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Missouri Broadcasters Assoc. v. Lafayette Lacy, 16-2006 (2017)

Court: Court of Appeals for the Eighth Circuit Number: 16-2006 Visitors: 28
Filed: Jan. 19, 2017
Latest Update: Mar. 03, 2020
Summary: United States Court of Appeals For the Eighth Circuit _ No. 16-2006 _ Missouri Broadcasters Association; Meyer Farms, Inc.; Uncle D’s Sports Bar & Grill, LLC; Zimmer Radio of Mid-MO, Inc. lllllllllllllllllllll Plaintiffs - Appellants v. Lafayette E. Lacy, State Supervisor of Liquor Control, in his official capacity; Chris Koster, Attorney General of the State of Missouri, in his official capacity lllllllllllllllllllll Defendants - Appellees _ Appeal from United States District Court for the West
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                 United States Court of Appeals
                            For the Eighth Circuit
                        ___________________________

                                No. 16-2006
                        ___________________________

 Missouri Broadcasters Association; Meyer Farms, Inc.; Uncle D’s Sports Bar &
                 Grill, LLC; Zimmer Radio of Mid-MO, Inc.

                      lllllllllllllllllllll Plaintiffs - Appellants

                                           v.

 Lafayette E. Lacy, State Supervisor of Liquor Control, in his official capacity;
 Chris Koster, Attorney General of the State of Missouri, in his official capacity

                      lllllllllllllllllllll Defendants - Appellees
                                       ____________

                     Appeal from United States District Court
               for the Western District of Missouri - Jefferson City
                                 ____________

                          Submitted: November 17, 2016
                             Filed: January 19, 2017
                                 ____________

Before RILEY, Chief Judge, WOLLMAN and KELLY, Circuit Judges.
                             ____________

RILEY, Chief Judge.

      The State of Missouri enacted a statute and two regulations detailing the
information alcohol manufacturers, wholesalers, distributers, and retailers could
include in their advertisements. See Mo. Rev. Stat. § 311.070.4(10); Mo. Code Regs.
Ann. tit. 11, § 70-2.240(5)(G), (I). Plaintiffs filed suit alleging the statute and
regulations violated their freedom of speech under the First Amendment of the United
States Constitution. Having appellate jurisdiction under 28 U.S.C. § 1291, we reverse
the district court’s grant of defendants’ motion to dismiss. Plaintiffs’ amended
complaint plausibly stated a claim upon which relief could be granted.

II.    BACKGROUND
       Missouri enacted two regulations prohibiting alcohol manufacturers,
wholesalers, distributers, and retailers from advertising certain information under
specific circumstances. Section 70-2.240(5)(G) (Discount Advertising Prohibition
Regulation) prohibits alcohol retailers from advertising discounted prices outside
their establishment.1 According to plaintiffs, the Discount Advertising Prohibition
Regulation prohibits retailers from advertising information such as “a two-for-one
special on beer at the local grocery store, a going-out-of-business sale at a specialty
wine shop, or a coupon for one free drink with the purchase of an entree at a
neighborhood bar and grill.” According to the interpretation put forth by defendants,
the Discount Advertising Prohibition Regulation does permit advertising sales using
generic descriptions (e.g., “Happy Hour” and “Ladies Night”) and advertising all
sales, promotions, and discounts within the retail establishment itself. In addition,



      1
          The Discount Advertising Prohibition Regulation reads:

      No advertisement of intoxicating liquor or nonintoxicating beer shall
      contain: . . . [a]ny statement offering any coupon, premium, prize,
      rebate, sales price below cost or discount as an inducement to purchase
      intoxicating liquor or nonintoxicating beer except, manufacturers of
      intoxicating liquor other than beer or wine shall be permitted to offer
      and advertise consumer cash rebate coupons and all manufacturers of
      intoxicating liquor may offer and advertise coupons for nonalcoholic
      merchandise.

Mo. Code Regs. Ann. tit. 11, § 70-2.240(5)(G).

                                         -2-
§ 70-2.240(5)(I) (Below Cost Advertising Prohibition Regulation) prohibits alcohol
retailers from advertising prices below the retailers’ actual cost.2

       Missouri also enacted a statute (Single Retailer Advertising Prohibition
Statute) specifying how distillers and wholesalers may advertise retailers selling their
products. See Mo. Rev. Stat. § 311.070.4(10).3 The Single Retailer Advertising
Prohibition Statute requires producers and wholesalers, if they choose to list any
retailer in an advertisement, to exclude the retail price of the product from the
advertisements, list multiple retail businesses not affiliated with one another, and
make the listing inconspicuous. See 
id. 2 The
Below Cost Advertising Prohibition reads: “No advertisement of
intoxicating liquor or nonintoxicating beer shall contain: . . . [a] price that is below
the retailer’s actual cost.” 
Id. 3 Section
311.070.4(10) reads:

      The distiller, wholesaler, winemaker or brewer may in an advertisement
      list the names and addresses of two or more unaffiliated retail businesses
      selling its product if all of the following requirements are met:

      (a) The advertisement shall not contain the retail price of the product;

      (b) The listing of the retail businesses shall be the only reference to such
      retail businesses in the advertisement;

      (c) The listing of the retail businesses shall be relatively inconspicuous
      in relation to the advertisement as a whole; and

      (d) The advertisement shall not refer only to one retail business or only
      to a retail business controlled directly or indirectly by the same retail
      business.


                                          -3-
       Plaintiffs—a non-profit corporation promoting the interests and welfare of the
broadcasting industry, a corporation operating radio stations, a winery, and a
commercial food and drink establishment licensed to sell alcohol—filed suit against
Missouri’s state supervisor of liquor control and state attorney general. According
to the amended complaint, the three challenged provisions are facially
unconstitutional under the First Amendment. Plaintiffs asserted the challenged
provisions prohibit truthful, non-misleading commercial speech and restrict the free
flow of truthful information to potential customers. Plaintiffs also claimed Missouri
inconsistently enforces the provisions, allowing some prohibited advertisements to
go unpunished, and the Single Retailer Advertising Prohibition Statute
unconstitutionally compels speech. Under plaintiffs’ theory, “[d]efendants cannot
show that the [challenged provisions] directly advance a substantial governmental
interest, nor that they regulate no more extensively than necessary to serve that
substantial interest.”

        Defendants moved to dismiss the amended complaint, which the district court
initially denied. Plaintiffs then moved for summary judgment. The district court
denied plaintiffs’ motion for summary judgment and, in the same order denying
summary judgment, stated: “[G]iven that defendants raised these same issues
previously in their motion to dismiss, the Court finds that reconsideration of the
Court’s previous order denying the motion to dismiss is warranted, and the Court sua
sponte grants defendants’ motion to dismiss.” The district court did not provide any
further discussion of how the amended complaint failed to state a claim. Plaintiffs
appeal the district court’s dismissal, and we reverse.4


      4
        Plaintiffs also appeal the district court’s denial of their motion for summary
judgment. “Ordinarily, we have no jurisdiction of an appeal challenging the denial
of a motion for summary judgment. Such orders are not final orders in the traditional
sense.” Miller v. Schoenen, 
75 F.3d 1305
, 1308 (8th Cir. 1996) (citation omitted).
Plaintiffs assert we do have jurisdiction over a denial of summary judgment if the
issues are “inextricably intertwined” with an order that is properly before us or we are

                                          -4-
II.     DISCUSSION
        We review a district court’s grant of a Rule 12(b)(6) motion to dismiss de novo.
See Sabri v. Whittier All., 
833 F.3d 995
, 998 (8th Cir. 2016). “[W]e accept as true
all factual allegations in the complaint and draw all reasonable inferences in favor of
the nonmoving party.” McDonough v. Ankoa County, 
799 F.3d 931
, 945 (8th Cir.
2015). “To survive a motion to dismiss, a complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face’” and
plead “factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 
556 U.S. 662
, 678
(2009) (quoting Bell Atl. Corp. v. Twombly, 
550 U.S. 544
, 570 (2007)). To state a
claim that a statute is facially invalid under the Free Speech Clause of the First
Amendment, plaintiffs must show “‘that no set of circumstances exist under which
[the statute] would be valid,’” United States v. Stevens, 
559 U.S. 460
, 472 (2010)
(quoting United States v. Salerno, 
481 U.S. 739
, 745 (1987)), or that “a ‘substantial
number’ of [the statute’s] applications are unconstitutional, ‘judged in relation to the


reviewing the grant of a cross-motion for summary judgment. We do not have
pendent jurisdiction in this case because pendent jurisdiction only applies where
reviewing a final order would necessarily impact a district court’s interlocutory order
in the same case. See Kincade v. City of Blue Springs, 
64 F.3d 389
, 394 (8th Cir.
1995) (“‘[P]endent appellate jurisdiction might still be appropriate where the
otherwise nonappealable decision is inextricably intertwined with the appealable
decision, or where review of the nonappealable decision is necessary to ensure
meaningful review of the appealable one.’” (quoting Moore v. City of Wynnewood,
57 F.3d 924
, 930 (10th Cir. 1995))). Here, our review of the grant of the motion to
dismiss does not impact the district court’s denial of summary judgment. This is also
a different situation than reviewing a denial of summary judgment when a grant of a
cross-motion for summary judgment is properly before us, because the instant appeal
is one of a dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6).
See United Fire & Cas. Co. v. Titan Contractors Serv., Inc., 
751 F.3d 880
, 886-87
(8th Cir. 2014) (reviewing a denial of a motion for summary judgment where the
appellant appealed both the denial of its motion for summary judgment and the grant
of a cross-motion for summary judgment in favor of the appellee).

                                          -5-
statute’s plainly legitimate sweep,’” Wash. State Grange v. Wash. State Republican
Party, 
552 U.S. 442
, 449 n.6 (2008) (quoting New York v. Ferber, 
458 U.S. 747
, 770-
71 (1982)).

       The parties agree the challenged provisions regulate commercial speech. The
First Amendment “accords a lesser protection to commercial speech than to other
constitutionally guaranteed expression.” Cent. Hudson Gas v. Pub. Serv. Comm’n
of N.Y., 
447 U.S. 557
, 563 (1980). In Central Hudson, the Supreme Court identified
four considerations to determine the constitutionality of laws burdening commercial
speech: “(1) whether the commercial speech at issue concerns unlawful activity or is
misleading; (2) whether the governmental interest is substantial; (3) whether the
challenged regulation directly advances the government’s asserted interest; and
(4) whether the regulation is no more extensive than necessary to further the
government’s interest.”5 1-800-411-PAIN Referral Serv. LLC v. Otto, 
744 F.3d 1045
, 1055 (8th Cir. 2014).

      At this stage, defendants accept the provisions prohibit truthful and non-
misleading speech and plaintiffs concede the asserted state interest of promoting

      5
        Plaintiffs argue the Supreme Court defined a new standard for commercial
speech in Sorrell v. IMS Health, Inc., 
564 U.S. 552
(2011). In Sorrell, the Supreme
Court reasoned the statute at issue “is designed to impose a specific, content-based
burden on protected expression. It follows that heightened judicial scrutiny is
warranted.” 
Id. at 565.
Plaintiffs claim the “heightened” scrutiny referenced in
Sorrell is strict scrutiny. But we do not need to address plaintiffs’ argument here as
we already rejected this argument in 1-800-411-PAIN Referral Service LLC v. Otto,
744 F.3d 1045
, 1055 (8th Cir. 2014). Though Sorrell does describe the required
scrutiny as “heightened,” the Supreme Court still went on to apply the four-prong
standard of Central Hudson: “The upshot [of Sorrell] is that when a court determines
commercial speech restrictions are content- or speaker-based, it should then assess
their constitutionality under Central Hudson.” 
Id. Thus, because
the challenged
provisions here are content- and speaker-based commercial speech restrictions, we
evaluate them using the Central Hudson factors.

                                         -6-
responsible drinking is substantial.6 See Mo. Rev. Stat. § 311.015. Thus, the only
two points at issue are whether plaintiffs’ amended complaint included sufficient
factual matter to state a claim that (1) the provisions do not directly advance the
substantial interests or (2) the provisions are more extensive than necessary.
See 
Iqbal, 556 U.S. at 678
; 1-800-411-PAIN Referral 
Serv., 744 F.3d at 1055
. We
hold plaintiffs pled more than sufficient facts to state a claim plausible on its face.

       First, the amended complaint included sufficient allegations that the challenged
provisions did not directly advance the substantial interest of promoting responsible
drinking. This consideration “concerns the relationship between the harm that
underlies the State’s interest and the means identified by the State to advance that
interest.” Lorillard Tobacco Co. v. Reilly, 
533 U.S. 525
, 555 (2001). Defendants
“‘must demonstrate that the harms [they] recite[] are real and that [defendants’]
restriction will in fact alleviate them to a material degree.’” Greater New Orleans
Broad. Ass’n, Inc. v. United States, 
527 U.S. 173
, 188 (1999) (quoting Edenfield v.
Fane, 
507 U.S. 761
, 771 (1993)).

       Defendants argue there is a “commonsense link” between advertising and
increasing demand for a product. It is true that it is “a matter of ‘common sense’ that
a restriction on the advertising of a product characteristic will decrease the extent to
which consumers select a product on the basis of that trait.” Rubin v. Coors Brewing

      6
        The interest in Missouri’s Liquor Control Law, the greater statutory scheme
within which the challenged restrictions are situated, is “to promote responsible
consumption, combat illegal underage drinking, and . . . maintain[] an orderly
marketplace.” Mo. Rev. Stat. § 311.015. Plaintiffs only concede the asserted state
interest in promoting responsible drinking is substantial. Even if we assume all three
of the asserted state interests are substantial, the amended complaint still stated a
claim upon which relief can be granted. The challenged restrictions are not targeted
at underage drinkers, so they do not directly advance the interest in combating illegal
underage drinking. Only the Single Retailer Advertising Prohibition Statute is related
to maintaining an orderly marketplace, so we do discuss that interest below.

                                          -7-
Co., 
514 U.S. 476
, 487 (1995). But the common sense link between advertising
promotions and increasing demand for alcohol does not demonstrate the challenged
restrictions directly advance the interest in promoting responsible drinking. A
theoretical increase in demand for alcohol based on a lower price does not necessarily
mean any consumption of that alcohol is irresponsible.

       The allegations in plaintiffs’ amended complaint make clear the challenged
provisions do little, if anything, to advance the asserted state interest. The multiple
inconsistences within the regulations poke obvious holes in any potential
advancement of the interest in promoting responsible drinking, to the point the
regulations do not advance the interest at all. See 
id. at 488
(reasoning if a regulatory
scheme is irrational, such as banning labeling alcohol content on beer but allowing
it on wine and liquor labels, the scheme does not directly advance the asserted
interest). As plaintiffs alleged in their amended complaint, the Discount Advertising
Prohibition Regulation and the Below Cost Advertising Prohibition Regulation do not
prohibit retailers from offering discounted prices or advertising those discounts
within the retail establishment. See Mo. Code Regs. Ann. tit. 11, § 70-2.240(5)(G),
(I). Defendants assert the challenged regulations prevent retailers from luring
vulnerable consumers to their places of business, yet defendants apparently are not
as concerned with retailers baiting consumers to drink excessively once they arrive.

       Generic descriptions of promotions (e.g., happy hours and ladies nights) could
also encourage irresponsible drinking, but the Discount Advertising Prohibition
Regulation does not prohibit these statements from advertisements. See 
id. § 70-
2.240(5)(G). Perhaps the most glaring inconsistency is apparent from the text of the
regulation. This provision explicitly exempts manufacturers of intoxicating liquor
other than beer and wine from its ban on advertising rebate coupons. See 
id. This inconsistency
allows certain speakers to make comments that, under Missouri’s
Liquor Control Law, supposedly encourage irresponsible drinking. See Mo. Rev.
Stat. § 311.015. The messages defendants seek to prohibit are allowed in certain

                                          -8-
advertisements, yet only for a select group of alcoholic beverages. See Mo. Code
Regs. Ann. tit. 11, § 70-2.240(5)(G). Making all reasonable inferences in favor of
plaintiffs, consumers are still exposed to advertisements of sales, discounts, and
promotions of the selected alcohol products, and, thus, the regulations do not
uniformly promote the asserted state interest. See 
Rubin, 514 U.S. at 488
(“The
failure to prohibit the disclosure of alcohol content in advertising, which would seem
to constitute a more influential weapon in any strength war than labels, makes no
rational sense if the Government’s true aim is to suppress strength wars.”). Like the
statute at issue in Rubin, if the true aim of the regulations is to promote responsible
drinking, the inconsistencies in the prohibitions on advertisements of promotions and
sales of alcohol “make[] no rational sense.” 
Id. Plaintiffs also
pled sufficient facts to suggest the Single Retailer Advertising
Prohibition Statute does not directly advance the asserted state interests of promoting
responsible drinking and maintaining an orderly marketplace.7 Missouri’s Liquor
Control Law establishes restrictions on retailers, wholesalers, and producers
exchanging money to promote the responsible consumption of alcohol and other state
policy interests. The challenged statute is an exception to those restrictions. See Mo.
Rev. Stat. § 311.070.1 (“Distillers, wholesalers, winemakers, brewers or their
employees, officers or agents shall not, except as provided in this section, directly or
indirectly, have any financial interest in the retail business for sale of intoxicating
liquors.”). The statute does nothing to further the interest in maintaining an orderly
marketplace and actually weakens the impact of the overall statutory scheme because
this statute is an exemption to the restrictions preventing retailers, wholesalers, and
producers from becoming financially entangled. See Mo. Rev. Stat. §§ 311.070.1,

      7
        Plaintiffs argue maintaining an orderly marketplace is not a substantial state
interest. Because it is clear from the facts pled in the complaint the Single Retailer
Advertising Prohibition Statute does not directly advance any of the asserted state
interests, we do not need to address whether this “orderly marketplace” state interest
is substantial.

                                          -9-
311.070.4(10). The amended complaint includes sufficient information, at the least,
to support a claim that the challenged provisions do not directly advance the stated
interests.

       Second, the amended complaint included more than sufficient information to
plead the challenged restrictions are more extensive than necessary. See 
Iqbal, 556 U.S. at 678
. The fourth prong of Central Hudson is not satisfied if there are
alternatives to the regulations that directly advance the asserted interest in a manner
less intrusive to plaintiffs’ First Amendment rights. See 
Rubin, 514 U.S. at 490-91
.
“[I]f the Government could achieve its interest in a manner that does not restrict
speech, or that restricts less speech, the Government must do so.” Thompson v. W.
States Med. Ctr., 
535 U.S. 357
, 371 (2002). However, defendants are not required
to show “the manner of restriction is absolutely the least severe that will achieve the
desired end.” Bd. of Trs. of State Univ. of N.Y. v. Fox, 
492 U.S. 469
, 480 (1989).

       Taking the facts in the light most favorable to plaintiffs, we find it clear there
are reasonable alternatives to the challenged restrictions Missouri could have enacted
that are less intrusive to plaintiffs’ First Amendment rights. See 44 Liquormart, Inc.
v. Rhode Island, 
517 U.S. 484
, 507 (1996) (suggesting limiting alcohol purchases by
heavily taxing and/or regulating alcohol or developing educational campaigns about
the effects of alcohol as alternatives to Rhode Island’s blanket ban on advertising the
price of alcohol).

       Finally, plaintiffs argue the Single Retailer Advertising Statute
unconstitutionally compels speech and association in that producers and wholesalers
must list more than one retailer on an advertisement if they choose to list any. See
Harper & Row, Publishers, Inc. v. Nation Enter., 
471 U.S. 539
, 559 (1985)
(“[F]reedom of thought and expression ‘includes both the right to speak freely and
the right to refrain from speaking at all.’” (quoting Wooley v. Maynard, 
430 U.S. 705
,
714 (1977))); Roberts v. U.S. Jaycees, 
468 U.S. 609
, 623 (1984) (“Freedom of

                                          -10-
association therefore plainly presupposes a freedom not to associate.”); 
Wooley, 430 U.S. at 717
(holding a state cannot compel individuals to drive a car with a license
plate bearing the slogan “Live Free or Die”). The statute is conditional in that it only
impacts speech if producers and wholesalers choose to include the name and address
of a retailer in an advertisement. See Mo. Rev. Stat. § 311.070.4. But if a producer
or wholesaler does choose to include such information, it is compelled to (1) associate
with multiple retailers, and (2) include multiple retailers’ information on the
advertisement. See 
id. As plaintiffs
pled in their amended complaint, this
conceivably is compelling speech and association in violation of the First
Amendment.

       Plaintiffs, at a minimum, pled sufficient facts to survive a Rule 12(b)(6) motion
to dismiss. See 
Iqbal, 556 U.S. at 678
. On its face, the amended complaint plausibly
demonstrates the challenged provisions do not directly advance the government’s
asserted substantial interest, are more extensive than necessary, and
unconstitutionally compel speech and association.

III.   CONCLUSION
       We reverse the Rule 12(b)(6) dismissal.
                      ______________________________




                                         -11-

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