Mo. Broadcasters Ass'n v. Schmitt
| Decision Date | 08 January 2020 |
| Docket Number | No. 18-2611,18-2611 |
| Parties | MISSOURI BROADCASTERS ASSOCIATION; Meyer Farms, Inc.; Uncle D’s Sports Bar & Grill, L.L.C. ; Zimmer Radio of Mid-MO, Inc., Plaintiffs - Appellees v. Eric S. SCHMITT, Attorney General of the State of Missouri, in his official capacity; Dorothy Taylor, Acting State Supervisor of the Division of Alcohol and Tobacco Control, Defendants - Appellants National Beer Wholesalers Association, Amicus on Behalf of Appellant(s) Washington Legal Foundation, Amicus on Behalf of Appellee(s) Wine & Spirits Wholesalers of America, Inc., Amicus on Behalf of Appellant(s) Show-Me Institute, Amicus on Behalf of Appellee(s) Missouri Beer Wholesalers Association, Amicus on Behalf of Appellant(s) American Civil Liberties Union of Missouri, Amicus on Behalf of Appellee(s) Missouri Craft Brewers Guild, Amicus on Behalf of Appellant(s) The Freedom Center of Missouri, Amicus on Behalf of Appellee(s) American Beverage Licensees, Amicus on Behalf of Appellant(s) Cato Institute, Amicus on Behalf of Appellee(s) |
| Court | U.S. Court of Appeals — Eighth Circuit |
Counsel who presented argument on behalf of the appellant and appeared on the brief were Christopher R. Wray, AAG, of Jefferson City, MO and John Sauer, AAG, of Jefferson City, MO. The following attorney(s) also appeared on the appellant brief; Joshua Divine, AAG, of Jefferson City, MO., and Emily Dodge, AAG, of Jefferson City, MO.
Counsel who presented argument on behalf of the appellee and appeared on the brief was Mark Sableman, of Saint Louis, MO. The following attorney(s) also appeared on the appellee brief; Michael Lee Nepple, of Saint Louis, MO., Anthony F. Blum, of Saint Louis, MO.
The following attorney(s) appeared on the amicus brief; Michael Madigan, of Minneapolis, MN., Anthony E. Rothert, of Saint Louis, MO., Richard Abbott Samp, of Washington, DC., Cory L. Andrews, of Washington, DC., Paul Edward Pisano, of Alexandria, VA., Gillian R. Wilcox, of St. Louis, MO., Brandt F. Erwin, of Minneapolis, MN., Ilya Shapiro, of Washington, DC., Jessie M. Steffan, of Saint Louis, MO., David Edward Roland, of Mexico, MO., Trevor Burrus, of Washington, DC.
Before KELLY, MELLOY, and STRAS, Circuit Judges.
Missouri Broadcasters sued Missouri concerning a Missouri statute and two Missouri regulations that allegedly violate the First Amendment right to free speech.1 After a bench trial, the district court2 determined that the Missouri laws violated the First Amendment. Missouri appeals the district court’s judgment.
Missouri has a three-tiered system to regulate the sale and distribution of alcohol within its borders. Mo. Rev. Stat. § 311.010–.950. It consists of (1) producers (e.g., distilleries, wineries, or breweries), (2) distributors or wholesalers, and (3) retailers (e.g., bars or liquor stores). Under a strict three-tiered system, producers are prohibited from distributing and retailing, distributors are prohibited from producing and retailing, and retailers are prohibited from producing and distributing. The laws that establish this system are commonly known as "tied-house" laws.3
The stated purpose of Missouri’s tied-house laws, formally known as its Liquor Control Law, is "to promote responsible consumption, combat illegal underage drinking, and achieve other important state policy goals such as maintaining an orderly marketplace composed of state-licensed alcohol producers, importers, distributors, and retailers." Id. § 311.015.
Section 311.070.1 (the Statute) of the Liquor Control Law provides, in relevant part:
Distillers, wholesalers, winemakers, brewers or their employees, officers or agents shall not, except as provided in this section, directly or indirectly, have any financial interest in the retail business for sale of intoxicating liquors, and shall not, except as provided in this section, directly or indirectly, loan, give away or furnish equipment, money, credit or property of any kind, except ordinary commercial credit for liquors sold to such retail dealers.
Id. § 311.070.1. Missouri interprets the Statute as prohibiting producers and distributors4 from retail advertising, because this type of advertising would qualify as a "financial interest in the retail business."
Subsection 311.070.4(10) provides an exception to the Statute’s general prohibition on retail advertising by producers and distributors. Under this exception, a producer or distributor "may in an advertisement list the names and addresses of two or more unaffiliated retail businesses selling its product," but only if it excludes the retail price of the product in the advertisement, lists multiple retail businesses not affiliated with one another, and makes the list of retailers inconspicuous.5 Id. § 311.070(4)(10). According to Missouri, this exception does not undermine its three-tiered system because any value to the retailer is "de minimis."
Missouri also enacted two regulations that prohibit certain types of advertisements. The first, the Discount Regulation, Mo. Code Regs. Rev. Tit. 11, § 70-2.240(5)(G), prohibits retailers from advertising discounted prices for "intoxicating liquor" outside of their establishments.6
For example, this regulation prohibits a retailer from taking out advertisements in a newspaper that say "$5 Margarita Mondays," "Buy One, Get One Free," "Half Price," or "Free Drinks for Ladies." Missouri interprets the regulation to permit advertisements that use a more generic description of a sale, such as "Happy Hour" or "Ladies Night." The Discount Regulation also allows advertising all sales, promotions, and discounts of any kind inside a retail establishment. The second regulation is the Below Cost Regulation, Mo. Code Regs. Rev. Tit. 11, § 70-2.240(5)(I), and it prohibits retailers from advertising prices below the retailers’ actual cost (e.g., "penny pitchers" or "90-cent Bud Lights").7 Retailers are, however, permitted to advertise below-cost alcohol inside their retail establishments. Neither regulation prohibits the sale of discounted or below-cost alcohol.
Missouri Broadcasters filed this action arguing that the Statute, as applied to advertisements by producers and distributors, and the Regulations, facially, violated their right to freedom of speech under the First Amendment. They further alleged that subsection 4(10) unconstitutionally compels speech. Missouri filed a motion to dismiss based on Fed. R. Civ. P. 12(b)(6), which the district court granted. This court reversed and remanded. Mo. Broads. Ass’n v. Lacy, 846 F.3d 295, 303 (8th Cir. 2017). On remand, the district court conducted a two-day bench trial and found that the Statute and the Regulations violated the First Amendment.
Missouri advances three arguments on appeal: (1) the Statute does not implicate the First Amendment; (2) even if the Statute implicates the First Amendment, it passes the Central Hudson test for commercial speech and subsection 4(10) does not compel speech; and (3) the Regulations are also constitutional under Central Hudson. Because the district court conducted a bench trial, we review the trial court’s factual findings for clear error and its legal conclusions de novo. Richardson v. Sugg, 448 F.3d 1046, 1052 (8th Cir. 2006).
The First Amendment, which applies to state and local government through the Fourteenth Amendment, prohibits laws "abridging the freedom of speech." U.S. Const. amend. I ; see also Passions Video, Inc. v. Nixon, 458 F.3d 837, 840 (8th Cir. 2006). The First Amendment "does not prevent restrictions directed at commerce or conduct from imposing incidental burdens on speech." Sorrell v. IMS Health Inc., 564 U.S. 552, 567, 131 S.Ct. 2653, 180 L.Ed.2d 544 (2011). But a statute falls within the purview of the First Amendment if it "imposes a burden based on the content of speech and the identity of the speaker." Id.
Missouri argues the Statute implements a three-tiered system that regulates economic activity and, at most, only incidentally affects speech. In particular, Missouri notes the Statute does not mention speech and instead simply prohibits producers and distributors from retail advertising. Missouri further contends its three-tiered system comports with its authority under the Twenty-first Amendment.8
Although the Statute on its face does not restrict speech, its practical operation restricts speech based on content and speaker identity. The Statute imposes content-based restrictions by limiting what producers and distributors can say in their advertisements. See id. at 564, 131 S.Ct. 2653 (). Under the Statute, a producer or distributor may not have an advertisement that says, "Drink Coors Light, now available at Joe’s Bar," because the advertisement mentions a retailer. The Statute also restricts speech based on speaker identity because it allows retailers—but not producers or distributors—to run certain advertisements. That is, Joe’s Bar could run the ad, "Drink Coors Light, now available at Joe’s Bar," but a producer or distributor could not. Missouri’s economic motivation for the Statute does not insulate it from First Amendment challenges. Cf. id. at 567, 131 S.Ct. 2653 (). The Statute "imposes a burden based on the content of speech and the identity of the speaker" and thus implicates the First Amendment. See id.
Missouri’s authority under the Twenty-first Amendment cannot save the Statute from its First Amendment implications. The Twenty-first Amendment allows states to regulate alcohol only if the regulations "do not ... violate rights secured by the Constitution of the United States." Tenn. Wine and Spirits, 139 S.Ct. at 2464 (citing Mugler v. Kansas, 123 U.S. 623, 659, 8 S.Ct. 273, 31 L.Ed. 205 (1887) ). The Supreme Court held in 44 Liquormart that "the Twenty-first...
To continue reading
Request your trial
-
Todd v. Am. Fed'n of State, Cnty., & Mun. Emps.
..., 936 F.3d 740, 750–53 (8th Cir. 2019) ; B.W.C. v. Williams , 990 F.3d 614 (8th Cir. 2021) ; Mo. Broadcasters’ Ass'n v. Schmitt , 946 F.3d 453, 463 (8th Cir. 2020) (Stras, J., concurring)). He warns that "if this Court holds that Janus is limited only to the agency-fee-payer scenario, then ......
-
Todd v. Am. Fed'n of State
... ... 2019); B.W.C ... v. Williams , 990 F.3d 614 (8th Cir. 2021; Mo ... Broadcasters' Ass'n v. Schmitt , 946 F.3d 453, ... 463 (8th Cir. 2020) (Stras, ... J., concurring)) ... ...
- Morningside Church, Inc. v. Rutledge
- Valued Pharm. Servs. of Midwest v. Avera Health Plans, Inc.