44 LIQUORMART, INC. AND PEOPLES SUPER LIQUOR STORES, INC. v. RHODE ISLAND AND RHODE ISLAND LIQUOR STORES ASSOCIATION

Legal Principle at Issue

Whether a state may constitutionally prohibit truthful, non-misleading price advertising regarding alcoholic beverages.

Action

Reversed. Petitioning party received a favorable disposition.

Facts/Syllabus

In 1956, Rhode Island adopted two statutes, R.I. Gen. Laws __ 3-8-7 and 3-8-8.1, that forbid both sellers and the media from advertising the price of any alcoholic beverage. The stated purpose of this legislation is to promote temperance by increasing the price of alcoholic beverages. These statutes were upheld by Rhode Island state courts. S & S Liquormart, Inc. v. Pastore, 497 A.2d 729 (R.I. 1985);Rhode Island Liquor Stores Ass'n. v. The Evening Call Pub. Co., 497 A.2d 331 (R.I. 1985). In early 1992, 44 Liquormart, a Rhode Island retail store that sells alcoholic beverages, and Peoples Super Liquor Stores, a Massachusetts retailer that would advertise in Rhode Island if it could, challenged the Rhode Island laws in federal court. The trial court, after a trial on the merits, held that the advertising ban was unconstitutional under the First Amendment. On appeal, the First Circuit Court of Appeals reversed.

In Central Hudson Gas & Electric Corp. v. Public Service Commission of N.Y., 447 U.S. 557 (1980), the Court held that, under the First Amendment, truthful, non-misleading commercial speech can be restricted only if (1) the government has a substantial interest in regulating the speech, (2) the regulation directly advances that substantial interest, and (3) the regulation is not more extensive than necessary to advance that interest. In Posadas de Puerto Rico Associates v. Tourism Council of Puerto Rico, 478 U.S. 328 (1986), the Court held that a legislature's power to ban a particular product or activity included the power to ban all advertising of that product or activity.

Importance of Case

The Court demonstrated strong support for commercial speech. The attacks on Posadasand Justice Thomas' challenge to the bases for the commercial speech doctrine indicate that the Court might be even more protective of commercial speech in the future. The decision also calls into question the constitutionality of the government's effort to restrict tobacco advertising.

All of the members of the Court agreed that the Rhode Island statute failed the Central Husdon test because the price advertising ban was more extensive than necessary to serve the state's interest in encouraging temperance. Rhode Island, for example, could have raised taxes on alcoholic beverages in order to increase prices. The Justices, however, disagreed about the test that should be applied in the case. Chief Justice Rehnquist and Justices O'Connor, Souter, and Breyer stated that the applicable test was that set forth in Central Hudson. Justices Stevens Kennedy, Souter, and Ginsburg argued that a blanket ban on a particular type of commercial speech must be reviewed with "special care" and cannot be approved unless the speech is misleading or related to an unlawful activity. Justices Stevens, Kennedy, Thomas, and Ginsburg questioned the continued viability of the decision in Posadas. Justice Thomas went even further, concluding that no reasonable basis exists for affording commercial speech less protection than noncommercial speech.