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On October 15, 2018, we blogged about Tennessee’s regulations on licensing for retail sales of alcoholic beverages. Tennessee requires residency within the state for two years in order to obtain an initial license. It requires residency for 10 consecutive years to obtain a renewal of the initial license.  But the initial license only runs for a year. The statute also requires that all officers, directors and shareholders of corporations to satisfy these residency requirements. The effect of this statute is to prohibit publicly traded corporations from obtaining a liquor license. It also gives a clear edge to Tennessee residents at the expense of out-of-staters.
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Continue Reading Tennessee Alcohol Update

On February 26, 2019, in Nutraceutical Corp. v. Lambert, the Supreme Court of the United States held that Federal Rule of Civil Procedure 23(f)’s 14-day deadline to request permission to appeal a district court’s order regarding class certification cannot be equitably tolled.

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Continue Reading Deadline for Permission to Appeal Class Certification Ruling Cannot be Equitably Tolled, Supreme Court Holds

The state and federal governments tax a wide variety of growers of agricultural products to fund generic advertising – e.g., beef producers to fund “Beef: It’s What’s For Dinner” or pork producers to fund “Pork: The Other White Meat.” Many growers would prefer not to fund these programs, but the Supreme Court has generally upheld them as long as the content was dictated or approved by a government agency.

These kinds of marketing efforts date to the 1930’s at the state level and the mid-1960’s at the federal level. They can cost large growers several hundred thousand dollars a year. The rationale is that all growers benefit from the increased demand supposedly generated by generic advertising, so the program must be compulsory to avoid free riders from benefiting from the advertising without sharing its costs. Not all growers agree with this proposition. Some of them argue that generic advertising is harmful to their interests, because they market their product on the basis that they are different from, and better quality than, generic products.

In 1976, the Supreme Court decided Virginia Board of Pharmacy v. Virginia Citizens Consumer Council, Inc. 425 U.S. 748 (1976). Virginia Citizens held that the First Amendment protects commercial speech such as advertising, at least so long as the advertising is truthful and not deceptive. And the Court has long held that the First Amendment also largely protects people from compelled speech – being forced to support speech with which they disagree.

In 1988, a California fruit grower challenged the marketing tax on First Amendment grounds. In Glickman v. Wileman Bros. & Elliott, 531 U.S. 457 (1997), by a 5-4 vote, the Supreme Court upheld the program. The majority held that the program did not compel Wileman to engage in speech, merely to contribute money to fund it. Because the end product contained no ideological or political message, it did not run afoul of the First Amendment.
Continue Reading Compelled Speech

The Supreme Court recently granted certiorari to review an opinion of the Sixth Circuit on constitutional limits on states’ ability to regulate the distribution of alcohol beverages. Tennessee Wine & Spirits Retailers Ass’n v. Byrd, No. 18-96.

With the advent of the 21st Amendment in 1933, which turned control of alcohol beverage regulation over to the states, temperance groups insisted on a rigid, three-tier system for the distribution of alcohol. Typically, under state laws a manufacturer of alcohol beverages can only sell to a distributor and it may not have any ownership interest in the distributor. The distributor in turn sells to retailers who sell to the general public. Neither the manufacturer nor the distributor may have any ownership interest in the retailer. Consumers can only purchase alcohol beverages from retailers.

The rise of the internet and direct delivery companies such as Amazon has undermined this rigid distribution system. The State of Michigan amended its statute to permit wineries located in Michigan to sell directly to consumers. Out-of-state wineries, however, could only sell to Michigan distributors. In Granholm v. Heald, 544 U.S. 460 (2005), a surprisingly divided Supreme Court held, 5-4, that its anti-discrimination holdings under the Commerce Clause trumped the states’ residual authority under the 21st Amendment. It also held that the direct-sale statute impermissibly discriminated in favor of in-state wineries.

Granholm settled the question of whether states could discriminate against out-of-state manufacturers. It left open the question of whether the Commerce Clause also protected wholesalers and retailers and the lower courts are divided on that point. Granholm clearly held that the three-tier system is not a per se violation of the Commerce Clause. Based on that holding, the Second, Fourth and Eighth Circuits have all held that Granholm does not apply to wholesalers and retailers.  The Fifth and Sixth Circuits have reached the opposite result.
Continue Reading Constitutional Requirements For Distribution Of Alcohol

On June 22, 2017, we blogged about the Wyoming “ag gag” statute designed to discourage undercover reporting in animal facilities. The statute prohibited persons from (1) trespassing on private land for the purpose of collecting data; (2) trespassing to collect data; or (3) trespassing to obtain access to public land for such purposes. The District…

For years, animal rights activists have employed various subterfuges to gain access to animal facilities to film or video animal abuses. For example, a reporter will apply for a job at an animal facility and use his/her I-phone to record mistreatment of animals. The adverse publicity generated by these undercover activities has cost many entities millions of dollars and resulted in some bankruptcies.

Several states have enacted so-called “ag gag” laws that attempt in one way or another to limit these underground efforts. These laws typically prohibit film or video of animal or research facilities.  Others prohibit submitting a false employment application as a means of gaining access to such facilities. These laws have met with varying results in court.

Idaho was the first state to enact a modern ag gag law in 2014, following release of a video demonstrating animal abuse at a dairy. The statute creates a new crime: interference with agricultural production. Such interference consists of:

  • Entry into an agricultural facility by force, threat, misrepresentation or trespass.
  • Acquisition of records of such a facility by force, threat, misrepresentation or trespass.
  • Obtaining employment in such a facility by force, threat, misrepresentation or trespass, with intent to injure the facility’s operations.
  • Making audio or video recordings of the operations of such a facility without consent.
  • Intentionally causing injury to the facility, its operations or its property.

Violation is a felony punishable by a year in jail. In addition, the statute provides a private right of action to recover twice the economic injury sustained by the facility.

The Animal Legal Defense Fund sued to enjoin the statute, arguing that it violated both the First Amendment and equal protection. The District Court agreed with both arguments. It rejected the State’s argument that the First Amendment does not protect false statements. The correct rule, the Court held, is that it does not protect false statements that cause legally cognizable harm. Here, false statements to obtain employment or access do not cause material harm. Disclosure of animal mistreatment may cause material harm, but that is not the direct product of the alleged misrepresentations. The false statements actually serve First Amendment values by exposing misconduct and fostering public debate.
Continue Reading “Ag Gag” Laws

In a split decision announced earlier today (Utility Air Regulatory Group v. Environmental Protection Agency, No. 12-1146, slip op. (June 23, 2014)) the United States Supreme Court ruled the Environmental Protection Agency exceeded its authority in requiring sources of air pollution to comply with the Clean Air Act’s prevention of significant deterioration (PSD) …