BOOZE RULES – PROMOTIONAL APPEARANCES AND AUTOGRAPHS

Promotional appearances by celebrity and non-celebrity brand owners and winemakers in California retail establishments (on and off premises) have been a sore subject in California for many years, with the ABC insisting that supplier promotional appearances are “things of value” and that autographing bottles and other items constitutes a “premium, gift or free goods” in violation of Business & Professions Code § 25600. The ABC has sent out warning letters and filed accusations seeking license suspension or revocation against both suppliers and retailers, and distilled spirits suppliers have proposed legislation to permit limited rights to autograph products.

However one major California retailer who was accused by the ABC of participating in an unlawful promotional appearance involving autographs decided to fight back. After an extensive hearing on June 14, 2012 the ABC, (less than a week later) dismissed the accusation seeking suspension of the retailers’ license for hosting a bottle-signing event. The retailer, which defended the case by relying on its First Amendment commercial free speech right to host promotional appearances, clearly demonstrated that its constitutional rights had been violated. 

The law is clear. Both the supplier’s appearance to communicate with customers and his or her signature on the product constitute commercial speech, which the Supreme Court defined as “expression related solely to the economic interests of the speaker and its audience.”  Central Hudson Gas & Electric Corp. v. Public Service Commission of New York, 447 U.S. 557, 561 (1980). Commercial speech includes a supplier’s ability to “propose a commercial transaction and the . . . listener’s opportunity to obtain information about products.” Lorillard Tobacco Co. v. Reilly, 533 U.S. 525, 565 (2001). In fact, in-person interactions with the public are considered especially deserving of protection under the First Amendment, as they make possible “direct and spontaneous communication between buyer and seller.” Edenfield v. Fane, 507 U.S. 761, 766 (1993). A supplier’s signature on a bottle or other item is also commercial speech. As the Second Circuit explained, bottle elements such as a logo or slogan may function like a trademark in serving to identify the source of the product, and this information alone proposes a commercial transaction and thus “suffices to invoke the protections for commercial speech.” Bad Frog Brewery, Inc. v. New York State Liquor Authority, 134 F.3d 87, 96-97 (2d Cir. 1998).

As the Supreme Court stated in Central Hudson, commercial speech is entitled to First Amendment protection unless the government can identify a substantial interest that is directly advanced by its speech restriction, and show that this restriction is not more extensive than necessary to serve that government interest. Central Hudson at 566. The government bears the burden of justifying its restriction, and that burden is not satisfied by “mere speculation or conjecture.” Instead, the government must demonstrate that the “harms it recites are real and that its restriction will in fact alleviate them to a material degree.” Edenfield at 770-771. Within this context, the First Amendment trumps any Twenty-first Amendment power to regulate alcoholic beverages that the government might try to claim.  44 Liquormart, Inc. v. State of Rhode Island, 517 U.S. 484 (1996).  The Twenty-first Amendment, the Supreme Court explains, “does not license the States to ignore their obligations under other provisions of the Constitution” and does not “qualify the constitutional prohibition against laws abridging the freedom of speech embodied in the First Amendment.”  Id. at 516.

In the case that was tried on June 14, the ABC did not in fact provide any meaningful justification for the restrictions on promotional appearances and autograph sessions that it attempted to impose through its interpretation of the “thing of value” and “premium, gift or free goods” statutes. That was because there was no justification for the interpretive restrictions advanced by the ABC other than the “whatever is not expressly permitted is prohibited” theory, a position that is at odds with the constitutional rights of licensees to promote their products.

The testimony presented in the case showed that promotional appearances and product endorsements via autographing bottles and other items are one of the most effective methods of communicating with customers available to the industry. Promotional events involving appearances and autographs freely occur throughout the US with no interference by the alcoholic beverage authorities. The proper question to ask is whether the promotion at issue was managed responsibly, not whether the right to promote exists at all.

Promotional appearances, as well as autographing bottles and other items, are protected First Amendment activity, and responsible promotions require careful structuring. For example, the decision on what is or is not signed should be at the discretion of the supplier; a purchase should not be required for a customer to meet the supplier and obtain an autograph; there should be no extra charge assessed to the customer for access to the event; nothing should be given away at the event that is not otherwise authorized by the regulations; any services necessary in relation to the promotion itself at the retail premises (such as crowd control) should be the responsibility of the retailer; and, if the promotion is on-premise, basic tenets of temperate behavior should be observed, such as responsible consumption, no drinking games and the like.

 

 

  1. TTB Consignment Sales Investigations - What is Behind the Curtain of the TTB Press Releases?
  2. Heads Up! The ABC Is Stepping Up Enforcement Against Licensees Located Near Universities
  3. Coming Soon: New Mandatory Training Requirements for over One Million “Alcohol Servers” In California – September 1, 2021 will be here quickly
  4. 2019 Legislative Changes for California Alcohol Producers – a Blessing or a Curse?
  5. A Picture (On Instagram) Is Worth A Thousand Words
  6. Playing by the Rules: California Cannabis Final Regulations Takeaways
  7. Hinman & Carmichael LLP Names Erin Kelleher Partner and Welcomes Gillian Garrett and Tsion “Sunshine” Lencho to the Firm
  8. Congress Makes History and Changes the CBD Game for Good
  9. Pernicious Practices (stuff we see that will get folks in trouble!) Today’s Rant – Bill & Hold
  10. CBD: An Exciting New Fall Schedule… or Not?
  11. MISSISSIPPI RISING - A VICTORY FOR LEGAL RETAILER TO CONSUMER SALES, AND PASSAGE OF TITLE UNDER THE UNIFORM COMMERCIAL CODE
  12. California ABC's Cannabis Advisory - Not Just for Stoners
  13. NEW CALIFORNIA WARNINGS FOR ALCOHOLIC BEVERAGES AND CANNABIS PRODUCTS TAKE EFFECT AUGUST 30, 2018, NOW INCLUDING ADDENDUM REGARDING 2014 CONSENT AGREEMENT PARTIES AND PARTICIPANTS
  14. National Conference of State Liquor Administrators – The Alcohol Industry gathers in Hawaii to figure out how to enforce the US “Highly Archaic Regulatory Scheme.”
  15. Founder John Hinman Honored with the Raphael House Community Impact Award
  16. ROUTE TO MARKET AND MARKETING RESTRICTIONS - NAVIGATING REGULATORY SYSTEM CONSTRAINTS
  17. Alcohol and Cannabis Ventures: Top 5 Legal Considerations
  18. ATF and TTB: Is Another Divorce on the Horizon? What’s Going on with the Agency?
  19. STRIKE 3 - YOU REALLY ARE OUT! THE ABC'S STRICT APPLICATION OF PENALTIES FOR SALES TO MINORS
  20. TTB Temporarily Fixes Problem with Fulfillment Warehouse Tax Credits - an “Alternate Procedure” for Paying Taxes & Reporting
  21. CUSTOMERS WHO HAVE HAD ONE TOO MANY - THE FREE TRANSPORTATION DILEMMA
  22. The Renaissance of Federal Unfair Trade Practices - Current Issues and Strategies
  23. ‘Twas the week before New Year’s and the ABC is out in Force – Alerts for the Last Week of 2017, including the Limits on Free Rides
  24. Big Bottles, Caviar and a CA Wine Strong Silent Auction for the Holidays!
  25. The FDA and the Wine and Spirits Industry – Surprise inspections anyone?
  26. NORTHERN CALIFORNIA WILDFIRES: UPDATED REGULATORY AGENCY DISASTER RELIEF RESOURCES AT A GLANCE
  27. NORTHERN CALIFORNIA WILDFIRES: REGULATORY AGENCY DISASTER RELIEF RESOURCES AT A GLANCE
  28. Soon to come to your Local Supermarket– Instant Redeemable Coupons of the digital age!
  29. The License Piggyback Dilemma – If it Sounds Too Good to be True, it Probably is
  30. A timely message from our Florida colleagues on the tied house laws, the three-tier system and the need for reform
  31. ABC Declaratory Rulings – A Modest Proposal Whose Time has Come
  32. More on FDA Inspections - Breweries, Distilleries and Questions
  33. WHY THE FDA IS INSPECTING WINERIES
  34. Senate Bill 378—The Proposed Demise of Due Process for Alcohol Licensees
  35. ABC Enforcement - Trends and Predictions
  36. The Corruption Chronicles – Volume One: A New Hope
  37. New Alcohol Delivery Oversight on the Horizon
  38. Michigan: Canary in the DtC Coal Mine?
  39. California ABC and Federal Credit Laws – Active Enforcement and Lots of Questions!
  40. Big Bottles For The Holidays - The Highest Calling Of The Winemaker's Art
  41. FINAL COMMENTS TO TTB NOTICE 160 DUE ON WEDNESDAY DECEMBER 7TH – WE ARE ASKING THE TTB TO EXTEND THE COMMENT PERIOD AGAIN TO ALLOW FOR INDUSTRY NEGOTIATION AND ALIGNMENT OF INTERESTS
  42. SONOMA COUNTY WINERY USE PERMITS, EVENT RESTICTIONS AND DTC
  43. New TTB Labeling Requirement Regulations: Out-of-State Bottling Is Not Created Equal and Consumers Right to Know Where the Grapes in their Wine Come from is Compromised
  44. Isn't A Written Agreement With A Distributor Worthless In A Franchise State?
  45. Crowd Funding for Alcohol Producers and Retailers – Down the Rabbit Hole with the Tied House laws
  46. Everything you ever wanted to know about the BPA Warning Statement but were afraid to ask
  47. AB 2082 - A Hunting License for Police and a Lethal Weapon for Politicians that Deprives Licensees of Currently Available Due Process Rights
  48. “Better Late Than Never”-- Judge in Illinois Dismisses 201 Sales Tax Cases against Retailers
  49. The Day the Music Almost Died: The Story of the BottleRock ABC Accusations, the ABC Appeals Board and a Victory for a Common Sense Interpretation of the Tied House Laws
  50. The Arsenic in Wine Class Action Dismissal – what it means
  51. Counterfeit or Artisanal Mexican Spirits? Pick your Poison, or your lime wedge
  52. Warning - CA ABC enforcement teams are on the prowl this weekend!
  53. RELIEF AT LAST! ILLINOIS MOVES TO FIX THE SALES TAX LAWSUITS AGAINST OUT-OF-STATE SELLERS BUT PROPOSES TO PENALIZE WINERIES AND RETAILERS THAT SHIP WITHOUT PERMITS
  54. The TTB Speaks on Category Management or, be Careful What you Ask for Because you might Get it!
  55. Hinman & Carmichael LLP Announces the Addition of Jeremy Siegel to its team of top beverage law lawyers
  56. 2016 LEGISLATIVE UPDATES: Part IV
  57. 2016 LEGISLATIVE UPDATES: Part III
  58. 2016 LEGISLATIVE UPDATES: Part II
  59. 2016 LEGISLATIVE UPDATES: Part I
  60. Hinman & Carmichael LLP is Hiring!
  61. John Hinman Presents NBI Webinar on Basics of Alcohol Beverage Law
  62. ABC DISMISSES SAVE MART GRAPE ESCAPE ACCUSATION BUT REFUSES TO ADOPT JUDGE’S DECISION FINDING NO STRICT LIABILITY FOR ABC VIOLATIONS
  63. Speakeasies are still with us, and proliferating!
  64. The War for the Soul of Sonoma County – the Winery Working Group Battle
  65. Santa Claus isn’t the only one coming to town this Christmas!
  66. Arizona's Direct to Consumer Shipping Rules - An Exercise in Complexity
  67. AB 780 - Social Media and the ABC: The California Legislative “Fix” that Fails
  68. Illinois Finally Offers Certainty and Relief for Victims of Sales Tax Lawsuits, but Prompt Action is Required in Pending Cases
  69. A Modest Proposal – Adopt the federal rule on Tied-House liability in California
  70. The Grapes Escaped - Why the First Amendment Matters
  71. Appellate Court Ruling Strikes Blow Against State’s Arbitrary Beer Label Ban
  72. Illinois Attorney General's Office Announces Intention to Dismiss False Claims Act Against Liquor Retailers
  73. Commercial Speech And Alcoholic Beverages - Part III
  74. Commercial Speech And Alcoholic Beverages - Part II
  75. Craft Beverages: Social Media Marketing the Effective and Compliant Way
  76. Commercial Speech And Alcoholic Beverages - Part I
  77. A LAYPERSON LOOKS AT ARSENIC IN WINE
  78. The Biggest Retailer in the World vs. the TABC
  79. Rebecca Stamey-White presents Emerging Issues in Wine Law
  80. Top Beverage Alcohol Law Firm Adds and Elevates Partners
  81. Illinois Qui Tam Lawsuits—Private Enforcement Of a State Claim: A Bonanza For A Plaintiff’s Lawyer And A Rip-Off Of Retailers
  82. BOOZE RULES OF SOCIAL MEDIA: The Retailer Right to Pay Exception
  83. LIONS AND TIGERS AND TWEETS, OH MY!
  84. AB 2004: Brewer's Incremental Parity with Wine Makers
  85. Expanding, Proud Of It, and Wanting to Tell the World
  86. DC Weighs in Strongly on Third Party Marketer Delivery Services
  87. “Visual Links” between Beer, Wine and Spirits Labels and Retailers Ruled Unlawful in California — the tied house laws run amok
  88. Hard Cider Legislative Update
  89. New Marketing Model for New York – Lot 18 and the NYSLA
  90. Sweeping Changes in Proposed NYSLA Bill Include Expansion for Craft
  91. Minimum Resale Price Policies - How to Control Price-Cutters
  92. AB 2130 – Gloves Off?
  93. “Gluten-Free” Labels for Wine, Beer and Distilled Spirits. We’re Still Waiting.
  94. AB 1252: Sanitation Overkill?
  95. Growlers: Not Just for Beer Anymore
  96. California Legislative Roundup 2014
  97. Build It and They Will Come: Craft Products Get New Privileges in CA and TX
  98. AB 1128: Veto of the “Serve a Minor” Felony Penalty Bill, or How to Lose a Winery in One Sale
  99. California Grocers Association v. ABC, Part 2: California Appeals Court Vacates ABC’s Adoption of a Trade Advisory That Correctly Guided Licensee Conduct
  100. California Grocers Association v. ABC, Part 1: California Appeals Court Prohibits Alcohol Sales at Self-Check Out Stands