USCA1 Opinion
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
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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.
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No. 93-1927
44 LIQUORMART, INC. AND
PEOPLES SUPER LIQUOR STORES, INC.,
Plaintiffs, Appellees,
v.
STATE OF RHODE ISLAND,
Defendant, Appellant.
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APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. Raymond J. Pettine, Senior U.S. District Judge]
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Before
Cyr, Circuit Judge,
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Aldrich, Senior Circuit Judge,
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and Stahl, Circuit Judge.
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Lauren E. Jones with whom Caroline C. Cornwell, Jones Associates,
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William P. Gasbarro and Robert M. Brady were on brief for Rhode Island
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Liquor Stores Association.
Rebecca Tedford Partington, Special Assistant Attorney General,
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with whom Jeffrey B. Pine, Attorney General, was on brief for State of
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Rhode Island.
Evan T. Lawson with whom Lawson & Weitzen was on brief for
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plaintiffs-appellees.
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October 24, 1994
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ALDRICH, Senior Circuit Judge. The State of Rhode
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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among the earliest to ratify the Twenty-First that repealed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
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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!"
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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."
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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
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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
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Commission of New York, 447 U.S. 557, 566 (1980). The
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ultimate purpose is to weigh "the expression [and] the
governmental interests served by its regulation." Id. at
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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.
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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
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material degree"); Trustees of the State University of New
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York v. Fox, 492 U.S. 469, 480 (1989) ("reasonable fit").
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See also Posadas de Puerto Rico Assoc. v. Tourism Co., 478
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U.S. 328, 342 (1986) ("reasonable"). And while the state has
the burden, in California v. LaRue, 409 U.S. 109, 118-19
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(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
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Hudson, 447 U.S. at 569; "unsupported assertions: nowhere
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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
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(1985); lack of studies or "anecdotal evidence," Edenfield,
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113 S. Ct. at 1800. Warrantable inferences, however, may be
sufficient. Posadas, 478 U.S. at 341-42 (advertising). What
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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,
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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
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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.
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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
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Dominique M. Hanssens, Alcohol Control Laws and the
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Consumption of Distilled Spirits and Beer, 12 J. Consumer
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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;
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Oklahoma Telecasters Ass'n v. Crisp, 699 F.2d 490, 501 (10th
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Cir. 1983), rev'd on other grounds sub nom Capital Cities
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Cable, Inc. v. Crisp, 467 U.S. 691 (1984). We do not
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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
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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
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Co. v. Liquor Control Commission, 69 Ohio St.2d 361 (1982), a
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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
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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
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Hudson tests and found that the statute was "not
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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
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Pharmacy v. Virginia Citizens Consumer
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Council, Inc., 425 U.S. 748 (1976),]
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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.
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Reliance on Queensgate as conclusive, however,
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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
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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.
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Midcal Aluminum, Inc., 445 U.S. 97 (1980); Bacchus Imports,
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Ltd. v. Dias, 468 U.S. 263 (1984). We need not resolve this
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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
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without, plaintiff 44 Liquormart must lose.
Finally, we observe that our conclusion coincides
with the Rhode Island court's. Rhode Island Liquor Stores
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Ass'n v. Evening Call Pub. Co., 497 A.2d 331 (R.I. 1985); S &
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S Liquor Mart, Inc. v. Pastore, 497 A.2d 729 (R.I. 1985). We
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have not mentioned its decisions hitherto because our
obligation is to decide for ourselves. See Watson v.
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Estelle, 886 F.2d 1093, 1095 and n.3 (9th Cir. 1989).
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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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By the hypothesis under which we are justifying
forbidding price advertising by local vendors, State
residents, whose shopping opportunity is thus curtailed, will
be more likely to purchase at higher-priced neighborhood
outlets and less at lower-priced, viz., discount sellers
elsewhere. Insofar as this constriction is aimed at foreign
sellers, it is a deliberate, and, by hypothesis effective,
discrimination and restraint on interstate commerce. Thus we
have two questions. One, is the State's interest in health
and welfare sufficient to overcome the foreign vendors' right
of free speech? Two, if so, are the rights given the State
by the Twenty First Amendment sufficient to meet the foreign
vendors' further objections under the Commerce Clause?
Viewed simply as free speech, if a party wishes to
come into a state and do business, to some extent, at least,
it should be subject to the same regulations as are its local
counterparts. While the question may be close, where we are
dealing simply with commercial speech, whose rights are
limited, Bigelow v. Virginia, 421 U.S. 809, 818 et seq.
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(1975), we believe the State health interest, as reinforced
by the Twenty First Amendment, should empower the State to
restrict foreigners as well. Nor do we find support for the
contrary in the Bigelow opinion. We read the language relied
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on by Peoples Super Liquor Stores in the light of the fact
that the advertisement contained more than commercial speech.
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See 421 U.S. at 822; Friedman v. Rogers, 440 U.S. 1, 11, n.10
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(1979). Here we have no more than commercial.
The serious question is whether the Twenty First
Amendment can prevail against the Commerce Clause when the
State is deliberately favoring local vendors against foreign
enterprise. The full meaning and effect of this Amendment
has been much debated. At a minimum it does not do away
altogether with the Commerce Clause. Cf. Hostetter v.
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Idlewild Bon Voyage Liquor Corp., 377 U.S. 324, 331-332
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(1964). But, as a matter of dictum, the Court in Bacchus
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Imports, Ltd. v. Dias, 468 U.S. 263, at 276 (1984), has
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recognized the possibility that a state might discriminate
"to promote temperance or to carry out any other purpose of
the Twenty First Amendment." We have tentatively explored
this question in some depth, and find it difficult.
This raises a problem. The record shows that,
initially, Peoples included the Commerce Clause in its
contentions. On appeal, it dropped it. While at first we
thought that the two principles were so tied together that we
should nevertheless consider it, we have concluded that
fairness to the State, and, indeed to us, requires that we do
not do so without full briefing and argument. Accordingly,
we apply the general principle and hold the Commerce Clause
waived. Interface Group, Inc. v. Mass. Port Authority, 816
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F.2d 9, 16 (1st Cir. 1987). Since without it Peoples must
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fail, the decision below is reversed, with judgment for
defendants.
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