USCA1 Opinion
July 8, 1994 [NOT FOR PUBLICATION]
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 93-1893
44 LIQUORMART, INC. AND
PEOPLES SUPER LIQUOR STORES, INC.,
Plaintiffs, Appellees,
v.
STATE OF RHODE ISLAND,
Defendant, Appellee,
RHODE ISLAND LIQUOR STORES ASSOCIATION,
Intervenor, Appellant.
____________________
No. 93-1927
44 LIQUORMART, INC. AND
PEOPLES SUPER LIQUOR STORES, INC.,
Plaintiffs, Appellees,
v.
STATE OF RHODE ISLAND,
Defendant, Appellant.
____________________
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. Raymond J. Pettine, Senior U.S. District Judge] __________________________
____________________
Before
Cyr, Circuit Judge, _____________
Aldrich, Senior Circuit Judge, ____________________
and Stahl, Circuit Judge. _____________
____________________
Lauren E. Jones with whom Caroline C. Cornwell, Jones Associates, _______________ ____________________ ________________
William P. Gasbarro and Robert M. Brady were on brief for Rhode Island ___________________ _______________
Liquor Stores Association.
Rebecca Tedford Partington, Special Assistant Attorney General, ___________________________
with whom Jeffrey B. Pine, Attorney General, was on brief for State of _______________
Rhode Island.
Evan T. Lawson with whom Lawson & Weitzen was on brief for ________________ __________________
plaintiffs-appellees.
____________________
____________________
ALDRICH, Senior Circuit Judge. The State of Rhode ____________________
Island, that did not ratify the Eighteenth Amendment, and was
among the earliest to ratify the Twenty-First that repealed
it, in 1956 adopted two statutes, assertedly aimed at
promoting temperance, forbidding advertising the price of
intoxicating liquor, except at the place of sale if sold
within the state. The "declared purpose is the promotion of
temperance and for the reasonable control of the traffic in
alcoholic beverages." R.I. Gen. Laws 3-1-5.
R.I. Gen. Laws 3-8-7 provides,
3-8-7. Advertising price of malt 3-8-7. Advertising price of malt
beverages, cordials, wine or distilled beverages, cordials, wine or distilled
liquor. -- No manufacturer, wholesaler, liquor. --
or shipper from without this state and no
holder of a license issued under the
provisions of this title and chapter
shall cause or permit the advertising in
any manner whatsoever of the price of any
malt beverage, cordials, wine or
distilled liquor offered for sale in this
state; provided, however, that the
provisions of this section shall not
apply to price signs or tags attached to
or placed on merchandise for sale within
the licensed premises in accordance with
rules and regulations of the department.
Section 3-8-8.1, post, enlarges this language to ____
forbidding making "reference to the price of any alcoholic
beverage,"1 that defendant Rhode Island Liquor Control
Administrator, a strict enforcer, construes as including
remote references such as "WOW!"
____________________
1. See also Liquor Control Adm. Reg. 32. ___ ____
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In this action plaintiffs, 44 Liquormart, Inc. and
Peoples Super Liquor Stores, Inc., having sufficient standing
to attack these statutes in every particular, seek a
declaration against the Administrator (hereinafter the State)
of unconstitutionality as contravening the First Amendment.
Rhode Island Liquor Stores Association (Association) has
intervened as a party defendant. After a bench trial, in an
extensive opinion the court found for plaintiffs. Defendants
appeal. They succeed with respect to limiting advertising by
Rhode Island vendors.
The stage it set below is described by the State.
[T]he advertising ban directly
advanced the governmental interest by
increasing the cost of alcoholic
beverages, thereby lowering the amount of
alcohol consumption by residents of the
State of Rhode Island. . . . [T]he
State's power to totally ban any
advertising about alcoholic beverages
necessarily included the lesser power to
restrict price advertising.
Further, the State contended that plaintiffs, in order to
rely on the First Amendment, must "prove that the four part
Central Hudson test could not be met." ______________
Association, a group of small liquor stores, whose
intervention as a co-defendant was not opposed by the State,
alleged as its ground for intervening that if advertising of
prices were to be allowed, its members "would be obliged to
participate in the advertising arena and would be at a
definite disadvantage when matched up against retailers who
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hold multiple licenses." This complaint was later bolstered
by adding that competitive price advertising would tend to
lower prices, and that "a more competitive market for alcohol
might be considered an undesirable goal."
We start with the four issues that Central Hudson ______________
raises when a state's interest conflicts with the rights of a
would-be commercial speaker.
At the outset, we must determine whether
the expression is protected by the First
Amendment. [I] For commercial speech to
come within that provision, it at least
must concern lawful activity and not be
misleading. [II] Next, we ask whether
the asserted governmental interest is
substantial. If both inquiries yield
positive answers, we must determine [III]
whether the regulation directly advances
the governmental interest asserted, and
[IV] whether it is not more extensive
than is necessary to serve that interest.
Central Hudson Gas & Electric Corp. v. Public Service ________________________________________ _______________
Commission of New York, 447 U.S. 557, 566 (1980). The ________________________
ultimate purpose is to weigh "the expression [and] the
governmental interests served by its regulation." Id. at __
563.
I. In the present case the first test raises no
question. II. For the second it was stipulated, "The State
of Rhode Island has a substantial interest in regulating the
sale of alcoholic beverages." Plaintiffs concede that
promoting temperance is such an interest. The dispute,
accordingly, is whether forbidding price advertising
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"directly advances" temperance, and "is not more extensive
than is necessary." There is a further question with regard
to local advertising by an out-of-state vendor.
III. "Directly advances." We start with the
burden of proof. The burden is on the party seeking
suppression, here the State. Edenfield v. Fane, 113 S. Ct. _________ ____
1792, 1800 (1993). But to what extent? The district court
held that it was an issue for it to decide, unfettered,
between competing witnesses, and since, on its weighing the
evidence, the court was not persuaded that the State was
correct, it failed. We do not think the burden that strict.
It is not correctness, it is reasonableness.
In the first place, the term "directly advances" is
not absolute. Edenfield, 113 S. Ct. at 1800 ("alleviate to a _________
material degree"); Trustees of the State University of New _________________________________________
York v. Fox, 492 U.S. 469, 480 (1989) ("reasonable fit"). ____ ___
See also Posadas de Puerto Rico Assoc. v. Tourism Co., 478 ___ ____ ______________________________ ___________
U.S. 328, 342 (1986) ("reasonable"). And while the state has
the burden, in California v. LaRue, 409 U.S. 109, 118-19 __________ _____
(1972), the Court spoke of "the added presumption in favor of
the validity of the state regulation in this area that the
Twenty-First Amendment requires." Historically the state has
failed where the evidence was "at most, tenuous," Central _______
Hudson, 447 U.S. at 569; "unsupported assertions: nowhere ______
does the State cite any evidence or authority of any kind,"
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Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626, 648 ________ ______________________________
(1985); lack of studies or "anecdotal evidence," Edenfield, _________
113 S. Ct. at 1800. Warrantable inferences, however, may be
sufficient. Posadas, 478 U.S. at 341-42 (advertising). What _______
should a court do when there is no empirical2 evidence
either way, and expert opinions go both ways? Even
plaintiffs' expert, whom the court credited, admitted that
"advertising has cumulative effects that are difficult to
detect in studies, and that research studies have been varied
and equivocal because it is a difficult topic to research."
Should the court be free to choose?
IV. Before answering these questions we observe
that the "not more extensive than is necessary" inquiry is
subject to the same considerations. Re R.M.J., 455 U.S. 191, _________
207 (1982) ("reasonably necessary"). The district court did
not deal with this directly, except to note the concession of
the State's expert that "the objective of lowering
consumption of alcohol by banning price advertising could be
accomplished by establishing minimum prices and/or by
increasing sales taxes on alcoholic beverages." This is not
an answer; the State is entitled to a reasonable choice.
This includes choice of method -- it is not obliged to prove
____________________
2. This word is a summary of the court's findings that such
studies as were offered were too inconclusive to be relied
on.
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that some other method, e.g., taxation, would be less
effective. Cf. Fox, 492 U.S. at 478. __ ___
Returning to our questions, there would seem
inherent merit in the State's contention that competitive
price advertising would lower prices, and that with lower
prices there would be more sales. We would enlarge on this.
There are doubtless many buyers whose consumption is
sometimes measured by their free money. If a buyer learns
that plaintiffs charge less, is he not likely to go there,
and then buy more? Correspondingly, if ignorant of lower
prices elsewhere, will he not tend to buy locally, at the
higher price, and thus buy less? See Stanley I. Ornstein and ___
Dominique M. Hanssens, Alcohol Control Laws and the __________________________________
Consumption of Distilled Spirits and Beer, 12 J. Consumer ____________________________________________
Res. 200 (September 1985). Further, if Association members
would fight plaintiffs' advertised prices, as they presage,
by lowering their own, then, again, might there not be more
buys?
Even plaintiffs' witness Smart conceded that some
believed this inference reasonable.
What I'm aware of are studies that show
that people generally decide how much
money they have to spend on alcoholic
beverages per week or per month. Then
they tend to spend that amount, and if
they can spend it in one way, they'll do
it and in another way they'll do that as
well.
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Advertising must be generally productive, or so much money
would not be spent on it. Posadas, 478 U.S. at 341-42; _______
Oklahoma Telecasters Ass'n v. Crisp, 699 F.2d 490, 501 (10th __________________________ _____
Cir. 1983), rev'd on other grounds sub nom Capital Cities ________________________________ ______________
Cable, Inc. v. Crisp, 467 U.S. 691 (1984). We do not ____________ _____
consider, in the absence of any affirmative contradiction to
rely on, that the district court was free to hold it
unreasonable. In addition, the presumption based upon the
Twenty-First Amendment, LaRue, supra, seems precisely in _____ _____
order.
Parenthetically, the State contends this discussion
to be unnecessary in view of the Court's action, 459 U.S. 807
(1982), dismissing an appeal, "for want of substantial
federal question," from the decision in Queensgate Investment _____________________
Co. v. Liquor Control Commission, 69 Ohio St.2d 361 (1982), a ___ _________________________
price advertising limitation case. The district court
rejected this contention because of a "different factual
predicate," and because "a summary dismissal lacks a reasoned
opinion." As to the latter, it is settled that such action
has precedental effect, although not necessarily on the
identical reasoning of the court. Mandel v. Bradley, 432 ______ _______
U.S. 173, 176 (1977). As to facts, the Ohio case involved a
statute similar to the one at bar. Defendant restaurant
advertised, in a circular, 50 cent drinks -- a markdown --
with meals. We see no relevant factual distinction.
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The Ohio court, recognizing that commercial speech
was entitled to some protection, pursued the four Central _______
Hudson tests and found that the statute was "not ______
unreasonable" in light of the Twenty-First Amendment's
authorization to curb the evils of alcoholic beverages. 690
Ohio St.2d at 366. It concluded as follows.
The regulation is directed toward
regulation of the intoxicants themselves,
rather than speech. This is unlike the
case, e.g., in [Virginia State Board of ________________________
Pharmacy v. Virginia Citizens Consumer ________ ___________________________
Council, Inc., 425 U.S. 748 (1976),] ______________
where the speech was the actual focus of
the regulation, since the aim of the
restriction was the prevention of
competition in pharmaceutical sales, not
the discouragement of pharmaceutical
purchases.
Ibid. ____
Reliance on Queensgate as conclusive, however, __________
might raise possible questions. The first is whether the
Court would have said there was no federal question if free
speech had been curtailed by a regulation clearly unrelated
to liquor. We need not answer this because we have found
that the State's action was reasonable as a control. But
suppose the primary purpose was that eliminated by the
Queensgate court? On the issue of purpose the State is not __________
helped by its friends. Association's given reason for
wanting to intervene as a defendant, that the statute
protects the small vendor from the giants, could make logical
sense, but might not be a lawful use of the Twenty-First
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Amendment. Cf. California Retail Liquor Dealers Ass'n v. __ ________________________________________
Midcal Aluminum, Inc., 445 U.S. 97 (1980); Bacchus Imports, ______________________ ________________
Ltd. v. Dias, 468 U.S. 263 (1984). We need not resolve this ____ ____
question either, however. There is a burden to rebut the
statutes' declared purpose, and plaintiffs have made no
attempt. We conclude therefore that, with Queensgate or __________
without, plaintiff 44 Liquormart must lose.
Finally, we observe that our conclusion coincides
with the Rhode Island court's. Rhode Island Liquor Stores ___________________________
Ass'n v. Evening Call Pub. Co., 497 A.2d 331 (R.I. 1985); S & _____ _____________________ ___
S Liquor Mart, Inc. v. Pastore, 497 A.2d 729 (R.I. 1985). We ___________________ _______
have not mentioned its decisions hitherto because our
obligation is to decide for ourselves. See Watson v. ___ ______
Estelle, 886 F.2d 1093, 1095 and n.3 (9th Cir. 1989). _______
Peoples Super Liquor Stores, a Massachusetts vendor
that wishes to advertise its Massachusetts prices in Rhode
Island, has a different case. Because of R.I. Gen. Laws 3-
8-8.1 no Rhode Island publisher will accept advertisements.
3-8-8.1. Price advertising by media 3-8-8.1. Price advertising by media
or advertising companies unlawful. -- No or advertising companies unlawful.
newspaper, periodical, radio or
television broadcaster or broadcasting
company or any other person, firm or
corporation with a principal place of
business in the state of Rhode Island
which is engaged in the business of
advertising or selling advertising time
or space shall accept, publish, or
broadcast any advertisement in this state
of the price or make reference to the
price of any alcoholic beverages. . . .
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Rhode Island can regulate Rhode Island sales because, to
quote Queensgate, supra, "The regulation is directed toward __________ _____
regulation of the intoxicants themselves, rather than
speech." This is precisely the reasoning that sustains
forbidding publication of Rhode Island prices: Action that
maintains higher prices achieves the State's purpose of
restricting sales. But how can it legislate to limit
Massachusetts sales? Cf. Brown-Forman Distillers Corp. v. __ ______________________________
New York State Liquor Authority, 476 U.S. 573 (1986). Even ________________________________
if it could assume a legitimate paternalistic interest in
regulating its citizens' out-of-state activities, cf. United __ ______
States v. Edge Broadcasting Co., 113 S. Ct. 2696, 2707 ______ ______________________
(1993),3 Rhode Island has no power to control Massachusetts
prices for any purpose. As the Court said in Collins v. _______
Yosemite Park & Curry Co., 304 U.S. 518, 538 (1938), quoting __________________________
from the court below, (207 F. Supp. at 1013), "[T]hough the
[Twenty-First] Amendment may have increased 'the state's
power to deal with the [alcohol] problem . . . , it did not
increase its jurisdiction.'" Thus, "[a] State does not
acquire power or supervision over the internal affairs of
another State merely because the welfare and health of its
own citizens may be affected when they travel to that
State. . . . [I]t may not, under the guise of exercising
____________________
3. Edge Broadcasting, a lottery case, involved Congressional _________________
action restricting advertising that raised no question of
jurisdiction.
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internal police powers, bar a citizen of another State from
disseminating information about an activity that is legal in
that State." Bigelow v. Virginia, 421 U.S. 809, 824-25 _______ ________
(1975) (abortion). This is a square answer. As to Peoples _______
Super Liquor Stores, the court was correct. ___________________
Reversed in part; affirmed in part. __________________________________
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