Court Opinion

ID: 195687
Source: CourtListenerOpinion
Date Created: 2011-02-07 02:45:22+00
Date Added: 2024-06-11T17:26:38.915670
License: Public Domain

UNITED STATES COURT OF APPEALS
                    FOR THE FIRST CIRCUIT

                                         

No. 93-1893

                   44 LIQUORMART, INC. AND
              PEOPLES SUPER LIQUOR STORES, INC.,

                    Plaintiffs, Appellees,

                              v.

                    STATE OF RHODE ISLAND,

                     Defendant, Appellee,

           RHODE ISLAND LIQUOR STORES ASSOCIATION,

                    Intervenor, Appellant.
                                         

No. 93-1927
                   44 LIQUORMART, INC. AND
              PEOPLES SUPER LIQUOR STORES, INC.,

                    Plaintiffs, Appellees,

                              v.

                    STATE OF RHODE ISLAND,

                    Defendant, Appellant.
                                         

        APPEALS FROM THE UNITED STATES DISTRICT COURT

               FOR THE DISTRICT OF RHODE ISLAND

    [Hon. Raymond J. Pettine, Senior U.S. District Judge]
                                                        
                                         

                            Before

                      Cyr, Circuit Judge,
                                        
                Aldrich, Senior Circuit Judge,
                                             
                  and Stahl, Circuit Judge.
                                          

                                         

Lauren E. Jones  with whom Caroline C. Cornwell, Jones Associates,
                                                                 
William P. Gasbarro and Robert M. Brady were on brief for Rhode Island
                                   
Liquor Stores Association.
Rebecca Tedford  Partington, Special  Assistant Attorney  General,
                           
with whom Jeffrey B. Pine, Attorney General, was on brief for State of
                     
Rhode Island.
Evan  T.  Lawson  with  whom Lawson  &  Weitzen was  on  brief for
                                               
plaintiffs-appellees.

                                         

                       October 24, 1994
                                         

          ALDRICH, Senior Circuit Judge.   The State of Rhode
                                       

Island, that did not ratify the Eighteenth Amendment, and was

among the  earliest to ratify the  Twenty-First that repealed

it,  in  1956  adopted  two  statutes,  assertedly  aimed  at

promoting temperance,  forbidding  advertising the  price  of

intoxicating  liquor, except  at  the place  of sale  if sold

within  the state.  The "declared purpose is the promotion of

temperance and for the reasonable  control of the traffic  in

alcoholic beverages."  R.I. Gen. Laws   3-1-5.

          R.I. Gen. Laws   3-8-7 provides,

               3-8-7.    Advertising price  of malt
          beverages,  cordials,  wine or  distilled
          liquor.  -- No  manufacturer, wholesaler,
          liquor.  -- 
          or shipper from without this state and no
          holder  of a  license  issued  under  the
          provisions  of  this  title  and  chapter
          shall cause or permit the  advertising in
          any manner whatsoever of the price of any
          malt   beverage,    cordials,   wine   or
          distilled liquor offered for sale in this
          state;   provided,   however,  that   the
          provisions  of  this  section  shall  not
          apply to price signs or tags attached  to
          or  placed on merchandise for sale within
          the licensed premises in  accordance with
          rules and regulations of the department.

          Section  3-8-8.1, post,  enlarges this  language to
                                

forbidding making  "reference to  the price of  any alcoholic

beverage,"1  that  defendant  Rhode  Island   Liquor  Control

Administrator,  a  strict  enforcer, construes  as  including

remote references such as "WOW!"

                    

1.  See also Liquor Control Adm. Reg. 32.
            

                             -3-

          In this action plaintiffs, 44  Liquormart, Inc. and

Peoples Super Liquor Stores, Inc., having sufficient standing

to  attack  these  statutes   in  every  particular,  seek  a

declaration against the Administrator (hereinafter the State)

of  unconstitutionality as contravening  the First Amendment.

Rhode  Island  Liquor  Stores Association  (Association)  has

intervened as a party defendant.  After a bench trial, in  an

extensive opinion the court found for plaintiffs.  Defendants

appeal.  They succeed with respect to limiting advertising by

Rhode Island vendors.

          The stage it set below is described by the State.

               [T]he   advertising   ban   directly
          advanced  the  governmental  interest  by
          increasing   the    cost   of   alcoholic
          beverages, thereby lowering the amount of
          alcohol consumption by  residents of  the
          State  of  Rhode  Island. . . .     [T]he
          State's   power   to   totally  ban   any
          advertising  about   alcoholic  beverages
          necessarily included the lesser  power to
          restrict price advertising.

Further,  the State  contended that  plaintiffs, in  order to

rely on the First  Amendment, must "prove that the  four part

Central Hudson test could not be met."
              

          Association, a group of small liquor stores,  whose

intervention as a co-defendant was not opposed  by the State,

alleged as  its ground for intervening that if advertising of

prices were to be  allowed, its members "would be  obliged to

participate  in  the advertising  arena  and  would  be at  a

definite disadvantage when  matched up against retailers  who

                             -4-

hold multiple licenses."   This complaint was later bolstered

by adding  that competitive  price advertising would  tend to

lower prices, and that "a more competitive market for alcohol

might be considered an undesirable goal."

          We start  with the four issues  that Central Hudson
                                                             

raises when a state's interest conflicts with the rights of a

would-be commercial speaker.

          At the outset, we must  determine whether
          the  expression is protected by the First
          Amendment.  [I]  For commercial speech to
          come  within that provision,  it at least
          must concern lawful  activity and not  be
          misleading.   [II]  Next, we  ask whether
          the  asserted  governmental  interest  is
          substantial.    If  both inquiries  yield
          positive answers, we must determine [III]
          whether the  regulation directly advances
          the  governmental interest  asserted, and
          [IV]  whether it  is  not more  extensive
          than is necessary to serve that interest.

Central  Hudson  Gas  &  Electric  Corp.  v.  Public  Service
                                                             

Commission  of New  York,  447 U.S.  557,  566 (1980).    The
                        

ultimate  purpose  is  to  weigh "the  expression  [and]  the

governmental  interests served  by its  regulation."   Id. at
                                                         

563.

          I.   In the present  case the first  test raises no

question.   II.  For the second it was stipulated, "The State

of Rhode Island has a substantial interest in regulating  the

sale  of  alcoholic  beverages."    Plaintiffs  concede  that

promoting  temperance  is such  an  interest.   The  dispute,

accordingly,   is   whether   forbidding  price   advertising

                             -5-

"directly advances" temperance,  and "is  not more  extensive

than  is necessary."  There is a further question with regard

to local advertising by an out-of-state vendor.

          III.    "Directly advances."    We  start with  the

burden  of proof.    The  burden  is  on  the  party  seeking

suppression, here the State.   Edenfield v. Fane, 113  S. Ct.
                                                

1792, 1800 (1993).   But to what extent?   The district court

held  that  it was  an issue  for  it to  decide, unfettered,

between competing  witnesses, and since, on  its weighing the

evidence,  the  court was  not persuaded  that the  State was

correct, it failed.  We do  not think the burden that strict.

It is not correctness, it is reasonableness.

          In the first place, the term "directly advances" is

not absolute.  Edenfield, 113 S. Ct. at 1800 ("alleviate to a
                        

material degree");  Trustees of  the State University  of New
                                                             

York v.  Fox, 492  U.S. 469,  480 (1989) ("reasonable  fit").
            

See  also Posadas de Puerto  Rico Assoc. v.  Tourism Co., 478
                                                        

U.S. 328, 342 (1986) ("reasonable").  And while the state has

the  burden,  in California  v. LaRue,  409 U.S.  109, 118-19
                                     

(1972), the Court spoke of "the added presumption in favor of

the  validity of the state  regulation in this  area that the

Twenty-First Amendment requires."  Historically the state has

failed  where the  evidence was  "at most,  tenuous," Central
                                                             

Hudson, 447  U.S. at  569; "unsupported assertions:   nowhere
      

does the State cite  any evidence or authority of  any kind,"

                             -6-

Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626, 648
                                          

(1985);  lack of studies  or "anecdotal evidence," Edenfield,
                                                            

113  S. Ct. at 1800.  Warrantable inferences, however, may be

sufficient.  Posadas, 478 U.S. at 341-42 (advertising).  What
                    

should  a  court do  when  there  is no  empirical2  evidence

either  way,  and  expert  opinions  go  both  ways?     Even

plaintiffs' expert,  whom the  court credited,  admitted that

"advertising  has  cumulative effects  that are  difficult to

detect in studies, and that research studies have been varied

and equivocal because it  is a difficult topic  to research."

Should the court be free to choose?

          IV.   Before answering  these questions we  observe

that the "not  more extensive than  is necessary" inquiry  is

subject to the same considerations.  Re R.M.J., 455 U.S. 191,
                                              

207 (1982) ("reasonably necessary").   The district court did

not deal with this directly, except to note the concession of

the   State's  expert   that   "the  objective   of  lowering

consumption of alcohol by  banning price advertising could be

accomplished  by  establishing   minimum  prices  and/or   by

increasing  sales taxes on alcoholic beverages."  This is not

an  answer; the  State is  entitled to  a reasonable  choice.

This includes choice of method --  it is not obliged to prove

                    

2.  This  word is a summary of the court's findings that such
studies  as were offered  were too inconclusive  to be relied
on.

                             -7-

that  some  other  method,  e.g.,  taxation,  would  be  less

effective.  Cf. Fox, 492 U.S. at 478.
                   

          Returning  to  our   questions,  there  would  seem

inherent merit  in the  State's  contention that  competitive

price  advertising would  lower prices,  and that  with lower

prices there would be more sales.   We would enlarge on this.

There  are   doubtless  many  buyers  whose   consumption  is

sometimes  measured by their free  money.  If  a buyer learns

that  plaintiffs charge less, is  he not likely  to go there,

and then buy  more?   Correspondingly, if  ignorant of  lower

prices elsewhere, will  he not  tend to buy  locally, at  the

higher price, and thus buy less?  See Stanley I. Ornstein and
                                     

Dominique  M.   Hanssens,  Alcohol   Control  Laws   and  the
                                                             

Consumption  of Distilled  Spirits and  Beer, 12  J. Consumer
                                            

Res. 200  (September 1985).  Further,  if Association members

would  fight plaintiffs' advertised  prices, as they presage,

by lowering their own,  then, again, might there not  be more

buys?

          Even plaintiffs' witness  Smart conceded that  some

believed this inference reasonable.

          What I'm  aware of are studies  that show
          that  people  generally  decide how  much
          money  they  have to  spend  on alcoholic
          beverages per  week or  per month.   Then
          they  tend to spend  that amount,  and if
          they can spend it  in one way, they'll do
          it and in another  way they'll do that as
          well.

                             -8-

Advertising must  be generally  productive, or so  much money

would  not be  spent on  it.   Posadas,  478 U.S.  at 341-42;
                                      

Oklahoma Telecasters Ass'n v. Crisp,  699 F.2d 490, 501 (10th
                                   

Cir.  1983), rev'd  on other grounds  sub nom  Capital Cities
                                                             

Cable,  Inc.  v. Crisp,  467  U.S.  691 (1984).    We do  not
                      

consider, in the absence  of any affirmative contradiction to

rely  on, that  the  district  court  was  free  to  hold  it

unreasonable.   In addition,  the presumption based  upon the

Twenty-First  Amendment,  LaRue,  supra, seems  precisely  in
                                       

order.

          Parenthetically, the State contends this discussion

to be unnecessary in view of the Court's action, 459 U.S. 807

(1982),  dismissing  an  appeal,  "for  want  of  substantial

federal question," from the decision in Queensgate Investment
                                                             

Co. v. Liquor Control Commission, 69 Ohio St.2d 361 (1982), a
                                

price  advertising  limitation  case.    The  district  court

rejected  this contention  because  of a  "different  factual

predicate," and because "a summary dismissal lacks a reasoned

opinion."   As to the latter, it  is settled that such action

has  precedental  effect,  although not  necessarily  on  the

identical reasoning  of the  court.   Mandel v.  Bradley, 432
                                                        

U.S. 173, 176 (1977).  As to facts, the Ohio  case involved a

statute  similar to  the one  at bar.   Defendant  restaurant

advertised,  in a circular, 50  cent drinks --  a markdown --

with meals.  We see no relevant factual distinction.

                             -9-

          The  Ohio court, recognizing that commercial speech

was  entitled to  some protection,  pursued the  four Central
                                                             

Hudson   tests  and   found   that  the   statute  was   "not
      

unreasonable"   in  light  of  the  Twenty-First  Amendment's

authorization to curb the evils  of alcoholic beverages.  690

Ohio St.2d at 366.  It concluded as follows.

          The   regulation   is   directed   toward
          regulation of the intoxicants themselves,
          rather than speech.   This is unlike  the
          case, e.g., in  [Virginia State Board  of
                                                   
          Pharmacy  v.  Virginia Citizens  Consumer
                                                   
          Council,  Inc.,  425  U.S.  748  (1976),]
                        
          where the speech was the actual focus  of
          the  regulation,  since  the aim  of  the
          restriction   was   the   prevention   of
          competition in  pharmaceutical sales, not
          the   discouragement  of   pharmaceutical
          purchases.

Ibid.
    

          Reliance  on  Queensgate  as  conclusive,  however,
                                  

might raise  possible questions.   The first  is whether  the

Court would have said  there was no federal question  if free

speech had  been curtailed by a  regulation clearly unrelated

to  liquor.   We need not  answer this because  we have found

that the State's  action was  reasonable as a  control.   But

suppose  the  primary  purpose  was that  eliminated  by  the

Queensgate court?  On the issue  of purpose the State is  not
          

helped  by  its  friends.   Association's  given  reason  for

wanting  to  intervene  as  a  defendant,  that  the  statute

protects the small vendor from the giants, could make logical

sense,  but might  not be  a lawful  use of  the Twenty-First

                             -10-

Amendment.   Cf.  California Retail  Liquor Dealers  Ass'n v.
                                                          

Midcal Aluminum,  Inc., 445 U.S. 97  (1980); Bacchus Imports,
                                                             

Ltd. v. Dias, 468 U.S. 263  (1984).  We need not resolve this
            

question either, however.   There  is a burden  to rebut  the

statutes'  declared purpose,  and  plaintiffs  have  made  no

attempt.   We  conclude  therefore that,  with Queensgate  or
                                                         

without, plaintiff 44 Liquormart must lose.

          Finally,  we observe that  our conclusion coincides

with the  Rhode Island court's.   Rhode Island  Liquor Stores
                                                             

Ass'n v. Evening Call Pub. Co., 497 A.2d 331 (R.I. 1985); S &
                                                             

S Liquor Mart, Inc. v. Pastore, 497 A.2d 729 (R.I. 1985).  We
                              

have  not   mentioned  its  decisions  hitherto  because  our

obligation  is  to  decide  for  ourselves.    See  Watson v.
                                                          

Estelle, 886 F.2d 1093, 1095 and n.3 (9th Cir. 1989).
       

          Peoples Super Liquor Stores, a Massachusetts vendor

that wishes  to advertise  its Massachusetts prices  in Rhode

Island, has a different case.  Because of R.I. Gen. Laws   3-

8-8.1 no Rhode Island publisher will accept advertisements.

               3-8-8.1.  Price advertising by media
          or advertising companies unlawful.  -- No
          or advertising companies unlawful.
          newspaper,    periodical,     radio    or
          television  broadcaster  or  broadcasting
          company  or  any  other person,  firm  or
          corporation  with  a  principal place  of
          business  in  the state  of  Rhode Island
          which  is  engaged  in  the  business  of
          advertising  or selling  advertising time
          or  space  shall   accept,  publish,   or
          broadcast any advertisement in this state
          of  the price  or make  reference to  the
          price of any alcoholic beverages. . . .

                             -11-

          By  the  hypothesis under  which we  are justifying

forbidding   price  advertising   by  local   vendors,  State

residents, whose shopping opportunity is thus curtailed, will

be  more  likely to  purchase  at higher-priced  neighborhood

outlets  and  less  at lower-priced,  viz.,  discount sellers

elsewhere.  Insofar as this constriction is aimed  at foreign

sellers, it  is a  deliberate, and, by  hypothesis effective,

discrimination and restraint on interstate commerce.  Thus we

have two questions.   One, is the State's interest  in health

and welfare sufficient to overcome the foreign vendors' right

of free speech?  Two,  if so, are the rights given  the State

by the Twenty First Amendment  sufficient to meet the foreign

vendors' further objections under the Commerce Clause?

          Viewed simply as free speech,  if a party wishes to

come into a state and do business, to some extent,  at least,

it should be subject to the same regulations as are its local

counterparts.   While the question may be close, where we are

dealing simply  with  commercial  speech,  whose  rights  are

limited,  Bigelow  v. Virginia,  421  U.S. 809,  818  et seq.
                                                            

(1975), we  believe the State health  interest, as reinforced

by the  Twenty First Amendment,  should empower the  State to

restrict foreigners as well.  Nor  do we find support for the

contrary in the Bigelow opinion.  We read the language relied
                       

on by  Peoples Super Liquor Stores  in the light  of the fact

that the advertisement contained more than commercial speech.

                             -12-

See 421 U.S. at 822; Friedman v. Rogers, 440 U.S. 1, 11, n.10
                                       

(1979).  Here we have no more than commercial.

          The serious  question is whether  the Twenty  First

Amendment can  prevail against  the Commerce Clause  when the

State is  deliberately favoring local vendors against foreign

enterprise.   The full meaning  and effect of  this Amendment

has  been much  debated.  At  a minimum  it does  not do away

altogether  with  the  Commerce  Clause.   Cf.  Hostetter  v.
                                                         

Idlewild  Bon  Voyage Liquor  Corp.,  377  U.S. 324,  331-332
                                   

(1964).   But, as a  matter of dictum,  the Court in  Bacchus
                                                             

Imports,  Ltd.  v. Dias,  468 U.S.  263,  at 276  (1984), has
                       

recognized the  possibility that  a state might  discriminate

"to promote temperance or  to carry out any other  purpose of

the Twenty  First Amendment."   We have  tentatively explored

this question in some depth, and find it difficult.

          This  raises a  problem.   The  record shows  that,

initially,  Peoples  included  the  Commerce  Clause  in  its

contentions.  On appeal,  it dropped it.   While at first  we

thought that the two principles were so tied together that we

should  nevertheless  consider  it, we  have  concluded  that

fairness to the State, and, indeed to us, requires that we do

not do  so without full briefing and  argument.  Accordingly,

we apply the  general principle and hold  the Commerce Clause

waived.   Interface Group, Inc. v.  Mass. Port Authority, 816
                                                        

F.2d 9,  16 (1st Cir. 1987).   Since without it  Peoples must

                             -13-

fail,  the  decision below  is  reversed,  with judgment  for

defendants.

                             -14-