LEGAL UPDATE AUGUST 24, 2015
Broadcasters Association et al. v. Lacy et al. - (Challenge to
ATC Advertising Regulation)
#: 13-4034-CV-C-FJG, pending in the U.S. District Court for the
Western District of Missouri (Jefferson City), District Judge
Background: The case was
initiated in February 2013.
Plaintiffs filed an amended complaint on April 26
challenging Missouri regulations regarding discount advertising
prohibitions and below cost advertising prohibitions and the
statute regarding the single retailer advertising prohibition.
The complaint alleges that the laws prohibit commercial
speech protected under the First Amendment and that they have a
chilling effect on speech and advertising sales.
The complaint also alleges inconsistent enforcement, and
seeks a declaration by the court that the laws are
filed a Motion to Dismiss, and Plaintiffs filed a Motion for
Summary Judgment. Defendants’
Motion to Dismiss was denied on August 26, and they filed an
answer on September 9. Plaintiffs’
Motion for Summary Judgment was denied as moot when the court
ordered that further discovery be conducted.
The parties may file or resubmit dispositive motions by
June 15, 2014.
May 5, 2014, Plaintiffs’ motion for summary judgment was
provisionally denied pending completion of discovery.
The parties have certified that discovery is complete.
On June 16, Plaintiffs filed their motion for summary
filed their suggestions in opposition on July 10, and Plaintiffs
filed reply suggestions on July 25.
On March 31, 2015,
the Court issued its Order on Plaintiffs’ Motion for Summary
determining that Plaintiffs had standing to challenge the
advertising rules, the Court turned to the merits of the
constitutional claims. The
Court analyzed the challenged regulations separately from §
311.070.4(10), RSMo, indicating in a footnote that the statute
is different in that it is not a ban on advertising discount
prices, but instead, regulates the ways a manufacturer or
producer may advertise on behalf of a retailer.
Court determined that the proposed commercial speech would be
constitutionally protected, and that the government’s interest
in regulating the speech (responsible consumption, combat
underage drinking, and maintaining an orderly marketplace) is
analyzing whether the regulations directly advance the
government’s claimed interest, the Court noted that Plaintiffs
would not have challenged the regulations and statute unless
they believed that sales would increase if the regulations were
restrictions on discount alcohol advertising will alleviate the
harms raised by the government.
the Court acknowledged that it was not clear from the record if
there is a reason why manufacturers of intoxicating liquor other
than beer are wine are treated differently in 11 CSR
70-2.240(5)(G), and it instructed the parties to further brief
the issue. In all
other respects, though, the Court found that the Defendants
established that the regulations directly advance the
Court also found that the regulations have a reasonable fit to
the harms they seek to alleviate.
And, therefore, the Court denied Plaintiff’s motion for
summary judgment as to the two regulations, and granted
Defendants’ motion to dismiss as to all claims related to the
two regulations, with the exception of the issue related to 11
CSR 70-2.240(5)(G)’s treatment of manufacturers of
intoxicating liquor other than beer or wine.
regard to § 311.070.4(10), RSMo, Plaintiffs argued that it
directs the content of advertising.
The Court determined otherwise, and stated that the
statute is not compelled advertising but should be considered a
limited allowance for some advertising paid for by producers or
wholesalers that mentions the names of retailers.
As such, the Court denied Plaintiffs’ motion for
summary judgment as to the statute, and granted Defendants’
motion to dismiss, as well.
summary, Plaintiffs’ motion for summary judgment was denied,
and all claims were dismissed with the exception of the
sub-issue of 11 CSR 70-2.240(5)(G)’s disparate treatment of
manufacturers of intoxicating liquor other than beer or wine,
which shall be addressed by the parties in briefs filed by April
Briefs: In their briefs,
Defendants argue that the exception in the regulation is solely
to make it consistent with § 311.355, RSMo.
Defendants assert that the statute was introduced at the
behest of the distilled spirits industry, and that the beer and
wine industry was apparently not interested in the cash rebates.
Defendants also assert that Plaintiffs did not
specifically attack the exception, and it is not so irrational
that it is unconstitutional on its face.
Defendants characterize the failure of the exception to
apply to beer and wine as a business or political decision, and
state that the exception is consistent with the state’s goals.
In terms of a proposed remedy, Defendants argue that the
constitutionality of the exception is outside the scope of the
pleadings and cannot be reached in the litigation.
In other words, Defendants contend that no separate claim
was made regarding the exception, and that there is no reason
why the court shouldn’t dismiss Plaintiffs’ complaint.
Defendants also note that even if the exception is found
to be unconstitutional, § 311.355 is still in effect and,
similarly, it was not specifically alleged to be
unconstitutional by Plaintiffs.
their briefs, Plaintiffs argue that because of § 311.355, the
Division had to carve out an exception for manufacturers other
than beer or wine to avoid a conflict between its regulation and
the statute. Plaintiffs
assert there is no way to justify the State’s discrimination.
Plaintiffs do not argue that the statute burdens speech
and do not challenge it. Plaintiffs
also contend that the only workable remedy is to find the
regulation unconstitutional and void the entire provision.
According to Plaintiffs, the statute will remain in
force, and because it does not restrict truthful speech, its
existence does no harm.
the court follows Defendants argument, then it will not reach a
decision on the constitutionality of the regulation, and it will
the court follows Plaintiffs argument, then 11 CSR
70-2.240(5)(G) will be voided in its entirety.
a decision by the court will not invalidate § 311.355, it
appears the parties may have different interpretations about
what its existence means.