Lamar Outdoor Advertising, Inc. v. Mississippi State Tax Com'n

Decision Date11 March 1983
Docket NumberNo. 82-4076,82-4076
Citation701 F.2d 314
Parties9 Media L. Rep. 1449 LAMAR OUTDOOR ADVERTISING, INC., et al., Plaintiffs-Appellees, v. MISSISSIPPI STATE TAX COMMISSION, et al., Defendants-Appellants.
CourtU.S. Court of Appeals — Fifth Circuit

John E. Milner, W. Timothy Jones, Peter M. Stockett, Jr., Asst. Atty. Gen., Jackson, Miss., for defendants-appellants.

Center for Science in the Public Interest, Bruce Silverglade, Dir. of Legal Affairs, Washington, D.C., for amicus curiae.

Gary W. Gardenhire, Asst. Atty. Gen., Chief, Civ. Div., Oklahoma City, Okl., for State of Oklahoma.

Peter H. Meyers, Washington, D.C., for Accuracy and Action About Alcohol Addiction.

John F. Banzhaf, III, Washington, D.C., for Ash.

James K. Child, Jr., Henry E. Chatham, Jr., Richard D. Gamblin, Jackson, Miss., Jack H. Pittman, Hattiesburg, Miss., for plaintiffs-appellees.

Appeal from the United States District Court for the Southern District of Mississippi.

Before GOLDBERG, GEE and HIGGINBOTHAM, Circuit Judges.

GEE, Circuit Judge:

This case presents the question whether certain statutes and regulations of the State of Mississippi violate our constitutional guarantee of freedom of speech because they effectively ban liquor advertising on billboards and in printed and electronic media originating within the state.*

Appellees are 56 outdoor advertising, newspaper, television and radio businesses that operate in Mississippi. They brought this action against the Mississippi State Tax Commission (the "Commission"), the individual Commissioners thereof, the Commission's Alcoholic Beverage Control Division (the "ABC Division"), and the Attorney General of the State of Mississippi. Each of the defendants is responsible for enforcement of at least part of the Mississippi liquor advertising ban. It was alleged that Mississippi's liquor regulatory scheme prevented appellees from accepting liquor advertising for publication or display within the state, causing them substantial losses of revenue. 1 The appellees sought a declaratory judgment that Mississippi's liquor advertising ban unconstitutionally abridged their commercial speech rights and an injunction against enforcement of the ban. Following a two-day trial, the district court granted appellees' prayers for declaratory and injunctive relief and the state brought this appeal.

Because an understanding of the precise structure of the challenged advertising laws within the wider context of the Mississippi liquor regulatory scheme is necessary to resolve the issues in this case, we begin by describing the elements of Mississippi law in some detail.

I. The Local Option Alcoholic Beverage Control Law.

In 1966, the Mississippi Legislature enacted the Local Option Alcoholic Beverage Control Law (the "Local Option Law"). Miss.Code Ann. Secs. 67-1-1 et seq. (1972). This statute strictly regulates manufacture, sale, distribution, possession and transportation in Mississippi of alcoholic beverages except light beers and wines. 2

The Local Option Law allows a county, or a judicial district within a county, to "vote itself out from under" the otherwise state-wide prohibition of liquor maintained by the statute. Miss.Code Ann. Secs. 67-1-3; 67-1-7 (1972). If by majority vote of its electors a county or judicial district votes to withdraw from state-wide prohibition, then subject to the "provisions and restrictions" of the Local Option Law, "possession and transportation" of liquor are legal throughout its jurisdiction. Id. However, the "manufacture, sale and distribution" of liquor is lawful only within incorporated municipalities, qualified resort areas, and clubs located within the county or judicial district. Id. In each county or judicial district, if an election is not held, or if the majority of electors votes against repeal, the Local Option Law continues to enforce strict prohibition within that jurisdiction: manufacture, sale and distribution of liquor, as well as possession or transportation, are banned completely. Id.; Miss.Code Ann. Sec. 67-1-17 (1972).

At the time of trial, thirty-five "dry" counties and four judicial districts in other counties had not voted to legalize liquor. Forty-three "wet" counties and four judicial districts in other counties had voted to repeal prohibition to the extent permitted by the Local Option Law. Wet and dry jurisdictions are distributed randomly throughout the state. According to the testimony of the Director of the ABC Division, a majority of Mississippi's population resides in wet counties. 3

Mississippi's liquor regulatory scheme incorporates several statutory provisions and regulations affecting advertisement of alcoholic beverages, all of which are challenged by the appellees. Section 97-31-1, enacted in 1916, completely bans all liquor advertising in the state. This provision is part of the "Intoxicating Beverages Offences" chapter of the Mississippi Code, which comprises Mississippi's pre-local option statutes that enforced complete prohibition of liquor in the state. Miss.Code Ann. Secs. 97-31-1 et seq. (1972). The subsequently-enacted Local Option Law incorporated the Intoxicating Beverages Offences by reference, repealing "[a]ll laws and parts of laws in conflict with [the Local Option Law] only to the extent of such conflict." Miss.Code Ann. Sec. 67-1-3 (1972). As we shall see, the advertising ban of the Local Option Law applies only to advertisements originating within Mississippi. Accordingly, since Section 97-31-1 is more extensive than the Local Option Law and must be read in pari materia with it, the scope of its advertising ban is limited to that of the Local Option Law as discussed below. 4

The principal provisions challenged in this case are Miss.Code Ann. Sec. 67-1-37(e) (1972) and its attendant regulation, Regulation No. 6. Section 67-1-37(e) provides:

The state tax commission, under its duties and powers with respect to the alcoholic beverage control division therein, shall have the following powers, functions and duties:

(e) To issue rules prohibiting the advertising of alcoholic beverages in the state in any class of media and to provide further that all advertising of the retail price of alcoholic beverages shall be prohibited except on placards or signs in the interior of licensed premises which are not visible from the exterior.

Pursuant to this statutory authority, the ABC Division has issued its Regulation No. 6:

No person, firm or corporation shall originate advertisement in this State dealing with alcoholic beverages by any means whatsoever, including but not limited to newspapers, radio, television, circular, dodger, word of mouth, signs, billboards, displays or any other advertising media ... (emphasis added).

Regulation No. 6 provides exceptions for certain limited types of advertising. Each retail package store may erect a sign on its premises that states the name of the business, its ABC Division permit number, and the legend "Package Liquor Sold Here." The size of the lettering and location of the sign are specified. Retail package dealers may also maintain advertising displays inside their places of business so long as they are not placed in windows and do not attract attention from outside the building. In addition, the word "lounge" may be used on signs and in other forms of advertising to identify establishments holding permits to sell liquor for on-premises consumption. No other words suggesting that liquor is sold, such as "cocktails" or "bar," may be used. Regulation No. 6 further provides that all advertising not specifically permitted by statute or regulation is prohibited. Finally, the Regulation provides that advertising of doubtful legality may be submitted to the Commission for approval prior to publication.

Appellees also challenge Section 67-1-85 of the Local Option Law which, like Regulation No. 6, prohibits liquor advertising on billboards. Miss.Code Ann. Sec. 67-1-85 (1972). This provision was amended by House Bill No. 905 in the 1982 session of the Mississippi Legislature to allow billboard advertising, except as to price, of native wines--wines produced principally from fruit grown in Mississippi--by Mississippi wineries. Miss.Code Ann. Secs. 67-1-85, 67-1-5(q), 67-5-5 (Supp.1982). All other billboard advertising of alcoholic beverages remains prohibited. 5

According to the testimony of Mr. L.R. Mashburn, the ABC Division's Chief of Enforcement, the policy of the ABC Division, consistent with the language of Regulation No. 6, is not to enforce the state's liquor advertising ban against anyone who does not "originate advertisement" of liquor within Mississippi. Mr. Mashburn further testified that the ABC Division has interpreted the phrase "originate advertisement in this State" to mean that the central place of publication or dissemination of the liquor advertisements must be within the physical boundaries of Mississippi. The state's policy is based upon a perceived lack of jurisdiction over out-of-state advertisers and is derived in part from two 1967 Opinions of the Attorney General of Mississippi. 6 In his opinion dated March 29, 1967, the Attorney General stated that Mississippi had no control over liquor advertisements in a magazine printed in another state and mailed into Mississippi. Later, on May 19, 1967, the Attorney General opined that "there would be no violation of our advertising law" if a magazine containing liquor advertisements were printed in Mississippi, shipped to Louisiana, and mailed for distribution from that state.

Mr. Mashburn testified that the state enforced its advertising ban against newspapers and magazines published in Mississippi and that the state considered itself without jurisdiction to ban advertisements in publications published in other states and circulated in Mississippi. Similarly, the state attempts to enforce its rules only against outdoor advertising physically located within its borders. Television and radio...

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