Eighth Circuit Strikes Down Multiple Missouri Alcohol Beverage Advertising Laws

By on January 13, 2020

In another blow to the constitutionality of alcohol beverage laws, the Court of Appeals for the Eighth Circuit struck down on First Amendment grounds a number of Missouri’s alcohol beverage advertising laws on the basis that Missouri failed to meets it burden to demonstrate that such laws both advanced the state’s substantial interest and were narrowly tailored to achieve that interest.

At issue in Missouri Broadcasters Ass’n v. Schmitt were familiar alcohol advertising laws that restricted:

  • Suppliers and distributors for advertising at retail on tied house grounds (e., advertising qualified as a “financial interest” in the retailer);
  • Retailers from advertising discounted prices outside of their establishments; and
  • Retailers from advertising below-cost alcohol inside their establishments.

In applying the four factor test articulated by the US Supreme Court in Central Hudson to assess the validity of governmental regulation of commercial speech, the Court focused squarely on the third and fourth prongs, which concern “whether the challenged law directly advances the government’s asserted interest” and “whether the law is no more extensive than necessary to further the government’s interest.”

In keeping with the recent trends in these cases, the Eight Circuit was fairly dismissive of the arguments advanced by Missouri regarding both the historical basis for tied house restrictions as well as the proliferation of similar laws across each state as well as the federal government. Instead, the Court admonished the state for failing to demonstrate a direct connection between a substantial interest in, among other things, promoting responsible consumption and the challenged regulations. Further, the Court noted that the regulatory regime itself is “so pierced by exemptions and inconsistencies that they render the Statute as applied irrational and ineffective.” Finally, the Court found that Missouri provided “no evidence” that the Statute as applied is not more extensive than necessary to further the state’s interest.

This decision is in direct contrast, however, to a similar challenge brought against California’s alcohol advertising restrictions in Retail Digital Network v. Prieto. There, the Court of Appeals for the Ninth Circuit held that under the same Central Hudson standard, the state’s laws stood up to First Amendment scrutiny. This is because the state’s laws directly and indirectly advanced the state’s interest in eliminating the danger that alcohol manufacturers and wholesalers would seek to circumvent the three-tiered system by using advertising payments to conceal illegal payoffs.

With the Eighth and Ninth circuits squarely at odds on their application of the Central Hudson factors, it is possible that the Supreme Court would grant cert if and when the State of Missouri were to appeal this decision.

However, the greater takeaway is the continued trend of the courts to be dismissive of the constitutional authority granted states under the 21st Amendment to regulate alcohol within their borders, as well as the clear and exacting evidentiary standards courts are imposing on individual states to provide affirmative proof that challenged alcohol regulations in fact achieve the ends they are professing to achieve.

Alva C. Mather
Alva Mather is the global head of McDermott’s Regulatory Practice Group and a member of the Firm’s Management Committee, and heads the Alcohol Regulatory & Distribution Practice. As a nationally recognized go-to lawyer for alcohol beverage regulatory, commercial and M&A matters, clients say that Alva “comes to the situation with clear leadership and strong knowledge of the food and beverage industry.” She combines her extensive knowledge of the commercial and legal landscape as well as deep understanding of the beverage industry to help clients mitigate risk, respond to challenges, and capture and pursue new business opportunities. Read Alva Mather's full bio.