United States Court of Appeals

For the First Circuit

No. 06-2224

WINE AND SPIRITS RETAILERS, INC., ET AL.,

Plaintiffs, Appellants,

v.

STATE OF RHODE ISLAND ET AL.,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF RHODE ISLAND

[Hon. Ernest C. Torres, U.S. District Judge]

Before

 Lynch, Circuit Judge, 

Selya, Senior Circuit Judge, 

and Howard, Circuit Judge.

Evan T. Lawson, with whom Robert J. Roughsedge, Michael

Williams, and Lawson & Weitzen, LLP were on brief, for appellants.

Rebecca Tedford Partington, Deputy Chief, Civil Division,

Department of Attorney General, with whom Patrick C. Lynch,

Attorney General, was on brief, for state appellees.

Joseph S. Larisa, Jr. and Larisa Law and Consulting, LLC on

brief for intervenor-appellee.

March 20, 2007
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SELYA, Senior Circuit Judge. This appeal requires us to

revisit the scene of an earlier battle. In Wine & Spirits

Retailers, Inc. v. Rhode Island, 418 F.3d 36 (1st Cir. 2005), we

affirmed the district court's denial of preliminary injunctive

relief against the enforcement of two amendments to Rhode Island's

statutory scheme governing in-state liquor sales at retail. See

R.I. Gen. Laws §§ 3-5-11, 3-5-11.1. Following further proceedings

on remand, including a full-dress bench trial, the district court,

ruling ore sponte, decided the case in favor of the defendants.

The plaintiffs again appeal. Discerning no error, we affirm the

judgment below.

I. BACKGROUND

Typically, we review factual determinations made during

a bench trial for clear error and afford plenary review to the

trier's formulation and application of the law. See Smith v. F. W.

Morse & Co., 76 F.3d 413, 420 (1st Cir. 1996); see also Fed. R.

Civ. P. 52(a). The existence of our earlier decision does not

alter this basic standard of review. In considering a prior appeal

from the grant or denial of preliminary injunctive relief, our

merits-oriented conclusions "are to be understood as statements as

to probable outcomes." Cohen v. Brown Univ., 101 F.3d 155, 169

(1st Cir. 1996).

This does not mean that, in such a situation, we must

necessarily reinvent each and every wheel. To the extent that the
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record compiled at the preliminary injunction stage was

"sufficiently developed and the facts necessary to shape the proper

legal matrix were sufficiently clear, and [if] nothing in the

record subsequently developed at trial constitutes substantially

different evidence that might undermine the validity of the prior

panel's rulings of law," those rulings may be deemed the law of the

case. Id. (citation and internal quotation marks omitted). It is

against this backdrop that we turn to the record below.

For efficiency's sake, we assume the reader's familiarity

with our earlier opinion. That said, we briefly recount the

identity of the parties. Plaintiff-appellant Wine & Spirits

Retailers, Inc. (W&S) is a Rhode Island corporation engaged in the

interstate business of franchising package stores. Plaintiffappellant John Haronian, a Rhode Island resident, is W&S's

principal. Following our earlier decision, these two plaintiffs

amended their complaint and enlisted three new plaintiffs, all

Rhode Island-based package stores (the Retail Stores) that had

entered into franchise agreements with W&S. The Retail Stores are

all appellants here. Each of them possesses a Class A license to

sell liquor at retail. Furthermore, each of them has operated, and

desires to operate in the future, under the trade name "Douglas

Wine & Spirits." 

The principal defendants (appellees before us) are the

State of Rhode Island and Jeffrey J. Greer, in his official
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capacity as the associate director of the Rhode Island Department

of Business Regulation. We henceforth shall refer to these

defendants, collectively, as "the State." In addition, a trade

association, the United Independent Liquor Retailers of Rhode

Island, has intervened as a defendant. 

In our previous decision, we described in detail the

relevant aspects of the statutory amendments challenged by the

plaintiffs. See Wine & Spirits, 418 F.3d at 42-43. Briefly

stated, those amendments, enacted in 2004, prohibit franchisees

from holding Class A liquor licenses and nullify existing franchise

agreements that conflict with that proscription. See R.I. Gen.

Laws § 3-5-11.1. Rhode Island had barred chain-store organizations

from holding Class A liquor licenses since 1933, and the Rhode

Island General Assembly accomplished the broader prohibition, in

part, by expanding the chain-store definition to encompass

franchise-type arrangements. See id. § 3-5-11(b). 

There is another facet to this case (not mentioned in the

earlier appeal). That facet involves the plaintiffs' challenge to

a related statutory provision, not part of the 2004 amendment

cycle, that imposes an in-state residency requirement for

prospective liquor licensees. See id. § 3-5-10.

In the court below, the plaintiffs attacked the statutory

scheme on several fronts. As stated, the district court

nonetheless denied preliminary injunctive relief. See Wine &
The plaintiffs to some extent also challenge the restrictions 1

on coordinated marketing, see R.I. Gen. Laws § 3-5-11(b)(1)(iv),

and the restrictions on agreed pricing, see id. § 3-5-11(b)(1)(v).

Because these provisions are similar in character to the joint

advertising ban and because the plaintiffs lavish most of their

attention on the latter, we use section 3-5-11(b)(1)(iii) as an

exemplar.

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Spirits, 418 F.3d at 42. Later, the court conducted a bench trial

and — for reasons described later in this opinion — repulsed each

and all of the plaintiffs' initiatives. 

This timely appeal followed. For ease in analysis, we

divide the plaintiffs' assignments of error into three groups.

II. THE FIRST AMENDMENT CLAIMS

The First Amendment applies to the several states by

operation of the Fourteenth Amendment. See 44 Liquormart, Inc. v.

Rhode Island, 517 U.S. 484, 489 n.1 (1996). Here, the plaintiffs

press two First Amendment claims, each of which charges abridgment

of speech. No arguments pertaining to freedom of association have

been briefed, and any such arguments are, therefore, waived. See

United States v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990). 

In essence, the plaintiffs assert that (i) the

prohibition against participation in joint advertisements, R.I.

Gen. Laws § 3-5-11(b)(1)(iii), and (ii) the prohibition against 1

the use of a trade name associated with a chain-store organization,

see id. § 3-5-11(b)(1)(vi), violate the First Amendment. In our

earlier decision, we acknowledged that "commercial speech,

including truthful liquor advertising, is entitled to a measure of
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protection under the First Amendment." Wine & Spirits, 418 F.3d at

48. As to W&S and Haronian, however, we determined that the

"provision of advertising and [trade name] licensing services is

not speech that proposes a commercial transaction and therefore

does not constitute commercial speech." Id. at 49 (citing Bd. of

Trs. of State Univ. of N.Y. v. Fox, 492 U.S. 469, 482 (1989)). By

the same token, the provision of such services is not protected as

symbolic speech. Id. (citing United States v. O'Brien, 391 U.S.

367, 376-77 (1968)). Since the plaintiffs have advanced no new

arguments on this front, there is no reason to revisit those

conclusions.

That does not end this aspect of the matter because, in

our earlier decision, we left open the question of whether the

restrictions on joint advertising and shared trade names might

infringe the First Amendment rights of a franchisee holding a Class

A liquor license — a claim that neither W&S nor Haronian had

standing to pursue. See id. at 48-50. Given the emergence of the

Retail Stores as parties plaintiff — they appear to have been

joined for precisely this purpose — we must now examine the merits

of these contentions. 

A. Joint Advertising.

With respect to joint advertising, the Retail Stores

contend that section 3-5-11(b)(1)(iii) does not prohibit agreements

about prices and products but, rather, prohibits the advertisements
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themselves. Building on this foundation, they suggest that, at its

core, the prohibition "bans speech as a means of addressing

underlying conduct." Appellants' Br. at 44. To support this

extravagant claim, the Retail Stores point to evidence adduced at

trial regarding joint advertisements that make no reference to

agreed-upon prices or common products. 

This argument lacks force. Section 3-5-11(b)(1)(iii)

forbids a licensee's "[p]articipation in a coordinated or common

advertisement." This prohibition does not target speech; each

individual liquor licensee remains at liberty to disseminate

information about its prices and products to other retail stores

and to the public at large. See Wine & Spirits, 418 F.3d at 47

(making a similar point with respect to W&S's provision of business

advice). Seen in that light, the statute is at a far remove from

the legislation at issue in 44 Liquormart, which completely banned

the advertising of prices. See 517 U.S. at 516. The statute at

issue here merely proscribes conduct — the launching of

advertisements resulting from pre-agreed commercial strategies.

Such a ban is not a ban on commercial speech. See Wine & Spirits,

418 F.3d at 49. The fact that it is possible to design

advertisements violative of the ban that do not mention specific

prices or products does not prove that the statute is concerned

with speech as opposed to conduct.
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We add, moreover, that even if the joint advertising

prohibition could be said to touch upon commercial speech under

other circumstances, it would not implicate any protected interest

possessed by the Retail Stores. Acting in concert to implement an

advertising plan no more proposes a commercial transaction than

does the provision of advertising services by W&S — a practice that

we have found not protected under the First Amendment. See id.

And, finally, the conduct in question is not so inherently

expressive as to warrant First Amendment protection under the

O'Brien doctrine. See Rumsfeld v. Forum for Acad. & Inst. Rights,

Inc., 126 S. Ct. 1297, 1310 (2006) (FAIR); see also O'Brien, 391

U.S. at 376-77. In these circumstances, any restriction of speech

would be purely incidental to the regulation of conduct. And as

the Supreme Court recently reminded us:

[I]t has never been deemed an abridgement of

freedom of speech or press to make a course of

conduct illegal merely because the conduct was

in part initiated, evidenced, or carried out

by means of language, either spoken, written,

or printed.

FAIR, 126 S. Ct. at 1308 (quoting Giboney v. Empire Storage & Ice

Co., 336 U.S. 490, 502 (1949)). 

Taking a somewhat different tack, the plaintiffs suggest

that the Rhode Island statute is flawed because other commercial

entities are not forbidden from advertising jointly. That

suggestion attempts to invoke the precept that, even in the

commercial milieu, "decisions that select among speakers conveying
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virtually identical messages are in serious tension with the

principles undergirding the First Amendment." Greater New Orleans

Broad. Ass'n v. United States, 527 U.S. 173, 193-94 (1999). The

precept, though sound, is inapposite here.

The Supreme Court has emphasized the importance of

context in evaluating claims that legislation abridges First

Amendment rights. See Edenfield v. Fane, 507 U.S. 761, 774 (1993);

see also Glickman v. Wileman Bros. & Elliott, Inc., 521 U.S. 457,

469 (1997). In line with that emphasis, the precept upon which the

Retail Stores rely cannot be construed to divest the states of

their ability to devise specific rules for businesses in different

fields, that is, for businesses that are not similarly situated.

See, e.g., Edenfield, 507 U.S. at 774 (stressing the importance, in

evaluating the constitutionality of commercial speech regulations,

of distinctions between different professions); cf. 37712, Inc. v.

Ohio Dep't of Liquor Control, 113 F.3d 614, 620-23 (6th Cir. 1997)

(rejecting due process and equal protection challenges because

holders of different licenses were not similarly situated). This

is merely a reflection of the time-honored tenet that, within wide

limits, courts must defer to state legislative classifications

constructed to further legitimate economic objectives. See 37712,

Inc., 113 F.3d at 622.

So it is here. A trial court's findings of fact, made in

connection with one legal theory, may often be treated as fungible
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in connection with another. See, e.g., Societe Des Produits Nestle

v. Casa Helvetia, Inc., 982 F.2d 633, 642 (1st Cir. 1992). That

principle applies in this case; although the lower court addressed

the "classification" argument in equal protection terms, its

findings of fact are readily transferable to the precincts

patrolled by the First Amendment. 

The district court found as a matter of fact that the

Retail Stores had failed to demonstrate that they and those other

entities to which they alluded were similarly situated. This

finding is not clearly erroneous (indeed, it appears to be

unassailable). Consequently, we reject the plaintiffs' disparate

treatment claim. 

B. Shared Trade Names.

The remaining prong of the plaintiffs' First Amendment

challenge involves the statutory restriction on the use of shared

trade names. See R.I. Gen. Laws § 3-5-11(b)(1)(vi) (prohibiting

Class A licensees from using "[a]ny term or name identified as a

chain or common entity"). The Retail Stores assert a

constitutional right to do business under the Douglas name, which

they believe "conveys a positive message to potential consumers."

Appellants' Br. at 42.

It cannot be gainsaid that the use of a trade name

implicates the user's commercial speech rights. See Friedman v.

Rogers, 440 U.S. 1, 11 (1979). This brings front and center the
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familiar four-part test for whether a regulation of commercial

speech is constitutionally permissible. See, e.g., Thompson v. W.

States Med. Ctr., 535 U.S. 357, 367 (2002) (citing Cent. Hudson Gas

& Elec. Corp. v. Pub. Serv. Comm'n, 447 U.S. 557, 566 (1980)); El

Día, Inc. v. P.R. Dep't of Consumer Affairs, 413 F.3d 110, 113 &

n.5 (1st Cir. 2005).

It is not always necessary, however, to deal with each of

the test's four parts. In framing the inquiry, the threshold

question is whether "the commercial speech concerns unlawful

activity or is misleading." W. States Med. Ctr., 535 U.S. at 367.

If so, the inquiry ends there: "the speech is not protected by the

First Amendment." Id.; see Fla. Bar v. Went For It, Inc., 515 U.S.

618, 623-24 (1995); Edenfield, 507 U.S. at 768. The Retail Stores

are unable to cross this threshold.

In a case that antedated Central Hudson, the Supreme

Court held that the First Amendment posed no obstacle to state

regulation of trade names when "a significant possibility" existed

that such names would "be used to mislead the public." Friedman,

440 U.S. at 13, 15. In that instance, the plaintiffs challenged a

total ban on the use of trade names in the practice of optometry.

While mulling the challenge, the Court took stock of the myriad

possibilities for deception and concluded that the ban related to

"conduct the State rationally may wish to discourage." Id. at 13.

With that framework in place, the Court upheld the restriction,
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explaining that it had only an incidental effect on the commercial

speech rights of optometrists (who remained free to advertise their

prices, products, and services under their own names). Id. at 15-

16. 

Since its decision in Friedman, the Court has made a

doctrinal refinement, distinguishing in the professional services

context between commercial speech that is inherently or actually

misleading and commercial speech that is only potentially

misleading. See, e.g., Ibanez v. Fla. Dep't of Bus. & Prof'l Reg.,

Bd. of Accountancy, 512 U.S. 136, 144-46 (1994); In re R. M. J.,

455 U.S. 191, 203 (1982); see also Am. Acad. of Pain Mgmt. v.

Joseph, 353 F.3d 1099, 1106-07 (9th Cir. 2004). Under the doctrine

as refined, advertising that is actually misleading "may be

prohibited entirely." In re R. M. J., 455 U.S. at 203.

Contrastingly, a state "may not place an absolute prohibition on

certain types of potentially misleading information . . . if the

information also may be presented in a way that is not deceptive."

Id. We need not (and do not) decide the issue, but we note that

recent decisions have applied this dichotomy beyond the

professional services context. See, e.g., Pearson v. Shalala, 164

F.3d 650, 655 (D.C. Cir. 1999).

In the case at hand, the plaintiffs argue that the State

has not shown that the use of a shared trade name by independent

package stores is misleading and that, in all events, there is no
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evidence of consumer confusion. While certain elements of this

argument are irreproachable — a governmental entity attempting to

enforce a restriction on commercial speech has the burden of

justifying the restriction, W. States Med. Ctr., 535 U.S. at 373,

and courts will not sustain restrictions resting either on a dearth

of evidence of deception or on unsupported assertions, see Ibanez,

512 U.S. at 145, 148-49; El Día, 413 F.3d at 116 — the argument as

a whole does not survive scrutiny. 

Even assuming, for argument's sake, that the Ibanez

dichotomy applies here, the State's concern about the misleading

nature of chain-associated trade names, when used by independent

package stores, is readily supportable. The district court, in its

preliminary injunction ruling, refused to enjoin the enforcement of

the "no franchise" provisions contained in the statutory scheme but

temporarily blocked the enforcement of the prohibition against the

use of a shared trade name. See Wine & Spirits, 418 F.3d at 44.

In conformity with those rulings, the Retail Stores relinquished

their franchise agreements and claimed, from that point forward, to

be acting as independent businesses. They nonetheless continued to

use the Douglas name. Although we subsequently allowed the

injunction against enforcement of the "trade name" restriction to

lapse, see id., the Retail Stores apparently persisted in using a

shared trade name. 
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At trial, the district court, as the finder of the facts,

examined the Retail Stores' actual use of the shared trade name

during the period when they professed to be operating

independently. It determined that each of the former franchisees

had simply appended the name of the municipality in which its shop

was located to the Douglas name. The court received evidence that

newspaper advertisements purportedly placed by individual stores on

a rotating basis featured the Douglas name in large letters and

bold font, while reporting the store's location information in much

smaller print that was "far less likely to be noticed by the

reader"; that participating stores prominently displayed exact

replicas of these advertisements and offered for sale the same

products (both advertised and non-advertised) for the same prices;

and that the Retail Stores continued to receive suggested store

layouts and employee dress codes from W&S. Citing this evidence,

the court found as a fact that the Retail Stores' shared use of the

Douglas name "conveys and, obviously, is intended to convey to

consumers the impression that all of the stores are part of a

single entity and operate in concert." Given the Retail Stores'

assurances that they had been operating independently from and

after the effective date of the 2004 amendments, the court

concluded that the impression conveyed by the use of the shared

trade name was "untrue and, therefore, misleading."
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These findings are not clearly erroneous (indeed, the

plaintiffs do not contest them). They graphically illustrate why

the use of a shared trade name in the retail liquor market by

supposedly independent package stores poses an area of legitimate

concern for a state that has abolished franchise and chain-store

arrangements in that market. The findings, therefore, comprise a

showing sufficient to underpin the restriction enacted by the Rhode

Island General Assembly.

The Retail Stores counter that the State should, at most,

be able to require the placement of qualifying language (say,

"independently owned and operated") in connection with independent

retailers' use of a shared trade name. That is whistling past the

graveyard: as a general matter, the law imposes no requirement that

a regulation of commercial speech constitute the least restrictive

means of accomplishing the State's legitimate goal. See Lorillard

Tobacco Co. v. Reilly, 533 U.S. 525, 556 (2001); Passions Video,

Inc. v. Nixon, 458 F.3d 837, 843 (8th Cir. 2006). At any rate, the

record here contains nothing that would compel — or even support —

a conclusion that such a disclaimer would be an effective means of

avoiding deception. 

That ends this chapter of the tale. As the district

court supportably found, the Retail Stores' actual usage of the

shared trade name tends, in a misleading fashion, to identify the

users as part of a chain or entity under common control. For that
None of the three appellate decisions bruited by the Retail 2

Stores casts doubt upon this conclusion. In two of them, the

restricted speech was neither misleading nor related to unlawful

activity. See Bad Frog Brewery, Inc. v. N.Y. State Liquor Auth.,

134 F.3d 87, 98 (2d Cir. 1998); Sambo's Rests., Inc. v. City of Ann

Arbor, 663 F.2d 686, 694 (6th Cir. 1981). In the third, the Fifth

Circuit, adjudicating an "as applied" challenge, found the use of

the trade names at issue to be not misleading in view of the

plaintiff's sophisticated consumer base and distinctive labeling

method. See Piazza's Seafood World, LLC v. Odom, 448 F.3d 744, 753

(5th Cir. 2006). This decision has little bearing on the issues

before us. 

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reason, the restriction imposed by the State is constitutionally

permissible.2

III. THE COMMERCE CLAUSE CLAIMS

The Constitution grants to Congress the power "[t]o

regulate Commerce . . . among the several States." U.S. Const.

art. I, § 8, cl. 3. Within this grant of power, what has come to

be known as the dormant commerce clause prohibits "protectionist

state regulation designed to benefit in-state economic interests by

burdening out-of-state competitors." Grant's Dairy—Me., LLC v.

Comm'r of Me. Dep't of Agric., Food & Rural Res., 232 F.3d 8, 18

(1st Cir. 2000). State regulation of the sale of alcoholic

beverages is, however, unique; while such regulation is subject to

the nondiscrimination principles of the dormant commerce clause,

the Twenty-first Amendment confers upon the several states wideranging control over the structure of local liquor distribution

systems. See Granholm v. Heald, 544 U.S. 460, 487-89 (2005). 
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Notwithstanding this constitutionally sanctioned zone of

control, the plaintiffs charge that Rhode Island's liquor

distribution regime violates the dormant commerce clause. This

charge, which was not addressed in our earlier decision, has two

facets — one narrowly focused and the other more global. In a

rifle-shot attack, the plaintiffs allege that, by limiting Class A

licenses to Rhode Island residents, R.I. Gen. Laws § 3-5-10

discriminates on its face against out-of-state residents. In a

broader fusillade, they allege variously that the statutory scheme

discriminates in both purpose and effect, legislates

extraterritorially, and unduly burdens the free flow of interstate

commerce.

A statute that discriminates on its face against

interstate commerce, whether in purpose or effect, demands

heightened scrutiny. See Alliance of Auto. Mfrs. v. Gwadosky, 430

F.3d 30, 35 (1st Cir. 2005). Under this rigorous form of review,

a statute is invalid unless it furthers a legitimate local

objective that cannot be served by reasonable non-discriminatory

means. See Or. Waste Sys., Inc. v. Dep't of Envtl. Quality, 511

U.S. 93, 99-101 (1994). Relatedly, the Supreme Court has explained

that legislation purporting to regulate commerce that occurs wholly

beyond a state's borders "is invalid regardless of whether the

statute's extraterritorial reach was intended by the legislature."

Healy v. Beer Inst., 491 U.S. 324, 336 (1989); see Pharm. Research
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& Mfrs. of Am. v. Concannon, 249 F.3d 66, 79 (1st Cir. 2001), aff'd

sub nom. Pharm. Research & Mfrs. of Am. v. Walsh, 538 U.S. 644

(2003).

A statute that "regulates evenhandedly and has only

incidental effects on interstate commerce engenders a lower level

of scrutiny." Alliance of Auto. Mfrs., 430 F.3d at 35 (citation

and internal quotation marks omitted). In those circumstances,

courts employ the balancing test limned in Pike v. Bruce Church,

Inc., 397 U.S. 137 (1970). That test is straightforward: assuming

that the statute operates evenhandedly to achieve a legitimate

local interest and that its effects on interstate commerce are

incidental, it will stand "unless the burden imposed on

[interstate] commerce is clearly excessive in relation to the

putative local benefits." Id. at 142.

With these jurisprudential building blocks in place, we

turn to the concerns identified by the plaintiffs.

A. Residency Requirements.

The plaintiffs' first line of attack is directed at

section 3-5-10. A liquor-license residency requirement has been in

force in Rhode Island since 1933 (albeit with modifications over

time). With exceptions not relevant here, the current version of

the Rhode Island law provides that Class A package store licenses

are to be issued "only to . . . residents of this state." R.I.

Gen. Laws § 3-5-10(a)(1). Relatedly, no such license "shall be
In a different provision, the statute states that 3

"[r]etailer's licenses may, however, be issued to corporations

incorporated in any other of the United States which are authorized

by the secretary of state to transact business in this state."

R.I. Gen. Laws § 3-5-10(a)(1). Despite this provision, the parties

have stipulated that "all Class A licenses must be held by Rhode

Island residents or Rhode Island corporations." Given the

plaintiffs' lack of standing, see text infra, we need not resolve

the seeming contradiction between the quoted provision and the

parties' stipulation.

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issued to [a] corporation unless each officer, director or

stockholder is a suitable person to hold a license." Id. § 3-5-

10(b)(1).3

These requirements, the plaintiffs contend, violate the

dormant commerce clause because they discriminate on their face

against out-of-state residents. The district court did not reach

the merits of this contention. Rather, the court ruled that the

plaintiffs lacked standing to contest the residency requirements.

It based this ruling on its findings (i) that the Retail Stores

were Rhode Island entities, each of which already possessed a Class

A license; (ii) that W&S, a Rhode Island corporation, had never

expressed an interest in obtaining a license; and (iii) that

Haronian, also a Rhode Islander, had displayed a similar

indifference to acquiring a Class A license. Given these facts,

the plaintiffs had failed to demonstrate any injury in fact

stemming from section 3-5-10's residency requirements. See Lujan

v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992) (describing
-20-

the requirements for Article III standing); Pagán v. Calderón, 448

F.3d 16, 26-27 (1st Cir. 2006) (similar).

On appeal, the plaintiffs do not challenge the district

court's findings of fact. They do, however, argue that as a legal

matter the district court took too crabbed a view of standing.

They urge us to apply the doctrine that, under the dormant commerce

clause, "cognizable injury is not restricted to those members of

the affected class against whom states . . . ultimately

discriminate." Houlton Citizens' Coal. v. Town of Houlton, 175

F.3d 178, 183 (1st Cir. 1999) (citing Gen. Motors Corp. v. Tracy,

519 U.S. 278, 286 (1997)). The plaintiffs insist that this

doctrine enables them to challenge a law that violates the dormant

commerce clause even though the law's harmful effects on them are

only indirect.

We have no quarrel with the abstract statements of law

set forth in Houlton. But context is all-important, and those

statements are of no help to the plaintiffs in the circumstances of

this case. Here, significantly, the plaintiffs have failed to show

any cognizable harm, direct or indirect, attributable to the

residency requirements of section 3-5-10. We explain briefly. 

The injuries of which the plaintiffs complain arise in

consequence of Rhode Island's ban on franchise and chain-store

arrangements, not in consequence of the residency requirements per

se. After all, the plaintiffs are all Rhode Island residents and,
-21-

if favoritism exists, none of them could conceivably have suffered

any cognizable harm as a result of it. This deficiency

distinguishes the plaintiffs' case from cases like Houlton in which

claimants have succeeded in making out the rudiments of standing.

See, e.g., Gen. Motors, 519 U.S. at 286-87; Bacchus Imports, Ltd.

v. Dias, 468 U.S. 263, 267 (1984); Alliance of Auto. Mfrs., 430

F.3d at 37; Houlton Citizens' Coal., 175 F.3d at 183.

Consequently, we uphold the district court's determination that the

plaintiffs lack standing to challenge the residency requirements

for Class A liquor licensees. 

B. Overall Statutory Scheme.

Taking aim at R.I. Gen. Laws §§ 3-5-11 and 3-5-11.1, the

plaintiffs mount a ferocious attack on the State's prohibition

against franchise and chain-store arrangements in the retail liquor

industry. Their argument runs along the following lines. In

determining whether an entity is a chain-store organization (and,

thus, forbidden from obtaining a Class A liquor license), the

statutory scheme continues to count "chains in which one or more

stores are located outside of the state." See id. § 3-5-11(a).

That aspect of the statute, when combined with the 2004 ban on

franchise-type arrangements, creates (or so the plaintiffs tell us)

a regime designed to achieve economic protectionism by advantaging

independently owned Rhode Island liquor stores. So viewed, the

plaintiffs continue, the statutory scheme discriminates in both
-22-

purpose and effect, legislates extra-territorially, and unduly

burdens the free flow of interstate commerce.

The State takes a diametrically opposite position. It

asserts that the statutory scheme applies uniformly across the

board, barring chain-store organizations and franchise entities,

regardless of whether they are based in Rhode Island, from owning

package stores. It adds that the evidence adduced at trial

revealed no burden on interstate commerce, let alone a

discriminatory effect. 

We begin with purpose. Parties challenging the validity

of a state statute on "purpose" grounds must show that the statute

was prompted by a discriminatory purpose. See Hughes v. Oklahoma,

441 U.S. 322, 336 (1979); Alliance of Auto. Mfrs., 430 F.3d at 37.

Here, the plaintiffs maintain that their effort finds sustenance in

two places in the record. First, they identify what they term an

admission by the State that the 2004 amendments were not enacted to

promote temperance. Second, they point to two actions by lawyers

representing the defendants (actions which, in the plaintiffs'

view, make pellucid that the legislature's sole purpose was to keep

the retail liquor industry from being dominated by a few megaplayers wielding nationwide market power). Based on these isolated

snippets, the plaintiffs urge us to hold that the real goal of the

statutory scheme is economic protectionism. 
-23-

The district court declined to make that quantum leap,

and so do we. The words of a legislative body itself, written or

spoken contemporaneously with the passage of a statute, are usually

the most authoritative guide to legislative purpose. See, e.g.,

Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456, 463 n.7, 471

n.15 (1981); Houlton Citizens' Coal., 175 F.3d at 191. The purpose

of the 2004 amendments, as articulated in the statute itself, is to

"promote the effective and reasonable control and regulation of the

Rhode Island alcoholic beverage industry and to help the consumer

by protecting their choices and ensuring equitable pricing." R.I.

Gen. Laws § 3-5-11.1(a). To put this statement of purpose into

perspective, it should be recalled that the prohibitions against

franchise and chain-store arrangements in the retail liquor

industry are part of Title 3 of the Rhode Island General Laws.

Title 3's stated purpose is the "promotion of temperance and for

the reasonable control of the traffic in alcoholic beverages." Id.

§ 3-1-5. The plaintiffs have not proffered any convincing reason

for doubting these formal statements of legislative purpose.

To be sure, the plaintiffs try. The centerpiece of their

effort is the State's so-called admission that the 2004 amendments

were not intended to promote temperance. That brazen claim relies

on the State's answer to an interrogatory, which clarified that the

State was not planning to argue in the district court that the

amendments had actually reduced the consumption of alcoholic
-24-

beverages. We are hard-pressed to see how that interrogatory

answer, which merely narrowed the field as to the issues that the

State was planning to emphasize at trial, in any way vitiates the

General Assembly's clear statements of overall legislative purpose.

The remainder of the plaintiffs' evidentiary cache

consists of two statements of counsel. The first is a comment by

counsel for the intervenor-defendant — a trade association, not a

state agency — about the need to count out-of-state entities in the

chain-store calculus lest a "giant, behemoth, nationwide liquor

retailer . . . quickly dominate the entire market with [its]

nationwide market power, thereby completely undermining in one fell

swoop the purpose of the law, which is to treat all Class A license

holders equally." The second is an offer of proof tendered by an

attorney for the State in connection with a rebuffed exhibit, which

was designed to supply background for the General Assembly's

decision to structure the retail liquor industry without any chainstore "entity controlling the business in a number of different

locations." To say that these statements override — or even weaken

— the legislature's formal statements of purpose would be to

elevate hope over reason.

What we have said to this point fully answers the

plaintiffs' questions about the General Assembly's intent. On this

record, we have no choice but to reject the construct that

enactment of the overall statutory scheme was driven by a
-25-

discriminatory purpose. See generally Fireside Nissan, Inc. v.

Fanning, 30 F.3d 206, 218 (1st Cir. 1994) (finding protection of

consumers against perceived "harmful franchising practices" to be

a legitimate legislative objective).

The plaintiffs' claim of discriminatory effect is equally

unavailing. Here, too, the plaintiffs must carry the devoir of

persuasion. See Alliance of Auto. Mfrs., 430 F.3d at 40. After a

full trial, the district court found no compelling evidence of

discriminatory effect. Because that finding is not clearly

erroneous, it commands our respect. See Fed. R. Civ. P. 52(a). 

The plaintiffs' principal rejoinder rests on an overly

expansive reading of our decision in Walgreen Co. v. Rullan, 405

F.3d 50 (1st Cir. 2005). In that case, the challenged statute

exempted existing pharmacies (roughly 92% of which were locally

owned) from compliance with a set of facially neutral statutory

requirements. Id. at 55-56. The statute also allowed those

"grandfathered" pharmacies to wield great influence in the

enforcement of the statutory requirements vis-à-vis new entrants.

Id. Statistical data adduced at trial "strongly indicate[d]" that

the statute suppressed competition and favored local interests.

Id. at 56.

The instant case is easily distinguishable from Walgreen.

Here, the plaintiffs adduced no evidence that the prohibition on

franchise and chain-store arrangements, in itself, has had, or
-26-

threatens to have, a debilitating or unfair impact either on

competition in general or — leaving aside residency requirements —

on out-of-state enterprises in particular. There is, for example,

no evidence of any carve-out or other device that would enable instate entities to evade the challenged restrictions, nor is there

any hint of a home-field advantage in connection with the State's

enforcement of the restrictions. The absence of any such evidence

is telling. See, e.g., Exxon Corp. v. Gov. of Md., 437 U.S. 117,

125-26 (1978) (rejecting unsubstantiated argument that effect of

evenhanded proscription against refiners was "to protect in-state

independent dealers from out-of-state competition"); see also Lewis

v. BT Inv. Mgrs., Inc., 447 U.S. 27, 42 (1980) (discussing Exxon

and terming the absence of discrimination between interstate and

local competitors "a most critical factor").

Notwithstanding this lack of evidence, the plaintiffs

asseverate that evenhanded laws that apply to in-state and out-ofstate entities alike nonetheless may produce a discriminatory

effect, in violation of the dormant commerce clause, if they "favor

a subset of in-state interests." Walgreen, 405 F.3d at 58 (citing

C & A Carbone, Inc. v. Town of Clarkstown, 511 U.S. 383, 391

(1994)). This asseveration can be dispatched quickly. Leaving to

one side the residency requirements, see supra Part III(A), the
The plaintiffs also make a rather feeble argument that the 4

statutory scheme discriminates by exempting certain types of instate establishments, such as wineries and brewpubs purveying

locally produced wine and beer, from the franchise and chain-store

prohibitions. See R.I. Gen. Laws §§ 3-5-11(a), 3-5-11.1(a). But

there has been no showing here either that these kinds of business

establishments are similarly situated to package stores or that

their claimed exempt status has "deprive[d] out-of-state businesses

of access to a local market." C & A Carbone, 511 U.S. at 389.

Consequently, we reject the argument out of hand.

-27-

statutory scheme at issue here does not favor in-state interests at

all.4

To this, we add one further observation: that a state

regulation that burdens some interstate firms "does not, by itself,

establish a claim of discrimination against interstate commerce."

Exxon, 437 U.S. at 126 (footnote omitted). Thus, the fact that the

mosaic of state laws enacted by the General Assembly may have had

a negative impact on W&S's business model is, in itself,

insufficient to show discriminatory effect. 

This brings us to the claim that the statutory scheme has

an impermissible extraterritorial reach. The district court did

not address this claim, presumably due to shortcomings in the

manner of its presentment. Even assuming that this argument was

squarely presented, it does not profit the plaintiffs' cause.

A statute is per se invalid if it "regulates commerce

wholly outside the state's borders or when the statute has a

practical effect of controlling conduct outside of the state."

Pharm. Care Mgmt. Ass'n v. Rowe, 429 F.3d 294, 311 (1st Cir. 2005)
-28-

(quoting Pharm. Research & Mfrs. of Am., 249 F.3d at 79). The

argument sketched by the plaintiffs on this point is that the

statutory scheme dictates that businesses must abandon (or refrain

from entering into) out-of-state franchise and chain-store

arrangements in order to be eligible for a Rhode Island retail

liquor license. That bare claim, without more, fails to pass

muster. The plaintiffs have not explained how the commercial

activity identified is "wholly outside" the State's boundaries nor

have they explained why the force exerted by the statutory scheme,

with respect to out-of-state conduct, can fairly be described as

"control." This sophisticated area of law requires developed

argumentation, with evidentiary support. Cf. Beer Inst., 491 U.S.

at 337 n.14 (labeling as a "critical consideration" regarding

extraterritorial reach claims the "overall effect of the statute on

both local and interstate commerce"). On the sketchy arguments

asserted by the plaintiffs, we are unable to say that the scheme

"necessarily requires out-of-state commerce to be conducted

according to in-state terms." Pharm. Care Mgmt. Ass'n, 429 F.3d at

311 (quoting Cotto Waxo Co. v. Williams, 46 F.3d 790, 794 (8th Cir.

1995)).

Leaving residency strictures to one side, see supra Part

III(A), the most that the plaintiffs have shown is that the neutral,

evenhanded requirements that we have been discussing incidentally

burden interstate commerce by precluding various methods of
-29-

distribution in the retail liquor market. That is not enough. In

order to invalidate the requirements, any such burden would have to

be "clearly excessive in relation to the putative local benefits."

Pike, 397 U.S. at 142.

Here, the hoped-for local benefits consist primarily of

regulating and safeguarding against anticompetitive behavior in the

retail liquor market. See R.I. Gen. Laws § 3-5-11.1; see also

Heald, 544 U.S. at 488-89; Wine & Spirits, 418 F.3d at 51, 54. The

corresponding burdens on interstate commerce are minimal. Again

leaving to one side the residency requirements, see supra Part

III(A), the plaintiffs have identified only two conceivable burdens:

a loss of flexibility in arranging business affairs and a less-thanoptimally-efficient distribution system for alcoholic beverages that

have traveled through interstate commerce. Even accepting that

these are real burdens, the plaintiffs have the obligation of

proving excessiveness, see Pharm. Care Mgmt. Ass'n, 429 F.3d at 313

— and they have not come close to showing that the burdens they

envision are excessive in relation to the statutory scheme's

legitimate goals. 

We need not tarry. The Supreme Court previously has

rejected the notion that the dormant commerce clause protects

particular business structures or methods of operation in retail

markets. See Exxon, 437 U.S. at 127. The plaintiffs' argument that

consumers would be advantaged by unregulated competition in retail
-30-

liquor sales, like the argument rejected in Exxon, "relates to the

wisdom of the statute, not to its burden on commerce." Id. at 128.

It is, therefore, of little moment. The bottom line is that the

plaintiffs have failed to prove a violation of the dormant commerce

clause.

IV. THE EQUAL PROTECTION CLAIM

In a last-gasp effort to stem an unfavorable tide, the

plaintiffs advance an equal protection challenge to the statutory

scheme. This challenge presents something of a moving target; its

specifics have been in constant flux during the course of the

litigation. At this juncture, the challenge has morphed into an

assault on the legitimacy of the State's interest in enacting the

statutory scheme.

We apply rational basis scrutiny to equal protection

challenges to economic legislation. See Wine & Spirits, 418 F.3d

at 53 (citing Hodel v. Indiana, 452 U.S. 314, 331 (1981)). Using

that level of scrutiny, economic legislation will be upheld as

against an equal protection challenge if "the means chosen by the

legislature are rationally related to some legitimate government

purpose." Id. Refined to bare essence, the plaintiffs' current

challenge is yet another iteration of their by-now-discredited claim

that the Rhode Island General Assembly's principal concern in

enacting the amendments was economic protectionism. As we

previously have made clear, the plaintiffs' underlying premise —
-31-

that economic protectionism is the primary justification for Rhode

Island's statutory scheme — is incorrect. See supra Part III(B).

Contrary to the plaintiffs' rodomontade, the State has not "freely

admit[ted]" that motivation, nor have the plaintiffs identified any

evidence that fairly supports it. Accordingly, we reject the

plaintiffs' ipse dixit and affirm our preliminary conclusion that

no cognizable equal protection violation has been demonstrated. See

Wine & Spirits, 418 F.3d at 53-54.

V. CONCLUSION

We need go no further. State legislatures acting in the

public interest are entitled to considerable deference in mapping

the contours of economic legislation. While that deference must

take full account of constitutional constraints, the Rhode Island

General Assembly has not crossed any constitutional boundaries here.

Accordingly, we uphold the judgment below.

Affirmed.