Hornell Brewing Co., Inc. v. Brady

• Citation: 819 F. Supp. 1227
• Decision Date: 07 April 1993
• Docket Number: No. CV 92-5720 (CBA).,CV 92-5720 (CBA).
• Parties: HORNELL BREWING CO., INC. and Don Vultaggio, Plaintiffs, v. Nicholas BRADY, as United States Secretary for the Department of the Treasury; the United States Department of the Treasury; Stephen E. Higgins, as Director of the Bureau of Alcohol, Tobacco & Firearms; and William T. Earle, as Chief, Industry Compliance Division for the Bureau of Alcohol, Tobacco & Firearms, Defendants.
• Court: U.S. District Court — Eastern District of New York

819 F. Supp. 1227

HORNELL BREWING CO., INC. and Don Vultaggio, Plaintiffs, v. Nicholas BRADY, as United States Secretary for the Department of the Treasury; the United States Department of the Treasury; Stephen E. Higgins, as Director of the Bureau of Alcohol, Tobacco & Firearms; and William T. Earle, as Chief, Industry Compliance Division for the Bureau of Alcohol, Tobacco & Firearms, Defendants.

No. CV 92-5720 (CBA).

United States District Court, E.D. New York.

April 7, 1993.

McDermott, Will & Emery by Lawrence I. Fox, Russell G. Tisman, New York City, and T. Raymond Williams, Nathalie F.P. Gilfoyle, Washington, DC, for plaintiffs.

Stuart M. Gerson, Asst. U.S. Atty. Gen.

Mary Jo White, U.S. Atty., E.D. New York, Brooklyn, NY by Igou Allbray, Asst. U.S. Atty.

Peter S. Modlin, Patricia M. Russotto, Sandra M. Schraiman, Dept. of Justice, Civil Div., Washington, DC, Imelda Koett, Jeanette Slattery, Office of Chief Counsel, Bureau of Alcohol, Tobacco & Firearms, of counsel, for defendants.

ORDER

AMON, District Judge.

This Court has received the Report and Recommendation of United States Magistrate Judge Joan M. Azrack on the parties' cross motions for summary judgment in the above-captioned case. After an exhaustive analysis of the complex issues raised by these motions, Magistrate Judge Azrack recommended granting summary judgment to the plaintiffs on their claim that Public Law 102-393, § 633 was an unconstitutional infringement of rights guaranteed by the First Amendment. The Magistrate Judge rejected plaintiffs' additional contentions that the statute violated plaintiffs' rights under the Fifth Amendment, constituted a bill of attainder in violation of Article I, § 9 of the Constitution, and violated the principles of separation of powers as delineated in Articles I, II and III of the Constitution.

Having received objections to the report, this Court has conducted an extensive de novo review of the entire record of the proceedings, considered the objections raised and heard oral argument. The Court hereby adopts the Report and Recommendation of the Magistrate Judge insofar as it concludes that the government has failed to satisfy the test to regulate commercial speech as set forth in Central Hudson Gas & Electric v. Public Service Comm'n, 447 U.S. 557, 100 S.Ct. 2343, 65 L.Ed.2d 341 (1980).¹

The Court further notes that, subsequent to issuance of Magistrate Judge Azrack's report, the Supreme Court, in Cincinnati v. Discovery Network, Inc., ___ U.S. ___, 113 S.Ct. 1505, 123 L.Ed.2d 99 (1993), held that the City of Cincinnati's refusal to allow the distribution of commercial publications through freestanding newsracks violated the First Amendment. The Court there determined that Cincinnati had not satisfied its burden of establishing a reasonable fit between this outright ban on such newsracks and the city's legitimate interest in ensuring safe streets and regulating visual blight. Id., ___ U.S. at ___, 113 S.Ct. at 1510. Cincinnati's failure "to address its recently developed concern about newsracks by regulating their size, shape, appearance, or number indicates that it has not `carefully calculated' the costs and benefits associated with the burden on speech imposed by its prohibition." Id. Likewise, here no attempt was made to consider alternative measures that were more narrowly tailored to the government's interest, short of a complete ban on use of the Crazy Horse label.

The Cincinnati Court also found that the requisite "fit" was absent because the benefit achieved by the prohibition, the removal of 62 newsracks "while about 1,500 to 2,000 remain in place," id., was "`minute'" and "`paltry.'" Id. Here, Public Law 102-393, § 633 prohibits the use of just a single name, Crazy Horse, on a label. All other potentially appealing names of revered and important Native American icons, such as Sitting Bull and Big Foot, or any other names or symbols that might appeal to Native Americans, are permitted to appear on alcohol labels. For these reasons and the reasons stated in Magistrate Judge Azrack's report, defendants have not met their burden under Central Hudson. Accordingly, plaintiffs' motion for summary judgment is granted.

Because the First Amendment prohibits enforcement of Public Law 102-393, § 633, the Court finds that it is unnecessary to address or adopt that portion of Magistrate Judge Azrack's report which deals with the remaining constitutional principles that plaintiffs contend invalidate the law.

The clerk of the court is directed to enter judgment accordingly.

SO ORDERED.

AZRACK, United States Magistrate Judge.

This action was brought by plaintiffs to challenge on six grounds the constitutionality of Public Law 102-393, § 633 and to seek a permanent injunction prohibiting defendants from revoking the existing Certificates of Label Approval (COLAs) for Crazy Horse Malt Liquor, and preventing them from denying pending and subsequently filed applications for COLAs pertaining to Crazy Horse Malt Liquor. Upon initiating the action, plaintiffs moved before the Honorable Carol Bagley Amon, United States District Judge, for a preliminary injunction. On December 22, 1992, the parties stipulated that the motion would be recast as a summary judgment motion, permitting time for response and cross motion by defendants. (See Stipulation at 1, 2.) Judge Amon referred the motions in their entirety to the undersigned for a Report and Recommendation. The matter was fully briefed and oral argument was heard on January 27, 1993. For the reasons set forth below, the undersigned respectfully recommends that summary judgment be granted in favor of plaintiffs on the First Amendment claim, and in favor of defendants on the five remaining claims.

BACKGROUND AND FACTS

The following facts are undisputed unless otherwise indicated. Plaintiff Hornell Brewing Company ("Hornell") is a New York corporation which maintains its principal place of business in Brooklyn, New York and produces and markets alcoholic and non-alcoholic beverages including "The Original Crazy Horse Malt Liquor" ("Crazy Horse"). Plaintiff Don Vultaggio is Chairman and co-owner of Hornell. In February, 1992, the Bureau of Alcohol, Tobacco and Firearms ("BATF") issued a Certificate of Label Approval ("COLA") to Hornell's bottler, G. Heileman Brewing Company ("GHBC"), authorizing the bottling and distribution of the Crazy Horse product.¹ The certification process of BATF includes the consideration of whether the label is misleading, fraudulent, or obscene. Hornell introduced Crazy Horse in fourteen states in March 1992. To date, Crazy Horse is distributed in thirty-one states through over 200 wholesalers who resell to over 100,000 retailers. Hornell claims that Crazy Horse Malt Liquor was to be the first product in a series of Hornell beverages that celebrate the American West.²

The introduction of the product caused a surge of indignation throughout Congress, seemingly initiated by the United States Surgeon General Antonia Novello. In April 1992, Dr. Novello held a press conference in Rapid City, South Dakota, where she criticized the choice of the name Crazy Horse for a malt liquor. She accused Hornell of "insensitive and malicious marketing" and encouraged the leaders of Indian nations to use public outrage to force Crazy Horse off the market. (Speech given in Rapid City, South Dakota, April 22, 1992, attached to Vultaggio Aff. as Ex. 5.) Subsequently, members of Congress joined the effort to prohibit use of the name Crazy Horse on the malt liquor product. By letter dated April 20, 1992, South Dakota Senator Larry Pressler directed Hornell to change the product's name or donate its proceeds to Native American causes because "defamation of this hero is an insult to Indian culture." (Vultaggio Aff. Ex. 6.) Similarly, on April 27, 1992, Senator Tom Daschle wrote to Hornell expressing his displeasure with the use of the name Crazy Horse. (Vultaggio Aff. Ex. 7.) On May 19, 1992, Dr. Novello appeared before the House Select Committee on Children, Youth and Family. Representative Patricia Schroeder had called the hearing to consider legislation to prohibit use of the name Crazy Horse on alcoholic beverages. No representative of Hornell was permitted to appear at the hearing. (Pls.' Mem.Supp.Mot. at 7; see also Confronting the Impact of Alcohol Labeling and Marketing on Native American Health and Culture: Hearing before the House Select Committee on Children, Youth, and Families, 102d Cong., 2d Sess. (1992), Defs.' Mem. Ex. A.)

Subsequently, Representative Frank Wolf offered an amendment to the Treasury, Postal Service and General Government Appropriations Bill then under consideration. The amendment would have prohibited the use of trade names or brand names for alcoholic beverages that bore the name of any deceased individual of public prominence if the use of the name were likely to degrade or disparage the reputation of the individual. (138 Cong.Rec. H5769-70 (July 1, 1992), Vultaggio Aff. Ex. 10.) Representative Wolf made clear that the introduction of the Crazy Horse product was the impetus for the proposed amendment, stating, "The language has been put in because this brewer has developed an alcoholic beverage called Crazy Horse. Crazy Horse was an Indian chief who was known for urging his people not to drink alcohol." A Point of Order was sustained because the amendment attempted to create legislation through an appropriations bill in violation of House of Representatives rules. (138 Cong.Rec.H. 5769-70 (July 1, 1992), Vultaggio Aff. Ex. 10.) Wolf then proposed an amendment explicitly aimed at prohibiting the use of the name "Crazy Horse" on any alcoholic beverage. (138 Cong.Rec.H. 5775 (July 1, 1992), Vultaggio Aff. Ex. 11.) The House approved this bill and referred it to the Conference Committee. Rather than adopting the House bill, the Senate Committee adopted a resolution directing Hornell to negotiate with Sioux leaders and...