of

that time will become null and void and it [thereafter] will be

illegal for a Class A package store to operate under a franchise

agreement."

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II. TRAVEL OF THE CASE

With the death knell set to toll, W & S filed this action

on September 29, 2004. Its complaint set forth eight statements of

claim. On January 18, 2005, W & S moved to enjoin enforcement of

the challenged provisions throughout the currency of the

litigation. In the motion for preliminary injunctive relief, it

relied on only three of its eight claims: (i) that sections 3-5-11

and 3-5-11.1 prohibit it from engaging in expression protected by

the First Amendment; (ii) that the laws violate its First Amendment

right to association; and (iii) that the laws violate the Equal

Protection Clause of the Fourteenth Amendment by treating it

differently from others who are similarly situated. The State

opposed the motion. The United Independent Liquor Retailers of

Rhode Island (UILRRI), an association of Class A licensees that had

lobbied for passage of the challenged laws, successfully moved to

intervene as a party defendant and sided with the State.

Following a hearing, the district court denied the

request for a preliminary injunction, principally on the ground

that W & S had not demonstrated a likelihood of success on the

merits. See Wine & Spirits Retailers, Inc. v. Rhode Island, 364 F.

Supp. 2d 172, 176-83 (D.R.I. 2005). W & S filed a timely notice of

appeal. See Fed. R. App. P. 4(a); 28 U.S.C. § 1292(a)(1). We

granted expedited review.

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 In the meantime, the district court had granted an

injunction pending appeal, see Fed. R. Civ. P. 62©), to prevent the

State "from enforcing R.I. Gen. Laws § 3-5-11 to the extent that

the enforcement action is based solely on a Class A licensee's use

of a name similar to or the same as that of another licensee."

Wine & Spirits Retailers, Inc. v. Rhode Island, No. 04-418 (D.R.I.

April 29, 2005) (unpublished order). At W & S's request, we

extended that injunction to the date of the issuance of our mandate

but, like the lower court, denied other requested relief. See Wine

& Spirits Retailers, Inc. v. Rhode Island, No. 05-1549 (1st Cir.

May 23, 2005) (unpublished order); see also Fed. R. App. P.

8(a)(2). We heard oral argument on June 7, 2005 and took the

matter under advisement. We now affirm.

III. JUSTICIABILITY

W & S maintains that the district court wrongfully denied

its request for a preliminary injunction against the enforcement of

sections 3-5-11 and 3-5-11.1. Both the State and UILRRI assert

that W & S lacks Article III standing to challenge those laws.

It is axiomatic that Article III standing is a

constitutional precondition to a federal court's power to

adjudicate a case. Osediacz v. City of Cranston, ___ F.3d ___, ___

(1st Cir. 2005) [No. 04-2673, slip op. at 2]; R.I. Ass'n of

Realtors, Inc. v. Whitehouse, 199 F.3d 26, 30 (1st Cir. 1999).

When standing is put in issue, a reviewing court is warranted in

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confirming its existence before proceeding to tackle the merits of

the case. We do so here.

The burden of establishing standing lies with the party

invoking federal jurisdiction. Osediacz, ___ F.3d at ___ [slip op.

at 3]. Accordingly, W & S "must show that (1) it personally has

suffered some actual or threatened injury, (2) the injury fairly

can be traced to the challenged conduct, and (3) a favorable

decision likely will redress [the injury]." R.I. Ass'n of

Realtors, 199 F.3d at 30.

W & S easily satisfies these requirements with respect to

section 3-5-11.1. After all, it alleges that section 3-5-11.1's

prohibition on liquor franchises nullifies its franchise agreements

with no fewer than eleven franchisees and subjects it, as a

franchisor, to monetary penalties should it attempt to maintain its

franchise relationships. See R.I. Gen. Laws § 3-5-11.1(b), (d).

Those imminent consequences satisfy the requirement of an injury in

fact. That injury, in turn, is fairly traceable to the statute and

redressable in a federal court proceeding. Consequently, W & S has

standing to press its constitutional claims insofar as those claims

implicate section 3-5-11.1.

With respect to section 3-5-11, the defendants' cardinal

contention is that W & S cannot meet the standing requirement

because it does not itself hold a Class A liquor license and,

therefore, is not subject to any enforcement action or penalty

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under the statute's terms. This contention has a patina of

plausibility. Section 3-5-11 does not carry any direct penalties

applicable to franchisors but, rather, applies directly to holders

of Class A liquor licenses. Thus, it cannot be enforced against a

franchisor, like W & S, which does not itself possess such a

license.

In the end, however, this statutory configuration does

not undermine the allegation that W & S has suffered an injury that

is fairly traceable to the statute. That allegation draws its

essence from W & S's claim that section 3-5-11, by restricting the

holders of Class A liquor licenses from engaging in certain

business activities vital to franchise arrangements, infringes on

a franchisor's First Amendment rights of speech and association and

thereby causes W & S economic harm. No more is exigible to clear

the standing hurdle.

The requirement that an alleged injury be fairly

traceable to the defendant's action does not mean that the

defendant's action must be the final link in the chain of events

leading up to the alleged harm. See Bennett v. Spear, 520 U.S.

154, 168-69 (1997). Nor does that requirement exclude injuries

produced by "coercive effect upon the action of someone else." Id.

at 169. Given these principles, the fact that the deleterious

effect of a statute is indirect will not by itself defeat standing.

See Becker v. FEC, 230 F.3d 381, 387 (1st Cir. 2000); see also

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Eulitt v. Me. Dep't of Educ., 386 F.3d 344, 353 (1st Cir. 2004)

(holding that parents had sufficiently alleged an Article III

injury even though "it [was] the educational institution, not the

parent[s]," that was denied access to certain tuition payments

under the challenged statute); Houlton Citizens' Coalition v. Town

of Houlton, 175 F.3d 178, 183 (1st Cir. 1999) (finding that trash

hauler had standing to assert a constitutional challenge to an

ordinance mandating residents' use of a town-designated

competitor); Wash. Legal Found. v. Mass. Bar Found., 993 F.2d 962,

972 (1st Cir. 1993) (finding that client had standing based on

alleged injury to her constitutional rights that was fairly

traceable to a rule, enforceable only against attorneys, that

required them to place client funds in a pooled interest-bearing

account).

These precedents are determinative here. Section 3-5-

11(b)(1) has an obviously coercive effect on W & S's franchisees;

under its terms, those franchisees either must desist from engaging

in certain collective business activities with W & S or forfeit

their Class A liquor licenses. Either way, W & S's business

relationship with the franchisees, which it claims to be

constitutionally protected, is damaged.2 Consequently, the

2
There is no suggestion here that any of W & S's franchisees
plan to terminate the franchise relationships for reasons unrelated
to the threatened enforcement of the new statutory provisions.
Therefore, this is not a case in which "the injury complained of is
'th[e] result [of] the independent action of some third party not

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economic harm that W & S alleges is fairly traceable to the statute

(and, thus, to the State).

To cinch matters, the threat to the franchisees is both

actual and imminent. It is undisputed that the DBR has taken

preliminary steps to enforce the statute against non-compliant

holders of Class A liquor licenses and has warned that it will

undertake such enforcement from and after the statute's effective

date. That is enough to show that the threatened harm is imminent.

See, e.g., Aroostook Band of Micmacs v. Ryan, 404 F.3d 48, 65-66

(1st Cir. 2005); Montalvo-Huertas v. Rivera-Cruz, 885 F.2d 971, 976

(1st Cir. 1989); see also Berner v. Delahanty, 129 F.3d 20, 24 (1st

Cir. 1997) (noting that to ground a claim of standing, harm must be

actual or imminent rather than conjectural or speculative).

Granting the requested declaratory and injunctive relief plainly

would palliate this threatened harm.

To say more on this point would be to paint the lily.

For the reasons elucidated above, we conclude, without serious

question, that W & S has alleged an injury fairly traceable to each

of the challenged statutes and redressable by the federal courts.

Accordingly, it has standing to pursue the claims that it asserts.

before the court.'" Bennett, 520 U.S. at 169 (alterations and
emphasis in original) (quoting Lujan v. Defenders of Wildlife, 504
U.S. 555, 560-61 (1992)).

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IV. THE PRELIMINARY INJUNCTION STANDARD

We turn next to the legal standards that apply to the

grant or denial of preliminary injunctions. A district court must

weigh four factors in determining whether to issue a preliminary

injunction:

(1) the likelihood of success on the merits;
(2) the potential for irreparable harm [to the
movant] if the injunction is denied; (3) the
balance of relevant impositions, i.e., the
hardship to the nonmovant if enjoined as
contrasted with the hardship to the movant if
no injunction issues; and (4) the effect (if
any) of the court's ruling on the public
interest.

Bl(a)ck Tea Soc'y v. City of Boston, 378 F.3d 8, 11 (1st Cir. 2004)

(citing Ross-Simons of Warwick, Inc. v. Baccarat, Inc., 102 F.3d

12, 15 (1st Cir. 1996)). "The sine qua non of this four-part

inquiry is likelihood of success on the merits: if the moving

party cannot demonstrate that he is likely to succeed in his quest,

the remaining factors become matters of idle curiosity." New Comm

Wireless Servs., Inc. v. SprintCom, Inc., 287 F.3d 1, 9 (1st Cir.

2002).

This court reviews the grant or denial of a preliminary

injunction for abuse of discretion. Bl(a)ck Tea Soc'y, 378 F.3d at

11; Ross-Simons, 102 F.3d at 16. Under that rubric, findings of

fact are reviewed for clear error and issues of law are reviewed de

novo. Air Line Pilots Ass'n, Int'l. v. Guilford Transp. Indus.,

Inc., 399 F.3d 89, 95 (1st Cir. 2005); New Comm Wireless Servs.,

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287 F.3d at 9. Judgment calls and issues that demand the balancing

of conflicting factors are reviewed deferentially. Bl(a)ck Tea

Soc'y, 378 F.3d at 11. In the last analysis, then, we will set

aside a district court's ruling on a preliminary injunction motion

only if the court clearly erred in assessing the facts,

misapprehended the applicable legal principles, or otherwise is

shown to have abused its discretion. McGuire v. Reilly, 260 F.3d

36, 42 (1st Cir. 2001).

V. THE FIRST AMENDMENT CHALLENGE

W & S asserts that sections 3-5-11 and 3-5-11.1 impair

its First Amendment rights to free speech and expressive

association by (i) constricting its ability to peddle marketing and

management advice, advertising services, and trade name protection

to holders of Class A liquor licenses and (ii) making it unlawful

to engage in a franchise relationship with those license holders.

We consider these assertions separately.

A. The Free Speech Claim.

The Free Speech Clause provides that "Congress shall make

no law . . . abridging the freedom of speech." U.S. Const. amend.

I. By incorporation through the Fourteenth Amendment, this

prohibition applies to states and their political subdivisions.

Knights of Columbus v. Town of Lexington, 272 F.3d 25, 30 (1st Cir.

2001).

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 In this case, W & S directs its free speech claim to

section 3-5-11(b)(1). It asseverates that various provisions of

that section adversely affect its ability to sell business advice

(sub-paragraphs (i), (ii), (iv), and (v)), advertising design and

placement services (sub-paragraph (iii)), and trade name rights

(sub-paragraph (vi)) to the holders of Class A liquor licenses.

Thus, the law unduly infringes on W & S's right to communicate with

the license holders. We examine this asseveration.

As an initial matter, we assess each of the activities

identified by W & S in light of its allegation that section 3-5-

11(b)(1) operates to prohibit or unduly curtail the activity. We

then consider the contention that the activity constitutes

protected speech or expressive conduct.

1. Business Advice. W & S maintains that the provision

of business advice for a fee is speech protected by the First

Amendment. The advice in question takes the form of a marketing

and management plan (including recommendations about purchasing and

pricing). The Supreme Court has recognized that some profit-

directed speech, such as legal or medical advice, is entitled to

constitutional protection. See Bd. of Trs. of State Univ. of N.Y.

v. Fox, 492 U.S. 469, 482 (1989). Here, however, we need not

determine whether and to what extent the business advice offered by

W & S to Class A license holders fits within this taxonomy. The

plain, hard fact is that section 3-5-11(b)(1) simply does not

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prohibit the communication of advice between a franchisor and the

holders of Class A liquor licenses.

To begin, nothing in the statute prevents W & S from

selling or otherwise communicating its recipe for the operation of

a successful package store to a Class A license holder. Nor does

the statute forbid a license holder from purchasing or receiving

that information. While the statute prevents certain conduct — the

implementation of W & S's business model — that prohibition imposes

no legally cognizable burden on the exchange of information between

the speaker (W & S) and the invited audience (the holders of Class

A liquor licenses).

Stripped of rhetorical flourishes, W & S's real complaint

is that section 3-5-11(b)(1) will have the incidental effect of

suppressing or eliminating the market demand for the particular

type of business advice that W & S offers (that is, marketing and

management strategies whose successful implementation requires the

coordination of business activities with those of other market

players). That circumstance does not suffice to hoist the red flag

of constitutional breach: the First Amendment does not guarantee

that speech will be profitable to the speaker3 or desirable to its

3
A case like this one, in which the statute imposes no burden
on the communication between the speaker and the intended audience
but has the effect of decreasing the audience's demand for a
particular kind of business advice, is distinguishable from cases
dealing with the State's direct imposition of financial burdens on
the dissemination of particular kinds of speech. See, e.g., Simon
& Schuster, Inc. v. Members of N.Y. State Crime Victims Bd., 502

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intended audience. See AMSAT Cable Ltd. v. Cablevision of Conn.

Ltd. P'ship, 6 F.3d 867, 871 (2d Cir. 1993); see also Young v. Am.

Mini Theatres, Inc., 427 U.S. 50, 78 (1976) (Powell, J.,

concurring) (noting that "[t]he inquiry for First Amendment

purposes is not concerned with economic impact; rather, it looks

only to the effect of [the challenged] ordinance upon freedom of

expression").

By the same token, the First Amendment does not safeguard

against changes in commercial regulation that render previously

profitable information valueless. That is a commonplace occurrence

in today's fast-moving world (an example would be the closing of a

tax loophole that renders a previously profitable tax shelter

worthless). The First Amendment's core concern is with the free

transmission of a message or idea from speaker to listener, not

with the speaker's ability to turn a profit or with the listener's

ability to act upon the communication.

That ends this aspect of the matter. Because section 3-

5-11(b)(1), on its face, imposes no burden on the ability of a

business advisor to relay marketing and management advice to

U.S. 105, 115-18, 123 (1991) (invalidating law requiring publisher
to place convicted criminals' income derived from publications
about their crimes into escrow for victim compensation);
Minneapolis Star & Tribune Co. v. Minn. Comm'r of Rev., 460 U.S.
575, 581-83 (1983) (finding that tax on paper and ink products
consumed in newspaper production imposed an unconstitutional burden
on freedom of the press). In such cases, the government, not
waning market demand, was directly responsible for the financial
disincentive to speak.

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holders of Class A liquor licenses, W & S is unlikely to succeed on

this facet of its First Amendment claim.

2. Advertising Services and Trade Names. W & S

suggests that section 3-5-11(b)(1)(iii)'s proscription on the

ability of the holders of Class A liquor licenses to participate

jointly "in a coordinated or common advertisement" and section 3-5-

11(b)(1)(vi)'s prohibition on a license holder's use of "[a]ny term

or name identified as a chain or common entity" constitute undue

restraints on commercial speech. We take no view on that

suggestion for two reasons: first, it would require us to examine

the commercial speech rights of Class A licensees — none of whom

are before this court — and second, W & S has not established any

basis upon which it can assert those rights on behalf of third

parties (including its franchisees). The only question properly

before us is narrower: whether the joint advertising and common

naming restrictions infringe on any speech or expressive conduct of

W & S that is protected by the First Amendment. We answer that

question in the negative.

Let us be perfectly clear. We agree with W & S's

underlying premise that commercial speech, including truthful

liquor advertising, is entitled to a measure of protection under

the First Amendment. See 44 Liquormart, Inc. v. Rhode Island, 517

U.S. 484, 501, 516 (1996); Cent. Hudson Gas & Elec. Corp. v. Pub.

Serv. Comm'n, 447 U.S. 557, 566 (1980); Va. State Bd. of Pharmacy

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v. Va. Citizens Consumer Council, Inc., 425 U.S. 748, 770 (1976).

We nonetheless reject W & S's suggestion because, in performing its

role in the activities in question, it does not engage in

commercial speech.

The activities that W & S claims to be protected as

commercial speech are its provision of advertising services,

including designing advertisements, arranging for their placement

in various media, and licensing the common use of trade names that,

according to W & S, have become synonymous with quality and value.

See Appellants' Br. at 5, 8; see also Wine & Spirits, 364 F. Supp.

2d at 177. The commercial speech doctrine protects the

communication of truthful information to potential customers about

a proposed commercial transaction. See Fox, 492 U.S. at 482; Cent.

Hudson, 447 U.S. at 561-63. W & S's assertions do not amount to a

claim that the joint advertising and common naming restrictions

impede its right to communicate with its potential customers,

rather, the claim is that those restrictions interfere with a right

to provide certain services. The provision of advertising and

licensing services is not speech that proposes a commercial

transaction and therefore does not constitute commercial speech.

See Fox 492 U.S. at 482 (distinguishing between the proposal of a

commercial transaction, "which is what defines commercial speech,"

and the provision of certain services for a profit, which is not

commercial speech).

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 Nor do these activities — W & S's creation of

advertisements, assistance in their placement, and facilitation of

the use of its trade names by franchisees — fall into the broader

category of expressive activity in which conduct itself can be said

to convey a particularized message and, thus, be entitled to

protection as symbolic speech. See United States v. O'Brien, 391

U.S. 367, 376-77 (1968); see generally Hurley v. Irish-Am. Gay,

Lesbian & Bisexual Group, 515 U.S. 557, 569-70 (1995) (discussing

instances in which the Supreme Court has found conduct to be

inherently communicative). It is the duty of the party seeking to

engage in allegedly expressive conduct to demonstrate that the

First Amendment applies to that conduct. Clark v. Cmty. for

Creative Non-Violence, 468 U.S. 288, 293 n.5 (1984). W & S has

offered no plausible argument as to why the provision of

advertising services is an inherently expressive activity.

Of course, W & S also complains that the advertising and

common naming restrictions infringe on the franchisees' rights

jointly to propose retail liquor sales through newspaper

advertisements and the like. Though loudly bruited, that complaint

lacks force because W & S has not established standing to pursue

it.

A party ordinarily has no standing to assert the First

Amendment rights of third parties. See Eulitt, 386 F.3d at 351.

While there is an isthmian exception that applies when some barrier

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or practical obstacle deters a third party from asserting its

rights, see, e.g., Powers v. Ohio, 499 U.S. 400, 414-15 (1991)

(allowing criminal defendant to assert rights of jurors because

they lack financial incentive to undertake the burden of

litigation), nothing in the record indicates that W & S's

franchisees are unable or unlikely to protect their own rights.

In some circumstances, out of concern that an overly

broad statute might chill constitutionally protected speech, the

Supreme Court has relaxed the prudential limitations on third-party

standing to permit a litigant to pursue a facial challenge to such

a statute on overbreadth grounds, even though the litigant's own

conduct could be regulated validly by a more narrowly drawn

statute. Broadrick v. Oklahoma, 413 U.S. 601, 612 (1973). Here,

however, any assertion that the advertising and common naming

provisions substantially overreach would fail because the

overbreadth doctrine is inapplicable in the commercial speech

context. See, e.g., Vill. of Hoffman Estates v. Flipside, Hoffman

Estates, Inc., 455 U.S. 489, 496-97 (1982); Bates v. State Bar of

Ariz., 433 U.S. 350, 380-81 (1977).

To recapitulate, W & S has not laid any groundwork

sufficient to establish third-party standing, so it cannot assert

the commercial speech rights of Class A license holders. W & S's

spavined attempt to assert a facial challenge affords no safety net

for this claim. Accordingly, we endorse the district court's

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conclusion that W & S's free speech claim has little chance of

succeeding on the merits.

B. The Freedom of Association Claim.

W & S strives to persuade us that the challenged

statutes, by directly and indirectly prohibiting the holders of

Class A liquor licenses from engaging in franchise relationships,

impinge on its First Amendment right to associate with its

franchisees for the purposes of joint advertising and development

of common management and marketing strategies. We are not

convinced.

The Supreme Court long has recognized that freedom of

speech embraces the "freedom to engage in association for the

advancement of beliefs and ideas." NAACP v. Alabama, 357 U.S. 449,

460 (1958). This freedom of expressive association emerges from

the insight that expressive rights explicitly guaranteed by the

First Amendment "could not be vigorously protected from

interference by the State unless a correlative freedom to engage in

group effort toward those ends were not also guaranteed." Roberts

v. U.S. Jaycees, 468 U.S. 609, 622 (1984). Because protection of

the right to associate evolves from the First Amendment's

guarantees of speech, assembly, petition, and free exercise, the

scope of protection for association corresponds to the

constitutional solicitude afforded to the mode of First Amendment

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expression in which a particular group seeks collectively to

engage. See id.

It follows logically that, in a free speech case, an

association's expressive purpose may pertain to a wide array of

ends (including economic ends), see id., but the embedded

associational right protects only collective speech and expressive

conduct in pursuit of those ends; it does not cover concerted

action that lacks an expressive purpose, see City of Dallas v.

Stanglin, 490 U.S. 19, 24-25 (1989). So viewed, the right to

expressive association does not confer a generalized freedom for

individuals or entities collectively to engage in activity that is

otherwise regulable when undertaken by a single individual or

entity. See id. As one treatise has noted, "[t]he Court has

tended to view the right of association as dependent on underlying

individual rights of expression; there is no right of association

in the abstract." Kathleen M. Sullivan & Gerald Gunther,

Constitutional Law 1337 (14th ed. 2001). Thus, W & S must

demonstrate that sections 3-5-11 and 3-5-11.1 unduly curtail its

associational right to engage in activities protected by the First

Amendment. Elsewise, it cannot prevail on its associational claim.

We already have explained why section 3-5-11(b)(1) does

not violate any of W & S's speech rights. See supra Part V(A).

The question, then, reduces to whether section 3-5-11.1 may be said

to work such a violation. To this end, W & S labors to

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characterize its concerted business activities as speech or

expressive conduct protected by the First Amendment. That effort

fails.

Business entities have no First Amendment right to

combine operations or coordinate market activities for the purpose

of obtaining a greater market share for each participant. The fact

that communication serves as the primary instrument of conducting

business among separate enterprises does not alter this conclusion.

The Supreme Court elaborated on this point more than half a century

ago in Giboney v. Empire Storage & Ice Co., 336 U.S. 490 (1949).

The Giboney Court acknowledged that, although courses of

conduct are, in most instances, effectuated by speaking or writing,

"it has never been deemed an abridgment of freedom of speech or

press to make a course of conduct illegal merely because the

conduct was in part initiated, evidenced, or carried out by means

of language." Id. at 502. Indeed, "[s]uch an expansive

interpretation of the constitutional guaranties of speech and press

would make it practically impossible ever to enforce laws against

agreements in restraint of trade as well as many other agreements

and conspiracies deemed injurious to society." Id.; see also

Calif. Motor Transp. Co. v. Trucking Unlimited, 404 U.S. 508, 513-

15 (1972) (explaining that while communication is an integral part

of joint conduct, that fact cannot be used as a pretext for

obtaining immunity from laws prohibiting anticompetitive commercial

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activities). After all, the Court has made clear that "the State

does not lose its power to regulate commercial activity deemed

harmful to the public whenever speech is a component of that

activity." Ohralik v. Ohio State Bar Ass'n, 436 U.S. 447, 456

(1978) (citing "the exchange of price and production information

among competitors" as an example of "communications that are

regulated without offending the First Amendment").

Against this backdrop, we turn to the case at hand. In

enacting section 3-5-11.1, Rhode Island exercised its police power,

including its power under the Twenty-First Amendment,4 to regulate

commercial transactions involving liquor and the organizational

structure of the market in which such transactions take place.

Seen in this light, the statute is tantamount to an antitrust law

— a category of regulation that recognizes the authority of the

State to adjust the distribution of market power among commercial

entities so as to prevent conditions that are, in its reasonably

held view, harmful to healthy competition and free trade.

It is black letter law that "the constitutionality of the

antitrust laws is not open to debate." Calif. Motor Transp., 404

U.S. at 515. Such laws, by definition, regulate the ways in which

market players may pool their capabilities to acquire market power.

4
In pertinent part, that amendment prohibits "[t]he
transportation or importation . . . for delivery or use . . . of
intoxicating liquors [into any state]" in violation of state law.
U.S. Const. amend. XXI, § 2.

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While the State cannot regulate the right of speakers to band

together to convey a common message in the marketplace of ideas, it

most assuredly can exercise control over the efforts of market

players to exploit the principle of strength in numbers in the

marketplace of goods. See U.S. Jaycees, 468 U.S. at 638 (O'Connor,

J., concurring) (positing that "there is only minimal

constitutional protection of the freedom of commercial

association," id. at 634, and that, in all events, "no First

Amendment interest stands in the way of a State's rational

regulation of economic transactions by or within a commercial

association"); Kathleen M. Sullivan, Free Speech and Unfree

Markets, 42 U.C.L.A. L. Rev. 949, 950 (1995) (observing that, in

the modern constitutional order, legislatures are free to pass laws

"that override private economic arrangements on allocative grounds

— such as correcting for collective action problems, externalities,

information asymmetries, or monopolies — or for reasons of

redistribution or paternalism").

The case law dealing with claimed exceptions to antitrust

or commercial conspiracy laws on First Amendment associational

grounds indicates that the State's right to enforce such laws

against collusive market behavior must abate only in instances in

which the joint activity constitutes an exercise of a core speech

right. In Eastern Railroad Presidents Conference v. Noerr Motor

Freight, Inc., 365 U.S. 127 (1961), the Supreme Court recognized

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that commercial actors' concerted petitioning for legislative

change was a form of political expression protected by the First

Amendment and, therefore, exempt from certain applications of the

antitrust laws. Id. at 136-38. In NAACP v. Claiborne Hardware

Co., 458 U.S. 886 (1982), where black citizens had banded together

to boycott white merchants as a means of protesting discriminatory

practices, the Supreme Court held that the merchants could not

premise liability for state antitrust violations and common law

conspiracy on the boycotters' collective exercise of First

Amendment rights. See id. at 890-92, 915, 933. Finding that the

boycott involved the exercise of core First Amendment rights

(speech, petition, and assembly), the Court ruled that the State's

right "to regulate economic activity could not justify a complete

prohibition against a nonviolent, politically motivated boycott

designed to force governmental and economic change and to

effectuate rights guaranteed by the Constitution." Id. at 914.

Several other cases in that lineage also turned on the fact that

the concerted activity implicated exceptions to the antitrust laws

designed to protect core speech rights. See, e.g., Prof'l Real

Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S.

49, 56-60 (1993) (explaining that antitrust liability cannot be

imposed upon entities that collectively pursue objectively

reasonable litigation, even when an anticompetitive intent

motivates the suit); United Mine Workers of Am. v. Pennington, 381

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U.S. 657, 669-70 (1965) (decreeing that antitrust laws cannot be

interpreted to prohibit joint efforts to influence public officials

through otherwise legal methods).

These cases must be contrasted with cases such as FTC v.

Superior Court Trial Lawyers Ass'n, 493 U.S. 411 (1990), in which

the Court upheld the imposition of an injunction under the Sherman

Act against a cadre of court-appointed lawyers that enjoined their

concerted refusal to accept further case assignments pending a

requested fee increase. See id. at 426-36. The Court explained

that "the undenied objective of [the] boycott was an economic

advantage for those who agreed to participate," id. at 426, and

that the lawyers' joint activity was aimed at "profit[ing]

financially from a lessening of competition in the boycotted

market," id. at 427 (internal quotation marks omitted). In those

circumstances, the Court refused to accept the lawyers' claim that

the law, as applied, violated their right to associate for

expressive purposes because to do so would be to "exaggerate[] the

significance of the expressive component in the [lawyers']

boycott." Id. at 430. In the absence of anything uniquely

expressive about the concerted commercial activity, no First

Amendment exception to the enforcement of an otherwise valid

antitrust law was warranted. Id. at 431 (noting that "[t]he most

blatant, naked price-fixing agreement is a product of

communication, but that is surely not a reason for viewing it with

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special solicitude"); accord Nat'l Soc'y of Prof'l Eng'rs v. United

States, 435 U.S. 679, 697 (1978) (upholding, against a First

Amendment challenge, an antitrust injunction that prohibited a

professional society "from adopting any official opinion, policy

statement, or guideline stating or implying that competitive

bidding is unethical").

Here, it is nose-on-the-face plain that W & S's

commercial conduct exhibits nothing that even the most vivid

imagination might deem uniquely expressive. Certainly, the mere

fact that the joint activities that define the business

relationship between the franchisor and its franchisees have some

communicative component cannot, in and of itself, establish an

entitlement to the prophylaxis of the First Amendment. See

Superior Court Trial Lawyers, 493 U.S. at 430. Consequently, that

conduct does not warrant overriding the State's historic right to

regulate market forces in the retail liquor industry.5

In sum, W & S has not established that the neoteric laws

prohibiting the holders of Class A liquor licenses from conducting

joint business activities infringe upon any right to advance its

beliefs or ideas by engaging in activities protected by the First

5
The conclusion that otherwise valid regulation of commercial
interactions between business entities does not offend the First
Amendment merely because such interactions have a communicative
component would apply with equal force to our analysis in Part
V(A)(1), had we found that the relevant sub-paragraphs of section
3-5-11(b)(1) did in fact impede communications between W & S and
the holders of Class A liquor licenses.

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Amendment. Accordingly, there is scant reason to believe

that W & S can succeed on the merits of its freedom of expressive

association claim.

VI. THE EQUAL PROTECTION CLAIM

As a last resort, W & S mounts an equal protection

challenge to sections 3-5-11 and 3-5-11.1. Its complaint is that

these statutes apply to package stores but not to other entities

licensed to sell alcoholic beverages at retail (such as restaurants

and bars). Its contrived attempt to tease an equal protection

violation out of this imperfect analogy is unpersuasive.

When economic legislation neither employs suspect

classifications nor infringes on fundamental rights, the

legislation need only survive rational basis scrutiny. Hodel v.

Indiana, 452 U.S. 314, 331 (1981). Under that standard, an

inquiring court must uphold the legislation as long as the means

chosen by the legislature are rationally related to some legitimate

government purpose. Id. In conducting that analysis, the State's

legislative choices "bear[] a strong presumption of validity."

Kittery Motorcycle, Inc. v. Rowe, 320 F.3d 42, 47 (1st Cir. 2003)

(internal quotation marks omitted). A challenger can overcome this

presumption only by "demonstrating that there exists no fairly

conceivable set of facts that could ground a rational relationship

between the challenged classification and the government's

legitimate goals." Eulitt, 386 F.3d at 356.

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 These rules are dispositive here. The legislation at

issue is economic in nature. It neither utilizes suspect

classifications nor trenches upon fundamental rights.6 Its

purpose, as stated by the Rhode Island General Assembly, is to

protect consumer choice and ensure the equitable pricing of retail

liquor products. See R.I. Gen. Laws § 3-5-11.1(a). W & S has not

explained why, given the unexceptionable goal of maintaining a

competitive retail liquor industry, it is irrational for Rhode

Island to enact measures aimed at preventing anticompetitive

practices by ensuring that holders of Class A liquor licenses

operate independently. By like token, W & S has wholly failed to

show that restaurants and bars (which are licensed to sell

alcoholic beverages only for consumption on their licensed

premises) are similarly situated entities vis-à-vis package stores

(which are licensed to sell alcoholic beverages only in sealed

containers and for off-premises consumption).7 Finally, it has

failed to support its contention that Rhode Island's decision to

6
To be sure, W & S contends that the challenged statutes
burden its fundamental rights of speech and association. We
dismiss that contention out of hand. See supra Part V
(establishing that the challenged statutes do not impermissibly
impinge upon W & S's First Amendment rights).
7
Even in the improbable event that the two markets were to be
deemed substantially similar, that showing alone would not ensure
W & S's success. Regulation must start somewhere. See FCC v.
Beach Commc'ns, Inc., 508 U.S. 307, 316 (1993) (explaining that
"the legislature must be allowed leeway to approach a perceived
problem incrementally").

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devise a special regulatory scheme for the retail liquor market is

arbitrary; for example, it has not negated the possibility that

healthy competition already exists with respect to other sectors of

the liquor industry (thus rendering regulation unnecessary).

The short of it is that W & S has not demonstrated that

the challenged legislation lacks a rational basis. Accordingly,

the district court did not miscalculate in finding it improbable

that W & S would prevail on its equal protection claim.

VII. CONCLUSION

We need go no further. W & S has not shown that it is

likely to succeed on the merits of any of its claims. Since such

a showing is a precondition to the securing of a preliminary

injunction, New Comm Wireless Servs., 287 F.3d at 9, we need not

probe the other components of the applicable four-part test. It

suffices to say that the district court acted well within the

encincture of its discretion in denying W & S's request for

preliminary injunctive relief.

Affirmed.

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