149 F.3d 334 (5th Cir. 1998), 94-30732, Greater New Orleans Broadcasting Ass'n v. United States

Docket Nº:94-30732.
Citation:149 F.3d 334
Party Name:(P&F) 452 GREATER NEW ORLEANS BROADCASTING ASSOCIATION; Phase II Broadcasting, Inc.; Radio Vanderbilt Inc.; Keymarket of New Orleans, Inc.; Professional Broadcasting; WGNO Inc.; Burnham Broadcasting Company, Plaintiffs-Appellants, v. UNITED STATES of America; Federal Communications Commission, Defendants-Appellees.
Case Date:July 30, 1998
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

Page 334

149 F.3d 334 (5th Cir. 1998)

(P&F) 452


Broadcasting, Inc.; Radio Vanderbilt Inc.; Keymarket of

New Orleans, Inc.; Professional Broadcasting; WGNO Inc.;

Burnham Broadcasting Company, Plaintiffs-Appellants,


UNITED STATES of America; Federal Communications

Commission, Defendants-Appellees.

No. 94-30732.

United States Court of Appeals, Fifth Circuit

July 30, 1998

Page 335

Ashton R. Hardy, Metairie, LA, for Plaintiffs-Appellants.

Hardy Carey, Metairie, LA, for Greater New Orleans Broadcasting Ass'n.

Scott Ramsey McIntosh, U.S. Dept. of Justice, Civ. Div., Appellate Staff, Washington, DC, for Defendants-Appellees.

Appeal from the United States District Court for the Eastern District of Louisiana.


Before POLITZ, Chief Judge, and JONES and PARKER, Circuit Judges.

EDITH H. JONES, Circuit Judge:

The Supreme Court remanded this case for reconsideration in light of 44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484, 116 S.Ct. 1495, 134 L.Ed.2d 711 (1996). Concluding that 44 Liquormart requires us to revise the Central Hudson 1 analysis in our previous opinion, we amend that opinion but nevertheless affirm the judgment of the district court.

What seemed a fairly straightforward analysis when this panel first considered the constitutionality of the federal statute prohibiting the broadcast of radio and television advertisements for casino gambling, 18 U.S.C. § 1304, has dissolved into a welter of confusion following 44 Liquormart. On one hand, in 1993, the Supreme Court upheld a companion provision that bans some broadcast advertising of state-sponsored lotteries, and five Justices approved the following statement:

In response to the appearance of state-sponsored lotteries, Congress might have continued to ban all radio or television lottery advertisements, even by stations in States that have legalized lotteries.

United States v. Edge Broad. Co., 509 U.S. 418, 428, 113 S.Ct. 2696, 2704, 125 L.Ed.2d 345 (1993). On the other hand, after 44 Liquormart was decided, the Ninth Circuit felt obliged to hold unconstitutional the provision at issue in this case, which bans radio and television advertisements for privately-run casino gambling. 2 Has Edge lost its edge in the succeeding five years? Or on the contrary, has the rule of Edge, become a constitutional mandate? Such that Congress can now ban broadcast advertisements for gambling only in states that prohibit such gambling? Finally, has the Supreme Court gone over the edge in constitutionalizing speech protection for socially harmful activities? The following discussion will suggest that the Supreme Court's jurisprudence has become as complex and difficult to rationalize as the statutory advertising regulations the Court has condemned. 3

To put the discussion in perspective, it is necessary to review this court's previous application of the Central Hudson balancing test to § 1304. Section 1304 prohibits broadcast

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advertising of "any advertisement of or information concerning any lottery, gift enterprise, or similar scheme, offering prizes depending in whole or in part upon lot or on chance...." This court applied the four-part test set forth in Central Hudson to determine whether § 1304 is a permissible regulation of commercial speech. Central Hudson recognized that truthful, non-misleading commercial speech is entitled to limited protection under the First Amendment. The first two prongs of the test are satisfied here: the casino owners' speech concerns lawful activity and is not misleading, and the government asserts substantial public interests in discouraging public participation in commercial gambling and in assisting states that restrict gambling by regulating broadcasting that is beyond the states' regulatory powers. 4

The majority and dissent in our earlier opinion parted company over application of the third Central Hudson standard, which inquires whether the advertising ban contained in § 1304 "directly advances the governmental interest asserted." The majority relied on numerous assertions by the Supreme Court that the purpose and effect of advertising are to increase consumer demand and, conversely, that limits on advertising will dampen such demand. See Edge, 509 U.S. at 433-34, 113 S.Ct. at 2707; Posadas, 478 U.S. at 342, 106 S.Ct. at 2977; Central Hudson, 447 U.S. at 569, 100 S.Ct. at 2353. The majority distinguished the Supreme Court's striking down of a federal prohibition on labeling the alcoholic strength of beer, where the entire legislative scheme represented an "irrational" patchwork and actually approved promotional advertising of stronger alcoholic beverages. Rubin v. Coors Brewing Co., 514 U.S. 476, 486-87, 115 S.Ct. 1585, 1591-92, 131 L.Ed.2d 532 (1995). The panel's dissent, however, relied heavily on Rubin to emphasize that federal law embodies a ban on advertising various forms of gambling "so pockmarked with exceptions and buffeted by countervailing state policies that it provides, at most, a very minimum support for the asserted interest." 5 Greater New Orleans Broad. Ass'n v. United States, 69 F.3d 1296, 1304 (Politz, C.J., dissenting), vacated, 419 U.S. 801, 117 S.Ct. 39, 136 L.Ed.2d 3 (1996).

This Court's majority and dissenting decisions also disagreed about the fourth Central Hudson criterion, which analyzes whether § 1304 cabins speech no more than necessary to serve the government's interests. The majority relied on an understanding that this prong of Central Hudson is not a "least restrictive means" test and that it requires only that the regulation's restrictions reasonably fit the desired objective. See Greater New Orleans Broad., 69 F.3d at 1302 (citing Florida Bar v. Went For It, Inc., 515 U.S. 618, 630-31, 115 S.Ct. 2371, 2379, 132 L.Ed.2d 541 (1995)). The majority then relied on Posadas, a decision which granted deference to the tailoring decision of the Puerto Rican legislature. See Greater New Orleans Broad., 69 F.3d at 1302. In Posadas, Puerto Rico was permitted to ban casino gambling advertising aimed at its residents, while permitting them to be solicited for other wagering games like cock fights. This court's dissenting member believed, however, that the § 1304 broadcast advertising ban is overbroad, because it fails to accommodate the policies of states that have legalized casino gambling. See id. at 1304 (Politz, C.J., dissenting).

After our panel issued its split decision, 44 Liquormart became the Supreme Court's newest pronouncement on the protection of commercial speech under the first amendment. At issue in 44 Liquormart was the constitutionality of a Rhode Island law that banned all advertisement of liquor prices outside the beverage stores' sales premises.

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The Supreme Court overturned the statute, and while the Court declined to modify the Central Hudson test, it divided over the interpretation of the third and fourth prongs. Justice Stevens, writing for four members, would require Rhode Island to show, for purposes of the third prong, that the statute directly advanced the state's asserted interest in promoting temperance by demonstrating that the advertising ban significantly reduced alcohol consumption. See 44 Liquormart, 517 U.S. at 505-06, 116 S.Ct. at 1509-10. Justice O'Connor, writing for three members of the court, pointedly declined to adopt Justice Stevens's approach on the third prong. See id. at 529-32, 116 S.Ct. at 1521-22 (O'Connor, J., concurring). Thus, after 44 Liquormart, what level of proof is required to demonstrate that a particular commercial speech regulation directly advances the state's interest is unclear.

The Court was nearly uniform, however, 6 concerning Central Hudson's fourth prong: the justices were willing to scrutinize more carefully whether the state's chosen regulation of commercial speech is closely enough tailored to serve the governmental interests without unduly burdening free speech. In particular, the Court decided, in the context of an outright ban of certain commercial speech, 7 to consider the availability of other, non-speech-related policies or measures that would more directly accomplish the state's purposes. Because the state's asserted goal was to deter price competition, in order to keep prices high and ultimately reduce liquor consumption, the Court pointed out the availability of taxation and minimum price regulation to accomplish that objective directly.

Eight members of the Court also ruled out the deference to the legislature demonstrated in the Posadas case with respect to restrictions on commercial speech. As Justice O'Connor put it,


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