4th Circuit fumbles decision on liquor ads in campus newspapers

Thursday, April 22, 2010

Reading the majority opinion in Educational Media Company at Virginia Tech v. Swecker is like watching a favored football team fumble the opening kickoff, throw an interception before halftime and commit a drive-killing penalty late in the second half. You see it happening, you keep expecting a different outcome and then, finally, you realize you’re watching an upset.

Unfortunately for college newspapers in Virginia, the decision in Swecker, though an upset of sorts, is not a game. In Swecker, the 4th U.S. Circuit Court of Appeals upheld Virginia regulations prohibiting college newspapers from publishing many types of alcohol advertisements. In doing so, the court surprisingly chose not to follow a contrary 2004 decision of the 3rd Circuit and struggled mightily in applying 30 years of relatively clear U.S. Supreme Court precedent.

The 4th Circuit started its analysis ominously, muffing a chance to avoid the case’s constitutional issues entirely. The evidence before the court established that neither newspaper challenging the regulations — Virginia Tech’s The Collegiate Times and the University of Virginia’s The Cavalier Daily — actually was subject to the regulations, as neither was “distributed or intended to be distributed primarily to persons under 21 years of age.” (More than half of the students and most faculty are over 21 on both campuses.) But the newspapers brought suit because Virginia's Alcoholic Beverage Control Board had suggested that it would view an alcohol ad as a violation.

Rather than simply prohibit the board from enforcing its regulations against these newspapers, the court stretched to find a “credible threat of prosecution” of the newspapers (a threat the court could have extinguished in a few sentences). Then it analyzed the regulations’ constitutionality under the U.S. Supreme Court’s 1980 holding in Central Hudson Gas & Electric Corp. v. Public Service Commission.

In Central Hudson, the Supreme Court held that truthful commercial speech about lawful activities can be restricted if the government asserts a substantial interest in restricting the speech, the restriction directly advances that interest and the restriction is no more extensive than necessary to serve the interest.

In applying Central Hudson, the 4th Circuit majority — in an opinion written by Judge Dennis Shedd and joined by Senior Judge Clyde Hamilton — almost entirely ignored the 3rd Circuit’s 2004 decision in Pitt News v. Pappert. The majority’s refusal to follow Pitt News was surprising because the 3rd Circuit case involved a similar Pennsylvania ban and similar evidence and because Pitt News was written by current U.S. Supreme Court Justice Samuel Alito.

Undaunted, the majority went through each step of the Central Hudson analysis. Appearing comfortable with that analysis, the court correctly concluded that even though drinking is unlawful for some, ads for age-restricted activities concern lawful activity for Central Hudson purposes as long as the audience contains at least some of-age members. The majority then rightly assumed — because the newspapers were challenging the regulations on their face, as opposed to how the government applied them to published ads — that the ads would be truthful. And the majority then escaped any need to analyze Virginia’s interest in combating under-age drinking when the alcohol-control board and the newspapers agreed that interest was substantial.

As the court turned to whether the advertising ban directly and materially advanced that interest, however, it stumbled.

First, although stating that the government bore the burden of proving that the ban directly and materially discouraged under-age and abusive drinking, the majority shifted to the newspapers the burden of proving that the ban was ineffective.

The government’s case, the court said, “need not be proven by empirical evidence” but instead could be shown by “history, consensus, and simple common sense.” As long as the ban is not “irrational, contrary to specific data, or rooted in speculation or conjecture,” it satisfied this prong of the Central Hudson test.

Disagreeing with the trial court’s conclusion that the government had not sustained its burden of proof on the issue, the majority, relying almost entirely on its version of “simple common sense,” found that the regulations decreased demand for alcohol among college students.

The correlation between restricting advertising and decreasing demand among students is especially strong in this instance, the majority said, because college newspapers “primarily target college students and play an inimitable role on campus.” Moreover, the majority said, the fact that vendors want to advertise in these papers means advertising must increase demand. In any event, the majority concluded, the newspapers had failed to provide empirical evidence that the ban was ineffective.

This conclusion would be difficult to accept even if its only flaws were that it improperly shifted the burden of proof and that it required the newspapers — but not the government — to provide empirical evidence of the ban’s effectiveness. As Judge Norman Moon pointed out in his dissent, however, the conclusion also is factually inaccurate.

In the trial court, the newspapers introduced expert testimony that brand advertising like that banned in Virginia affects only how brands divvy up the market and that “market-wide demand for alcohol is not stimulated by advertising.” Though the alcohol-control board’s expert testified differently, the dissent noted that he previously had published a statement that there was “very little empirical evidence that alcohol advertising has any effect on actual alcohol consumption” and that he acknowledged that “a ban on advertising in one medium generally results in greater advertising saturation in other media or forms of marketing.”

Then turning to common sense, the dissent noted that the regulations had been in place since the repeal of Prohibition and that under-age drinking has nevertheless increased during that time.

Moon therefore agreed with the decision in Pitt News, in which the 3rd Circuit, relying on similar evidence, invalidated a comparable Pennsylvania statute.

The 4th Circuit panel also disagreed about whether a “reasonable fit” existed between the regulations and the state’s interest in reducing drinking on campus. The disagreement centered on the fact that the regulations allow dining establishments to advertise in college newspapers that they sell alcohol, but only if they use the words “beer,” “wine,” “mixed beverages” and “cocktails” to describe their offerings.

To the majority, this exemption demonstrated that the ban, because it was not complete, was “narrowly tailored to serve the Board’s interest of establishing a comprehensive scheme attacking the problem of underage and dangerous drinking by college students.”

To the dissent, however, the exemption simply proved a poor fit between the government’s stated objective and its regulations. “It is inconsistent to maintain that a regulation that permits advertisements for ‘beer night’ or ‘mixed drink night’ ‘in reference to a dining establishment,’” Moon wrote, “forms a reasonable fit with the goal of curbing underage or excessive drinking merely because it forbids advertisements for keg delivery, ‘mojito night,’ or the “Blacksburg Wine Festival.’”

While conceding that a “reasonable fit” can exist even if the regulation is not the best or only means of accomplishing the government’s objective, Moon argued that the regulation must be necessary and that the ban was far from necessary to serve Virginia’s interest.

In this case, Moon wrote, the ban “and its impact on protected commercial speech are far out of proportion to the interest served.” Moreover, he said, this case is like Pitt News in that “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.”

Nonetheless, Moon realized he was in the minority and that the majority’s view, even if inconsistent with precedent, would prevail. He therefore could only lament — and warn.

“It is objectionable that the Commonwealth’s rationale for regulation applies only to underage and abusive drinking, while the regulation itself applies much more broadly,” he concluded. “In free speech cases, it is dangerous and unwise to sustain broad regulations for narrow reasons.”