Appellate Court Ruling Strikes Blow Against State’s Arbitrary Beer Label Ban

A Message from John Hinman: This post is part of our “guest blogger” series.  Today’s guest blogger is the Chief Counsel of the Legal Studies division of the Washington Legal Foundation. Glenn was struck by the parallels between our current cases and the Flying Dog Brewery First Amendment crusade to both approve their “Raging Bitch” label and to recover monetary damages from the actual regulators who withheld approval of their label.  The fact that regulators could be personally liable for First Amendment violations should cause them to think twice before enforcing bans on First Amendment protected conduct. Our unresolved First Amendment cases, which are currently at various stages in the ABC administrative hearing process, include multiple Bottlerock 2013 accusations, as well as a Grape Escape accusation over Facebook posts and an accusation brought against a retailer for giving coffee, waffles and a gift bag to the first customers visiting a store during a grand opening.

-John                  
          

Appellate Court Ruling Strikes Blow Against State’s Arbitrary Beer Label Ban

April 29, 2015
Glenn G. Lammi, Washington Legal Foundation

In part II of his informative Booze Rules series on commercial speech and alcoholic beverages, John W. Edwards II referenced a recent U.S. Court of Appeals for the Sixth Circuit decision involving Flying Dog Brewery. This commentary takes a closer look at Flying Dog Brewery v. Michigan Liquor Control Commission, which is a positive, albeit slightly flawed, precedent on arbitrary enforcement of speech restrictions.

Michigan’s Liquor Control Commission (LCC) rejected approval for Flying Dog’s Belgian IPA, Raging Bitch, in November 2009, ruling its label “contains such language deemed detrimental to the health, safety, or welfare of the general public.” During the April 2010 appeal hearing, an LCC commissioner elaborated on the decision, stating “we don’t believe in censorship . . . but we also are placing a product in front of ten million people . . . of all ages from children on up” (our emphasis). Three months later, the LCC denied Flying Dog’s appeal.

Flying Dog filed suit against the commissioners individually, alleging that the rule LCC had relied upon was constitutionally invalid. Prior to the federal district court’s ruling on Flying Dog’s preliminary injunction motion, the U.S. Supreme Court decided Sorrell v. IMS Health, a case involving content-based restrictions on commercial speech. In reaction to Sorrell, the LCC rescinded the rule that Flying Dog’s suit challenged, and approved Raging Bitch for release in Michigan. LCC had likely hoped the approval would put an end to the brewery’s lawsuit, but Flying Dog carried on its claim for damages. The district court, however, dismissed the suit, ruling that qualified immunity protected the commissioners.

Flying Dog appealed to the Sixth Circuit, arguing that qualified immunity did not apply because the commissioners violated its First Amendment rights and those rights were “clearly established at the time the conduct occurred.” The three-judge panel unanimously found that the commissioners were “on notice that banning a beer label based on its content would violate the First Amendment” unless they could satisfy the exacting judicial test for such speech restrictions. The judges split, 2-1, however, on whether the commissioners violated Flying Dog’s constitutional rights. The majority sent the case back down to the federal district court, which would assess whether the commissioners could justify their actions.

In dissent on that issue, Judge Karen Nelson Moore explained why the appeals court should have found a First Amendment infringement on the record before them. Judge Moore’s dissent reads very much like a majority opinion.  It provides background on the suit and the legal issues being considered in a level of detail that is normally only seen in a majority opinion. One suspects that Judge Moore had originally drafted the opinion for the majority, but at some point lost Senior Judge Martha Craig Daughtrey’s vote on the First Amendment violation issue (Judge Jane B. Stranch ultimately authored the majority opinion).

Judge Moore analyzed the labeling ban under the “Central Hudson test” that John Edwards discussed in Part I of his Booze Rules series. Her analysis of whether the commissioners were advancing a “substantial governmental interest” reveals their ever-shifting reasons for banning Raging Bitch. Those reasons included that the label was “offensive”; “promiscuous”; “obscene”; undermined temperance; “promotes sexism”; and was contrary to “the physical and psychological well-being of minors.” Judge Moore wondered whether instead of being actual state interests, those justifications were simply “post-hoc rationalizations developed for federal courts.” Nevertheless, because she would find a First Amendment violation on other grounds, Judge Moore assumed that the commissioners were advancing a substantial state interest.

The commissioners failed the third and fourth parts of the Central Hudson test, Judge Moore wrote, because they “present[ed] no evidence whatsoever that observing the phrase ‘Raging Bitch’ on the label of a beer bottle would increase alcohol consumption, harm the physical or psychological well-being of minors, or pose a danger . . . to Michigan citizens.” Her elaboration on this conclusion is impressively detailed and definitive.

Judge Moore deserves applause for offering such an extensive constitutional analysis from which the federal district court can (and should) crib extensively if the case does continue on remand. It is unfortunate that her reasoning is contained in the dissenting, rather than the majority, opinion, but it nonetheless offers valuable guidance to future litigants who challenge equally arbitrary commercial speech restrictions.

Flying Dog should also be commended for continuing its First Amendment challenge even after Michigan withdrew the offending rule and approved Raging Bitch. The company’s CEO, Jim Caruso, told the Baltimore Sun, “We are pursuing this not for the [monetary] damages but because of the behavior . . .This will set a precedent that I think will be useful nationwide.” And so it will.

Other breweries, wineries, and distilleries will surely agree that the best outcome of Flying Dog Brewery v. Michigan Liquor Control Commission would be that they won’t themselves ever have to spend the time and money the Frederick, Maryland craft brewery invested to fight paternalistic speech restrictions.
 

Glenn G. Lammi is Chief Counsel of Washington Legal Foundation’s (WLF) Legal Studies Division.  WLF is a national, non-profit public interest law and policy center.  It devotes significant resources to advancing and defending commercial speech rights.  Mr. Lammi also edits WLF’s blog, the WLF Legal Pulse.