39 F.3d 5 (1st Cir. 1994), 93-1893, 44 Liquormart, Inc. v. State of R.I.

Docket Nº:93-1893, 93-1927.
Citation:39 F.3d 5
Party Name: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. 44 LIQUORMART, INC. and Peoples Super Liquor Stores, Inc., Plaintiffs, Appellees, v. STATE of RHODE ISLAND, Defendant, Appellant.
Case Date:October 24, 1994
Court:United States Courts of Appeals, Court of Appeals for the First Circuit

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39 F.3d 5 (1st Cir. 1994)

44 LIQUORMART, INC. and Peoples Super Liquor Stores, Inc.,

Plaintiffs, Appellees,


STATE of RHODE ISLAND, Defendant, Appellee,

Rhode Island Liquor Stores Association, Intervenor, Appellant.

44 LIQUORMART, INC. and Peoples Super Liquor Stores, Inc.,

Plaintiffs, Appellees,


STATE of RHODE ISLAND, Defendant, Appellant.

Nos. 93-1893, 93-1927.

United States Court of Appeals, First Circuit

October 24, 1994

Heard Feb. 10, 1994.

Lauren E. Jones with whom Caroline C. Cornwell, Jones Associates, Providence, RI, William P. Gasbarro and Robert M. Brady, East Providence, RI, were on brief, for Rhode Island Liquor Stores Ass'n.

Rebecca Tedford Partington, Sp. Asst. Atty. Gen., with whom Jeffrey B. Pine, Atty. Gen., Providence, RI, was on brief, for State of Rhode Island.

Evan T. Lawson with whom Lawson & Weitzen, Boston, MA, was on brief, for plaintiffs-appellees.

Before CYR, Circuit Judge, ALDRICH, Senior Circuit Judge, and STAHL, Circuit Judge.

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

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that repealed it, in 1956 adopted two statutes, assertedly aimed at promoting temperance, forbidding advertising the price of intoxicating liquor, except at the place of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 Sec. 3-1-5.

R.I.Gen.Laws Sec. 3-8-7 provides,

3-8-7. Advertising price of malt beverages, cordials, wine or distilled liquor.--No manufacturer, wholesaler, 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!"

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 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, 100 S.Ct. 2343, 2351, 65 L.Ed.2d 341 (1980). The ultimate purpose is to weigh "the expression [and] the governmental interests served by its regulation." Id. at 563, 100 S.Ct. at 2350.

I. In the present case the first test raises no question. II. For the second it was stipulated, "The State of Rhode Island

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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 "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, --- U.S. ----, ----, 113 S.Ct. 1792, 1800, 123 L.Ed.2d 543 (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, --- U.S. at ----, 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, 109 S.Ct. 3028, 3034-35, 106 L.Ed.2d 388 (1989) ("reasonable fit"). See also Posadas de Puerto Rico Assoc. v. Tourism Co., 478 U.S. 328, 342, 106 S.Ct. 2968, 2977, 92 L.Ed.2d 266 (1986) ("reasonable"). And while the state has the burden, in California v. LaRue, 409 U.S. 109, 118-19, 93 S.Ct. 390, 397, 34 L.Ed.2d 342 (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, 100 S.Ct. at 2353; "unsupported assertions: nowhere does the State cite any evidence or authority of any kind," Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626, 648, 105 S.Ct. 2265, 2280, 85 L.Ed.2d 652 (1985); lack of studies or "anecdotal evidence," Edenfield, --- U.S. at ----, 113 S.Ct. at 1800. Warrantable inferences, however, may be sufficient. Posadas, 478 U.S. at 341-42, 106 S.Ct. at 2976-77 (advertising). What should a court do when there is no empirical 2 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...

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