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Monday, July 2, 2018

Missouri Law Banning Truthful Advertising on Alcohol Prices Is Found Unconstitutional

Posted By on Mon, Jul 2, 2018 at 1:56 PM

For decades, the byzantine rules governing how and where alcohol can be advertised in Missouri have given retailers a massive headache. And that doesn't even begin to get at the hassles experienced by some media outlets.

"I get calls all the time from stations on the borders of the state," says Mark Gordon, president and CEO of the Missouri Broadcasters Association. "'Can I mention this discount price, or say that?' And they can't. They're competing with stations across state lines, and they don't get a level playing field."

It's not just that Missouri's two biggest cities are situated on its borders, or even that many small ones are too. (The Show Me State has eight neighboring states — tied with Tennessee for the most in the U.S.) It's also that the Internet, which is vacuuming up an increased share of advertising dollars, doesn't play by the same rules. "Social media already does it," Gordon says. "Groupon already does it."

And now traditional forms of media can do it too. Last week, U.S. District Judge Douglas Harpool issued a ruling in favor of the broadcasters association and its allies, agreeing that the state's longtime ban on truthful advertising of alcohol prices is unconstitutional. So is the Missouri law that limits the ways alcohol wholesalers and distillers can advertise via retail stores.

The ruling followed a trial in February, and before that, a legal battle that raged for more than five years. Thompson Coburn attorneys Mark Sableman and Mike Nepple, who represent the broadcast association, originally sought summary judgment, only to have the case dismissed and the state granted an early victory. But they appealed, and the Eighth Circuit reversed the dismissal last year, sending the case back to the lower court. Last week's ruling gave them an outright win — both barring enforcement of the statues in question and also ordering the state to pay their legal fees.

"Now," says Gordon, "we're going to be a level playing field."

Gordon says the broadcasters association had long chafed at the rules, but it wasn't until a bizarre situation in Springfield last decade that it finally grew motivated to pursue a legal challenge. In that case, a radio station's promotion of an event was deemed to have a "more than an inconspicuous reference" to an alcohol distributor who'd helped to underwrite it. No fewer than sixteen businesses ended up being subpoenaed and ordered to explain themselves.

The association still fought to avoid litigation, making its case to the state's alcohol control board and Attorney General's Office that the rules were bizarre and should go without enforcement. But those state agencies declined.

In legal filings, lawyers for Missouri argued they had a compelling interest in discouraging overconsumption. But the state's laws didn't bar stores from selling alcohol below cost — or even advertising those prices inside the store. It simply banned them from being advertised outside the store.

As Judge Harpool wrote, the broadcasters association
submitted credible and substantial evidence, through their expert witness, that that there is in fact no demonstrative relationship between media advertising of alcohol and overall consumption rates or underage drinking.

Plaintiffs’ evidence demonstrated that advertising significantly affected the brand and type of alcohol sold, but did not statistically impact the total amount of alcohol consumed by individuals. In fact, Plaintiffs submitted convincing evidence that increases in overall alcohol advertising expenditures have occurred while the per capita consumption of alcohol has actually declined. The State failed to present any evidence contradicting the testimony, empirical studies, and statistical analysis relied on by Plaintiffs’ expert. ... [T]he Court finds the State has provided no evidence that the challenged regulations significantly advance a substantial State interest.

Going forward, Judge Harpool's ruling bars the state from enforcing the controversial regulations. And so if your friendly neighborhood liquor store has a super-cheap Fourth of July special on a particular bottle or case, for the first time in a century, you just might read about it in the newspaper or hear about it on the radio — without driving to Illinois first.

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