Mo. Broadcasters Ass'n v. Lacy

• Decision Date: 19 January 2017
• Docket Number: No. 16-2006,16-2006
• Citation: 846 F.3d 295
• Parties: MISSOURI BROADCASTERS ASSOCIATION; Meyer Farms, Inc.; Uncle D's Sports Bar & Grill, LLC; Zimmer Radio of Mid–MO, Inc., Plaintiffs–Appellants v. Lafayette E. LACY, State Supervisor of Liquor Control, in his official capacity; Chris Koster, Attorney General of the State of Missouri, in his official capacity, Defendants–Appellees
• Court: U.S. Court of Appeals — Eighth Circuit

846 F.3d 295

MISSOURI BROADCASTERS ASSOCIATION; Meyer Farms, Inc.; Uncle D's Sports Bar & Grill, LLC; Zimmer Radio of Mid–MO, Inc., Plaintiffs–Appellants

v.Lafayette E. LACY, State Supervisor of Liquor Control, in his official capacity; Chris Koster, Attorney General of the State of Missouri, in his official capacity, Defendants–Appellees

No. 16-2006

United States Court of Appeals, Eighth Circuit.

Submitted: November 17, 2016

Filed: January 19, 2017

Michael Lee Nepple, Mark Sableman, Thompson & Coburn, Saint Louis, MO, for Plaintiffs–Appellants.

Emily Ann Dodge, Joanna L.W. Trachtenberg, Assistant Attorney General, Attorney General's Office, Jefferson City, MO, for Defendants–Appellees.

Before RILEY, Chief Judge, WOLLMAN and KELLY, Circuit Judges.

RILEY, Chief Judge.

The State of Missouri enacted a statute and two regulations detailing the information alcohol manufacturers, wholesalers, distributers, and retailers could include in their advertisements. See Mo. Rev. Stat. § 311.070.4(10) ; Mo. Code Regs. Ann. tit. 11, § 70–2.240(5)(G), (I). Plaintiffs filed suit alleging the statute and regulations violated their freedom of speech under the First Amendment of the United States Constitution. Having appellate jurisdiction under 28 U.S.C. § 1291, we reverse the district court's grant of defendants' motion to dismiss. Plaintiffs' amended complaint plausibly stated a claim upon which relief could be granted.

I. BACKGROUND

Missouri enacted two regulations prohibiting alcohol manufacturers, wholesalers, distributers, and retailers from advertising certain information under specific circumstances. Section 70–2.240(5)(G) (Discount Advertising Prohibition Regulation) prohibits alcohol retailers from advertising discounted prices outside their establishment.¹ According to plaintiffs, the Discount Advertising Prohibition Regulation prohibits retailers from advertising information such as "a two-for-one special on beer at the local grocery store, a going-out-of-business sale at a specialty wine shop, or a coupon for one free drink with the purchase of an entree at a neighborhood bar and grill." According to the interpretation put forth by defendants, the Discount Advertising Prohibition Regulation does permit advertising sales using generic descriptions (e.g., "Happy Hour" and "Ladies Night") and advertising all sales, promotions, and discounts within the retail establishment itself. In addition, § 70–2.240(5)(I) (Below Cost Advertising Prohibition Regulation) prohibits alcohol retailers from advertising prices below the retailers' actual cost.²

Missouri also enacted a statute (Single Retailer Advertising Prohibition Statute) specifying how distillers and wholesalers may advertise retailers selling their products. See Mo. Rev. Stat. § 311.070.4(10).³

The Single Retailer Advertising Prohibition Statute requires producers and wholesalers, if they choose to list any retailer in an advertisement, to exclude the retail price of the product from the advertisements, list multiple retail businesses not affiliated with one another, and make the listing inconspicuous. See id.

Plaintiffs—a non-profit corporation promoting the interests and welfare of the broadcasting industry, a corporation operating radio stations, a winery, and a commercial food and drink establishment licensed to sell alcohol—filed suit against Missouri's state supervisor of liquor control and state attorney general. According to the amended complaint, the three challenged provisions are facially unconstitutional under the First Amendment. Plaintiffs asserted the challenged provisions prohibit truthful, non-misleading commercial speech and restrict the free flow of truthful information to potential customers. Plaintiffs also claimed Missouri inconsistently enforces the provisions, allowing some prohibited advertisements to go unpunished, and the Single Retailer Advertising Prohibition Statute unconstitutionally compels speech. Under plaintiffs' theory, "[d]efendants cannot show that the [challenged provisions] directly advance a substantial governmental interest, nor that they regulate no more extensively than necessary to serve that substantial interest."

Defendants moved to dismiss the amended complaint, which the district court initially denied. Plaintiffs then moved for summary judgment. The district court denied plaintiffs' motion for summary judgment and, in the same order denying summary judgment, stated: "[G]iven that defendants raised these same issues previously in their motion to dismiss, the Court finds that reconsideration of the Court's previous order denying the motion to dismiss is warranted, and the Court sua sponte grants defendants' motion to dismiss." The district court did not provide any further discussion of how the amended complaint failed to state a claim. Plaintiffs appeal the district court's dismissal, and we reverse.⁴

II. DISCUSSION

We review a district court's grant of a Rule 12(b)(6) motion to dismiss de novo. See Sabri v. Whittier All., 833 F.3d 995, 998 (8th Cir. 2016). "[W]e accept as true all factual allegations in the complaint and draw all reasonable inferences in favor of the nonmoving party." McDonough v. Ankoa County, 799 F.3d 931, 945 (8th Cir. 2015). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face’ " and plead "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). To state a claim that a statute is facially invalid under the Free Speech Clause of the First Amendment, plaintiffs must show " ‘that no set of circumstances exist under which [the statute] would be valid,’ " United States v. Stevens, 559 U.S. 460, 472, 130 S.Ct. 1577, 176 L.Ed.2d 435 (2010) (quoting United States v. Salerno, 481 U.S. 739, 745, 107 S.Ct. 2095, 95 L.Ed.2d 697 (1987) ), or that "a ‘substantial number’ of [the statute's] applications are unconstitutional, ‘judged in relation to the statute's plainly legitimate sweep,’ " Wash. State Grange v. Wash. State Republican Party, 552 U.S. 442, 449 n.6, 128 S.Ct. 1184, 170 L.Ed.2d 151 (2008) (quoting New York v. Ferber, 458 U.S. 747, 770–71, 102 S.Ct. 3348, 73 L.Ed.2d 1113 (1982) ).

The parties agree the challenged provisions regulate commercial speech. The First Amendment "accords a lesser protection to commercial speech than to other constitutionally guaranteed expression." Cent. Hudson Gas v. Pub. Serv. Comm'n of N.Y., 447 U.S. 557, 563, 100 S.Ct. 2343, 65 L.Ed.2d 341 (1980). In Central Hudson, the Supreme Court identified four considerations to determine the constitutionality of laws burdening commercial speech: "(1) whether the commercial speech at issue concerns unlawful activity or is misleading; (2) whether the governmental interest is substantial; (3) whether the challenged regulation directly advances the government's asserted interest; and (4) whether the regulation is no more extensive than necessary to further the government's interest."⁵ 1–800–411–PAIN Referral Serv. , LLC v. Otto, 744 F.3d 1045, 1055 (8th Cir. 2014).

At this stage, defendants accept the provisions prohibit truthful and non-misleading speech and plaintiffs concede the asserted state interest of promoting responsible drinking is substantial.⁶ SeeMo. Rev. Stat. § 311.015. Thus, the only two points at issue are whether plaintiffs' amended complaint included sufficient factual matter to state a claim that (1) the provisions do not directly advance the substantial interests or (2) the provisions are more extensive than necessary. See Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 ; 1–800–411–PAIN Referral Serv., 744 F.3d at 1055. We hold plaintiffs pled more than sufficient facts to state a claim plausible on its face.

First, the amended complaint included sufficient allegations that the challenged provisions did not directly advance the substantial interest of promoting responsible drinking. This consideration "concerns the relationship between the harm that underlies the State's interest and the means identified by the State to advance that interest." Lorillard Tobacco Co. v. Reilly, 533 U.S. 525, 555, 121 S.Ct. 2404, 150 L.Ed.2d 532 (2001). Defendants " ‘must demonstrate that the harms [they] recite[ ] are real and that [defendants'] restriction will in fact alleviate them to a material degree.’ " Greater New Orleans Broad. Ass'n, Inc. v. United States, 527 U.S. 173, 188, 119 S.Ct. 1923, 144 L.Ed.2d 161 (1999) (quoting Edenfield v. Fane, 507 U.S. 761, 771, 113 S.Ct. 1792, 123 L.Ed.2d 543 (1993) ).

Defendants argue there is a "commonsense link" between advertising and increasing demand for a product. It is true that it is "a matter of ‘common sense’ that a restriction on the advertising of a product characteristic will decrease the extent to which consumers select a product on the basis of that trait." Rubin v. Coors Brewing Co., 514 U.S. 476, 487, 115 S.Ct. 1585, 131 L.Ed.2d 532 (1995). But the common sense link between advertising promotions and increasing demand for alcohol does not demonstrate the challenged restrictions directly advance the interest in promoting responsible drinking. A theoretical increase in demand for alcohol based on a lower price does not necessarily mean any consumption of that alcohol is irresponsible.

The allegations in plaintiffs' amended complaint make clear the challenged provisions do little, if anything, to advance the asserted state interest. The multiple inconsistencies within the regulations poke obvious holes in any potential advancement of the interest in promoting responsible drinking, to the point the regulations do not advance the interest at all. See id. at 488, 115 S.Ct. 1585 (reasoning if a regulatory scheme is irrational, such as banning labeling...