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Eighth Circuit Hints at Unconstitutionality of Missouri Restrictions on Alcohol Advertising

Last week, the US Court of Appeals for the Eighth Circuit weighed in on the legality of restrictions on alcohol advertising under the First Amendment, issuing an opinion in Missouri Broadcasters Association v. Lacy that could eventually broaden free speech protections for alcohol beverage advertisements. After the lower court granted defendants’ motion to dismiss and plaintiffs appealed, the Eighth Circuit reversed the district court’s dismissal, finding that plaintiffs’ claim alleging the unconstitutionality of a Missouri statute and two regulations should be heard.

The case concerned three Missouri provisions – two regulations and a statute – that restrict the advertising of alcohol beverages:

  1. a regulation prohibiting retailers from advertising price discounts outside of the licensed premises (but allowing the advertising of discounts by using generic descriptions (e.g., “Happy Hour”), as well as the advertising of specific discounts within the licensed premises);
  2. a regulation prohibiting retailers from advertising prices below cost; and
  3. a statute requiring manufacturers and wholesalers choosing to a list a retailer in an advertisement to exclude the retail price of the product from the advertisement, list multiple unaffiliated retailers and make the listing relatively inconspicuous.

Plaintiffs – a broadcasting industry group, radio station operator, winery and retailer – sued Missouri’s supervisor of liquor control and attorney general, alleging that the three provisions are facially invalid under the First Amendment in that they prohibit truthful, non-misleading commercial speech, are inconsistently enforced by the state and the challenged statute unconstitutionally compels speech.

To state a claim that a statute is facially unconstitutional under the First Amendment, Supreme Court precedent instructs that plaintiffs must show that there are no set of circumstances under which the challenged provision would be valid, or that a substantial number of the provision’s applications are unconstitutional. Alcohol beverage advertisements involve commercial speech, which receives less protection under the First Amendment than other constitutionally protected forms of expression. In Central Hudson Gas & Electric Corp. v. Public Service Comm’n of New York (1980), the Supreme Court articulated a four-part test for determining the constitutionality of laws restricting commercial speech:  whether (1) the speech concerns lawful activity and is not misleading; (2) the governmental interest justifying the regulation is substantial; (3) the regulation directly advances the governmental interest; and (4) the regulation is no broader than necessary to further the governmental interest.

Applying the third and fourth factors of the Central Hudson test (plaintiffs and defendants agreed on the first two factors of the test), the court found that the facts plaintiffs alleged were “more than sufficient” to state a plausible claim. First, the court opined, plaintiffs made sufficient allegations that the challenged provisions do not directly advance Missouri’s substantial interest in promoting responsible drinking. Although defendants argued that a link exists between advertising promotions and increased demand for alcohol beverages, the court noted that “multiple” inconsistencies in the regulations demonstrate that the regulations do not advance Missouri’s interest in promoting responsible drinking. Likewise, the court determined, plaintiffs pled sufficient facts to support [...]

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Alcohol Advertising in Digital Media, Part 2: Federal Regulation

This past year brought examples of federal regulation and oversight of social media.  Both illustrate the general policy concerns of federal agencies that regulate alcohol beverage advertising.

TTB Industry Circular 2013-1, reviews the application of TTB regulations to beer, wine and spirits advertising in social media and other forms of digital advertising.  TTB’s primary concerns are the clear disclosure of the company responsible for an advertisement and prohibiting communication of false and misleading information.   The circular makes clear that TTB’s advertising regulations apply to digital advertising, including user-generated content.  Helpful references are provided to key sections of TTB advertising regulations for beer, wine and spirits.

FTC 2012 Special Order (FTC Matter No. P104518) requested a broad range of information on advertising expenditures and practices from companies in the alcohol beverage industry to make sure that they comply with the Federal Trade Commission Act and voluntary industry advertising codes.  The FTC has broad authority to prohibit and take enforcement action against advertising that is deceptive or unfair.  FTC officials have long maintained that this authority empowers the agency to limit exposure of persons under the legal drinking age to alcohol beverage advertising content in all media.  The Special Order requested information about online and social media activity at pages 4-6 and 9-10, and companies should recognize that advertising content, planning documents and placement information may be requested in similar special orders in the future.




Alcohol Advertising in Digital Media, Part 1: Overview

Tremendous opportunities exist for advertising brands, events and other promotional activities in digital media, which includes traditional web sites, social networks and integrated advertising platforms.  Properly executed marketing efforts provide great flexibility to reach and interact with adults of legal drinking age on a range of devices.  “Properly executed” is the key, particularly in digital media where campaigns can go from the conceptual stage to dissemination to millions of consumers in a matter of days.

Many professionals in the rapidly evolving media landscape grew up in a culture of free expression unparalleled in human history and several generations removed from the post- Prohibition mindset that inspired existing restrictions on alcohol advertising.  Those who are anxious to use their creative talents in alcohol beverage advertising campaigns must become familiar with unique federal and state laws governing alcohol advertising as well as voluntary industry codes.  Failure to take basic compliance measures can result in a devastating delay or removal of an innovative app, social network site or geo-targeting plan.  In addition to the loss of a key part of a campaign, government enforcement actions can result in penalties and reputational damage.

  • At the federal level, the Alcohol and Tobacco Tax and Trade Bureau (TTB) and the Federal Trade Commission (FTC) regulate alcohol beverage advertising.  Both agencies have shown recent interest in online and social media.
  • Each state has alcohol beverage and consumer protection statutes and policies.
  • Several industry trade associations and many digital media outlets have self-regulatory codes or unique rules that apply to content and placement of alcohol beverage advertising.

Basic principles of government regulation and industry self-regulation include societal concerns over issues such as alcohol abuse and potential appeal of advertising content to underage audiences.  The power of digital media triggers additional issues such as privacy and data security.

The next three parts of this series will address federal regulation, state regulation and industry self-regulation.




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