Petitioner
44 Liquormart, Inc., et al.
Respondent
State of Rhode Island, et al.
Petitioner's Claim
That a Rhode Island law prohibiting liquor retailers from advertising truthful information about liquor prices violated the liquor retailers' freedom of speech under the First Amendment.
Chief Lawyer for Petitioner
Evan T. Lawson
Chief Lawyer for Respondent
Rebecca T. Partington
Justices for the Court
Stephen Breyer, Ruth Bader Ginsburg, Anthony M. Kennedy, Sandra Day O'Connor,William H. Rehnquist, Antonin Scalia, David H. Souter, John Paul Stevens (writing for the Court), Clarence Thomas
Justices Dissenting
None
Place
Washington, D.C.
Date of Decision
13 May 1996
Decision
That Rhode Island's complete ban on advertising of liquor prices unconstitutionally restricted free speech in violation of the First Amendment.
Significance
Although disagreeing as to the exact method of applying the First Amendment'sprotection of free speech to statutes prohibiting truthful commercial speech, all the justices applied tests that make it extremely difficult, if not impossible, for such bans to withstand constitutional scrutiny. Thus, after theCourt's decision, it is unlikely that complete bans on truthful advertising will ever be valid under the First Amendment.
The First Amendment to the U.S. Constitution provides, in part, that the government "shall make no law . . . abridging the freedom of speech[.]" Since theadoption of the First Amendment in 1792, it has been clear that the amendment protects speech by citizens on political issues and other matters of publicconcern. However, the Supreme Court has struggled to define the extent to which the amendment protects other areas of speech. One such area in which theCourt has been inconsistent in defining the extent of the First Amendment's protection of speech involves so-called "commercial" speech, most notably advertising. In 44 Liquormart, Inc. v. Rhode Island, the Court once againstruggled on this subject.
In 1956, the state of Rhode Island passed a law prohibiting any liquor manufacturers, wholesalers, or retailers from advertising the price of alcoholic beverages. The theory behind the law was that it would discourage drinking because the advertising ban would force consumers to spend more time trying to locate the best deals for alcohol. In 1991, 44 Liquormart, an alcoholic beverage retailer, ran an advertisement in a Rhode Island newspaper. Although the addid not explicitly state the price of any alcoholic beverages, it did show pictures of alcoholic beverages and low prices of other goods such as peanuts,potato chips, and soda pop. The Rhode Island Liquor Control Administrator concluded that the advertisement implied that 44 Liquormart was selling alcoholfor bargain prices, and thus violated the state's ban an advertising of liquor prices. Accordingly, the administrator assessed a $400.00 fine against 44Liquormart.
After paying the fine, 44 Liquormart, along with Peoples Super Liquor Stores,filed a lawsuit in the U.S. District Court for the District of Rhode Island.44 Liquormart sought a declaration that the price advertising ban was an impermissible restriction on its right to free speech, and thus violated the First Amendment. The district court found that the statute was unconstitutionalbecause it did not "directly advance" the state's interest in reducing alcohol consumption and restricted more speech than was necessary to promote the state's interest. Rhode Island appealed the decision to the U.S. Court of Appeals for the First Circuit, which reversed the district court's decision. The court of appeals concluded that the price advertising ban was permissible because it advanced the state's interest in promoting temperance. The court of appeals reasoned that competitive price advertising would lower the prices foralcoholic beverages, and the lower prices in turn would result in increased consumption. Accordingly, the court of appeals concluded that the price advertising ban was permissible under the First Amendment.
44 Liquormart and Peoples Super Liquor Stores sought to appeal the decision to the U.S. Supreme Court by filing a petition for a writ of certiorari, which the Court granted. On appeal, the Court was unanimous in reversing the court of appeals and concluding that Rhode Island's ban on alcohol price advertising violated the First Amendment's guarantee of freedom of speech. However, the justices were unable to agree on the approach to follow in analyzingclaims involving restrictions on truthful, non-misleading commercial speech,issuing four separate opinions.
Initially, all the justices agreed that the Twenty-first Amendment provided no support for the Rhode Island price advertising ban. In 1919, the EighteenthAmendment was ratified, prohibiting the manufacture or sale of intoxicatingliquors in the United States. The Era of Prohibition ushered in by the Eighteenth Amendment lasted until 1933, when the Twenty-first Amendment was ratified. The Twenty-first Amendment expressly repealed the Eighteenth Amendment. However, the amendment also provided that the states remained free to prohibitthe sale and use of alcoholic beverages. Rhode Island argued that this portion of the Twenty-first Amendment altered the analysis for resolving claims involving commercial speech regulations related to alcohol by giving such regulations a presumption of validity. All of the justices agreed with Justice Stevens's conclusion that "the Twenty-first Amendment does not qualify the constitutional prohibition against laws abridging the freedom of speech embodied inthe First Amendment." However, beyond that, the justices disagreed over theappropriate test for analyzing challenges to laws prohibiting truthful commercial speech.
Justice O'Connor's Four Part Test
Justice O'Connor, writing an opinion which was joined by Chief Justice Rehnquist and Justices Souter and Breyer, thought that the Court should continue toapply the four part test established by the Court in the 1980 case of Central Hudson Gas and Electric Corp. v. Public Service Commission of New York. In Central Hudson, the Court found that a New York law prohibitingall promotional advertising by electric utilities violated the First Amendment. In doing so, the Court established a four part test for analyzing commercial speech claims under the First Amendment. Under this test, the Court firstasks whether the speech is truthful and concerns lawful activity. If not, then the First Amendment provides no protection. If the speech is truthful andconcerns lawful activity, then the Court asks whether the interest which thegovernment seeks to advance is substantial. If it is not, then the regulationon speech is invalid. If the government interest is substantial, then the regulation will be upheld if it meets the third and fourth part of the test: the regulation must directly advance the government's interest, and may not restrict more speech than is necessary to advance that interest.
Justice O'Connor concluded that because Central Hudson involved a statute prohibiting truthful commercial advertising similar to the one involved in this case, there was no reason to depart from the Central Hudson four part test in analyzing the constitutionality of the Rhode Island price advertising ban. Applying the Central Hudson test, Justice O'Connor concluded that the Rhode Island price advertising ban was unconstitutional becauseit did not meet the fourth prong of the test. She reasoned that, assuming that the price advertising ban directly advanced Rhode Island's interest in reducing alcohol consumption, it nevertheless restricted more speech than was necessary to advance that interest. She reasoned that Rhode Island had other, more effective methods for reducing alcohol consumption, such as establishing minimum prices for alcohol, increasing sales taxes on alcoholic beverages, limiting purchase of alcohol, or conducting an educational campaign about the dangers of drinking. Thus, Justice O'Connor concluded that Rhode Island's priceadvertising ban failed to meet the Central Hudson standard and was aninfringement on the First Amendment right to free speech.
Justice Stevens's Modified Central Hudson Test
In contrast to Justice O'Connor, Justice Stevens, who was joined in his opinion by Justices Kennedy and Ginsburg, proposed that the Central Hudsontest be modified. While not abandoning that test entirely, Justice Stevens read the test more strictly than did Justice O'Connor. He reasoned that, in general, the Court has been more willing to uphold restrictions on commercial speech than on other forms of speech because the government has an interest inprotecting consumers from commercial harms. However, he noted that such commercial harms are only present when the commercial speech is misleading, involves an illegal activity, or exerts "undue influence" over consumers. Because such concerns are not present when a company seeks to advertise using truthfulinformation, under the Central Hudson test, laws which place a complete ban on truthful advertising should be examined by the Court with "specialcare" to ensure that they do not impermissibly restrict free speech. He notedthat "speech prohibitions of this type will rarely survive constitutional review."
Applying his stricter version of the Central Hudson test, Justice Stevens concluded that the Rhode Island price advertising ban failed to meet boththe third and fourth parts of the test. With respect to the third part, Justice Stevens found that there was no evidence that the advertising ban reducedconsumption of alcoholic beverages. With respect to the fourth part of the test, Justice Stevens concluded, as did Justice O'Connor, that Rhode Island had a number of non-speech related means of reducing alcohol consumption, suchas increased taxes, a limit on purchases of alcohol, or an educational campaign. Thus, Justice Stevens likewise concluded that the Rhode Island law was unconstitutional.
Justice Thomas's Per Se Approach
Unlike the other justices, Justice Thomas thought that the Central Hudson test had no application to a complete ban on truthful advertising such asRhode Island's ban on alcohol price advertising. In his view:
Justice Scalia's Historical Approach
In a separate opinion, Justice Scalia "share[d] Justice Thomas's discomfort with the Central Hudson test," as well as Justice Stevens's "aversion towards paternalistic governmental policies that prevent men and women from hearing facts that might not be good for them." However, Justice Scalia thoughtthat the First Amendment, outside of cases involving suppression of political ideas which the First Amendment was clearly designed to prohibit, should beinterpreted according the historical practices of the American people. Nevertheless, Justice Scalia concluded that the Court did not have before it in this case sufficient information to determine what these practices were. Thus,he concluded that he "must resolve this case in accord with" the Court's existing law in this area, which he agreed with Justices Stevens and O'Connor compelled the conclusion that the Rhode Island statute was unconstitutional
Impact
The Court's decision in 44 Liquormart drastically altered the analysisfor determining whether total bans on truthful advertising are permissible under the First Amendment. Seven of the justices applied the Central Hudson test, as Justice Thomas recognized both Justice Stevens's and Justice O'Connor's application of the fourth prong was much stricter than in previous cases. As Justice Thomas stated, their interpretations, "as a practical matter, go a long way toward the position" of Justice Thomas that complete bans oftruthful advertising are always unconstitutional. Thus, after 44 Liquormart, it is unlikely that the Court will uphold any blanket restrictions ontruthful commercial speech.
Related Cases
Commercial Speech
Commercial speech is advertising or speech proposing a financial transactionand, with limitations, is protected by the First Amendment. Commercial speechserves significant interests of both the producers of goods and services andthe consumers. Supreme Court Justice Harry A. Blackmun wrote, "The free flowof commercial information is indispensable to the proper allocation of resources in a free enterprise system."
Consumers rely on commercial speech for information about the quality and price of goods in order to make economic decisions. Examples of commercial speech are advertisements of products in a newspaper or magazine, television commercials, advertisements in the yellow pages, promotional advertisements by a public utility, and advertising by professionals such as lawyers.
The government can legally regulate commercial speech to prevent publicationof false or misleading advertising. Therefore, commercial speech enjoys lessfreedom than noncommercial expression, such as political speech. The U.S. Supreme Court has suggested that citizens and their pocketbooks may be more vulnerable to false advertising than to false or overblown rhetoric by a politician. Therefore, the First Amendment protects commercial speech only as long asit is truthful and does not advertise illegal or harmful activity.
Sources
Smolla, Rodney A. Free Speech in an Open Society. New York: Knopf, 1992.
44 Liquormart, Inc., et al.
Respondent
State of Rhode Island, et al.
Petitioner's Claim
That a Rhode Island law prohibiting liquor retailers from advertising truthful information about liquor prices violated the liquor retailers' freedom of speech under the First Amendment.
Chief Lawyer for Petitioner
Evan T. Lawson
Chief Lawyer for Respondent
Rebecca T. Partington
Justices for the Court
Stephen Breyer, Ruth Bader Ginsburg, Anthony M. Kennedy, Sandra Day O'Connor,William H. Rehnquist, Antonin Scalia, David H. Souter, John Paul Stevens (writing for the Court), Clarence Thomas
Justices Dissenting
None
Place
Washington, D.C.
Date of Decision
13 May 1996
Decision
That Rhode Island's complete ban on advertising of liquor prices unconstitutionally restricted free speech in violation of the First Amendment.
Significance
Although disagreeing as to the exact method of applying the First Amendment'sprotection of free speech to statutes prohibiting truthful commercial speech, all the justices applied tests that make it extremely difficult, if not impossible, for such bans to withstand constitutional scrutiny. Thus, after theCourt's decision, it is unlikely that complete bans on truthful advertising will ever be valid under the First Amendment.
The First Amendment to the U.S. Constitution provides, in part, that the government "shall make no law . . . abridging the freedom of speech[.]" Since theadoption of the First Amendment in 1792, it has been clear that the amendment protects speech by citizens on political issues and other matters of publicconcern. However, the Supreme Court has struggled to define the extent to which the amendment protects other areas of speech. One such area in which theCourt has been inconsistent in defining the extent of the First Amendment's protection of speech involves so-called "commercial" speech, most notably advertising. In 44 Liquormart, Inc. v. Rhode Island, the Court once againstruggled on this subject.
In 1956, the state of Rhode Island passed a law prohibiting any liquor manufacturers, wholesalers, or retailers from advertising the price of alcoholic beverages. The theory behind the law was that it would discourage drinking because the advertising ban would force consumers to spend more time trying to locate the best deals for alcohol. In 1991, 44 Liquormart, an alcoholic beverage retailer, ran an advertisement in a Rhode Island newspaper. Although the addid not explicitly state the price of any alcoholic beverages, it did show pictures of alcoholic beverages and low prices of other goods such as peanuts,potato chips, and soda pop. The Rhode Island Liquor Control Administrator concluded that the advertisement implied that 44 Liquormart was selling alcoholfor bargain prices, and thus violated the state's ban an advertising of liquor prices. Accordingly, the administrator assessed a $400.00 fine against 44Liquormart.
After paying the fine, 44 Liquormart, along with Peoples Super Liquor Stores,filed a lawsuit in the U.S. District Court for the District of Rhode Island.44 Liquormart sought a declaration that the price advertising ban was an impermissible restriction on its right to free speech, and thus violated the First Amendment. The district court found that the statute was unconstitutionalbecause it did not "directly advance" the state's interest in reducing alcohol consumption and restricted more speech than was necessary to promote the state's interest. Rhode Island appealed the decision to the U.S. Court of Appeals for the First Circuit, which reversed the district court's decision. The court of appeals concluded that the price advertising ban was permissible because it advanced the state's interest in promoting temperance. The court of appeals reasoned that competitive price advertising would lower the prices foralcoholic beverages, and the lower prices in turn would result in increased consumption. Accordingly, the court of appeals concluded that the price advertising ban was permissible under the First Amendment.
44 Liquormart and Peoples Super Liquor Stores sought to appeal the decision to the U.S. Supreme Court by filing a petition for a writ of certiorari, which the Court granted. On appeal, the Court was unanimous in reversing the court of appeals and concluding that Rhode Island's ban on alcohol price advertising violated the First Amendment's guarantee of freedom of speech. However, the justices were unable to agree on the approach to follow in analyzingclaims involving restrictions on truthful, non-misleading commercial speech,issuing four separate opinions.
Initially, all the justices agreed that the Twenty-first Amendment provided no support for the Rhode Island price advertising ban. In 1919, the EighteenthAmendment was ratified, prohibiting the manufacture or sale of intoxicatingliquors in the United States. The Era of Prohibition ushered in by the Eighteenth Amendment lasted until 1933, when the Twenty-first Amendment was ratified. The Twenty-first Amendment expressly repealed the Eighteenth Amendment. However, the amendment also provided that the states remained free to prohibitthe sale and use of alcoholic beverages. Rhode Island argued that this portion of the Twenty-first Amendment altered the analysis for resolving claims involving commercial speech regulations related to alcohol by giving such regulations a presumption of validity. All of the justices agreed with Justice Stevens's conclusion that "the Twenty-first Amendment does not qualify the constitutional prohibition against laws abridging the freedom of speech embodied inthe First Amendment." However, beyond that, the justices disagreed over theappropriate test for analyzing challenges to laws prohibiting truthful commercial speech.
Justice O'Connor's Four Part Test
Justice O'Connor, writing an opinion which was joined by Chief Justice Rehnquist and Justices Souter and Breyer, thought that the Court should continue toapply the four part test established by the Court in the 1980 case of Central Hudson Gas and Electric Corp. v. Public Service Commission of New York. In Central Hudson, the Court found that a New York law prohibitingall promotional advertising by electric utilities violated the First Amendment. In doing so, the Court established a four part test for analyzing commercial speech claims under the First Amendment. Under this test, the Court firstasks whether the speech is truthful and concerns lawful activity. If not, then the First Amendment provides no protection. If the speech is truthful andconcerns lawful activity, then the Court asks whether the interest which thegovernment seeks to advance is substantial. If it is not, then the regulationon speech is invalid. If the government interest is substantial, then the regulation will be upheld if it meets the third and fourth part of the test: the regulation must directly advance the government's interest, and may not restrict more speech than is necessary to advance that interest.
Justice O'Connor concluded that because Central Hudson involved a statute prohibiting truthful commercial advertising similar to the one involved in this case, there was no reason to depart from the Central Hudson four part test in analyzing the constitutionality of the Rhode Island price advertising ban. Applying the Central Hudson test, Justice O'Connor concluded that the Rhode Island price advertising ban was unconstitutional becauseit did not meet the fourth prong of the test. She reasoned that, assuming that the price advertising ban directly advanced Rhode Island's interest in reducing alcohol consumption, it nevertheless restricted more speech than was necessary to advance that interest. She reasoned that Rhode Island had other, more effective methods for reducing alcohol consumption, such as establishing minimum prices for alcohol, increasing sales taxes on alcoholic beverages, limiting purchase of alcohol, or conducting an educational campaign about the dangers of drinking. Thus, Justice O'Connor concluded that Rhode Island's priceadvertising ban failed to meet the Central Hudson standard and was aninfringement on the First Amendment right to free speech.
Justice Stevens's Modified Central Hudson Test
In contrast to Justice O'Connor, Justice Stevens, who was joined in his opinion by Justices Kennedy and Ginsburg, proposed that the Central Hudsontest be modified. While not abandoning that test entirely, Justice Stevens read the test more strictly than did Justice O'Connor. He reasoned that, in general, the Court has been more willing to uphold restrictions on commercial speech than on other forms of speech because the government has an interest inprotecting consumers from commercial harms. However, he noted that such commercial harms are only present when the commercial speech is misleading, involves an illegal activity, or exerts "undue influence" over consumers. Because such concerns are not present when a company seeks to advertise using truthfulinformation, under the Central Hudson test, laws which place a complete ban on truthful advertising should be examined by the Court with "specialcare" to ensure that they do not impermissibly restrict free speech. He notedthat "speech prohibitions of this type will rarely survive constitutional review."
Applying his stricter version of the Central Hudson test, Justice Stevens concluded that the Rhode Island price advertising ban failed to meet boththe third and fourth parts of the test. With respect to the third part, Justice Stevens found that there was no evidence that the advertising ban reducedconsumption of alcoholic beverages. With respect to the fourth part of the test, Justice Stevens concluded, as did Justice O'Connor, that Rhode Island had a number of non-speech related means of reducing alcohol consumption, suchas increased taxes, a limit on purchases of alcohol, or an educational campaign. Thus, Justice Stevens likewise concluded that the Rhode Island law was unconstitutional.
Justice Thomas's Per Se Approach
Unlike the other justices, Justice Thomas thought that the Central Hudson test had no application to a complete ban on truthful advertising such asRhode Island's ban on alcohol price advertising. In his view:
Incases such as this, in which the government's asserted interest is to keep legal users of a product or service ignorant in order to manipulate their choices in the marketplace, the balancing test . . . should not be applied, in myview. Rather, such an `interest' is per se illegitimate and can no more justify regulation of `commercial' speech than it can justify regulation of `noncommercial' speech.He reasoned that, in a number of cases, the Court has recognized that consumers have a strong interest in the freeflow of truthful commercial information and that the First Amendment does notpermit the government to protect consumers from truthful information which may lead consumers to make choices which the government thinks are "bad." Justice Thomas reasoned that there is no reason to distinguish between truthful commercial speech and other forms of speech. He also noted that the CentralHudson test has proved difficult to apply in the courts and has lead toinconsistent results. Thus, Justice Thomas favored a categorical rule under which "all attempts to dissuade legal choices by citizens by keeping them ignorant are impermissible." Under this approach, Rhode Island's complete ban onadvertising of liquor prices clearly violated the First Amendment.
Justice Scalia's Historical Approach
In a separate opinion, Justice Scalia "share[d] Justice Thomas's discomfort with the Central Hudson test," as well as Justice Stevens's "aversion towards paternalistic governmental policies that prevent men and women from hearing facts that might not be good for them." However, Justice Scalia thoughtthat the First Amendment, outside of cases involving suppression of political ideas which the First Amendment was clearly designed to prohibit, should beinterpreted according the historical practices of the American people. Nevertheless, Justice Scalia concluded that the Court did not have before it in this case sufficient information to determine what these practices were. Thus,he concluded that he "must resolve this case in accord with" the Court's existing law in this area, which he agreed with Justices Stevens and O'Connor compelled the conclusion that the Rhode Island statute was unconstitutional
Impact
The Court's decision in 44 Liquormart drastically altered the analysisfor determining whether total bans on truthful advertising are permissible under the First Amendment. Seven of the justices applied the Central Hudson test, as Justice Thomas recognized both Justice Stevens's and Justice O'Connor's application of the fourth prong was much stricter than in previous cases. As Justice Thomas stated, their interpretations, "as a practical matter, go a long way toward the position" of Justice Thomas that complete bans oftruthful advertising are always unconstitutional. Thus, after 44 Liquormart, it is unlikely that the Court will uphold any blanket restrictions ontruthful commercial speech.
Related Cases
- Virginia Board of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748 (1976).
- Linmark Associates, Inc. v. Willingboro, 431 U.S. 85 (1977).
- Central Hudson Gas and Electric Corp. v. Public Service Commission ofNew York, 447 U.S. 557 (1980).
- Posadas de Puerto Rico Associates v. Tourism Co. of Puerto Rico, 478 U.S. 328 (1986).
- Rubin v. Coors Brewing Co., 514 U.S. 476 (1995).
- Glickman v. Wileman Brothers and Elliott, 521 U.S. 457 (1997).
Commercial Speech
Commercial speech is advertising or speech proposing a financial transactionand, with limitations, is protected by the First Amendment. Commercial speechserves significant interests of both the producers of goods and services andthe consumers. Supreme Court Justice Harry A. Blackmun wrote, "The free flowof commercial information is indispensable to the proper allocation of resources in a free enterprise system."
Consumers rely on commercial speech for information about the quality and price of goods in order to make economic decisions. Examples of commercial speech are advertisements of products in a newspaper or magazine, television commercials, advertisements in the yellow pages, promotional advertisements by a public utility, and advertising by professionals such as lawyers.
The government can legally regulate commercial speech to prevent publicationof false or misleading advertising. Therefore, commercial speech enjoys lessfreedom than noncommercial expression, such as political speech. The U.S. Supreme Court has suggested that citizens and their pocketbooks may be more vulnerable to false advertising than to false or overblown rhetoric by a politician. Therefore, the First Amendment protects commercial speech only as long asit is truthful and does not advertise illegal or harmful activity.
Sources
Smolla, Rodney A. Free Speech in an Open Society. New York: Knopf, 1992.
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