Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-89-01203/USCOURTS-ca10-89-01203-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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PUBLISH 

FILEDA ,,. United States Co~~! p~w Tent.~ C1rCUlv 

UNITED STATES COURT OF APPEALS 

SEP 2 3 1991 

ROBERT L. HOECKER 

Clerk TENTH CIRCUIT 

ADOLPH COORS COMPANY 1 ) 

) 

Plaintiff-Appellee, ) 

) 

v. ) 

) 

NICHOLAS BRADY, in his official capac- ) 

ity as Secretary of the United States ) 

Department of the Treasury; STEVE ) 

HIGGINS, in his official capacity as ) 

Director, Bureau of Alcohol, Tobacco ) 

and Fire arms , ) 

) 

Defendants-Appellants, ) 

) 

and ) 

) 

SPEAKER AND BIPARTISAN LEADERSHIP ) 

GROUP OF THE UNITED STATES HOUSE OF ) 

REPRESENTATIVES, ) 

) 

Intervenor-Defendant-Appellant, ) 

) 

CENTER FOR SCIENCE IN THE PUBLIC ) 

INTEREST; G. HEILEMAN BREWING COMPANY, ) 

) 

Amicus Curiae. ) 

Nos. 89-1203 

89-1239 

Appeal from the United States District Court 

for the District of Colorado 

(D.C. No. 87-Z-977) 

John s. Koppel, Attorney, Department of Justice, washington, D.C. 

(Stuart M. Gerson, Assistant Attorney General, Washington, D.C.; 

Michael J. Norton, United States Attorney, Denver, Colorado; John 

F. Cordes and Michael J. Singer, Attorneys, Department of Justice, 

Washington, D.C., with him on the briefs), for DefendantsAppellants. 

Appellate Case: 89-1203 Document: 01019291114 Date Filed: 09/23/1991 Page: 1 
Steven R. Ross, General Counsel to the Clerk (Charles Tiefer, 

Deputy General Counsel to the Clerk; Michael L. Murray, Senior 

Assistant Counsel to the Clerk; Robert Michael Long, Assistant 

Counsel to the Clerk; Janina Jaruzelski, Assistant Counsel to the 

Clerk), U.S. House of Representatives, Washington, D.C., for 

Intervenor-Defendant-Appellant. 

K. Preston Oade, Jr. (Thomas J. Carney and Linda Gavit, with him 

on the brief), of Broadley, Campbell, Carney & Madsen, Golden, 

Colorado, for Plaintiff-Appellee. 

Bruce Silverglade of Center for Science in the Public Interest, 

Washington, D.C., filed a brief as Amicus Curiae. 

Reid L. Ashinoff of Ashinoff, Ross & Korff, New York, New York; 

Randy J. Smith of G. Heilemen Brewing Company, Inc.; and Joseph E. 

Meyer, III, and Erin K. Toll of Pendleton & Sabian, P.C., Denver, 

Colorado, filed a brief for Amicus Curiae G. Heilmen Brewing 

Company, Inc. 

Before McKAY, McWILLIAMS, and SEYMOUR, Circuit Judges. 

SEYMOUR, Circuit Judge. 

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Nicholas Brady, Secretary of the Treasury, et al. (the 

Treasury), and intervenors Speaker and Bipartisan Leadership Group 

of the United States House of Representatives (the House), appeal 

the district court's grant of summary judgment in favor of Adolph 

Coors Co. (Coors). The district court ruled that 27 U.S.C. §§ 

20S(e) and 20S(f) (1988), which prohibit the disclosure of alcohol 

content information in advertising or labeling malt liquor, 

constitute an illegal restraint on free speech in violation of the 

First Amendment, and enjoined the government's enforcement of the 

statute's restrictions. We reverse and remand. 

I. 

In 1987, Coors submitted an application to the Bureau of 

Alcohol, Tobacco and Firearms (BATF) requesting approval for 

labels and advertisements for its Coors and Coors Light beer that 

would disclose the alcohol content of these products. The BATF 

denied Coors' application stating that sections 205(e)(2) and 

205(f)(2) prohibit labels or advertisements disclosing the alcohol 

content of malt beverages unless such disclosure is required by 

1 state law. 

1 27 u.s.c. §§ 20S(e)(2) and 205(f)(2) (1988) provide 

relevant part: 

in 

"S 205. Unfair competition and unlawful practices 

"It shall be unlawful for any person engaged in 

business as a distiller, brewer, rectifier, blender, or 

other producer, or as an importer or wholesaler, of 

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On July 2, 1987, Coors filed a complaint against the 

Secretary of the Treasury, and the Director of the BATF, alleging 

distilled spirits, wine, or malt beverages, or as a 

bottler, or warehouseman and bottler, of distilled 

spirits, directly or indirectly or through an affiliate: 

" 

" (e) Labeling 

"To sell or ship or deliver for sale or shipment, 

or otherwise introduce in interstate or foreign 

commerce, or to receive therein, or to remove from 

customs custody for consumption, any distilled spirits, 

wine, or malt beverages in bottles, unless such products 

are bottled, packaged, and labeled in conformity with 

such regulations, to be prescribed by the Secretary of 

the Treasury, with respect to packaging, marking, 

branding, and labeling and size and fill of container 

o o o (2) as will provide the consumer with adequate 

information as to the identity and quality of the 

products, the alcoholic content thereof (except that 

statements of, or statements likely to be considered as 

statements of, alcoholic content of malt beverages are 

prohibited unless required by State law and except that, 

in case of wines, statements of alcoholic content shall 

be required only for wines containing more than 14 per 

centum of alcohol by volume) o o o o 

" 

"(f) Advertising 

"To publish or disseminate or cause to be published 

or disseminated by radio broadcast, or in any newspaper, 

periodical or other publication or by any sign or 

outdoor advertisement or any other printed or graphic 

matter, any advertisement of distilled spirits, wine, or 

malt beverages, if such advertisement is in, or is 

calculated to induce sales in, interstate or foreign 

commerce, or is disseminated by mail, unless such 

advertisement is in conformity with such regulations, to 

be prescribed by the Secretary of the Treasury o o o (2) 

as will provide the consumer with adequate information 

as to the identity and quality of the products 

advertised, the alcoholic content thereof (except the 

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that sections 205(e) and 205(f) violate Coors' rights under the 

Free Speech Clause of the First Amendment because they prohibit 

Coors from disclosing truthful information as to the alcohol 

content of its malt beverages. Coors asked the district court to 

set aside the BATF's denial of Coors' labeling and advertisement 

application, and to declare the statutory sections invalid. 

The Treasury admitted in its answer that sections 205(e)(2) 

and 205(f)(2) are unconstitutional under the First Amendment. The 

Justice Department, acting on behalf of the Treasury and BATF, 

also asserted that the Executive Branch believed restricting the 

labeling and advertising of the alcoholic content of malt 

beverages to be unconstitutional. The House, however, moved to 

intervene in order to defend the constitutionality of the statute. 

The House and Coors filed cross-motions for summary judgment. 

Following a hearing, the district court issued an order holding 

that sections 205(e)(2) and 205(f)(2) constitute an illegal 

restraint on speech under the First Amendment, and enjoining the 

BATF from enforcing those provisions. The Treasury, which now 

defends the constitutionality of the statutory sections, and the 

House seek a reversal of the district court's order. The relevant 

statements of, or statements likely to be considered as 

statements of, alcoholic content of malt beverages and 

wines are prohibited) . . " 

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facts and legal arguments presented to the district court and the 

legal conclusions drawn therefrom are summarized below. 

II. 

To review a summary judgment order, we apply the same 

standard used by the trial court under Fed. R. Civ. P. 56. Osgood 

v. State Farm Mut. Auto Ins. Co., 848 F.2d 141, 143 (lOth Cir. 

1988). Rule 56 directs that summary judgment is appropriate where 

there is no genuine issue of material fact and the moving party is 

entitled to a judgment as a matter of law. This court determines 

whether, under the correct interpretation of the substantive law, 

there exist material factual disputes which preclude summary 

judgment. See id.; see also Anderson v. Liberty Lobby, Inc., 477 

u.s. 242, 247-48 (1986). In determining whether a material issue 

of fact exists, we review the record in the light most favorable 

to the party opposing summary judgment. McKenzie v. Mercy Hosp., 

854 F.2d 365, 367 (lOth Cir. 1988). The district court's 

conclusions of law are reviewed de novo. Id. 

Commercial speech is that which does "'no more than propose a 

commercial transaction.'" Virginia Pharmacy Bd. v. Virginia 

Citizens Consumer Council, Inc., 425 u.s. 748, 762 (1976) (quoting 

Pittsburgh Press Co. v. Human Relations Comm'n, 413 U.S. 376, 385 

(1973)). Advertising has been recognized as commercial speech. 

Zauderer v. Office of Disciplinary Counsel, 471 u.s. 626, 637 

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(1985). Product labels, which are part of a firm's marketing plan 

to provide certain information to the consumer, also constitute 

commercial speech. See id.; Central Hudson Gas v. Public Serv. 

Comm'n, 447 u.s. 557, 563 (1980) (noting that "[t]he First Amendment's concern for commercial speech is based on the informational 

function of advertising"). 

Regulations limiting commercial speech that are challenged on 

First Amendment grounds are subject to a four-part analysis 

described by the Supreme Court as follows: 

"At the outset, we must determine whether the expression 

is protected by the First Amendment. For commercial 

speech to come within that provision, it at least must 

concern lawful activity and not be misleading. Next, we 

ask whether the asserted governmental interest is substantial. If both inquiries yield positive answers, we 

must determine whether the regulation directly advances 

the governmental interest asserted, and whether it is 

not more extensive than is necessary to serve that 

interest." 

Central Hudson, 447 U.S. at 566. 

A. 

In order for commercial speech to come within the protection 

of the First Amendment under the first prong of the Central Hudson 

test, it must concern a lawful activity and not be misleading. 

Id. The labeling and advertising of malt beverages relate to an 

activity lawful under federal law. u.s. Canst. amend. XXI, § 1 

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(repeal of Prohibition); see also Dunagin v. City of Oxford, 718 

F.2d 738 (5th Cir. 1983) (although alcohol sales and consumption 

may be illegal in some state counties, such activity is 

nonetheless considered lawful for First Amendment purposes). 

Moreover, as the district court correctly noted, consumers have a 

substantial interest in knowing the alcohol content of beer. For 

example, many state statutes prohibit certain activities (such as 

driving) at or past a specific level of intoxication. Rec., vol. 

II, at 53. Consequently, restrictions on alcohol content 

disclosure are within the ambit of First Amendment protection. 2 

B. 

Under the second prong of the Central Hudson test, we must 

assess the strength of the government's interest in regulating the 

disclosure of alcohol content. The legislative history introduced 

in evidence below reveals the Congressional interests underlying 

sections 205(e) and 205(f). The Federal Alcohol Administration 

Act (FAAA), which became law in 1935 shortly after the repeal of 

Prohibition, was designed as a comprehensive statute to deal with 

2 The House argued below that alcohol content disclosure is 

inherently misleading. The district court rejected this 

contention. On appeal, the Justice Department, on behalf of 

defendants, has taken the position that "accurate and specific 

statements of alcohol content by Coors of its malt beverages" 

would not be misleading. Opening Brief of Defendants-Appellants 

at 15. The House has apparently abandoned its position that 

disclosure of malt beverage alcohol content alone is misleading 

and does not urge the position as a basis for reversal. See 

Opening Brief of Intervenor-Defendant-Appellant at 26-27 n.16. 

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practices 3 within the alcohol beverage industry that Congress had 

judged to be unfair and deceptive, resulting in harm to both 

competitors and consumers. When reporting favorably to Congress 

on the FAAA, the House Ways and Means Committee summarized its 

conclusions with respect to alcohol content disclosure as follows: 

"The variation of alcoholic content has little consumer 

importance and the industry recognizes that attempts to 

sell beer and other malt beverages on the basis of 

alcoholic content are attempts to take advantage of the 

ignorance of the consumer and the psychology created by 

prohibition experiences. 

"Legitimate members of the industry have suffered 

seriously from unfair competition resulting from labeling and advertising that uses such terms as 'strong', 

'extra strength', 'high test', 'high proof', 'pre-war 

strength', '14 percent original extract', and from brand 

names or other statements or references which include 

conspicuous numerals or symbols intending to suggest 

that the numerals or symbols represent the alcoholic 

content. Usually such representations of excess alcoholic content are false, but irrespective of their 

falsity, their abuse has grown to such an extent since 

repeal that the prohibition of all such statements is in 

the interest of the consumer and the promotion of fair 

competition." 

Federal Alcohol Administration Act: Hearings Before the Ways and 

Means Committee, HR8539, 74th Cong., 1st Sess. (1935). The 

legislation thus stemmed from the belief that withholding alcohol 

content information would benefit the consumer and promote fair 

competition within the industry. 

3 In addition to the prohibitions at issue in this case, 

Congress enacted regulations restricting the use of exclusive 

outlets, 27 u.s.c. § 205(a), tied houses, § 205(b), and commercial 

bribery,§ 205(c). 

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Testimony given during Federal Alcohol Control Administration 

(FACA} hearings 4 confirms that one of the concerns underlying the 

movement to prohibit the disclosure of the alcohol content of malt 

beverages was that such disclosures tended to be misleading and 

were therefore subject to misuse. Testimony showed that accurate 

readings of alcohol content were difficult to obtain due to the 

"very peculiar" conditions of the brewing industry, namely that 

the malt crops and the atmospheric pressures and temperatures of 

fermenting cellars varied. Rec., vol. I, doc. 15, at 36-37. 

Given these problems, the alcohol content of beer could not be 

accurately measured and disclosed without allowing for a .4-.5 

percent error of margin. Id. at 38-39. Testimony also suggested 

that not disclosing the alcohol content of malt beverages would 

relieve marketplace pressures to produce beer on the basis of 

alcohol content, resulting over the long term in beers with a 

lower alcohol content. Id. at 33. 

4 FACA hearings were held just prior to the drafting and 

adoption of the FAAA on November 1, 1934. Federal Alcohol 

Regulations were a precursor to the FAAA. The FAAA Senate Report 

states: 

"The bill embodies in statutory form so much of the 

former code system as the committee now deems 

appropriate and within the constitutional power of 

Congress to enact." 

S. Rep. No. 1215, 7th Cong., 17 Sess. 2 (1935). Because the 

drafters of the FAAA intended to adopt many FACA regulations, 

these hearings are relevant to congressional intent with respect 

to the FAAA. The hearings were introduced into evidence in the 

district court by Coors. See rec., vol. I, doc. 17, at 9 n.5 

(Plaintiff's Response to Motion for Summary Judgment), and rec., 

vol. I, docs. 15 and 16. 

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The legislative history reveals congressional concern 

regarding the effect of "strength wars" on brewers and the 

consuming public. In the FACA hearings, witnesses testified that 

statements of alcohol content on malt beverages should be 

prohibited to avoid this evil. Ralph w. Jackman of the Wisconsin 

State Brewers Association testified that labels displaying alcohol 

content resulted in a strength war wherein producers competed for 

market share by putting increasing amounts of alcohol in their 

beer. See id. at 34-38. Jackman testified that "the legitimate 

brewer does not desire to sell his beer on the basis of alcohol." 

Id. at 34. He said that brewers were unable to market beer on the 

basis of taste and flavor, however, because the practice of 

disclosing the alcohol content of malt beverages generally exerted 

market pressure on brewers to increase the alcohol content of 

their own products. See id. at 40. Alexander H. Bell, another 

representative of the brewing industry, echoed Mr. Jackman's 

testimony: 

"I have steadfastly urged that beer be sold as a 

beverage, with limited alcohol content, not as an 

intoxicant. That was followed for some little time by 

one of the local brewers here, till they found that in 

order to meet the competition it was necessary to 

increase the alcohol content of the beer to some 

extent." 

Id. at 68. Jackman further testified that competitors in the 

marketplace would benefit because producing beer with a greater 

amount of alcohol was more costly. See id. at 35. Finally, 

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industry witnesses testified that beer with a lower alcohol 

content would appease the "drys," who opposed drinking, and thus 

nondisclosure of alcohol content would benefit the industry as a 

whole. 

The asserted government interest central to this case is the 

prevention of strength wars among the brewers. Congress believed 

that, in the long run, the market as regulated by section 205(e) 

and (f) would produce a lower alcohol beer for the benefit of the 

industry and the consuming public. The interests outl._ned above, 

as asserted, are substantial. It is a reasonable, legitimate 

legislative interest within Congress' commerce power to regulate 

the marketing of beer in interstate commerce to ensure fair 

competition, and to maintain moderate levels of alcohol in beer in 

order to protect the consumer from the otherwise unchecked 

"mistakes and excesses" of the brewing industry. See Opening 

Brief for the Defendants-Appellants at 4. 5 

5 Contrary to Coors' contentions, the fact that Congress 

pursued non-commercial as well as commercial aims in enacting 

205(e) and 205(f) does not detract from either the legitimacy 

substantiality of Congress' aims. See infra at 27. The noncommercial protective aims of this legislation are consistent 

the Commerce Clause. 

"One permissible and particularly potent form of federal 

commerce regulation is the imposition of protective 

conditions on the privilege of engaging in activity that 

affects interstate commerce .... [T]he Supreme Court 

has consistently upheld congressional use of protective 

conditions to combat activities largely disfavored for 

largely noncommercial reasons." 

§§ 

or 

with 

Laurence Tribe, Constitutional Law§ 5-6 at 311-12 (2d ed. 19BB). 

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In assessing the strength of the government's interests in 

withholding the alcohol content of the beers, the district court 

focused primarily on the validity of the asserted ends given the 

passage of time and changed circumstances. The court concluded 

that the factual circumstances that had given rise to the statute 

in 1935 no longer exist, and consequently, the statute no longer 

serves a substantial interest. The court first noted that because 

there are fewer brewers producing a larger percentage of the 

market share, "it's very difficult for the court to see how there 

is any unfair competition or antitrust aspect to this." Rec., 

vol. II, at 52. 

It is irrelevant that the circumstances giving rise to a 

particular piece of legislation have changed so long as the 

legislation continues to serve some valid and substantial 

government interest. See Bolger v. Young Drug Prods., 463 u.s. 

60, 71 (1983); Ohralik v. Ohio State Bar Ass'n, 436 U.S. 447, 460 

(1978). The fact that the malt beverage industry and market have 

changed does not compel the conclusion that strength wars are no 

longer a real danger to the consuming public as well as to the 

brewers. The government argues that, in spite of changed 

circumstances, there is a continuing danger of strength wars 

similar to those that existed in 1935, as evidenced by Coors' 

advertising campaign, current market conditions, and consumer 

demand. See Opening Brief of Defendants-Appellants at 17-18. 

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Coors' admission at oral argument that it desires to publish the 

alcohol content of its products to dispel Coors' image of being a 

"weak" beer testifies to the viability of the government's 

interest. See Testimony of Oral Argument, Nov. 6, 1990 (on file 

with Clerk of Court for Tenth Circuit). The House argues that the 

statute has continuing validity given that the emerging trend in 

the beer industry toward many small breweries may precipitate the 

strength war problems associated with the marketplace of 1935. 

Opening Brief of Intervenors-Defendants at 24 n.15. Similarly, 

the government still asserts its interest in protecting the public 

against the "excesses" of the brewing industry. Opening Brief for 

Defendants-Appellants at 4, 22. Given all of these circumstances, 

it is apparent that the government has asserted a legitimate and 

substantial interest supporting the continuing validity of the 

legislation at issue. 

c. 

We next assess whether the regulation at issue "directly 

advances" the government's asserted interest. See Central Hudson, 

447 U.S. at 566. Whether legislation "directly advances" the 

government's end requires us to focus on the relationship between 

the government's interest and the prohibition on speech. Id. at 

569. There must be an "immediate connection" between the 

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prohibition and the government's asserted end. Id. If the meansend connection is "tenuous" or "highly speculative", the 

regulation cannot survive constitutional scrutiny. Id. 

We begin our analysis by noting that the record here does not 

unambiguously reflect a correct legislative judgment that the 

enacted means directly advance the intended ends. Unlike a number 

of cases in the commercial speech area, the link between 

advertising and strength wars is not self-evident. See, ~' 

Posadas de Puerto Rico Assocs. v. Tourism Co., 478 U.S. 325, 341-

42 (1986) (link between ban on gambling advertising and level of 

gambling self-evident); Central Hudson, 447 U.S. at 2353 (link 

between advertising ban and sales self-evident); Dunagin v. City 

of Oxford, 718 F.2d 738, 747-49 & n.8 (5th Cir. 1983) (link 

between advertising and increased alcohol use deemed self-evident; 

separate analysis of means-end connection therefore not 

conducted), cert. denied, 467 u.s. 1259 (1984). In addition, this 

is not a case where we can defer to the legislature on the basis 

of precedent which already has established that the legislature's 

chosen means directly advances the asserted ends. See, ~, 

Metromedia v. City of San Diego, 453 u.s. 489, 509 n.14 (1981) 

(plurality relied on established line of cases to ratify 

legislature's judgment that banning commercial billboards would 

improve traffic safety). On the other hand, we cannot agree with 

the district court that, as a matter of law, the government's 

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asserted end is not directly advanced by the promotion on 

advertising the alcohol content of beer. 

The party urging the prohibition on speech has the burden of 

justifying such a restriction. See Board of Trustees v. Fox, 492 

U.S. 469 (1989) (Fox III). In Fox v. Board of Trustees, 841 F.2d 

1207, 1213 (2d Cir. 1988) (Fox II), the Second Circuit considered 

whether a prohibition placed on corporations conducting product 

demonstrations in campus dormitories directly advanced the 

University's interest in prevention of crime, protection against 

consumer exploitation, preservation of residential tranquillity, 

and the promotion of education. The court of appeals concluded 

that the district court erred in assessing whether the legislation 

directly advanced the asserted governmental interests because it 

had only considered whether the legislative means were reasonably 

related to the legislative ends. Id. The appellate court 

rejected the district court's deferential review, stating: 

"The burden . . . shifts to the state not merely to 

assert that it has a substantial interest but to 

demonstrate that interest by real evidence .... 

"It is less clear, however, that the Regulation 

directly advances the State's interests; the Regulation 

cannot be sustained if it only provides 'ineffective or 

remote support for the government's purpose.' Central 

Hudson, 447 U.S. at 564, 100 S. Ct. at 2350 .•.. 

Whether SUNY offered sufficient evidence to meet its 

burden is not evident as the district court considered 

only whether the Regulation was reasonably related to 

the asserted governmental interests, not whether it 

directly advanced them." 

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• 

Id. (emphasis added). 

In reviewing the Second Circuit's decision in Fox II, the 

Supreme Court held: 

"The Court of Appeals did not decide, however, whether 

Resolution 66-156 directly advances these interests, and 

whether the regulation it imposes is more extensive than 

is necessary for that purpose. . . . We think that 

remand was correct, since further factual findings had 

to be made." 

Fox III, 492 U.S. at 475-76 (emphasis added). The Supreme Court 

reversed the Second Circuit's decision with respect to the terms 

of the appellate court's remand order detailing how the "more 

extensive than necessary prong" of the analysis should be applied, 

but the Court did not further comment on the terms of the remand 

with respect to the "directly advance" prong. This tacit approval 

of the Second Circuit's approach to whether t_.e legislative means 

"directly advance" the legislative ends comports with the Supreme 

Court's statement in Fox III that "the State bears the burden of 

justifying its restrictions." Id. at 480; see also Linmark 

Assocs. v. Township of Willingboro, 431 U.S. 85, 95-96 (1977) 

(record evidence required to establish nexus between legislative 

ends and means); cf. Dunagin, 718 F.2d at 748 n. 8 (noting that 

particularized findings of fact should play a limited role in 

determining the constitutionality of any given statute). 

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Requiring the government to affirmatively demonstrate a nexus 

between its legislative means and ends may appear an undue 

judicial intrusion on the legislative function. Fox III, 492 u.s. 

at 478-81 (deference should be accorded governmental decisionmakers). Nonetheless, the "directly advance" prong of the Central 

Hudson analysis compels a reviewing court to assess whether the 

legislative ends are served by the legislative means: a 

determination that the legislature presumably made in enacting the 

legislation at issue. Therefore, we cannot simply assume that 

particular means will accomplish certain ends because the 

legislature presumed they would and enacted them into law. 

In this case, Congress chose to regulate alcohol content 

disclosure in order to remove the pressure to produce malt 

beverages with ever-increasing alcohol content. Coors introduced, 

and the district court considered, evidence that the legislation 

as enacted now provides only "ineffective or remote support for 

the government's purpose." Central Hudson, 447 U.S. at 564; see, 

~, rec., val. II, at 22-24 and 29. In assessing whether the 

prohibition at issue directly advanced the government's ends, the 

district court did not have the benefit of Fox III. The court 

first looked at the issue in conjunction with whether Congress was 

pursuing a substantial end. See rec., vol. II, at 51-52. It then 

indicated it would merge its consideration of "directly advance" 

with its "less restrictive means" analysis: 

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"Whether the governmental interest is directly 

advanced by the statute is an interesting question, 

because we still have the ability of the Bureau, BATF, 

to regulate, if this statute is declared unconstitutional, in violation of the First Amendment. We still 

have the opportunity for regulation to make sure that 

there is no misleading type of information given." 

Id. at 53-54. As a consequence, the district court did not 

separately consider whether the facts presented by both sides 

presented a genuine issue of material fact on whether the 

legislative means directly advanced the legislative ends. The 

record before us demonstrates that there is a question of material 

fact. Summary judgment in favor of Coors was thus inappropriate. 

D. 

If the district court determines on remand that Congress' 

substantial interest in controlling strength wars among breweries 

is directly advanced by the regulation of alcohol-content 

advertising, it must then assess whether the absolute prohibition 

of such advertising is more extensive than necessary to serve the 

government's interest. Subsequent to the district court's 

decision in this case, the Supreme Court formulated a standard for 

the "no more extensive than necessary" element of the Central 

Hudson analysis: 

"What our decisions require is a '"fit" between the 

legislature's ends and the means chosen to accomplish 

those ends,'-- a fit that is not necessarily perfect, 

but reasonable; that represents not necessarily the 

single best disposition but one whose scope is 'in 

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• 

proportion to the interest served,' that employs not 

necessarily the least restrictive means but, as we have 

put it in the other contexts discussed above, a means 

narrowly tailored to achieve the desired objective. 

"We reject the contention that the test we have 

described is overly permissive. It is far different, of 

course, from the 'rational basis' test used for 

Fourteenth Amendment equal protection analysis. There 

it suffices if the law could be thought to further a 

legitimate governmental goal, without reference to 

whether it does so at inordinate cost. Here we require 

the government goal to be substantial, and the cost to 

be carefully calculated." 

Fox III, 492 U.S. at 480 (citations omitted) (emphasis added). 

The Court placed the burden firmly on the government to demonstrate that restrictions were in proportion to the interest 

served: "Moreover, since the State bears the burden of justifying 

its restrictions, it must affirmatively establish the reasonable 

fit we require." Id. (citation omitted). 

The district court here concluded that the absolute 

prohibition of alcohol content advertising does not satisfy the 

fourth prong of the Central Hudson test because "there [could] be 

a much less extensive regulation carefully drawn to achieve the 

objectives that are argued for by the defendant intervenor in this 

case other than the flat prohibition." Rec., vol. II, at 54. 

Rendering its decision without the benefit of the precedent 

established by Fox III, the district court misperceived the nature 

of the "no more extensive than necessary" analysis. For a 

regulation of speech to pass constitutional muster, it need not be 

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demonstrated that the government chose the least restrictive 

means; rather, the governmental goal must be "substantial" and the 

cost "carefully calculated." Fox III, 492 u.s. at 480. The Court 

in Fox III emphasized the limits of judicial review in this 

respect and the necessity of deferring to the legislature's 

judgment as to what "reasonable" means best effectuate the 

governmental end: "[W]e leave it to governmental decisionmakers 

to judge what manner of regulation may best be employed." Id. In 

addition, the Court stated that it chose not to adopt a leastrestrictive-means requirement in order to "provide the Legislative 

and Executive Branches needed leeway in a field (commercial 

speech) 'traditionally subject to governmental regulation.'" Id. 

at 481 (quoting Ohralik, 436 u.s. at 455-56). 

As discussed above, the government has asserted a substantial 

interest in preventing strength wars for the benefit of both 

consumers and producers. The possibility of less extensive means 

of regulation does not require the conclusion that the chosen 

means are impermissible. The legislative history here demonstrates that the legislature reasonably could have concluded that 

strength wars and their attendant dangers could be eliminated by 

prohibiting alcohol content disclosure. See Fox III, 492 u.s. at 

480; San Francisco Arts & Athletics Inc. v. United States Olympic 

Comm., 483 U.S. 522, 539 (1987); Posadas de Puerto Rico Assocs., 

478 u.s. at 344; cf. Capital Broadcasting Co. v. Mitchell, 333 F. 

Supp. 582, 585 (D.C. Cir. 1971) (three-judge court) ("Congress had 

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. . 

convincing evidence that the Labeling Act of 1965 had not 

materially reduced the incidence of smoking"), aff'd sub nom. 

Capital Broadcasting Co. v. Acting Attorney General, 405 U.S. 1000 

(1972); Dunagin, 718 F.2d at 751 ("We do not believe that a less 

restrictive time, place and manner restriction, such as a 

disclaimer warning of the dangers of alcohol, would be effective. 

The state's concern is not that the public is unaware of the 

dangers of alcohol. The concern instead is that advertising 

will unduly promote alcohol consumption despite known dangers"). 

The district court apparently concluded that the legislation 

currently fails the more-restrictive-than-necessary analysis 

because it represents an incorrect balance between the consumers' 

interest in having complete disclosure and the government's 

interest in preventing strength wars. See rec., vol. II, at 

52-53. The court reasoned that because the government has a 

relatively insubstantial interest in preventing strength wars when 

compared to the consumers' countervailing interest in disclosure, 

the statute is unconstitutional. Id. Relevant case law suggests 

that a court may evaluate the competing interests in this manner 

to conclude that, as a constitutional matter, the ends cannot 

justify the scope of the regulation at issue. Thus, in Fox III, 

the Court stated that the scope of a regulation must be "'in 

proportion to the interest served.'" 492 u.s. at 480 (citation 

omitted). In Bolger, 463 U.S. at 75, the court struck down a 

statute prohibiting the mailing of condom advertisements because 

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the asserted interest of shielding recipients from offensive 

materials was insufficient to justify the suppression of speech. 

With respect to the governmental interest articulated in Bolger, 

the Court concluded: 

"Because the proscribed information 'may bear on one of 

the most important decisions' parents have a right to 

make, the restriction of 'the free flow of truthful 

information' constitutes a 'basic' constitutional defect 

regardless of the strength of the government's 

interest." 

Id. at 75 (citation omitted). Similarly, in Linmark Associates, 

the Court concluded that the interest in ensuring racial 

integration could not, as a constitutional matter, justify the 

suppression of "for sale" signs on homes because the suppression 

weighed unfavorably against "one of the most important decisions 

[people] have a right to make: where to live and raise their 

families." 431 u.s. at 96. 

However, neither relevant precedent nor the record in this 

case require the conclusion that the public's interest in 

information relating to alcohol content so outweighs the 

government's interest in non-disclosure as to render the statute 

unconstitutional. We have held that legislation prohibiting 

alcohol advertisements promotes a substantial interest in health 

and welfare, which otherwise would be adversely affected by 

alcohol consumption. Oklahoma Telecasters Ass'n v. Crisp, 699 

F.2d 490, 498 (lOth Cir. 1983), rev'd on other grounds sub nom. 

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Capital Cities Cables, Inc. v. Crisp, 467 U.S. 691 (1984). 

Similarly, in Dunagin, 718 F.2d at 747, the Fifth Circuit upheld a 

statute that significantly restricted liquor advertising by local 

media as a legitimate way to avoid the undue promotion of alcohol 

consumption, in the interest of the public welfare. 

Coors notes that the balance struck in favor of nondisclosure in Oklahoma Telecasters and Dunagin was altered by the 

fact the state legislatures had promulgated the statutes at issue 

pursuant to the authority granted them under the Twenty-first 

Amendment. Coors argues that because the regulation in this case 

was promulgated by Congress, the balance of interests weigh in 

favor of disclosure. Thus, in Oklahoma Telecasters, we stated 

that "when the Twenty-first Amendment is considered in addition to 

Oklahoma's substantial interest under its police power, the 

balance shifts in the state's favor, permitting regulation of 

commercial speech that might otherwise not be permissible." 699 

F.2d at 502 (emphasis added). In Dunagin, the Fifth Circuit 

upheld the validity of the advertising regulation noting that 

precedent establishing the state's special interest in regulating 

alcohol "help[ed] establish the balance in favor of the state." 

718 F.2d at 750. 

Oklahoma Telecasters does not require us to conclude that the 

federal government has no constitutional basis to substantiate its 

interest, or that the federal government's interest in regulating 

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. • 

alcohol content disclosure is insufficient to justify a restraint 

on speech. 6 The Twenty-first Amendment did not completely 

abrogate Congressional power to regulate under the Commerce 

Clause. See Arrow Distilleries, Inc. v. Alexander, 109 F.2d 397 

(7th Cir.) (FAAA not unconstitutional on ground that Twenty-first 

Amendment deprived Congress of power to enact interstate alcohol 

regulation), cert. denied, 310 u.s. 646 (1940); see also South 

Dakota v. Dole, 483 u.s. 203, 209 (1987) (Twenty-first Amendment 

does not preclude Congress from indirectly establishing minimum 

drinking age by exercising its spending power); Craig v. Boren, 

429 u.s. 190 (1976) (Twenty-first Amendment not pro tanto repeal 

of Commerce Clause, but merely requires that each provision "be 

considered in the light of the other, and in the context of the 

issues at stake in any concrete case"); United States v. Frankort 

Distilleries, Inc., 324 u.s. 293, 297-99 (1945) (federal antitrust prosecution of alcohol producers and distributors consistent 

with Twenty-first Amendment). We conclude that Congress has 

sufficient residual authority to regulate the marketplace for the 

benefit of consumers and producers under the Commerce Clause even 

though it may result in indirect regulation of alcohol. See id. 

6 As demonstrated by the regulation itself, which is effective 

only if not contradicted by state law, Congress may have a less 

compelling interest than state legislatures in the labeling and 

advertising of the alcohol content of malt beverages. See 27 

U.S.C. §§ 205(e) and 205(f). Because the statute at issue 

expressly states that alcohol content may not be disclosed unless 

required by state law, we need not address whether the holdings in 

Oklahoma Telecasters and Dunagin demonstrate that Congress has 

attempted to trump those powers expressly granted to the states by 

the Twenty-first Amendment. 

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Like the state legislatures in Oklahoma Telecasters and Dunagin, 

therefore, Congress may constitutionally regulate alcohol 

advertisements. 

Coors makes a similar argument with respect to the decision 

rendered in Posadas. There, the Supreme Court stated that the 

advertising ban was permissible as "the greater power (of the 

state] to completely ban casino gambling necessarily includes the 

lesser power to ban advertising of casino gambling." 478 U.S. at 

345-46. The Court did not state that the greater power to ban 

gambling was necessary to ban gambling advertising. The Court 

relied on the fact that Puerto Rico had the greater power to ban 

gambling to distinguish Posadas from those cases that struck down 

regulations restricting information pertaining to constitutionally 

protected conduct. 7 Id. The Court also stated that finding 

Puerto Rico possessed the power to ban gambling advertisements was 

necessary to avoid the anomalous result of concluding that Puerto 

Rico had the police power to .• take gambling illegal but not to 

prohibit the advertising of gambling. Id. Consequently, Congress 

need not possess the greater power to completely regulate alcohol 

sales, a power expressly reserved to the states under the 

Twenty-first Amendment, in order to reconcile Posadas with the 

holding in this case that Congress can regulate alcohol 

advertisements consistent with the First Amendment. 

7 We note that the sale and consumption of alcohol are not 

constitutionally protected activities and can be prohibited. 

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• 

III. 

In sum, we hold that Coors' proposal to advertise the alcohol 

content of beer is commercial speech protected by the First 

Amendment, and that the public's interests in disclosure are 

significant. We also hold that the interests asserted by Congress 

and demonstrated in the legislative history are legitimate and 

substantial. We conclude that there are genuine issues of 

material fact underlying the question of whether the federal 

regulation of alcohol content advertising directly advances the 

government's asserted interest in preventing strength wars, and 

whether the complete prohibition of such advertising results in a 

"reasonable fit" between the legislature's goal and the means 

chosen to reach it, within the meaning of Fox III. 

The district court judgment in favor of Coors is REVERSED and 

the case is REMANDED for further proceedings consistent with this 

opinion. 

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