2004 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

7-29-2004

The Pitt News v. Atty Gen PA

Precedential or Non-Precedential: Precedential

Docket No. 03-1725

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"The Pitt News v. Atty Gen PA" (2004). 2004 Decisions. Paper 427.

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PRECEDENTIAL

UNITED STATES COURT OF

APPEALS

FOR THE THIRD CIRCUIT

____________

No. 03-1725

____________

THE PITT NEWS,

 

 Appellant

 

v.

 

GERALD J. PAPPERT, in his capacity

as Attorney General of the

Commonwealth of Pennsylvania*;

FRANK KOSCELNAK, in his capacity

as Director, Bureau of Liquor Control

Enforcement, Pennsylvania State Police;

JOHN E. JONES, III, in his capacity as

Chairman Pennsylvania Liquor Control

Board

 

___________________

ON APPEAL FROM THE UNITED

STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF

PENNSYLVANIA

District Court Judge: Honorable William

L. Standish

(D.C. No. 99-cv-00529)

____________________

Argued: January 22, 2004

Before: ALITO, CHERTOFF, and

DEBEVOISE,** Circuit Judges

(Opinion Filed: July 29, 2004 )

WITOLD J. WALCZAK (argued)

American Civil Liberties Union

313 Atwood Street

Pittsburgh, PA 15213

Counsel for Appellant

J. BART DeLONE (argued)

15th Floor

Office of A ttorney Gen eral of

Pennsylvania

Strawberry Square

Harrisburg, PA 17120

Counsel for Appellee

GAYLE C. SPROUL

Levine, Sullivan, Koch & Schultz

2004 Makefield Road

Yardley, PA 19067

Counsel for Amicus Curiae The Student

Press Law Center, PA Newspaper

Association, and Reports Committee for

Freedom of the Press

____________________

OPINION OF THE COURT

 

*

Pursuant to Federal Rule of Appellate

Procedure 43(c)(2).

 

**The Honorable Dickinson R.

Debevoise, District Judge of the United

States District Court for the District of

New Jersey, sitting by designation.
2

____________________

ALITO, Circuit Judge:

The case conc erns th e

constitutionality of a Pennsylvania law that

bans advertisers from paying for the

dissemination of “alcoholic beverage

advertising” by communications media

affiliated with a university, college, or

other “educational institution.” The Pitt

News, a university newspaper, sought an

injunction against enforcement of the law,

but the District Court granted summary

judgment for the defendants, holding that

the law “has no effect on The Pitt News’

freedom of expression” because the paper

remains free to say whatever it wishes

about alcoholic beverages as long as it is

not paid for engaging in the expression. 

We hold that the First Amendment

precludes the enforcement of the law in

question against advertisers in The Pitt

News, and we therefore reverse the order

of the District Court and remand for the

entry of a permanent injunction.

I .

The Pitt News is a certified student

organization at the University of

Pittsburgh (“the University”). The

University has more than 25,000 students,

at least two-thirds of whom are old enough

to drink under Pennsylvania law. Overall,

more than 75% of the total University

population (students, faculty, and staff) is

more than 21 years of age.

The Pitt News was created by the

University Board of Trustees “in

recognition of the constitutional right of

students to freedom of speech.” The

parties do not dispute that the paper

represents independent student speech, not

official speech disseminated on behalf of

the University. The newspaper is

published daily during the school year and

weekly during the summer, and it is

distributed free of charge at 75 locations

around the campus. The Pitt News is

displayed at these locations together with

other free weekly newspapers, including

In Pittsburgh, City Paper, and UR

Pittsburgh. None of these other

publications is affiliated with an

educational institution, and they all contain

alcoholic beverage advertisements. All of

The Pitt News’ revenue is derived from

advertising, and until Act 199 took effect,

the paper received substantial income from

alcoholic beverage ads. 

In 1996, the Pennsylvania

Legislature enacted an amendment to the

state Liquor Code that is popularly known

as “Act 199.” A provision of this

amendment, 42 Pa. Stat. Ann. §4-498

(e)(5)(g) (hereinafter “Section 4-498”),

prohibits “any advertising of alcoholic

beverages” in virtually any medium of

mass communication that is affiliated with

“any educational institution,” including a

c o llege or u n i v e rsi ty. 1

 

1

“Act 199” states in relevant part:

§ 4 -49 8. U nlaw f u l
3

Violations of this provision are

misdemeanors and may be punished by

fines of up to $500 or imprisonment for up

to three months on a first charge, and by a

mandatory minimum sentence of three

months in jail for a subsequent offense.

See 47 Pa. Stat. Ann. § 4-494(a). 

To clarify the meaning of Act 199,

the Pennsylvania Liquor Control Board

(LCB) issued Advisory Notice No. 15,

which states in relevant part:

W h a t k i n d o f

advertisements would be

affected by the prohibition

against advertisements in

publications published by,

for and in behalf of any

educational institution?

Advertisements wh ich

indicate the availability

and/or price of alcoholic

beverages may not be

contained in publications

published by, for and in

behalf of any educational

institutions. Universities are

considered educational

advertising

(e)The following shall apply

to all alcoholic beverage and

malt beverage advertising:

(4) The use in any

advertisement of alcoholic

beverages of any subject

matter, language or slogan

directed to minors to

promote consumption of

alcoholic beverages is

prohibited. Nothing in this

section shall be deemed to

restrict or prohibit any

advertisement of alcoholic

beverages to those persons

of legal drinking age.

(5) No advertisement shall

be permitted, either directly

or indirectly, in any booklet,

program book, yearbook,

maga zine, newspaper,

period ical, broch u r e ,

circular or other similar

publication published by, for

or in behalf of any

educational institution.

(g) For purposes of this

subsection, the t e rm

“advertisement” shall mean

any advertising of alcoholic

beverages through the

medium of radio broadcast,

televisio n broadcast,

newspapers, periodicals or

other publication, outdoor

advertisement, any form of

electronic transmission or

any other printed or graphic

matter, including booklets,

flyers or cards, or on the

product label or attachment

itself.
4

institutions under this

s e ction. Thu s, a n

advertisement in a college

newspaper or a college

foo tball progra m

announ cing beverages

would not be permissible.

However, an advertisement

merely indicating the name

and address of a licensee or

licensed premise, or an

adve rtis ement w hic h

indicates what nonalcoholic

products may be acquired at

the licensed premise making

no reference to th e

availability of alcoholic

beverages would b e

permissible. Further,

adver tiseme nts i n

magazines, newspapers or

other periodicals which have

no connection to an

educational institution other

than the fact the school may

subscribe to that particular

newspaper are permissible .

. . .

During testimony in this case, a

representative of the LCB, Faith S. Diehl,

stated that, in the LCB’s view, Section 4-

498 contains two restrictions that are not

expressly set out in the statute. First, Diehl

testified that Section 4-498 is enforceable

only against advertisers and not against the

media. Second, according to Diehl,

Section 4-498 applies only when the media

receives some form of payment for an

advertisement.2 

On December 9, 1997, Terry Lucas,

the general manager of The Pitt News,

received a fax from the owner of an area

restaurant, the Fuel & Fuddle, which had

previously placed alcoholic beverage

advertisements in the paper. The fax

consisted of a December 4, 1998, letter to

the restaurant from the Bureau of Liquor

Control Enforcement of the Pennsylvania

State Police (BLCE) stating that the BLCE

had received information that the Fuel &

Fuddle had “advertised . . . alcoholic

beverages, either directly or indirectly, in

a publication published by, for or in behalf

of an educational institution” and that this

could result in the suspension or

revocation of its license or in the

imposition of a fine. Based on this notice,

the owner of the restaurant canceled its

advertising contract with The Pitt News,

and the paper, in order to protect its

advertisers, felt compelled to stop

accep ting alcoholic bev era g e

advertisements. 

The Pitt News then sought to

persuade establishments with liquor

 

2The Pitt News submitted the

deposition of Stanley Woloski, an

employee of the Office of the Chief

Counsel of the Pennsylvania State Police

who is assigned to the Bureau of Liquor

Control Enforcement (BLCE), which

stated that, while Woloski did not

“wholeheartedly agree” with Diehl’s

interpretation of the statute, the BLCE was

bound by the LCB’s interpretation.
5

licenses to place ads that did not refer to

the sale of alcoholic beverages, but these

efforts were unsuccessful. In 1998 alone,

the newspaper lost approximately $17,000

in revenue, and this loss affected the

length of the newspaper, as well as its

ability to make capital expenditures,

including payments for updating its

computers and acquiring digital cameras.

The inability to make these capital

expenditures has harmed The Pitt News’

ability to compete for readers with other

newspapers. Furthermore, the newspaper

may be compelled in the future to begin to

charge subscribers, and this would result in

a further decrease in readership. 

In April 1999, The Pitt News3 filed

a complaint in the United States District

Court for the Western District of

Pennsylvania against state officials

responsible for the enforcement of the Act.

Asserting claims under 42 U.S.C. § 1983,

The Pitt News alleged that Section 4-498

violated its constitutional rights to freedom

of expression, freedom of the press, and

the equal protection of the laws. The Pitt

News moved for a preliminary injunction,

and an evidentiary hearing was held.

In July 1999, the District Court

denied the motion for a preliminary

injunction and held that The Pitt News

lacked standing to challenge the

constitutionality of Section 4-498. The

District Court opined that The Pitt News

could not assert First Amendment rights on

behalf of advertisers or readers and that

the paper had not itself suffered any injury

in fact because it could still publish

anything it wanted as long as it was not

paid for it. 

On appeal, a panel of this Court (

the “TPN I Panel”) affirmed the District

Court’s denial of the preliminary

injunction application, but the panel relied

in part on different grounds. See The Pitt

News v. Fisher, 215 F.3d 354, 360 (3d Cir.

2000) (“TPN I”). While the TPN I Panel

agreed with the District Court that The Pitt

News did not have standing to assert the

third-party claims of its advertisers and

readers, the panel found that The Pitt News

did have standing to raise its own First

Amendment claims. Noting the paper’s

loss of advertising revenue, the panel held

that the paper had “demonstrated a

personal stake in the outcome of this

litigation” and that its injury was both

traceable to Section 4-498 and redressable

by the courts. TPN I, 215 F.3d at 360

After determining that The Pitt

News had standing to challenge Section 4-

498, the TPN I Panel turned to the familiar

four-pronged preliminary injunction

analysis, under which a court assesses “(a)

the likelihood that the plaintiff will prevail

on the merits at the final hearing; (b) the

extent to which the plaintiff is being

irreparably harmed by the conduct

complained of; (c) the extent to which the

defendant will suffer irreparable harm if

 

3The American Civil Liberties Union

Student Club joined as a plaintiff, but the

District Court dismissed the club for lack

of standing at an early point in the

litigation, and that order is not contested

here. 
6

the preliminary injunction is issued; and

(d) the public interest.” TPN I, 215 F.3d at

366. At the first step of this analysis, the

TPN I panel concluded that The Pitt News

“ha[d] not shown a likelihood of

succeeding on the merits.” Id. at 367. The

Court reasoned as follows:

The fact that The Pitt News

is a newspaper does not give

it a constitutional right to a

certain level of profitability,

or even to stay in business at

all. . . . Thus, although it is

true that the enforcement of

Act 199 has had the effect

of driving away certain

closely regulated businesses

who previously advertised

in The Pitt News, this does

not in itself amount to a

violation of The Pitt News’

First Amendment rights. 

Id. at 366. 

The TPN I panel went on to reject

The Pitt News’ reliance on the “line of

cases holding that it is unconstitutional to

impose selective taxes or other financial

burdens on newspapers because of their

content.” TPN I, 215 F.3d at 366-67. The

panel found these cases to be

distinguishable because, “[f]irst, they

involve taxes, not regulations on

advertising” and, “[s]econd, they involve

fees levied directly against a newspaper.”

Id. at 367. The panel thus held that The

Pitt News had failed to satisfy the first

prong of the test for the issuance of a

preliminary injunction, and the panel

consequently did not go on to analyze any

of the other prongs.4

Following the decision in TPN I,

the parties filed cross-motions for

summary judgment, and the District Court

issued an order granting summary

judgment for the defendants. The Pitt

News then took this appeal.

II.

We exercise plenary review of a

District Court decision granting summary

judgment. See, e.g., Olson v. Gen. Elec.

Astrospace, 101 F.3d 947, 951 (3d Cir.

1996). Moreover, under the circumstances

present here, the prior panel’s decision in

TPN I is not controlling. 

When a panel is presented with

legal issues that are related to issues

previously addressed by another panel in

an earlier appeal in the same case at the

preliminary injunction stage,three separate

rules are relevant. First, it is our Court’s

tradition that a panel may not overrule “a

holding” of a prior panel. 3d Cir. IOP 9.1.

Second, it is well established that neither

this tradition nor the law-of-the-case

doctrine requires a panel hearing an appeal

from the entry of a final judgment to

follow the legal analysis contained in a

prior panel decision addressing the

question whether a party that moved for

preliminary injunctive relief showed a

 

4

The Pitt News’ petition for a writ of

certiorari was denied. See The Pitt News

v. Fisher, 531 U.S. 1113 (2001). 
7

likelihood of success on the merits. See

University of Texas v. Camenisch, 451

U.S. 390, 395 (1981); Council of

Alternative Political Parties v. Hooks, 179

F.3d 64, 69 (3d Cir. 1999); American Civil

Liberties Union of New Jersey v. Black

Horse Pike Regional Bd. of Educ., 84 F.3d

1471, 1476-1477 (3d Cir. 1996). Third,

although a panel entertaining a preliminary

injunction appeal generally decides only

whether the district court abused its

discretion in ruling on the request for relief

and generally does not go into the merits

any farther than is necessary to determine

whether the moving party established a

likelihood of success, a panel is not always

required to take this narrow approach. If a

preliminary injunction appeal presents a

question of law “and the facts are

established or of no controlling relevance,”

the panel may decide the merits of the

claim. Thornburgh v. Am. College of

Obstetricians & Gynecologists., 476 U.S.

747, 756 -57 (1986); see also Maldonado

v. Houston, 157 F.3d 179, 183-84 (3d Cir.

1998). 

In the typical situation – where the

prior panel stopped at the question of

likelihood of success – the prior panel’s

legal analysis must be carefully

considered, but it is not binding on the

later panel. Indeed, particularly where

important First Amendment issues are

raised, the later panel has a duty, in the

end, to exercise its own best judgment. On

the other hand, if the first panel does not

stop at the question of likelihood of

success and instead addresses the merits,

the later panel, in accordance with our

Court’s traditional practice, should regard

itself as bound by the prior panel opinion.

Here, the TPN I panel did not

decide whether Section 4-498 is or is not

constitutional. Instead, the TPN I panel

was careful to state only that The Pitt News

“ha[d] not shown a likelihood of

succeeding on the merits of its claim.”

215 F.3d at 367 (emphasis added). Had

the TPN I panel gone further and taken an

unequivocal position on the merits, we

would consider ourselves bound under the

tradition expressed in IOP 9.1. But the

TPN I panel did not take that approach. 

III.

We now turn to the question5

whether Section 4-498 violates The Pitt

News’ First Amendment rights.6 We

 

5At the outset, we note two issues that

are not before us. First, the

Commonwealth does not suggest that The

Pitt News represents the Commonwealth’s

own speech as opposed to independent

student speech that the University

facilitates in order to foster the expression

of a diversity of views, see Rosenberger v.

Rector & Visitors of Univ. of Virginia,

515 U.S. 819, 833 (1995). Nor does the

Commonwealth suggest that precedents

concerning publications associated with

schools below the college level, see, e.g.,

Hazelwood School Dist. v. Kuhlmeirer,

484 U.S. 260 (1988), have any relevance

here. 

 

6

The Pitt News urges us to revisit the

issue of its standing to assert the First
8

conc lude that Section 4-498 is

unconstitutional as applied to The Pitt

News for two reasons. First, the law

represents an impermissible restriction on

commercial speech. Second, the law is

presumptively unconstitutional because it

targets a narrow segment of the media, and

the Commonwealth has not overcome this

presumption. 

A.

Although the Commonwealth

makes much of the fact that Section 4-498

does not prohibit The Pitt News from

printing alcoholic beverage ads but simply

prevents the paper from receiving

payments for running such ads7, Section 4-

498 clearly restricts speech. The very

purpose of Section 4-498 is to discourage

a form of speech (alcoholic beverage ads)

that the Commonwealth regards as

harmful. If government were free to

suppress disfavored speech by preventing

potential speakers from being paid, there

would not be much left of the First

Amendment. Imposing a financial burden

on a speaker based on the content of the

speaker’s expression is a content-based

restriction of expression and must be

analyzed as such. 

The Supreme Court’s decision in

Simon & Schuster, Inc. v. Members of the

New York State Crime Victims Bd., 502

U.S. 105 (1991), illustrates this point.

There, a career criminal named Henry Hill

provided an author with the information

that the author used in writing a book

about Hill’s life. Under a contract with the

book’s publisher, Hill was entitled to

compensation, but New York’s “Son of

Sam” law required that these funds be held

in escrow for five years for use in

satisfying any civil judgments obtained by

the victims of Hill’s crimes. Although the

Son of Sam law did not prohibit Hill from

telling his story and did not prohibit the

publisher from publishing the book, the

Supreme Court held that the law placed a

content-based restriction on Hill’s speech

and that of the publisher because it

“impose[d] a financial disincentive only on

speech of a particular content.” Id. at 116.

Similarly, Section 4-498 imposes “a

financial disincentive” on certain speech

by The Pitt News (alcoholic beverage ads)

because would-be advertisers cannot pay

the paper to run such ads, and

consequently Section 4-498, like New

York’s Son of Sam law, must be analyzed

as a content-based restriction of speech. 

At a minimum, therefore, Section 4-

498 must satisfy the test for restrictions on

commercial speech set out in Central

Hudson Gas & Elec. Corp. v. Pub. Serv.

Comm’n of New York, 447 U.S. 557

(1980). Under Central Hudson, we must

Amendment rights of its advertisers and

readers. We find it unnecessary to reach

this issue, however, because we hold that

Section 4-498 violates The Pitt News’ own

First Amendment rights. 

 

7

Indeed, the Commonwealth suggests

that The Pitt News has not “suffered a First

Amendment violation” because Section 4-

498 “places no restriction on what the Pitt

News can or cannot publish.” Appellee’s

Br. at 9. 
9

engage in “a four-part analysis.” Id. at

566. First, “we must determine whether

the expression is protected by the First

Amendment,” and this means that “it at

least must concern lawful activity and not

be misleading.” Id. Second, “we ask

whether the asserted governmental interest

is substantial.” Id. If the first and second

“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.” Id. Here, the first and

second prongs are satisfied. As noted,

Section 4-498 burdens speech. In

addition, the law applies to ads that

concern lawful activity (the lawful sale of

alcoholic beverages) and that are not

misleading, and we see no other ground on

which it could be argued that the covered

ads are outside the protection of the First

Amendment. 

There can also be no dispute that

the asserted government interests –

preventing underage drinking and alcohol

abuse – are, at minimum, “substantial.”

See, e.g., Lorillard Tobacco Co. v Reilly,

533 U.S. 525, 589 (2001)(opinion of

Thomas, J.); Michigan Dept. of State

Police v. Sitz, 496 U.S. 444, 451 (1990).

Section 4-498 founders, however,

on the third and fourth prongs of the

Central Hudson test. To satisfy the third

prong, the government must demonstrate

that the challenged law “alleviate[s]” the

cited harms “to a material degree.” Florida

Bar v. Went For It, Inc., 515 U.S. 618, 624

(1995)(citation omitted); see also Greater

New Orleans Broad. Ass’n, Inc. v. U.S.,

527 U.S. 173, 188 (1999). Although the

government has considerable latitude in

the sources on which it may draw to make

this showing, “[t]his burden is not satisfied

by mere speculation or conjecture.”

Edenfield v. Fane, 507 U.S. 761, 770-71

(1993); Lorillard Tobacco Co. v. Reilly,

533 U.S. 525, 555 (2001). Furthermore, it

is not enough if a law “provides only

ineffective or remote support for the

government’s purposes,” Edenfield, 507

U.S. at 770 (quoting Central Hudson, 447

U.S. at 564) or if there is “little chance”

that the law will advance the state’s goal.

Lorillard, 533 U.S. at 566. The Supreme

Court has noted that the third prong of the

Central Hudson test “is critical; otherwise,

‘a State could with ease restrict

commercial speech in the service of other

objectives that could not themselves justify

a burden on commercial expression.’”

Rubin v. Coors Brewing Co., 514 U.S.

476, 487 (1995)(quoting Edenfield, 507

U.S. at 771).

In this case, the Commonwealth has

not shown that Section 4-498 combats

underage or abusive drinking “to a

material degree,” Florida Bar, 515 U.S. at

624, or that the law provides anything

more than “ineffective or remote support

for the government’s purposes.”

Edenfield, 507 U.S. at 770 (quoting

Central Hudson, 447 U.S. at 564). We do

not dispute the proposition that alcoholic

beverage advertising in general tends to

encourage consumption, and if Section 4-

498 had the effect of greatly reducing the

quantity of alcoholic beverage ads viewed
10

by underage and abusive drinkers on the

Pitt campus, we would hold that the third

prong of the Central Hudson test was met.

But Section 4-498 applies only to

advertising in a very narrow sector of the

media (i.e., media associated with

educational institutions), and the

Commonwealth has not pointed to any

evidence that eliminating ads in this

narrow sector will do any good. Even if

Pitt students do not see alcoholic beverage

ads in The Pitt News, they will still be

exposed to a torrent of beer ads on

television and the radio, and they will still

see alcoholic beverage ads in other

publications, including the other free

weekly Pittsburgh papers that are

displayed on campus together with The

Pitt News. The suggestion that the

elimination of alcoholic beverage ads from

The Pitt News and other publications

connected with the University will slacken

the demand for alcohol by Pitt students is

counterintuitive and unsupported by any

evidence that the Commonwealth has

called to our attention. Nor has the

Commonwealth pointed to any evidence

that the elimination of alcoholic beverage

ads from The Pitt News will make it harder

for would-be purchasers to locate places

near campus where alcoholic beverages

may be purchased. Common sense

suggests that would-be drinkers will have

no difficulty finding those establishments

desp ite Section 4-4 98, an d the

Commonwealth has not pointed to any

contrary evidence. In contending that

underage and abusive drinking will fall if

alcoholic beverage ads are eliminated from

just those media affiliated with educational

institutions, the Commonwealth relies on

nothing more than “speculation” and

“conjecture.” 

Section 4-498 is also not adequately

tailored to achieve the Commonwealth’s

asserted objectives. The fourth step of the

Central Hudson test does not require

government to use the least restrictive

means to achieve its goals, but it does

demand a “reasonable fit between the

legislature’s ends and the means chosen to

accomplish those ends, . . . a means

narrowly tailored to achieve the desired

objective.” Lorillard, 533 U.S. at 555

(quotations omitted). Here, Section 4-498

is both severely over- and under-inclusive.

As noted, more than 67% of Pitt students

and more than 75% of the total University

population is over the legal drinking age,

and, in Lorillard, the Supreme Court held

that a restriction on tobacco advertising

was not narrowly tailored in part because

it prevented the communication to adults

of truthful information about products that

adults could lawfully purchase and use.

Not only does Section 4-498 suffer from

this same defect, but the Commonwealth

can seek to combat underage and abusive

drinking by other means that are far more

direct and that do not affect the First

Amendment. The most direct way to

combat underage and abusive drinking by

college students is the enforcement of the

alcoholic beverage control laws on college

campuses. However, studies have shown

that enforcement of these laws on college
11

campuses is often half-hearted

8

, and the

Commonwealth has not demonstrated that

its law enforcement officers, at either the

state or local level, or the administrators of

its colleges and universities engage in

aggressive enforcement of these laws on

college and university campuses. 

In arguing that Section 4-498

satisfies the Central Hudson test, the

Commonwealth relies heavily on

Anheuser-Busch, Inc. v. Schmoke, 63 F.3d

1305 (4th Cir. 1995), which sustained a

Baltimore ordinance that generally

prohibited outdoor alcoholic beverage ads.

That decision, however, predates Lorillard,

which struck down a ban on outdoor

tobacco advertising, and in any event,

Baltimore’s showings in Anheuser-Busch

on the third and fourth prongs of the

Central Hudson test were stronger than the

Commonwealth’s are here. Because the

ordinance in Anheuser-Busch applied

(with some exceptions) to an entire

medium of communication (outdoor

advertising), there was a firmer basis for

concluding that the law would achieve its

objective (reducing underage drinking)

than there is in this case, where the

challenged law applies to only a narrow

sector of the media. Similarly, in

Anheuser-Busch, there was less force to

the argument that the city could achieve its

goal by the alternative strategy of

increasing enforcement of the laws against

underage drinking. Because the Baltimore

ordinance was designed to combat

underage drinking throughout the city, a

decision to forego the outdoor advertising

ban in favor of a campaign of increased

enforcement would have necessitated an

increase in enforcement over a wide area.

Here, increased enforcement could target

very limited, easily identifiable areas –

namely, university and college campuses

and surrounding neighborhoods. We thus

find Anheuser Busch to be distinguishable,

and we hold that Section 4-498 fails the

Central Hudson test. 

B.

Section 4-498 violates the First

Amendment for an additional, independent

reason: it unjustifiably imposes a financial

burden on a particular segment of the

media, i.e., media associated with

universities and colleges. 

1.

The Supreme Court recognized

long ago that laws that impose special

financial burdens on the media or a narrow

sector of the media present a threat to the

First Amendment. In Grosjean v. Am.

Press Co., 297 U.S. 233 (1936), Louisiana

had imposed a special 2% gross receipts

 

8

See Henry Wechsler, Barbara A.

Moe ykens, and William DeJong,

“Enforcing the Minimum Drinking Age

Law: A Survey of College Administrators

and Security Chiefs” (2001), available at

http://www.edc.org/hec/pubs/enforce.htm.

This study, conducted by the Harvard

School of Public Health and published by

the U.S. Department of Education’s

Higher Education Center, concluded that

“a detailed examination of how rules

against underage drinking are currently

enforced reveals a widespread laxity.” 
12

tax on newspapers with circulations of

more than 20,000. The Court noted that

the form of the tax made it plain that its

purpose was to penalize and curtail the

circulation of “a select group of

newspapers,” namely, as the Court later

pointed out, the state’s large papers, which

had attacked Governor Huey Long. See

Minneapolis Star & Tribune Co. v.

Minnesota Comm’r of Revenue, 460 U.S.

575, 579-80 (1983). Holding this tax

unconstitutional, the Court wrote:

The tax here involved is bad

not because it takes money

from the pockets of the

appellees. If that were all, a

wholly different question

would be in presented. It

is bad because, in the light

of its history and of its

present setting, it is seen to

be a deliberate and

calculated device in the

guise of a tax to limit the

circulation of information to

which the public is entitled

i n v irtue of th e

constitutional guaranties. A

free press stands as one of

the gre at interpreters

between the government and

the people. To allow it to be

fettered is to fette r

ourselves.

Grosjean, 297 U.S. at 250. 

In Minneapolis Star, the Court

struck down a state law that required

publications to pay a use tax if they

consumed more than $100,000 worth of

paper and ink in a year. This tax, like the

one in Grosjean, had the effect of favoring

small newspapers over large ones, but the

Court did not suggest that the Minnesota

legislature had passed the challenged law

in order to retaliate for anything that the

covered papers had said in the past or to

influence anything that they might publish

in the future. See id. at 592. Rather, the

Court held that, regardless of the

legislature’s motives, the state was

required to show that the disparate

treatment of large and small papers was

needed to serve a compelling state interest,

id. at 585, and the Court concluded that the

state had not satisfied this test, id. at 586-

92. The Court observed: 

Whatever the motive of the

legislature in this case, we

think that recognizing a

power in the State not only

to single out the press but

also to tailor the tax so that

it singles out a few members

of the press presents such a

potential for abuse that no

interest suggested by

Minnesota can justify the

scheme.

Id. at 591-92.

In Arkansas Writers’ Project, Inc. v.

Ragland, 481 U.S. 221 (1987), the Court

considered a feature of Arkansas’s gross

receipts tax. Under the Arkansas scheme,

general interest magazines were subject to

the tax but religious, professional, trade,

and sports journals were exempt. Id. at
13

221, 226. Noting that the Arkansas

scheme drew distinctions between

publications based on content, the Court

applied strict scrutiny and held that the

scheme was unconstitutional. Id. at 231-

32. 

By contrast, in Leathers v.

Medlock, 499 U.S. 439 (1991), the Court

rejected the argument that the Arkansas

scheme violated the First Amendment by

exempting newspapers but not cable

television. The Court noted that the

Arkansas tax was “a tax of general

applicability” that applied to “receipts

from the sale of all tangible personal

property and a broad range of services.”

Id. at 447. The Court further observed that

“[t]he tax does not single out the press and

does not therefore threaten to hinder the

press as a watchdog of government

activity.” Id. Stating that “there [was] no

indication that Arkansas ha[d] targeted

cable television in a purposeful attempt to

interfere with its First Amendment

activities,” the Court continued: “Nor is

the tax one that is structured so as to raise

suspicion that it was intended to do so.”

Id. at 448. “Unlike the taxes involved in

Grosjean and Minneapolis Star,” the Court

wrote, the Arkansas tax did not “select[] a

narrow group to bear fully the burden of

the tax.” Id. In addition, the Court stated

that the feature of the Arkansas scheme

that was then at issue was “structurally

dissimilar” to the feature challenged in

Arkansas Writers’, where “only ‘a few’

Arkansas magazines paid the State’s sales

tax.” Id. 

2.

Under the above cases, laws that

impose financial burdens on a broad class

of entities, including the media, do not

violate the First Amendment. “It is

beyond dispute that the States and the

Federal Government can subject [the

media] to generally applicable economic

regulations without creating constitutional

problems.” Minneapolis Star, 460 U.S. at

581. A business in the communications

field cannot escape its obligation to

comply with generally applicable laws on

the ground that the cost of compliance

would be prohibitive. As TPN I put it, “a

newspaper does [not have] a constitutional

right to a certain level of profitability, or

even to stay in business at all.” TPN I, 215

F.3d at 366. 

At the same time, however, courts

must be wary that taxes, regulatory laws,

and other laws that impose financial

burdens are not used to undermine

freedom of the press and freedom of

speech. Government can attempt to cow

the media in general by singling it out for

special financial burdens. Government

can also seek to control, weaken, or

destroy a disfavored segment of the media

by targeting that segment. Speaking of

the difference be tween genera lly

applicable tax laws and tax laws that target

the media or a segment of the media, the

Supreme Court has explained:

A p owe r to ta x

differentially, as opposed to

a power to tax generally,

gives a government a
14

powerful weapon against the

taxpayer selected. When the

State imposes a generally

applicable tax, there is little

cause for concern. We need

not fear that a government

will destroy a selected group

of taxpayers by burdensome

taxation if it must impose

the same burden on the rest

of its constituency. . . . 

When the State singles out

the press, though, the

political constraints that

prevent a legislature from

passing crippling taxes of

general applicability are

weakened, and the threat of

burdensome taxes becomes

acute. That threat can

operate as effectively as a

censor to check critical

comment by the press . . . .

Minneapolis Star, 460 U.S. at 585. 

To prevent such abuse, laws that

impose special financial burdens on the

media or a segment of the media must be

carefully examined. A law is

presumptively invalid if it “single[s] out

the press” or “a small group of speakers.”

Leathers, 499 U.S. at 447. This

presumption is not limited to instances in

which there is evidence that the law

represents a “purposeful attempt to

interfere with . . . First Amendment

activities.” Id. at 448. Even “where . . .

there is no evidence of an improper

censorial motive,” Arkansas Writers’, 481

U.S. at 228, a law is presumptively

unconstitutional if it is “structured so as to

raise suspicion that it was intended to

[interfere with protected expression].”

Leathers, 499 U.S. at 448. Once the

presumption of unconstitutionality arises,

it can be overcome only by showing that

the challenged law is needed to serve a

compelling interest. Minneapolis Star, 460

U.S. at 582, 585. 

3. 

Applying these standards, we hold

that Section 4-498 violates the First

Amendment. To begin, the Act’s structure

makes it presumptively unconstitutional.

Like the provisions struck down in

Grosjean, Minneapolis Star, and Arkansas

Writers’, Section 4-498 singles out a

relatively “small group” of speakers.

Leathers, 499 U.S. at 447. By its terms,

Section 4-498 is limited to media affiliated

with educational institutions, and in

practice the scope of the Act is

undoubtedly even narrower. Because

newspapers and other media affiliated with

elementary and secondary schools are most

unlikely to seek to run alcoholic beverage

ads, Section 4-498 in practice singles out

med i a assoc i a ted w ith th e

Commonwealth’s universities and

colleges. Accordingly, the structure of

Section 4-498 triggers the presumption of

unconstitutionality and thus requires the

Commonwealth to show that the Act is

“necessary” to achieve what the Court has

described as “an overriding government

interest” and an “interest of compelling

importance.” Minneapolis Star, 460 U.S.

at 582, 585. 

The Commonwealth has not
15

discharged that obligation. For the reasons

already discussed, the Commonwealth has

not shown that Section 4-498 is

“necessary” to discourage underage

drinking or abusive drinking. The

Commonwealth has not demonstrated that

Section 4-498 has curbed or promises to

curb such drinking to any appreciable

degree. Nor has the Commonwealth

shown that its worthy objectives cannot be

served at least as well by other means,

such as the diligent enforcement of the

alcoholic beverage laws on and around

college campuses. 

The Commonwealth contends that

cases such as Grosjean, Minneapolis Star,

and Arkansas Writers’ are inapposite

because they concerned laws that required

publications to pay taxes, rather than laws

that deprived the publications of a source

of revenue, but this difference is

insignificant for present purposes. In

Simon & Schuster, the state noted that the

Son of Sam law simply required that the

funds in question be held in escrow for

five years, and the state argued that the

Son of Sam law was therefore quite

different from a tax law, which

permanently deprives the taxpayer of the

money paid. See 502 U.S. at 116-17.

Rejecting this contention, the Court wrote

that “[b]oth forms of financial burden

operate as disincentives to speak.” Id. at

117. Thus, the Supreme Court’s cases

concerning disparate taxation of the media

or of a segment of the media apply to other

laws that impose other types of disparate

financial burdens. The threat to the First

Amendment arises from the imposition of

financial burdens that may have the effect

of influencing or suppressing speech, and

whether those burdens take the form of

taxes or some other form is unimportant. 

The Commonwealth also suggests

that the tax cases are inapplicable here

because the laws struck down in those

cases imposed financial burdens directly

on the media, whereas Section 4-498, as

interpreted by the LCB, is directly

applicable only to advertisers. We reject

this argument as well. Much like the

proffered distinction between taxes and

other financial burdens, this argument

disregards the reason for the presumptive

unconstitutionality of laws that impose

disparate financial burdens on the media or

segments of the media. As noted, such

schemes are suspect because they can

easily be used as a way of controlling or

suppressing speech. Because a law that

imposes a significant, but indirect,

financial burden on the media or a segment

of the media can be used in the same way

and with the same effect, there is no

principled reason to draw a distinction

between laws that impose direct and

indirect burdens of comparable practical

significance.9

 

9We also note that while the TwentyFirst Amendment provides the States with

the authority to regulate alcohol, such

regulation is subject “to the same First

Amendment restrictions that apply to the

Federal Government.” Rubin v. Coors

Brewing Co., 514 U.S. 476, 485-86

(1995); see also 44 Liquormart, Inc. v.

Rhode Island, 517 U.S. 484, 516-17
16

As did the TPN I panel, the

Commonwealth relies on AMSAT Cable

Ltd. v. Cablevision of Connecticut, 6 F.3d

867 (2d Cir. 1993), and Warner

Communications, Inc. v. City of Niceville,

911 F.2d 634 (11th Cir. 1990), but neither

case supports the Commonwealth’s

position here. In AMSAT, a satellite

television company that had an exclusive

agreement with some apartment buildings

to provide television service to their

tenants challenged a state law that required

apartment building owners to give access

to cable and antenna companies that

wanted to service the tenants. The satellite

company argued that the state anti-trust

law was unconstitutional because it would

undermine the economic viability of

satellite companies. Id. at 871. Rejecting

this argument, the Second Circuit held that

the satellite company had no First

Amendment right to an exemption from

the law simply because such a law would

harm the company’s revenue. In AMSAT,

there was no evidence that it was a

targeted attempt to suppress speech, rather

than a generally applicable anti-trust

scheme. Id.

AMSAT plainly differs from the

present case in several respects. As far as

the AMSAT opinion reveals, the satellite

law was part of the state’s overall effort to

combat monopolies and there was nothing

about the structure of the law at issue in

that case that gave rise to a presumption of

unconstitutionality. As stated above,

media are not exempt from generally

applicable laws or schemes simply because

they harm the media’s profit. Minneapolis

Star, 460 U.S. at 581. Section 4-498,

however, is specific to certain media

content and specifically targets certain

types of media. It is not part of a generally

applicable scheme. 

The Eleventh Circuit’s decision in

City of Niceville is even farther afield.

There, Warner, a leading cable provider,

claimed that the city’s entry into the

market as a competing cable provider

violated Warner’s First Amendment rights.

The Eleventh Circuit rejected Warner’s

claim, holding that the city was entitled to

enter the market and that Warner had no

First Amendment right to be free from

competition. Id. at 637-638. The

argument that the Court rejected in City of

Niceville – that the First Amendment

protec ts a media company from

competition by a state-sponsored

enterprise – simply has no relevance in the

present case. Here, the Commonwealth is

not damaging The Pitt News by sponsoring

a competing publication; it is damaging

The Pitt News by preventing it, and a small

group of similarly situated media, from

generating revenue from ads of specific

content. While there was no indication of

intent to suppress speech or harm specific

media in City of Niceville, these elements

do exist in our case.

(1996)(“[W]e now hold that the

Twenty-first Amendment does not qualify

the constitutional prohibition against laws

abridging the freedom of speech embodied

in the First Amendment.”)
17

IV.

For these reasons, we hold that

Section 4-498 violates the First

Amendment as applied to The Pitt News.

We therefore reverse the order of the

District Court and remand for the entry of

a permanent injunction against the

enforcement of Section 4-498 with respect

to any advertisements in that paper.