Utah's Alcohol Advertising Regulations Challenged

A primary role played by a state alcohol regulatory agency is monitoring the

impact of the beverage alcohol industry on the public. Indeed, many state

agencies were created by laws the express purpose of which was the promotion of

temperance among state citizens. Not surprisingly, therefore, should a citizen

voice concerns regarding the content of a particular alcohol advertisement, a

beverage alcohol regulatory official may be charged with investigating the

advertisement in question.

Once a regulatory official has developed concerns about the content of an

advertisement, he or she must carefully consider how to proceed. If an industry

member has expended significant resources in preparing an advertisement and has

employed its own evaluation concerning the ad's suitability, the member

understandably may be resistant to any regulatory pressure to alter the ad.

Should the official decide to restrict an industry member's right to advertise

basic product information, that agency could find itself on the losing end of

costly and protracted litigation.

Utah's Advertising Restrictions Questioned

The difficulty state agencies and state legislators face in attempting to

restrict alcohol advertising is illustrated in the 10th Circuit Court of

Appeals' recent decision in Utah Licensed Beverage Ass'n v. Leavitt, 256

F.3d 1061 (10th Cir. 2001), which enjoined Utah from enforcing certain statutory

provisions governing the advertisement of alcohol beverages. In so doing, the

court cast doubt on the constitutionality of such advertising restrictions in

light of Rubin v. Coors Brewing Company1 and 44 Liquormart

v. Rhode Island2. A review of the 10th Circuit's

decision also provides an opportunity to outline the analysis courts typically

employ when examining content-based advertising restrictions.

In 1996, the Utah Licensed Beverage Association (ULBA) and others filed suit

in federal district court to enjoin Utah from enforcing certain state provisions

restricting advertisements of distilled spirits and wine. After three years, the

district court denied ULBA's request for an injunction. ULBA appealed this

decision.

At issue on appeal were essentially two statutory provisions. UTAH CODE ANN.

32A-12-401(2) (2001) effectively banned all advertising of distilled spirits

or wine, except that retailers could post a sign that designated the retailer as

the holder of a state alcohol beverage license.3 Similarly, Utah Code

Ann. . 32A-12-401(4) (2001) prohibited retailer price advertisements that

could be viewed by passersby.4

The Central Hudson Test

To determine the constitutionality of the provisions, the 10th Circuit

employed the four-part Central Hudson test:

whether the speech concerned is not misleading and concerns a lawful

activity

whether the asserted governmental interest is substantial

whether the regulation directly advances the asserted governmental

interest, and

whether the regulation is more extensive than is necessary to achieve the

asserted interest5

Courts generally have accepted that alcohol advertising restrictions prohibit

truthful statements concerning lawful activity and that governments have a

substantial interest in limiting beverage alcohol consumption. The 10th

Circuit's decision regarding Utah's statutory provisions follows this approach.6

Courts historically have applied the final two prongs of the analysis

differently, however. For instance, courts have disagreed about whether

advertising restrictions have any substantial effect on the overall...