Dunagin v. City of Oxford, Miss.

• Decision Date: 31 October 1983
• Docket Number: Nos. 80-3762,82-4076,s. 80-3762
• Citation: 718 F.2d 738
• Parties: 10 Media L. Rep. 1001 Kathy DUNAGIN, et al., Plaintiffs-Appellants, v. The CITY OF OXFORD, MISSISSIPPI, et al., Defendants-Appellees, The State of Mississippi, Intervenor-Appellee. LAMAR OUTDOOR ADVERTISING, INC., et al., Plaintiffs-Appellees, v. MISSISSIPPI STATE TAX COMMISSION, et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 738

718 F.2d 738

10 Media L. Rep. 1001

Kathy DUNAGIN, et al., Plaintiffs-Appellants, v. The CITY OF OXFORD, MISSISSIPPI, et al., Defendants-Appellees, The State of Mississippi, Intervenor-Appellee.

LAMAR OUTDOOR ADVERTISING, INC., et al., Plaintiffs-Appellees, v. MISSISSIPPI STATE TAX COMMISSION, et al., Defendants-Appellants.

Nos. 80-3762, 82-4076.

United States Court of Appeals Fifth Circuit.

Oct. 31, 1983.

Holcomb, Dunbar, Connell, Merkel, Tollison & Khayat, Dan W. Webb, Grady F. Tollison, Jr., Guy T. Gillespie, III, Oxford, Miss., for plaintiffs-appellants in No. 80-3762.

James K. Child, Jr., Jackson, Miss., Henry E. Chatham, Jr., Jack H. Pittman, Hattiesburg, Miss., for Lamar Outdoor Advertising, et al. in both cases.

Richard D. Gamblin, Hattiesburg, Miss., for plaintiffs-appellees in No. 82-4076.

John E. Milner, W. Timothy Jones, Edmund L. Brunini, Sr., Sp. Asst. Attys. Gen., Peter M. Stockett, Jr., Asst. Atty. Gen., Jackson, Miss., for State of Miss. in No. 80-3762 and for defendants-appellants in No. 82-4076.

William S. Boyd, III, Sp. Asst. Atty. Gen., Jackson, Miss., for State of Miss. in No. 80-3762.

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

F. Edwin Perry, Oxford, Miss., for City of Oxford, in No. 80-3762.

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

Peter H. Meyers, John F. Banzhaf, III, Washington, D.C., amicus curiae for Accuracy and Action about Alcohol Addiction.

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

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

Before CLARK, Chief Judge, BROWN, GOLDBERG, GEE, REAVLEY, POLITZ, RANDALL, TATE, JOHNSON, WILLIAMS, GARWOOD, JOLLY and HIGGINBOTHAM, Circuit Judges. ^*

REAVLEY, Circuit Judge:

Mississippi is one of several states which significantly restrict liquor advertising by the local media. ¹ Two suits were filed attacking, principally on First Amendment grounds, the Mississippi law. The District Courts for the Northern and Southern Districts of Mississippi reached opposite judgments in those cases. Dunagin v. City of Oxford, 489 F.Supp. 763 (N.D.Miss.1980) (upholding); Lamar Outdoor Advertising, Inc. v. Mississippi State Tax Commission, 539 F.Supp. 817 (S.D.Miss.1982) (invalidating). ² We uphold the constitutionality of the Mississippi law.

I. The Mississippi Law

Until 1966 the possession and sale of alcohol were banned in Mississippi. The state then accepted the impossibility of enforcement of total prohibition and enacted a local option law, allowing each county or judicial district therein to vote an end to the prohibition that otherwise continues throughout the state. Miss.Code Ann. Secs. 67-1-1 et seq. (1973). Mississippi did not drop its objection to intoxicants by enacting the 1966 law; it reannounced the state policy of prohibition while allowing local exceptions under strict regulation:

The policy of this state is reannounced in favor of prohibition of the manufacture, sale, distribution, possession and transportation of intoxicating liquor .... The purpose and intent of this chapter is to vigorously enforce the prohibition laws throughout the state, except in those counties voting themselves out from under the prohibition law in accordance with the provisions of this chapter, and, in those counties, to require strict regulation and supervision of the manufacture, sale, distribution, possession and transportation of intoxicating liquor....

Id. Sec. 67-1-3. At the time of trial in Lamar Outdoor Advertising, thirty-five counties and four judicial districts remained "dry," while forty-three counties and four judicial districts had voted to legalize liquor. The wet and dry counties are spread across the state in a checkerboard pattern, with the majority of the population residing in wet counties.

Pursuant to its rulemaking authority granted by the local option law, id. Sec. 67-1-37(e), the Mississippi State Tax Commission promulgated Regulation No. 6, which prohibits most advertisements that "originate" within the state. ³ The plaintiffs challenged this regulation, as well as Miss.Code Ann. Sec. 67-1-85 (1973) which prohibits most forms of liquor sign advertising as well. ⁴

The combined effect of Regulation No. 6 and section 67-1-85 is that there are no billboards advertising hard liquor or wine in Mississippi. Local newspapers printed and distributed within the state are similarly restricted. Radio and television stations operating within the state cannot carry wine commercials, and must delete such advertisements from incoming network programming.

There are some exceptions to this ban upon the advertising of alcoholic beverages. Beer advertisements are generally allowed in all media. ⁵ A retail package store is allowed under Regulation No. 6 to erect on-site signs with the message "Package Liquor Sold Here" along with its permit number, and may advertise inside the premises. Bars and restaurants can use the word "lounge" on signs and in other media.

The state has interpreted its law to mean that advertisements must originate within the state to be subject to its regulation. Hence, television and radio stations in other states broadcast liquor commercials that reach in-state viewers and listeners. Newspapers and magazines containing liquor advertisements from other states are mailed into the state, and newsstands in Mississippi are allowed to sell such publications. The state has even taken the position that a publication printed in Mississippi but mailed for distribution in Mississippi from another state is not subject to regulation. The state has also interpreted federal regulations to prohibit it from interrupting or deleting wine commercials in cable television transmissions sent from outside the state. See 47 C.F.R. Sec. 76.55 (1982).

II. The First Amendment and Liquor Regulation

Those challenging the advertising ban argue primarily that it violates the First Amendment. They contend that this advertising falls within that limited protection afforded pure commercial speech which does "no more than propose a commercial transaction," Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748, 762, 96 S.Ct. 1817, 1825, 48 L.Ed.2d 346 (1976) and which is "related solely to the economic interests of the speaker and its audience," Central Hudson Gas & Electric Corp. v. Public Service Commission of New York, 447 U.S. 557, 561, 100 S.Ct. 2343, 2348, 65 L.Ed.2d 341 (1980). ⁶

A. The Scope of Commercial Speech Protection

While we need not so hold, there may be no First Amendment protection of purely commercial advertising of those products which the state could entirely proscribe. ⁷ Or, if by virtue of its police power the state may prohibit or severely limit a trade or conduct (e.g., prostitution, hand-guns, explosive devices, marijuana, pipes and paraphernalia designed to be used with illegal drugs), the state may be entitled to allow the trade but restrict the advertising without having to justify the restriction by balancing the state interest against the public interest in the commercial speech. The Court has not expressly excepted this category of advertising from commercial speech protection. It has excluded advertising of illegal activity from the protection. Pittsburgh Press Co. v. Pittsburgh Commission on Human Relations, 413 U.S. 376, 388-389, 93 S.Ct. 2553, 2560, 37 L.Ed.2d 669 (1973). And restrictions on false, deceptive, and misleading commercial speech are permissible. Friedman v. Rogers, 440 U.S. 1, 9, 99 S.Ct. 887, 893, 59 L.Ed.2d 100 (1979). Thus far, the Court has written to place commercial speech under protection where "it at least concern[s] lawful activity and [is] not ... misleading." Central Hudson Gas, 447 U.S. at 566, 100 S.Ct. at 2351.

The Court may or may not choose to exclude from protection the truthful advertising of lawful trades or activities which the state has so great an interest in abating that they are subject to prohibition. It probably makes no difference, however, whether this category of advertising is treated as outside of commercial speech protection or whether the Central Hudson Gas four-part test, discussed below, is applied, because cases of this category likely present state interests which justify advertising restrictions that pass the latter test as a matter of law.

The state argues that liquor advertising is excluded from protection by the previous opinions of the Supreme Court because that advertising does promote illegal activity and is inherently misleading. We do not agree with these contentions.

The illegality argument is based on the fact that nearly half of the counties in the state are dry, and the fact that even in the wet counties, the manufacture, sale and distribution of liquor are only legal in limited areas--municipalities, qualified resort areas and clubs, Miss.Code Ann. Sec. 67-1-7 (1973)--and even consumption is banned in certain areas of wet counties, such as public schools and colleges, id. Sec. 67-1-37(g). The state reasons that liquor advertising would therefore necessarily relate to unlawful activity. The district court in Dunigan agreed:

The Local Option Law does not expressly forbid the advertising of alcoholic beverages in "dry" areas, but it is beyond peradventure that such advertising must contribute to and encourage violation of the statute. This is true whether or not the newspaper is circulated only in a "dry" county because advertisement of liquor is apt to encourage consumers in "dry" counties to violate the law by purchasing liquor in "wet" counties for transportation home. This factor is exacerbated in the case of The Daily Mississippian because its principal readers are University students, particularly mobile citizens who come to Oxford from all sections of Mississippi to attend school. Some...