PRECEDENTIAL
UNITED STATES COURT OF
APPEALS
FOR THE THIRD CIRCUIT
____________
No. 03-1725
____________
THE PITT NEWS,
Appellant
v.
GERALD J. PAPPERT, in his capacity
as Attorney General of the
Commonwealth of Pennsylvania*;
FRANK KOSCELNAK, in his capacity
as Director, Bureau of Liquor Control
Enforcement, Pennsylvania State Police;
JOHN E. JONES, III, in his capacity as
Chairman Pennsylvania Liquor Control
Board
___________________
ON APPEAL FROM THE UNITED
STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF
PENNSYLVANIA
District Court Judge: Honorable William
L. Standish
(D.C. No. 99-cv-00529)
____________________
Argued: January 22, 2004
Before: ALITO, CHERTOFF, and
DEBEVOISE,** Circuit Judges
(Opinion Filed: July 29, 2004 )
WITOLD J. WALCZAK (argued)
American Civil Liberties Union
313 Atwood Street
Pittsburgh, PA 15213
Counsel for Appellant
J. BART DeLONE (argued)
15th Floor
Office of Attorney General of
Pennsylvania
Strawberry Square
Harrisburg, PA 17120
Counsel for Appellee
GAYLE C. SPROUL
Levine, Sullivan, Koch & Schultz
2004 Makefield Road
Yardley, PA 19067
Counsel for Amicus Curiae The Student
Press Law Center, PA Newspaper
Association, and Reports Committee for
Freedom of the Press
____________________
OPINION OF THE COURT
*Pursuant to Federal Rule of Appellate
Procedure 43(c)(2).
**The Honorable Dickinson R.
Debevoise, District Judge of the United
States District Court for the District of
New Jersey, sitting by designation.
2
____________________
ALITO, Circuit Judge:
The case concerns th e
constitutionality of a Pennsylvania law that
bans advertisers from paying for the
dissemination of “alcoholic beverage
advertising” by communications media
affiliated with a university, college, or
other “educational institution.” The Pitt
News, a university newspaper, sought an
injunction against enforcement of the law,
but the District Court granted summary
judgment for the defendants, holding that
the law “has no effect on The Pitt News’
freedom of expression” because the paper
remains free to say whatever it wishes
about alcoholic beverages as long as it is
not paid for engaging in the expression.
We hold that the First Amendment
precludes the enforcement of the law in
question against advertisers in The Pitt
News, and we therefore reverse the order
of the District Court and remand for the
entry of a permanent injunction.
I .
The Pitt News is a certified student
organization at the University of
Pittsburgh (“the University”). The
University has more than 25,000 students,
at least two-thirds of whom are old enough
to drink under Pennsylvania law. Overall,
more than 75% of the total University
population (students, faculty, and staff) is
more than 21 years of age.
The Pitt News was created by the
University Board of Trustees “in
recognition of the constitutional right of
students to freedom of speech.” The
parties do not dispute that the paper
represents independent student speech, not
official speech disseminated on behalf of
the University. The newspaper is
published daily during the school year and
weekly during the summer, and it is
distributed free of charge at 75 locations
around the campus. The Pitt News is
displayed at these locations together with
other free weekly newspapers, including
In Pittsburgh, City Paper, and UR
Pittsburgh. None of these other
publications is affiliated with an
educational institution, and they all contain
alcoholic beverage advertisements. All of
The Pitt News’ revenue is derived from
advertising, and until Act 199 took effect,
the paper received substantial income from
alcoholic beverage ads.
In 1996, the Pennsylvania
Legislature enacted an amendment to the
state Liquor Code that is popularly known
as “Act 199.” A provision of this
amendment, 42 Pa. Stat. Ann. §4-498
(e)(5)(g) (hereinafter “Section 4-498”),
prohibits “any advertising of alcoholic
beverages” in virtually any medium of
mass communication that is affiliated with
“any educational institution,” including a
c o l l e g e o r u n i v e r s i t y . 1
1“Act 199” states in relevant part:
§ 4-498. Unlaw fu l
3
Violations of this provision are
misdemeanors and may be punished by
fines of up to $500 or imprisonment for up
to three months on a first charge, and by a
mandatory minimum sentence of three
months in jail for a subsequent offense.
See 47 Pa. Stat. Ann. § 4-494(a).
To clarify the meaning of Act 199,
the Pennsylvania Liquor Control Board
(LCB) issued Advisory Notice No. 15,
which states in relevant part:
W h a t k i n d o f
advertisements would be
affected by the prohibition
against advertisements in
publications published by,
for and in behalf of any
educational institution?
Advertisements which
indicate the availability
and/or price of alcoholic
beverages may not be
contained in publications
published by, for and in
behalf of any educational
institutions. Universities are
considered educational
advertising
(e)The following shall apply
to all alcoholic beverage and
malt beverage advertising:
(4) The use in any
advertisement of alcoholic
beverages of any subject
matter, language or slogan
directed to minors to
promote consumption of
alcoholic beverages is
prohibited. Nothing in this
section shall be deemed to
restrict or prohibit any
advertisement of alcoholic
beverages to those persons
of legal drinking age.
(5) No advertisement shall
be permitted, either directly
or indirectly, in any booklet,
program book, yearbook,
magazine, newspaper,
period i c a l , brochu re,
circular or other similar
publication published by, for
or in behalf of any
educational institution.
(g) For purposes of this
subsecti o n , the te rm
“advertisement” shall mean
any advertising of alcoholic
beverages through the
medium of radio broadcast,
t e l ev i s ion broadcast,
newspapers, periodicals or
other publication, outdoor
advertisement, any form of
electronic transmission or
any other printed or graphic
matter, including booklets,
flyers or cards, or on the
product label or attachment
itself.
4
institutions under this
s e c t i o n . Thus, an
advertisement in a college
newspaper or a college
f o o t b a l l p r o g r a m
announcing beverages
would not be permissible.
However, an advertisement
merely indicating the name
and address of a licensee or
licensed premise, or an
adve r t i se m e n t wh i c h
indicates what nonalcoholic
products may be acquired at
the licensed premise making
no reference to the
availability of alcoholic
b e v e r a g e s would be
permissible. Further,
a d v e r t i s e m e n t s i n
magazines, newspapers or
other periodicals which have
no connection to an
educational institution other
than the fact the school may
subscribe to that particular
newspaper are permissible .
. . .
During testimony in this case, a
representative of the LCB, Faith S. Diehl,
stated that, in the LCB’s view, Section 4-
498 contains two restrictions that are not
expressly set out in the statute. First, Diehl
testified that Section 4-498 is enforceable
only against advertisers and not against the
media. Second, according to Diehl,
Section 4-498 applies only when the media
receives some form of payment for an
advertisement.2
On December 9, 1997, Terry Lucas,
the general manager of The Pitt News,
received a fax from the owner of an area
restaurant, the Fuel & Fuddle, which had
previously placed alcoholic beverage
advertisements in the paper. The fax
consisted of a December 4, 1998, letter to
the restaurant from the Bureau of Liquor
Control Enforcement of the Pennsylvania
State Police (BLCE) stating that the BLCE
had received information that the Fuel &
Fuddle had “advertised . . . alcoholic
beverages, either directly or indirectly, in
a publication published by, for or in behalf
of an educational institution” and that this
could result in the suspension or
revocation of its license or in the
imposition of a fine. Based on this notice,
the owner of the restaurant canceled its
advertising contract with The Pitt News,
and the paper, in order to protect its
advertisers, felt compelled to stop
a c c e p t i n g alcoholic bev e r a g e
advertisements.
The Pitt News then sought to
persuade establishments with liquor
2The Pitt News submitted the
deposition of Stanley Woloski, an
employee of the Office of the Chief
Counsel of the Pennsylvania State Police
who is assigned to the Bureau of Liquor
Control Enforcement (BLCE), which
stated that, while Woloski did not
“wholeheartedly agree” with Diehl’s
interpretation of the statute, the BLCE was
bound by the LCB’s interpretation.
5
licenses to place ads that did not refer to
the sale of alcoholic beverages, but these
efforts were unsuccessful. In 1998 alone,
the newspaper lost approximately $17,000
in revenue, and this loss affected the
length of the newspaper, as well as its
ability to make capital expenditures,
including payments for updating its
computers and acquiring digital cameras.
The inability to make these capital
expenditures has harmed The Pitt News’
ability to compete for readers with other
newspapers. Furthermore, the newspaper
may be compelled in the future to begin to
charge subscribers, and this would result in
a further decrease in readership.
In April 1999, The Pitt News3 filed
a complaint in the United States District
Court for the Western District of
Pennsylvania against state officials
responsible for the enforcement of the Act.
Asserting claims under 42 U.S.C. § 1983,
The Pitt News alleged that Section 4-498
violated its constitutional rights to freedom
of expression, freedom of the press, and
the equal protection of the laws. The Pitt
News moved for a preliminary injunction,
and an evidentiary hearing was held.
In July 1999, the District Court
denied the motion for a preliminary
injunction and held that The Pitt News
lacked standing to challenge the
constitutionality of Section 4-498. The
District Court opined that The Pitt News
could not assert First Amendment rights on
behalf of advertisers or readers and that
the paper had not itself suffered any injury
in fact because it could still publish
anything it wanted as long as it was not
paid for it.
On appeal, a panel of this Court (
the “TPN I Panel”) affirmed the District
Court’s denial of the preliminary
injunction application, but the panel relied
in part on different grounds. See The Pitt
News v. Fisher, 215 F.3d 354, 360 (3d Cir.
2000) (“TPN I”). While the TPN I Panel
agreed with the District Court that The Pitt
News did not have standing to assert the
third-party claims of its advertisers and
readers, the panel found that The Pitt News
did have standing to raise its own First
Amendment claims. Noting the paper’s
loss of advertising revenue, the panel held
that the paper had “demonstrated a
personal stake in the outcome of this
litigation” and that its injury was both
traceable to Section 4-498 and redressable
by the courts. TPN I, 215 F.3d at 360
After determining that The Pitt
News had standing to challenge Section 4-
498, the TPN I Panel turned to the familiar
four-pronged preliminary injunction
analysis, under which a court assesses “(a)
the likelihood that the plaintiff will prevail
on the merits at the final hearing; (b) the
extent to which the plaintiff is being
irreparably harmed by the conduct
complained of; (c) the extent to which the
defendant will suffer irreparable harm if
3The American Civil Liberties Union
Student Club joined as a plaintiff, but the
District Court dismissed the club for lack
of standing at an early point in the
litigation, and that order is not contested
here.
6
the preliminary injunction is issued; and
(d) the public interest.” TPN I, 215 F.3d at
366. At the first step of this analysis, the
TPN I panel concluded that The Pitt News
“ha[d] not shown a likelihood of
succeeding on the merits.” Id. at 367. The
Court reasoned as follows:
The fact that The Pitt News
is a newspaper does not give
it a constitutional right to a
certain level of profitability,
or even to stay in business at
all. . . . Thus, although it is
true that the enforcement of
Act 199 has had the effect
of driving away certain
closely regulated businesses
who previously advertised
in The Pitt News, this does
not in itself amount to a
violation of The Pitt News’
First Amendment rights.
Id. at 366.
The TPN I panel went on to reject
The Pitt News’ reliance on the “line of
cases holding that it is unconstitutional to
impose selective taxes or other financial
burdens on newspapers because of their
content.” TPN I, 215 F.3d at 366-67. The
panel found these cases to be
distinguishable because, “[f]irst, they
involve taxes, not regulations on
advertising” and, “[s]econd, they involve
fees levied directly against a newspaper.”
Id. at 367. The panel thus held that The
Pitt News had failed to satisfy the first
prong of the test for the issuance of a
preliminary injunction, and the panel
consequently did not go on to analyze any
of the other prongs.4
Following the decision in TPN I,
the parties filed cross-motions for
summary judgment, and the District Court
issued an order granting summary
judgment for the defendants. The Pitt
News then took this appeal.
II.
We exercise plenary review of a
District Court decision granting summary
judgment. See, e.g., Olson v. Gen. Elec.
Astrospace, 101 F.3d 947, 951 (3d Cir.
1996). Moreover, under the circumstances
present here, the prior panel’s decision in
TPN I is not controlling.
When a panel is presented with
legal issues that are related to issues
previously addressed by another panel in
an earlier appeal in the same case at the
preliminary injunction stage, three separate
rules are relevant. First, it is our Court’s
tradition that a panel may not overrule “a
holding” of a prior panel. 3d Cir. IOP 9.1.
Second, it is well established that neither
this tradition nor the law-of-the-case
doctrine requires a panel hearing an appeal
from the entry of a final judgment to
follow the legal analysis contained in a
prior panel decision addressing the
question whether a party that moved for
preliminary injunctive relief showed a
4The Pitt News’ petition for a writ of
certiorari was denied. See The Pitt News
v. Fisher, 531 U.S. 1113 (2001).
7
likelihood of success on the merits. See
University of Texas v. Camenisch, 451
U.S. 390, 395 (1981); Council of
Alternative Political Parties v. Hooks, 179
F.3d 64, 69 (3d Cir. 1999); American Civil
Liberties Union of New Jersey v. Black
Horse Pike Regional Bd. of Educ., 84 F.3d
1471, 1476-1477 (3d Cir. 1996). Third,
although a panel entertaining a preliminary
injunction appeal generally decides only
whether the district court abused its
discretion in ruling on the request for relief
and generally does not go into the merits
any farther than is necessary to determine
whether the moving party established a
likelihood of success, a panel is not always
required to take this narrow approach. If a
preliminary injunction appeal presents a
question of law “and the facts are
established or of no controlling relevance,”
the panel may decide the merits of the
claim. Thornburgh v. Am. College of
Obstetricians & Gynecologists., 476 U.S.
747, 756 -57 (1986); see also Maldonado
v. Houston, 157 F.3d 179, 183-84 (3d Cir.
1998).
In the typical situation – where the
prior panel stopped at the question of
likelihood of success – the prior panel’s
legal analysis must be carefully
considered, but it is not binding on the
later panel. Indeed, particularly where
important First Amendment issues are
raised, the later panel has a duty, in the
end, to exercise its own best judgment. On
the other hand, if the first panel does not
stop at the question of likelihood of
success and instead addresses the merits,
the later panel, in accordance with our
Court’s traditional practice, should regard
itself as bound by the prior panel opinion.
Here, the TPN I panel did not
decide whether Section 4-498 is or is not
constitutional. Instead, the TPN I panel
was careful to state only that The Pitt News
“ha[d] not shown a likelihood of
succeeding on the merits of its claim.”
215 F.3d at 367 (emphasis added). Had
the TPN I panel gone further and taken an
unequivocal position on the merits, we
would consider ourselves bound under the
tradition expressed in IOP 9.1. But the
TPN I panel did not take that approach.
III.
We now turn to the question5
whether Section 4-498 violates The Pitt
News’ First Amendment rights.6 We
5At the outset, we note two issues that
are not before us. First, the
Commonwealth does not suggest that The
Pitt News represents the Commonwealth’s
own speech as opposed to independent
student speech that the University
facilitates in order to foster the expression
of a diversity of views, see Rosenberger v.
Rector & Visitors of Univ. of Virginia,
515 U.S. 819, 833 (1995). Nor does the
Commonwealth suggest that precedents
concerning publications associated with
schools below the college level, see, e.g.,
Hazelwood School Dist. v. Kuhlmeirer,
484 U.S. 260 (1988), have any relevance
here.
6The Pitt News urges us to revisit the
issue of its standing to assert the First
8
conclude that Section 4-498 is
unconstitutional as applied to The Pitt
News for two reasons. First, the law
represents an impermissible restriction on
commercial speech. Second, the law is
presumptively unconstitutional because it
targets a narrow segment of the media, and
the Commonwealth has not overcome this
presumption.
A.
Although the Commonwealth
makes much of the fact that Section 4-498
does not prohibit The Pitt News from
printing alcoholic beverage ads but simply
prevents the paper from receiving
payments for running such ads7, Section 4-
498 clearly restricts speech. The very
purpose of Section 4-498 is to discourage
a form of speech (alcoholic beverage ads)
that the Commonwealth regards as
harmful. If government were free to
suppress disfavored speech by preventing
potential speakers from being paid, there
would not be much left of the First
Amendment. Imposing a financial burden
on a speaker based on the content of the
speaker’s expression is a content-based
restriction of expression and must be
analyzed as such.
The Supreme Court’s decision in
Simon & Schuster, Inc. v. Members of the
New York State Crime Victims Bd., 502
U.S. 105 (1991), illustrates this point.
There, a career criminal named Henry Hill
provided an author with the information
that the author used in writing a book
about Hill’s life. Under a contract with the
book’s publisher, Hill was entitled to
compensation, but New York’s “Son of
Sam” law required that these funds be held
in escrow for five years for use in
satisfying any civil judgments obtained by
the victims of Hill’s crimes. Although the
Son of Sam law did not prohibit Hill from
telling his story and did not prohibit the
publisher from publishing the book, the
Supreme Court held that the law placed a
content-based restriction on Hill’s speech
and that of the publisher because it
“impose[d] a financial disincentive only on
speech of a particular content.” Id. at 116.
Similarly, Section 4-498 imposes “a
financial disincentive” on certain speech
by The Pitt News (alcoholic beverage ads)
because would-be advertisers cannot pay
the paper to run such ads, and
consequently Section 4-498, like New
York’s Son of Sam law, must be analyzed
as a content-based restriction of speech.
At a minimum, therefore, Section 4-
498 must satisfy the test for restrictions on
commercial speech set out in Central
Hudson Gas & Elec. Corp. v. Pub. Serv.
Comm’n of New York, 447 U.S. 557
(1980). Under Central Hudson, we must
Amendment rights of its advertisers and
readers. We find it unnecessary to reach
this issue, however, because we hold that
Section 4-498 violates The Pitt News’ own
First Amendment rights.
7Indeed, the Commonwealth suggests
that The Pitt News has not “suffered a First
Amendment violation” because Section 4-
498 “places no restriction on what the Pitt
News can or cannot publish.” Appellee’s
Br. at 9.
9
engage in “a four-part analysis.” Id. at
566. First, “we must determine whether
the expression is protected by the First
Amendment,” and this means that “it at
least must concern lawful activity and not
be misleading.” Id. Second, “we ask
whether the asserted governmental interest
is substantial.” Id. If the first and second
“inquiries yield positive answers, we must
determine whether the regulation directly
advances the governmental interest
asserted, and whether it is not more
extensive than is necessary to serve that
interest.” Id. Here, the f irst and
second prongs are satisfied. As noted,
Section 4-498 burdens speech. In
addition, the law applies to ads that
concern lawful activity (the lawful sale of
alcoholic beverages) and that are not
misleading, and we see no other ground on
which it could be argued that the covered
ads are outside the protection of the First
Amendment.
There can also be no dispute that
the asserted government interests –
preventing underage drinking and alcohol
abuse – are, at minimum, “substantial.”
See, e.g., Lorillard Tobacco Co. v Reilly,
533 U.S. 525, 589 (2001)(opinion of
Thomas, J.); Michigan Dept. of State
Police v. Sitz, 496 U.S. 444, 451 (1990).
Section 4-498 founders, however,
on the third and fourth prongs of the
Central Hudson test. To satisfy the third
prong, the government must demonstrate
that the challenged law “alleviate[s]” the
cited harms “to a material degree.” Florida
Bar v. Went For It, Inc., 515 U.S. 618, 624
(1995)(citation omitted); see also Greater
New Orleans Broad. Ass’n, Inc. v. U.S.,
527 U.S. 173, 188 (1999). Although the
government has considerable latitude in
the sources on which it may draw to make
this showing, “[t]his burden is not satisfied
by mere speculation or conjecture.”
Edenfield v. Fane, 507 U.S. 761, 770-71
(1993); Lorillard Tobacco Co. v. Reilly,
533 U.S. 525, 555 (2001). Furthermore, it
is not enough if a law “provides only
ineffective or remote support for the
government’s purposes,” Edenfield, 507
U.S. at 770 (quoting Central Hudson, 447
U.S. at 564) or if there is “little chance”
that the law will advance the state’s goal.
Lorillard, 533 U.S. at 566. The Supreme
Court has noted that the third prong of the
Central Hudson test “is critical; otherwise,
‘a State could with ease restrict
commercial speech in the service of other
objectives that could not themselves justify
a burden on commercial expression.’”
Rubin v. Coors Brewing Co., 514 U.S.
476, 487 (1995)(quoting Edenfield, 507
U.S. at 771).
In this case, the Commonwealth has
not shown that Section 4-498 combats
underage or abusive drinking “to a
material degree,” Florida Bar, 515 U.S. at
624, or that the law provides anything
more than “ineffective or remote support
for the government’s purposes.”
Edenfield, 507 U.S. at 770 (quoting
Central Hudson, 447 U.S. at 564). We do
not dispute the proposition that alcoholic
beverage advertising in general tends to
encourage consumption, and if Section 4-
498 had the effect of greatly reducing the
quantity of alcoholic beverage ads viewed
10
by underage and abusive drinkers on the
Pitt campus, we would hold that the third
prong of the Central Hudson test was met.
But Section 4-498 applies only to
advertising in a very narrow sector of the
media (i.e., media associated with
educational institutions), and the
Commonwealth has not pointed to any
evidence that eliminating ads in this
narrow sector will do any good. Even if
Pitt students do not see alcoholic beverage
ads in The Pitt News, they will still be
exposed to a torrent of beer ads on
television and the radio, and they will still
see alcoholic beverage ads in other
publications, including the other free
weekly Pittsburgh papers that are
displayed on campus together with The
Pitt News. The suggestion that the
elimination of alcoholic beverage ads from
The Pitt News and other publications
connected with the University will slacken
the demand for alcohol by Pitt students is
counterintuitive and unsupported by any
evidence that the Commonwealth has
called to our attention. Nor has the
Commonwealth pointed to any evidence
that the elimination of alcoholic beverage
ads from The Pitt News will make it harder
for would-be purchasers to locate places
near campus where alcoholic beverages
may be purchased. Common sense
suggests that would-be drinkers will have
no difficulty finding those establishments
despite Section 4-498, and the
Commonwealth has not pointed to any
contrary evidence. In contending that
underage and abusive drinking will fall if
alcoholic beverage ads are eliminated from
just those media affiliated with educational
institutions, the Commonwealth relies on
nothing more than “speculation” and
“conjecture.”
Section 4-498 is also not adequately
tailored to achieve the Commonwealth’s
asserted objectives. The fourth step of the
Central Hudson test does not require
government to use the least restrictive
means to achieve its goals, but it does
demand a “reasonable fit between the
legislature’s ends and the means chosen to
accomplish those ends, . . . a means
narrowly tailored to achieve the desired
objective.” Lorillard, 533 U.S. at 555
(quotations omitted). Here, Section 4-498
is both severely over- and under-inclusive.
As noted, more than 67% of Pitt students
and more than 75% of the total University
population is over the legal drinking age,
and, in Lorillard, the Supreme Court held
that a restriction on tobacco advertising
was not narrowly tailored in part because
it prevented the communication to adults
of truthful information about products that
adults could lawfully purchase and use.
Not only does Section 4-498 suffer from
this same defect, but the Commonwealth
can seek to combat underage and abusive
drinking by other means that are far more
direct and that do not affect the First
Amendment. The most direct way to
combat underage and abusive drinking by
college students is the enforcement of the
alcoholic beverage control laws on college
campuses. However, studies have shown
that enforcement of these laws on college
11
campuses is often half-hearted8, and the
Commonwealth has not demonstrated that
its law enforcement officers, at either the
state or local level, or the administrators of
its colleges and universities engage in
aggressive enforcement of these laws on
college and university campuses.
In arguing that Section 4-498
satisfies the Central Hudson test, the
Commonwealth relies heavily on
Anheuser-Busch, Inc. v. Schmoke, 63 F.3d
1305 (4th Cir. 1995), which sustained a
Baltimore ordinance that generally
prohibited outdoor alcoholic beverage ads.
That decision, however, predates Lorillard,
which struck down a ban on outdoor
tobacco advertising, and in any event,
Baltimore’s showings in Anheuser-Busch
on the third and fourth prongs of the
Central Hudson test were stronger than the
Commonwealth’s are here. Because the
ordinance in Anheuser-Busch applied
(with some exceptions) to an entire
medium of communication (outdoor
advertising), there was a firmer basis for
concluding that the law would achieve its
objective (reducing underage drinking)
than there is in this case, where the
challenged law applies to only a narrow
sector of the media. Similarly, in
Anheuser-Busch, there was less force to
the argument that the city could achieve its
goal by the alternative strategy of
increasing enforcement of the laws against
underage drinking. Because the Baltimore
ordinance was designed to combat
underage drinking throughout the city, a
decision to forego the outdoor advertising
ban in favor of a campaign of increased
enforcement would have necessitated an
increase in enforcement over a wide area.
Here, increased enforcement could target
very limited, easily identifiable areas –
namely, university and college campuses
and surrounding neighborhoods. We thus
findAnheuser Busch to be distinguishable,
and we hold that Section 4-498 fails the
Central Hudson test.
B.
Section 4-498 violates the First
Amendment for an additional, independent
reason: it unjustifiably imposes a financial
burden on a particular segment of the
media, i.e., media associated with
universities and colleges.
1.
The Supreme Court recognized
long ago that laws that impose special
financial burdens on the media or a narrow
sector of the media present a threat to the
First Amendment. In Grosjean v. Am.
Press Co., 297 U.S. 233 (1936), Louisiana
had imposed a special 2% gross receipts
8See Henry Wechsler, Barbara A.
Moeykens, and William DeJong,
“Enforcing the Minimum Drinking Age
Law: A Survey of College Administrators
and Security Chiefs” (2001), available at
http://www.edc.org/hec/pubs/enforce.htm.
This study, conducted by the Harvard
School of Public Health and published by
the U.S. Department of Education’s
Higher Education Center, concluded that
“a detailed examination of how rules
against underage drinking are currently
enforced reveals a widespread laxity.”
12
tax on newspapers with circulations of
more than 20,000. The Court noted that
the form of the tax made it plain that its
purpose was to penalize and curtail the
circulation of “a select group of
newspapers,” namely, as the Court later
pointed out, the state’s large papers, which
had attacked Governor Huey Long. See
Minneapolis Star & Tribune Co. v.
Minnesota Comm’r of Revenue, 460 U.S.
575, 579-80 (1983). Holding this tax
unconstitutional, the Court wrote:
The tax here involved is bad
not because it takes money
from the pockets of the
appellees. If that were all, a
wholly different question
would be in presented. It
is bad because, in the light
of its history and of its
present setting, it is seen to
be a deliberate and
calculated device in the
guise of a tax to limit the
circulation of information to
which the public is entitled
i n v i r t u e o f t h e
constitutional guaranties. A
free press stands as one of
the great interpreters
between the government and
the people. To allow it to be
f e t tered is to fetter
ourselves.
Grosjean, 297 U.S. at 250.
In Minneapolis Star, the Court
struck down a state law that required
publications to pay a use tax if they
consumed more than $100,000 worth of
paper and ink in a year. This tax, like the
one in Grosjean, had the effect of favoring
small newspapers over large ones, but the
Court did not suggest that the Minnesota
legislature had passed the challenged law
in order to retaliate for anything that the
covered papers had said in the past or to
influence anything that they might publish
in the future. See id. at 592. Rather, the
Court held that, regardless of the
legislature’s motives, the state was
required to show that the disparate
treatment of large and small papers was
needed to serve a compelling state interest,
id. at 585, and the Court concluded that the
state had not satisfied this test, id. at 586-
92. The Court observed:
Whatever the motive of the
legislature in this case, we
think that recognizing a
power in the State not only
to single out the press but
also to tailor the tax so that
it singles out a few members
of the press presents such a
potential for abuse that no
interest suggested by
Minnesota can justify the
scheme.
Id. at 591-92.
In Arkansas Writers’ Project, Inc. v.
Ragland, 481 U.S. 221 (1987), the Court
considered a feature of Arkansas’s gross
receipts tax. Under the Arkansas scheme,
general interest magazines were subject to
the tax but religious, professional, trade,
and sports journals were exempt. Id. at
13
221, 226. Noting that the Arkansas
scheme drew distinctions between
publications based on content, the Court
applied strict scrutiny and held that the
scheme was unconstitutional. Id. at 231-
32.
By contrast, in Leathers v.
Medlock, 499 U.S. 439 (1991), the Court
rejected the argument that the Arkansas
scheme violated the First Amendment by
exempting newspapers but not cable
television. The Court noted that the
Arkansas tax was “a tax of general
applicability” that applied to “receipts
from the sale of all tangible personal
property and a broad range of services.”
Id. at 447. The Court further observed that
“[t]he tax does not single out the press and
does not therefore threaten to hinder the
press as a watchdog of government
activity.” Id. Stating that “there [was] no
indication that Arkansas ha[d] targeted
cable television in a purposeful attempt to
interfere with its First Amendment
activities,” the Court continued: “Nor is
the tax one that is structured so as to raise
suspicion that it was intended to do so.”
Id. at 448. “Unlike the taxes involved in
Grosjean and Minneapolis Star,” the Court
wrote, the Arkansas tax did not “select[] a
narrow group to bear fully the burden of
the tax.” Id. In addition, the Court stated
that the feature of the Arkansas scheme
that was then at issue was “structurally
dissimilar” to the feature challenged in
Arkansas Writers’, where “only ‘a few’
Arkansas magazines paid the State’s sales
tax.” Id.
2.
Under the above cases, laws that
impose financial burdens on a broad class
of entities, including the media, do not
violate the First Amendment. “It is
beyond dispute that the States and the
Federal Government can subject [the
media] to generally applicable economic
regulations without creating constitutional
problems.” Minneapolis Star, 460 U.S. at
581. A business in the communications
field cannot escape its obligation to
comply with generally applicable laws on
the ground that the cost of compliance
would be prohibitive. As TPN I put it, “a
newspaper does [not have] a constitutional
right to a certain level of profitability, or
even to stay in business at all.” TPN I, 215
F.3d at 366.
At the same time, however, courts
must be wary that taxes, regulatory laws,
and other laws that impose financial
burdens are not used to undermine
freedom of the press and freedom of
speech. Government can attempt to cow
the media in general by singling it out for
special financial burdens. Government
can also seek to control, weaken, or
destroy a disfavored segment of the media
by targeting that segment. Speaking of
the difference between generally
applicable tax laws and tax laws that target
the media or a segment of the media, the
Supreme Court has explained:
A po w er to ta x
differentially, as opposed to
a power to tax generally,
gives a government a
14
powerful weapon against the
taxpayer selected. When the
State imposes a generally
applicable tax, there is little
cause for concern. We need
not fear that a government
will destroy a selected group
of taxpayers by burdensome
taxation if it must impose
the same burden on the rest
of its constituency. . . .
When the State singles out
the press, though, the
political constraints that
prevent a legislature from
passing crippling taxes of
general applicability are
weakened, and the threat of
burdensome taxes becomes
acute. That threat can
operate as effectively as a
censor to check critical
comment by the press . . . .
Minneapolis Star, 460 U.S. at 585.
To prevent such abuse, laws that
impose special financial burdens on the
media or a segment of the media must be
carefully examined. A law is
presumptively invalid if it “single[s] out
the press” or “a small group of speakers.”
Leathers, 499 U.S. at 447. This
presumption is not limited to instances in
which there is evidence that the law
represents a “purposeful attempt to
interfere with . . . First Amendment
activities.” Id. at 448. Even “where . . .
there is no evidence of an improper
censorial motive,” Arkansas Writers’, 481
U.S. at 228, a law is presumptively
unconstitutional if it is “structured so as to
raise suspicion that it was intended to
[interfere with protected expression].”
Leathers, 499 U.S. at 448. Once the
presumption of unconstitutionality arises,
it can be overcome only by showing that
the challenged law is needed to serve a
compelling interest. Minneapolis Star, 460
U.S. at 582, 585.
3.
Applying these standards, we hold
that Section 4-498 violates the First
Amendment. To begin, the Act’s structure
makes it presumptively unconstitutional.
Like the provisions struck down in
Grosjean, Minneapolis Star, and Arkansas
Writers’, Section 4-498 singles out a
relatively “small group” of speakers.
Leathers, 499 U.S. at 447. By its terms,
Section 4-498 is limited to media affiliated
with educational institutions, and in
practice the scope of the Act is
undoubtedly even narrower. Because
newspapers and other media affiliatedwith
elementary and secondary schools are most
unlikely to seek to run alcoholic beverage
ads, Section 4-498 in practice singles out
m e d i a a s s o c i a t e d w i t h t h e
Commonwealth’s universities and
colleges. Accordingly, the structure of
Section 4-498 triggers the presumption of
unconstitutionality and thus requires the
Commonwealth to show that the Act is
“necessary” to achieve what the Court has
described as “an overriding government
interest” and an “interest of compelling
importance.” Minneapolis Star, 460 U.S.
at 582, 585.
The Commonwealth has not
15
discharged that obligation. For the reasons
already discussed, the Commonwealth has
not shown that Section 4-498 is
“necessary” to discourage underage
drinking or abusive drinking. The
Commonwealth has not demonstrated that
Section 4-498 has curbed or promises to
curb such drinking to any appreciable
degree. Nor has the Commonwealth
shown that its worthy objectives cannot be
served at least as well by other means,
such as the diligent enforcement of the
alcoholic beverage laws on and around
college campuses.
The Commonwealth contends that
cases such as Grosjean, Minneapolis Star,
and Arkansas Writers’ are inapposite
because they concerned laws that required
publications to pay taxes, rather than laws
that deprived the publications of a source
of revenue, but this difference is
insignificant for present purposes. In
Simon & Schuster, the state noted that the
Son of Sam law simply required that the
funds in question be held in escrow for
five years, and the state argued that the
Son of Sam law was therefore quite
different from a tax law, which
permanently deprives the taxpayer of the
money paid. See 502 U.S. at 116-17.
Rejecting this contention, the Court wrote
that “[b]oth forms of financial burden
operate as disincentives to speak.” Id. at
117. Thus, the Supreme Court’s cases
concerning disparate taxation of the media
or of a segment of the media apply to other
laws that impose other types of disparate
financial burdens. The threat to the First
Amendment arises from the imposition of
financial burdens that may have the effect
of influencing or suppressing speech, and
whether those burdens take the form of
taxes or some other form is unimportant.
The Commonwealth also suggests
that the tax cases are inapplicable here
because the laws struck down in those
cases imposed financial burdens directly
on the media, whereas Section 4-498, as
interpreted by the LCB, is directly
applicable only to advertisers. We reject
this argument as well. Much like the
proffered distinction between taxes and
other financial burdens, this argument
disregards the reason for the presumptive
unconstitutionality of laws that impose
disparate financial burdens on the media or
segments of the media. As noted, such
schemes are suspect because they can
easily be used as a way of controlling or
suppressing speech. Because a law that
imposes a significant, but indirect,
financial burden on the media or a segment
of the media can be used in the same way
and with the same effect, there is no
principled reason to draw a distinction
between laws that impose direct and
indirect burdens of comparable practical
significance.9
9We also note that while the Twenty-
First Amendment provides the States with
the authority to regulate alcohol, such
regulation is subject “to the same First
Amendment restrictions that apply to the
Federal Government.” Rubin v. Coors
Brewing Co., 514 U.S. 476, 485-86
(1995); see also 44 Liquormart, Inc. v.
Rhode Island, 517 U.S. 484, 516-17
16
As did the TPN I panel, the
Commonwealth relies on AMSAT Cable
Ltd. v. Cablevision of Connecticut, 6 F.3d
867 (2d Cir. 1993), and Warner
Communications, Inc. v. City of Niceville,
911 F.2d 634 (11th Cir. 1990), but neither
case supports the Commonwealth’s
position here. In AMSAT, a satellite
television company that had an exclusive
agreement with some apartment buildings
to provide television service to their
tenants challenged a state law that required
apartment building owners to give access
to cable and antenna companies that
wanted to service the tenants. The satellite
company argued that the state anti-trust
law was unconstitutional because it would
undermine the economic viability of
satellite companies. Id. at 871. Rejecting
this argument, the Second Circuit held that
the satellite company had no First
Amendment right to an exemption from
the law simply because such a law would
harm the company’s revenue. In AMSAT,
there was no evidence that it was a
targeted attempt to suppress speech, rather
than a generally applicable anti-trust
scheme. Id.
AMSAT plainly differs from the
present case in several respects. As far as
the AMSAT opinion reveals, the satellite
law was part of the state’s overall effort to
combat monopolies and there was nothing
about the structure of the law at issue in
that case that gave rise to a presumption of
unconstitutionality. As stated above,
media are not exempt from generally
applicable laws or schemes simply because
they harm the media’s profit. Minneapolis
Star, 460 U.S. at 581. Section 4-498,
however, is specific to certain media
content and specifically targets certain
types of media. It is not part of a generally
applicable scheme.
The Eleventh Circuit’s decision in
City of Niceville is even farther afield.
There, Warner, a leading cable provider,
claimed that the city’s entry into the
market as a competing cable provider
violated Warner’s First Amendment rights.
The Eleventh Circuit rejected Warner’s
claim, holding that the city was entitled to
enter the market and that Warner had no
First Amendment right to be free from
competition. Id. at 637-638. The
argument that the Court rejected in City of
Niceville – that the First Amendment
protects a media company from
competition by a state-sponsored
enterprise – simply has no relevance in the
present case. Here, the Commonwealth is
not damaging The Pitt News by sponsoring
a competing publication; it is damaging
The Pitt News by preventing it, and a small
group of similarly situated media, from
generating revenue from ads of specific
content. While there was no indication of
intent to suppress speech or harm specific
media in City of Niceville, these elements
do exist in our case.
(1996)(“[W]e now hold that the
Twenty-first Amendment does not qualify
the constitutional prohibition against laws
abridging the freedom of speech embodied
in the First Amendment.”)
17
IV.
For these reasons, we hold that
Section 4-498 violates the First
Amendment as applied to The Pitt News.
We therefore reverse the order of the
District Court and remand for the entry of
a permanent injunction against the
enforcement of Section 4-498 with respect
to any advertisements in that paper.
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