Pitt News v. Pappert

• Decision Date: 29 July 2004
• Docket Number: No. 03-1725.,03-1725.
• Citation: 379 F.3d 96
• Court: U.S. Court of Appeals — Third Circuit
• Parties: The PITT NEWS, Appellant v. Gerald J. PAPPERT, in his capacity as Attorney General of the Commonwealth of Pennsylvania;<SMALL><SUP>*</SUP></SMALL> Frank Koscelnak, in his capacity as Director, Bureau of Liquor Control Enforcement, Pennsylvania State Police; John E. Jones, III, in his capacity as Chairman Pennsylvania Liquor Control Board.

379 F.3d 96

The PITT NEWS, Appellant v. Gerald J. PAPPERT, in his capacity as Attorney General of the Commonwealth of Pennsylvania;^* Frank Koscelnak, in his capacity as Director, Bureau of Liquor Control Enforcement,

Pennsylvania State Police; John E. Jones, III, in his capacity as Chairman Pennsylvania Liquor Control Board.

No. 03-1725.

United States Court of Appeals, Third Circuit.

Argued January 22, 2004.

Filed July 29, 2004.

Appeal from the United States District Court for the Western District of Pennsylvania, William L. Standish, J.

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Witold J. Walczak (argued), American Civil Liberties Union, Pittsburgh, PA, for Appellant.

J. Bart DeLone (argued), Office of Attorney General of Pennsylvania, Harrisburg, PA, for Appellee.

Gayle C. Sproul, Levine, Sullivan, Koch & Schultz, Yardley, PA, for Amicus Curiae The Student Press Law Center, PA Newspaper Association, and Reports Committee for Freedom of the Press.

Before ALITO, CHERTOFF, Circuit Judges, and DEBEVOISE,^** Senior District Judge.

OPINION OF THE COURT

ALITO, Circuit Judge.

The case concerns the constitutionality of a Pennsylvania law that bans advertisers from paying for the dissemination of "alcoholic beverage advertising" by communications media affiliated with a university, college, or other "educational institution." The Pitt News, a university newspaper, sought an injunction against enforcement of the law, but the District Court granted summary judgment for the defendants, holding that the law "has no effect on The Pitt News' freedom of expression" because the paper remains free to say whatever it wishes about alcoholic beverages as long as it is not paid for engaging in the expression.

We hold that the First Amendment precludes the enforcement of the law in question against advertisers in The Pitt News, and we therefore reverse the order of the District Court and remand for the entry of a permanent injunction.

I.

The Pitt News is a certified student organization at the University of Pittsburgh ("the University"). The University has more than 25,000 students, at least two-thirds of whom are old enough to drink under Pennsylvania law. Overall, more than 75% of the total University population (students, faculty, and staff) is more than 21 years of age.

The Pitt News was created by the University Board of Trustees "in recognition of the constitutional right of students to freedom of speech." The parties do not dispute that the paper represents independent student speech, not official speech disseminated on behalf of the University. The newspaper is published daily during the school year and weekly during the summer, and it is distributed free of charge at 75 locations around the campus. The Pitt News is displayed at these locations together with other free weekly newspapers, including In Pittsburgh, City Paper, and UR Pittsburgh. None of these other publications is affiliated with an educational institution, and they all contain alcoholic beverage advertisements. All of The Pitt News' revenue is derived from advertising, and until Act 199 took effect, the paper received substantial income from alcoholic beverage ads.

In 1996, the Pennsylvania Legislature enacted an amendment to the state Liquor Code that is popularly known as "Act 199." A provision of this amendment, 47 Pa. Stat. Ann. § 4-498(e)(5), (g) (hereinafter "Section 4-498"), prohibits "any advertising of alcoholic beverages" in virtually any medium of mass communication that is affiliated with "any educational institution," including a college or university.¹ Violations of this provision are misdemeanors and may be punished by fines of up to $500 or imprisonment for up to three months on a first charge, and by a mandatory minimum sentence of three months in jail for a subsequent offense. See 47 Pa. Stat. Ann. § 4-494(a).

To clarify the meaning of Act 199, the Pennsylvania Liquor Control Board (LCB) issued Advisory Notice No. 15, which states in relevant part:

What kind of advertisements would be affected by the prohibition against advertisements in publications published by, for and in behalf of any educational institution?

Advertisements which indicate the availability and/or price of alcoholic beverages may not be contained in publications published by, for and in behalf of any educational institutions. Universities are considered educational institutions under this section. Thus, an advertisement in a college newspaper or a college football program announcing beverages would not be permissible. However, an advertisement merely indicating the name and address of a licensee or licensed premise, or an advertisement which indicates what nonalcoholic products may be acquired at the licensed premise making no reference to the availability of alcoholic beverages would be permissible. Further, advertisements in magazines, newspapers or other periodicals which have no connection to an educational institution other than the fact the school may subscribe to that particular newspaper are permissible....

During testimony in this case, a representative of the LCB, Faith S. Diehl, stated that, in the LCB's view, Section 4-498 contains two restrictions that are not expressly set out in the statute. First, Diehl testified that Section 4-498 is enforceable only against advertisers and not against the media. Second, according to Diehl, Section 4-498 applies only when the media receives some form of payment for an advertisement.²

On December 9, 1997, Terry Lucas, the general manager of The Pitt News, received a fax from the owner of an area restaurant, the Fuel & Fuddle, which had previously placed alcoholic beverage advertisements in the paper. The fax consisted of a December 4, 1998, letter to the restaurant from the Bureau of Liquor Control Enforcement of the Pennsylvania State Police (BLCE) stating that the BLCE had received information that the Fuel & Fuddle had "advertised ... alcoholic beverages, either directly or indirectly, in a publication published by, for or in behalf of an educational institution" and that this could result in the suspension or revocation of its license or in the imposition of a fine. Based on this notice, the owner of the restaurant canceled its advertising contract with The Pitt News, and the paper, in order to protect its advertisers, felt compelled to stop accepting alcoholic beverage advertisements.

The Pitt News then sought to persuade establishments with liquor licenses to place ads that did not refer to the sale of alcoholic beverages, but these efforts were unsuccessful. In 1998 alone, the newspaper lost approximately $17,000 in revenue, and this loss affected the length of the newspaper, as well as its ability to make capital expenditures, including payments for updating its computers and acquiring digital cameras. The inability to make these capital expenditures has harmed The Pitt News' ability to compete for readers with other newspapers. Furthermore, the newspaper may be compelled in the future to begin to charge subscribers, and this would result in a further decrease in readership.

In April 1999, The Pitt News ³ filed a complaint in the United States District Court for the Western District of Pennsylvania against state officials responsible for the enforcement of the Act. Asserting claims under 42 U.S.C. § 1983, The Pitt News alleged that Section 4-498 violated its constitutional rights to freedom of expression, freedom of the press, and the equal protection of the laws. The Pitt News moved for a preliminary injunction, and an evidentiary hearing was held.

In July 1999, the District Court denied the motion for a preliminary injunction and held that The Pitt News lacked standing to challenge the constitutionality of Section 4-498. The District Court opined that The Pitt News could not assert First Amendment rights on behalf of advertisers or readers and that the paper had not itself suffered any injury in fact because it could still publish anything it wanted as long as it was not paid for it.

On appeal, a panel of this Court (the "TPN I Panel") affirmed the District Court's denial of the preliminary injunction application, but the panel relied in part on different grounds. See The Pitt News v. Fisher, 215 F.3d 354, 360 (3d Cir.2000) ("TPN I"). While the TPN I Panel agreed with the District Court that The Pitt News did not have standing to assert the third-party claims of its advertisers and readers, the panel found that The Pitt News did have standing to raise its own First Amendment claims. Noting the paper's loss of advertising revenue, the panel held that the paper had "demonstrated a personal stake in the outcome of this litigation" and that its injury was both traceable to Section 4-498 and redressable by the courts. TPN I, 215 F.3d at 360

After determining that The Pitt News had standing to challenge Section 4-498, the TPN I Panel turned to the familiar four-pronged preliminary injunction analysis, under which a court assesses "(a) the likelihood that the plaintiff will prevail on the merits at the final hearing; (b) the extent to which the plaintiff is being irreparably harmed by the conduct complained of; (c) the extent to which the defendant will suffer irreparable harm if the preliminary injunction is issued; and (d) the public interest." TPN I, 215 F.3d at 366. At the first step of this analysis, the TPN I panel concluded that The Pitt News "ha[d] not shown a likelihood of succeeding on the merits." Id. at 367. The Court reasoned as follows:

The fact that The Pitt News is a newspaper does not give it a constitutional right to a certain level of profitability, or even to stay in business at all.... Thus, although it is true that the enforcement of Act 199 has had the effect of driving away certain closely regulated businesses who previously advertised in The Pitt News, this does not in itself amount to a violation of The Pitt News' First Amendment...