The Pitt News v. Atty Gen PA

Opinions of the United

2004 Decisions States Court of Appeals

for the Third Circuit

7-29-2004

The Pitt News v. Atty Gen PA

Precedential or Non-Precedential: Precedential

Docket No. 03-1725

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PRECEDENTIAL Argued: January 22, 2004

UNITED STATES COURT OF Before: ALITO, CHERTOFF, and

APPEALS DEBEVOISE,** Circuit Judges

FOR THE THIRD CIRCUIT

____________ (Opinion Filed: July 29, 2004 )

No. 03-1725 WITOLD J. WALCZAK (argued)

____________ American Civil Liberties Union

313 Atwood Street

THE PITT NEWS, Pittsburgh, PA 15213

Appellant Counsel for Appellant

v. J. BART DeLONE (argued)

15 th Floor

GERALD J. PAPPERT, in his capacity O f f i c e of A ttor n ey Gen eral of

as Attorney General of the Pennsylvania

Commonwealth of Pennsylvania * ; Strawberry Square

FRANK KOSCELNAK, in his capacity Harrisburg, PA 17120

as Director, Bureau of Liquor Control

Enforcement, Pennsylvania State Police; Counsel for Appellee

JOHN E. JONES, III, in his capacity as

Chairman Pennsylvania Liquor Control GAYLE C. SPROUL

Board Levine, Sullivan, Koch & Schultz

2004 Makefield Road

___________________ Yardley, PA 19067

ON APPEAL FROM THE UNITED Counsel for Amicus Curiae The Student

STATES DISTRICT COURT Press Law Center, PA Newspaper

FOR THE WESTERN DISTRICT OF Association, and Reports Committee for

PENNSYLVANIA Freedom of the Press

District Court Judge: Honorable William ____________________

L. Standish

(D.C. No. 99-cv-00529) OPINION OF THE COURT

____________________

**

The Honorable Dickinson R.

Debevoise, District Judge of the United

*

Pursuant to Federal Rule of Appellate States District Court for the District of

Procedure 43(c)(2). New Jersey, sitting by designation.

____________________ The Pitt News was created by the

University Board of Trustees “in

ALITO, Circuit Judge: recognition of the constitutional right of

students to freedom of speech.” The

The case concerns th e parties do not dispute that the paper

constitutionality of a Pennsylvania law that represents independent student speech, not

bans advertisers from paying for the official speech disseminated on behalf of

dissemination of “alcoholic beverage the University. The newspaper is

advertising” by communications media published daily during the school year and

affiliated with a university, college, or weekly during the summer, and it is

other “educational institution.” The Pitt distributed free of charge at 75 locations

News, a university newspaper, sought an around the campus. The Pitt News is

injunction against enforcement of the law, displayed at these locations together with

but the District Court granted summary other free weekly newspapers, including

judgment for the defendants, holding that In Pittsburgh, City Paper, and UR

the law “has no effect on The Pitt News’ Pittsburgh. None of these other

freedom of expression” because the paper publications is affiliated with an

remains free to say whatever it wishes educational institution, and they all contain

about alcoholic beverages as long as it is alcoholic beverage advertisements. All of

not paid for engaging in the expression. The Pitt News’ revenue is derived from

advertising, and until Act 199 took effect,

We hold that the First Amendment the paper received substantial income from

precludes the enforcement of the law in alcoholic beverage ads.

question against advertisers in The Pitt

News, and we therefore reverse the order In 1996, the Pennsylvania

of the District Court and remand for the Legislature enacted an amendment to the

entry of a permanent injunction. state Liquor Code that is popularly known

as “Act 199.” A provision of this

I. amendment, 42 Pa. Stat. Ann. §4-498

(e)(5)(g) (hereinafter “Section 4-498”),

The Pitt News is a certified student prohibits “any advertising of alcoholic

organization at the University of beverages” in virtually any medium of

Pittsburgh (“the University”). The mass communication that is affiliated with

University has more than 25,000 students, “any educational institution,” including a

at least two-thirds of whom are old enough college or university.1

to drink under Pennsylvania law. Overall,

more than 75% of the total University

population (students, faculty, and staff) is 1

“Act 199” states in relevant part:

more than 21 years of age.

§ 4-49 8. Unlaw ful

2

Violations of this provision are

misdemeanors and may be punished by

fines of up to $500 or imprisonment for up

advertising

to three months on a first charge, and by a

mandatory minimum sentence of three

(e) The following shall apply

months in jail for a subsequent offense.

to all alcoholic beverage and

See 47 Pa. Stat. Ann. § 4-494(a).

malt beverage advertising:

To clarify the meaning of Act 199,

(4) The use in any the Pennsylvania Liquor Control Board

advertisement of alcoholic (LCB) issued Advisory Notice No. 15,

beverages of any subject which states in relevant part:

matter, language or slogan

Wh at kind of

directed to minors to

advertisements would be

promote consumption of

affected by the prohibition

alcoh olic beverages is

against advertisements in

prohibited. Nothing in this

publications published by,

section shall be deemed to

for and in behalf of any

restrict or prohibit any

educational institution?

advertisement of alcoholic

beverages to those persons A dve r tise ments wh ic h

of legal drinking age. indicate the availability

and/or price of alcoholic

(5) No advertisement shall beverages may not be

be permitted, either directly contained in publications

or indirectly, in any booklet, published by, for and in

program book, yearbook, behalf of any educational

magazine, newspaper, institutions. Universities are

period ical, brochure, c onside re d e duc a tional

circular or other similar

publication published by, for

or in behalf of any newspapers, periodicals or

educational institution. other publication, outdoor

advertisement, any form of

(g) For purposes of this electronic transmission or

s u b s e c ti o n , t h e t e r m any other printed or graphic

“advertisement” shall mean matter, including booklets,

any advertising of alcoholic flyers or cards, or on the

beverages through th e product label or attachment

medium of radio broadcast, itself.

t e l ev i s io n broadcast,

3

institutions under this advertisement. 2

section. Thus, an

On December 9, 1997, Terry Lucas,

advertisement in a college

the general manager of The Pitt News,

newspaper or a college

received a fax from the owner of an area

football program

restaurant, the Fuel & Fuddle, which had

a n n o u n c i n g b e v e r a g es

previously placed alcoholic beverage

would not be permissible.

advertisements in the paper. The fax

However, an advertisement

consisted of a December 4, 1998, letter to

merely indicating the name

the restaurant from the Bureau of Liquor

and address of a licensee or

Control Enforcement of the Pennsylvania

licensed premise, or an

State Police (BLCE) stating that the BLCE

adve rtisement which

had received information that the Fuel &

indicates what nonalcoholic

Fuddle had “advertised . . . alcoholic

products may be acquired at

beverages, either directly or indirectly, in

the licensed premise making

a publication published by, for or in behalf

n o r e f er e n c e t o t h e

of an educational institution” and that this

availability of alcoholic

could result in the suspension or

beverages would be

revocation of its license or in the

p ermissible. F urther,

imposition of a fine. Based on this notice,

advertisements in

the owner of the restaurant canceled its

magazines, newspapers or

advertising contract with The Pitt News,

other periodicals which have

and the paper, in order to protect its

n o connection to an

advertisers, felt compelled to stop

educational institution other

accepting alcoholic beverage

than the fact the school may

advertisements.

subscribe to that particular

newspaper are permissible . The Pitt News then sought to

... persuade establishments with liquor

During testimony in this case, a

representative of the LCB, Faith S. Diehl,

2

stated that, in the LCB’s view, Section 4- The Pitt News submitted the

498 contains two restrictions that are not deposition of Stanley Woloski, an

expressly set out in the statute. First, Diehl employee of the Office of the Chief

testified that Section 4-498 is enforceable Counsel of the Pennsylvania State Police

only against advertisers and not against the who is assigned to the Bureau of Liquor

media. Second, according to Diehl, Control Enforcement (BLCE), which

Section 4-498 applies only when the media stated that, while Woloski did not

receives some form of payment for an “wholeheartedly agree” with Diehl’s

interpretation of the statute, the BLCE was

bound by the LCB’s interpretation.

4

licenses to place ads that did not refer to lacked standing to ch alleng e the

the sale of alcoholic beverages, but these constitutionality of Section 4-498. The

efforts were unsuccessful. In 1998 alone, District Court opined that The Pitt News

the newspaper lost approximately $17,000 could not assert First Amendment rights on

in revenue, and this loss affected the behalf of advertisers or readers and that

length of the newspaper, as well as its the paper had not itself suffered any injury

ability to make capital expenditures, in fact because it could still publish

including payments for updating its anything it wanted as long as it was not

computers and acquiring digital cameras. paid for it.

The inability to make these capital

On appeal, a panel of this Court (

expenditures has harmed The Pitt News’

the “TPN I Panel”) affirmed the District

ability to compete for readers with other

Court’s denial of the preliminary

newspapers. Furthermore, the newspaper

injunction application, but the panel relied

may be compelled in the future to begin to

in part on different grounds. See The Pitt

charge subscribers, and this would result in

News v. Fisher, 215 F.3d 354, 360 (3d Cir.

a further decrease in readership.

2000) (“TPN I”). While the TPN I Panel

In April 1999, The Pitt News3 filed agreed with the District Court that The Pitt

a complaint in the United States District News did not have standing to assert the

Court for the Western District of third-party claims of its advertisers and

Pennsylvania against state officials readers, the panel found that The Pitt News

responsible for the enforcement of the Act. did have standing to raise its own First

Asserting claims under 42 U.S.C. § 1983, Amendment claims. Noting the paper’s

The Pitt News alleged that Section 4-498 loss of advertising revenue, the panel held

violated its constitutional rights to freedom that the paper had “demonstrated a

of expression, freedom of the press, and personal stake in the outcome of this

the equal protection of the laws. The Pitt litigation” and that its injury was both

News moved for a preliminary injunction, traceable to Section 4-498 and redressable

and an evidentiary hearing was held. by the courts. TPN I, 215 F.3d at 360

In July 1999, the District Court After determining that The Pitt

denied the motion for a preliminary News had standing to challenge Section 4-

injunction and held that The Pitt News 498, the TPN I Panel turned to the familiar

four-pronged preliminary injunction

analysis, under which a court assesses “(a)

3 the likelihood that the plaintiff will prevail

The American Civil Liberties Union

on the merits at the final hearing; (b) the

Student Club joined as a plaintiff, but the

extent to which the plaintiff is being

District Court dismissed the club for lack

irreparably harmed by the conduct

of standing at an early point in the

complained of; (c) the extent to which the

litigation, and that order is not contested

defendant will suffer irreparable harm if

here.

5

the preliminary injunction is issued; and consequently did not go on to analyze any

(d) the public interest.” TPN I, 215 F.3d at of the other prongs.4

366. At the first step of this analysis, the

Following the decision in TPN I,

TPN I panel concluded that The Pitt News

the parties filed cross-motions for

“ha[d] not shown a likelihood of

summary judgment, and the District Court

succeeding on the merits.” Id. at 367. The

issued an order granting summary

Court reasoned as follows:

judgment for the defendants. The Pitt

The fact that The Pitt News News then took this appeal.

is a newspaper does not give

II.

it a constitutional right to a

certain level of profitability, We exercise plenary review of a

or even to stay in business at District Court decision granting summary

all. . . . Thus, although it is judgment. See, e.g., Olson v. Gen. Elec.

true that the enforcement of Astrospace, 101 F.3d 947, 951 (3d Cir.

Act 199 has had the effect 1996). Moreover, under the circumstances

of driving away certain present here, the prior panel’s decision in

closely regulated businesses TPN I is not controlling.

who previously advertised

When a panel is presented with

in The Pitt News, this does

legal issues that are related to issues

not in itself amount to a

previously addressed by another panel in

violation of The Pitt News’

an earlier appeal in the same case at the

First Amendment rights.

preliminary injunction stage, three separate

Id. at 366. rules are relevant. First, it is our Court’s

tradition that a panel may not overrule “a

The TPN I panel went on to reject

holding” of a prior panel. 3d Cir. IOP 9.1.

The Pitt News’ reliance on the “line of

Second, it is well established that neither

cases holding that it is unconstitutional to

this tradition nor the law-of-the-case

impose selective taxes or other financial

doctrine requires a panel hearing an appeal

burdens on newspapers because of their

from the entry of a final judgment to

content.” TPN I, 215 F.3d at 366-67. The

follow the legal analysis contained in a

panel found these cases to be

prior panel decision addressing the

distinguishable because, “[f]irst, they

question whether a party that moved for

involve taxes, not regulations on

preliminary injunctive relief showed a

advertising” and, “[s]econd, they involve

fees levied directly against a newspaper.”

Id. at 367. The panel thus held that The

4

Pitt News had failed to satisfy the first The Pitt News’ petition for a writ of

prong of the test for the issuance of a certiorari was denied. See The Pitt News

preliminary injunction, and the panel v. Fisher, 531 U.S. 1113 (2001).

6

likelihood of success on the merits. See Court’s traditional practice, should regard

University of Texas v. Camenisch, 451 itself as bound by the prior panel opinion.

U.S. 390, 395 (1981); Council of

Here, the TPN I panel did not

Alternative Political Parties v. Hooks, 179

decide whether Section 4-498 is or is not

F.3d 64, 69 (3d Cir. 1999); American Civil

constitutional. Instead, the TPN I panel

Liberties Union of New Jersey v. Black

was careful to state only that The Pitt News

Horse Pike Regional Bd. of Educ., 84 F.3d

“ha[d] not shown a likelihood of

1471, 1476-1477 (3d Cir. 1996). Third,

succeeding on the merits of its claim.”

although a panel entertaining a preliminary

215 F.3d at 367 (emphasis added). Had

injunction appeal generally decides only

the TPN I panel gone further and taken an

whether the district court abused its

unequivocal position on the merits, we

discretion in ruling on the request for relief

would consider ourselves bound under the

and generally does not go into the merits

tradition expressed in IOP 9.1. But the

any farther than is necessary to determine

TPN I panel did not take that approach.

whether the moving party established a

likelihood of success, a panel is not always III.

required to take this narrow approach. If a

We now turn to the question 5

preliminary injunction appeal presents a

whether Section 4-498 violates The Pitt

question of law “and the facts are

News’ First Amendment rights.6 We

established or of no controlling relevance,”

the panel may decide the merits of the

claim. Thornburgh v. Am. College of 5

Obstetricians & Gynecologists., 476 U.S. At the outset, we note two issues that

747, 756 -57 (1986); see also Maldonado are not before us. First, the

v. Houston, 157 F.3d 179, 183-84 (3d Cir. Commonwealth does not suggest that The

1998). Pitt News represents the Commonwealth’s

own speech as opposed to independent

In the typical situation – where the student speech that the University

prior panel stopped at the question of facilitates in order to foster the expression

likelihood of success – the prior panel’s of a diversity of views, see Rosenberger v.

legal analysis must be caref ully Rector & Visitors of Univ. of Virginia,

considered, but it is not binding on the 515 U.S. 819, 833 (1995). Nor does the

later panel. Indeed, particularly where Commonwealth suggest that precedents

important First Amendment issues are concerning publications associated with

raised, the later panel has a duty, in the schools below the college level, see, e.g.,

end, to exercise its own best judgment. On Hazelwood School Dist. v. Kuhlmeirer,

the other hand, if the first panel does not 484 U.S. 260 (1988), have any relevance

stop at the question of likelihood of here.

success and instead addresses the merits,

6

the later panel, in accordance with our The Pitt News urges us to revisit the

issue of its standing to assert the First

7

conc lude that S ection 4-498 is speaker’s expression is a content-based

unconstitutional as applied to The Pitt restriction of expression and must be

News for two reasons. First, the law analyzed as such.

represents an impermissible restriction on

The Supreme Court’s decision in

commercial speech. Second, the law is

Simon & Schuster, Inc. v. Members of the

presumptively unconstitutional because it

New York State Crime Victims Bd., 502

targets a narrow segment of the media, and

U.S. 105 (1991), illustrates this point.

the Commonwealth has not overcome this

There, a career criminal named Henry Hill

presumption.

provided an author with the information

A.

that the author used in writing a book

Although the Commonwealth about Hill’s life. Under a contract with the

makes much of the fact that Section 4-498 book’s publisher, Hill was entitled to

compensation, but New York’s “Son of

does not prohibit The Pitt News from

Sam” law required that these funds be held

printing alcoholic beverage ads but simply

in escrow for five years for use in

prevents the paper from receiving

satisfying any civil judgments obtained by

payments for running such ads7 , Section 4-

the victims of Hill’s crimes. Although the

498 clearly restricts speech. The very

Son of Sam law did not prohibit Hill from

purpose of Section 4-498 is to discourage

telling his story and did not prohibit the

a form of speech (alcoholic beverage ads)

publisher from publishing the book, the

that the Commonwealth regards as

Supreme Court held that the law placed a

harmful. If government were free to

content-based restriction on Hill’s speech

suppress disfavored speech by preventing

and that of the publisher because it

potential speakers from being paid, there

“impose[d] a financial disincentive only on

would not be much left of the First

speech of a particular content.” Id. at 116.

Amendment. Imposing a financial burden

Similarly, Section 4-498 imposes “a

on a speaker based on the content of the

financial disincentive” on certain speech

by The Pitt News (alcoholic beverage ads)

Amendment rights of its advertisers and because would-be advertisers cannot pay

readers. We find it unnecessary to reach the paper to run such ads, and

this issue, however, because we hold that consequently Section 4-498, like New

Section 4-498 violates The Pitt News’ own York’s Son of Sam law, must be analyzed

First Amendment rights. as a content-based restriction of speech.

7 At a minimum, therefore, Section 4-

Indeed, the Commonwealth suggests

498 must satisfy the test for restrictions on

that The Pitt News has not “suffered a First

commercial speech set out in Central

Amendment violation” because Section 4-

Hudson Gas & Elec. Corp. v. Pub. Serv.

498 “places no restriction on what the Pitt

Comm’n of New York, 447 U.S. 557

News can or cannot publish.” Appellee’s

(1980). Under Central Hudson, we must

Br. at 9.

8

engage in “a four-part analysis.” Id. at New Orleans Broad. Ass’n, Inc. v. U.S.,

566. First, “we must determine whether 527 U.S. 173, 188 (1999). Although the

the expression is protected by the First government has considerable latitude in

Amendment,” and this means that “it at the sources on which it may draw to make

least must concern lawful activity and not this showing, “[t]his burden is not satisfied

be misleading.” Id. Second, “we ask by mere speculation or conjecture.”

whether the asserted governmental interest Edenfield v. Fane, 507 U.S. 761, 770-71

is substantial.” Id. If the first and second (1993); Lorillard Tobacco Co. v. Reilly,

“inquiries yield positive answers, we must 533 U.S. 525, 555 (2001). Furthermore, it

determine whether the regulation directly is not enough if a law “provides only

advances the governmental interest ineffective or remote support for the

asserted, and whether it is not more government’s purposes,” Edenfield, 507

extensive than is necessary to serve that U.S. at 770 (quoting Central Hudson, 447

interest.” Id. H ere, the f irst a nd U.S. at 564) or if there is “little chance”

second prongs are satisfied. As noted, that the law will advance the state’s goal.

Section 4-498 burdens speech. In Lorillard, 533 U.S. at 566. The Supreme

addition, the law applies to ads that Court has noted that the third prong of the

concern lawful activity (the lawful sale of Central Hudson test “is critical; otherwise,

alcoholic beverages) and that are not ‘a State could with ease restrict

misleading, and we see no other ground on commercial speech in the service of other

which it could be argued that the covered objectives that could not themselves justify

ads are outside the protection of the First a burden on commercial expression.’”

Amendment. Rubin v. Coors Brewing Co., 514 U.S.

476, 487 (1995)(quoting Edenfield, 507

There can also be no dispute that

U.S. at 771).

the asserted government interests –

preventing underage drinking and alcohol In this case, the Commonwealth has

abuse – are, at minimum, “substantial.” not shown that Section 4-498 combats

See, e.g., Lorillard Tobacco Co. v Reilly, underage or abusive drinking “to a

533 U.S. 525, 589 (2001)(opinion of material degree,” Florida Bar, 515 U.S. at

Thomas, J.); Michigan Dept. of State 624, or that the law provides anything

Police v. Sitz, 496 U.S. 444, 451 (1990). more than “ineffective or remote support

f or the governm ent’s purp oses.”

Section 4-498 founders, however,

Edenfield, 507 U.S. at 770 (quoting

on the third and fourth prongs of the

Central Hudson, 447 U.S. at 564). We do

Central Hudson test. To satisfy the third

not dispute the proposition that alcoholic

prong, the government must demonstrate

beverage advertising in general tends to

that the challenged law “alleviate[s]” the

encourage consumption, and if Section 4-

cited harms “to a material degree.” Florida

498 had the effect of greatly reducing the

Bar v. Went For It, Inc., 515 U.S. 618, 624

quantity of alcoholic beverage ads viewed

(1995)(citation omitted); see also Greater

9

by underage and abusive drinkers on the institutions, the Commonwealth relies on

Pitt campus, we would hold that the third nothing more than “speculation” and

prong of the Central Hudson test was met. “conjecture.”

But Section 4-498 applies only to

Section 4-498 is also not adequately

advertising in a very narrow sector of the

tailored to achieve the Commonwealth’s

media (i.e., media associated with

asserted objectives. The fourth step of the

educational institutions), and the

Central Hudson test does not require

Commonwealth has not pointed to any

government to use the least restrictive

evidence that eliminating ads in this

means to achieve its goals, but it does

narrow sector will do any good. Even if

demand a “reasonable fit between the

Pitt students do not see alcoholic beverage

legislature’s ends and the means chosen to

ads in The Pitt News, they will still be

accomplish those ends, . . . a means

exposed to a torrent of beer ads on

narrowly tailored to achieve the desired

television and the radio, and they will still

objective.” Lorillard, 533 U.S. at 555

see alcoholic beverage ads in other

(quotations omitted). Here, Section 4-498

publications, including the other free

is both severely over- and under-inclusive.

weekly Pittsburgh papers that are

As noted, more than 67% of Pitt students

displayed on campus together with The

and more than 75% of the total University

Pitt News. The suggestion that the

population is over the legal drinking age,

elimination of alcoholic beverage ads from

and, in Lorillard, the Supreme Court held

The Pitt News and other publications

that a restriction on tobacco advertising

connected with the University will slacken

was not narrowly tailored in part because

the demand for alcohol by Pitt students is

it prevented the communication to adults

counterintuitive and unsupported by any

of truthful information about products that

evidence that the Commonwealth has

adults could lawfully purchase and use.

called to our attention. Nor has the

Not only does Section 4-498 suffer from

Commonwealth pointed to any evidence

this same defect, but the Commonwealth

that the elimination of alcoholic beverage

can seek to combat underage and abusive

ads from The Pitt News will make it harder

drinking by other means that are far more

for would-be purchasers to locate places

direct and that do not affect the First

near campus where alcoholic beverages

Amendment. The most direct way to

may be purchased. Common sense

combat underage and abusive drinking by

suggests that would-be drinkers will have

college students is the enforcement of the

no difficulty finding those establishments

alcoholic beverage control laws on college

desp ite S ection 4-4 98, an d th e

campuses. However, studies have shown

Commonwealth has not pointed to any

that enforcement of these laws on college

contrary evidence. In contending that

underage and abusive drinking will fall if

alcoholic beverage ads are eliminated from

just those media affiliated with educational

10

campuses is often half-hearted 8 , and the concluding that the law would achieve its

Commonwealth has not demonstrated that objective (reducing underage drinking)

its law enforcement officers, at either the than there is in this case, where the

state or local level, or the administrators of challenged law applies to only a narrow

its colleges and universities engage in sector of the media. Similarly, in

aggressive enforcement of these laws on Anheuser-Busch, there was less force to

college and university campuses. the argument that the city could achieve its

goal by the alternative strategy of

In arguing that Section 4-498

increasing enforcement of the laws against

satisfies the Central Hudson test, the

underage drinking. Because the Baltimore

Co mm onw ealth relies he av ily on

ordinance was designed to combat

Anheuser-Busch, Inc. v. Schmoke, 63 F.3d

underage drinking throughout the city, a

1305 (4 th Cir. 1995), which sustained a

decision to forego the outdoor advertising

Baltimore ordinance that generally

ban in favor of a campaign of increased

prohibited outdoor alcoholic beverage ads.

enforcement would have necessitated an

That decision, however, predates Lorillard,

increase in enforcement over a wide area.

which struck down a ban on outdoor

Here, increased enforcement could target

tobacco advertising, and in any event,

very limited, easily identifiable areas –

Baltimore’s showings in Anheuser-Busch

namely, university and college campuses

on the third and fourth prongs of the

and surrounding neighborhoods. We thus

Central Hudson test were stronger than the

find Anheuser Busch to be distinguishable,

Commonwealth’s are here. Because the

and we hold that Section 4-498 fails the

ordinance in Anheuser-Busch applied

Central Hudson test.

(with some exceptions) to an entire

medium of communication (outdoor B.

advertising), there was a firmer basis for

Section 4-498 violates the First

Amendment for an additional, independent

8 reason: it unjustifiably imposes a financial

See Henry Wechsler, Barbara A.

burden on a particular segment of the

Moe ykens, and W illiam DeJong,

media, i.e., media associated with

“Enforcing the Minimum Drinking Age

universities and colleges.

Law: A Survey of College Administrators

and Security Chiefs” (2001), available at

1.

http://www.edc.org/hec/pubs/enforce.htm.

This study, conducted by the Harvard The Supreme Court recognized

School of Public Health and published by long ago that laws that impose special

the U.S. Department of Education’s financial burdens on the media or a narrow

Higher Education Center, concluded that sector of the media present a threat to the

“a detailed examination of how rules First Amendment. In Grosjean v. Am.

against underage drinking are currently Press Co., 297 U.S. 233 (1936), Louisiana

enforced reveals a widespread laxity.” had imposed a special 2% gross receipts

11

tax on newspapers with circulations of consumed more than $100,000 worth of

more than 20,000. The Court noted that paper and ink in a year. This tax, like the

the form of the tax made it plain that its one in Grosjean, had the effect of favoring

purpose was to penalize and curtail the small newspapers over large ones, but the

circulation of “a select group of Court did not suggest that the Minnesota

newspapers,” namely, as the Court later legislature had passed the challenged law

pointed out, the state’s large papers, which in order to retaliate for anything that the

had attacked Governor Huey Long. See covered papers had said in the past or to

Minneapolis Star & Tribune Co. v. influence anything that they might publish

Minnesota Comm’r of Revenue, 460 U.S. in the future. See id. at 592. Rather, the

575, 579-80 (1983). Holding this tax Court held that, regardless of the

unconstitutional, the Court wrote: legislature’s motives, the state was

required to show that the disparate

The tax here involved is bad

treatment of large and small papers was

not because it takes money

needed to serve a compelling state interest,

from the pockets of the

id. at 585, and the Court concluded that the

appellees. If that were all, a

state had not satisfied this test, id. at 586-

wholly different question

92. The Court observed:

would be in presented. It

is bad because, in the light Whatever the motive of the

of its history and of its legislature in this case, we

present setting, it is seen to think that recognizing a

b e a d e l ib e r a t e a n d power in the State not only

calculated device in the to single out the press but

guise of a tax to limit the also to tailor the tax so that

circulation of information to it singles out a few members

which the public is entitled of the press presents such a

in virtue of the potential for abuse that no

constitutional guaranties. A i n t e r e s t s u g g este d b y

free press stands as one of Minnesota can justify the

t h e gre at i n t e rp r e t e rs scheme.

between the government and

Id. at 591-92.

the people. To allow it to be

f e t te r e d i s t o f e t t e r In Arkansas Writers’ Project, Inc. v.

ourselves. Ragland, 481 U.S. 221 (1987), the Court

considered a feature of Arkansas’s gross

Grosjean, 297 U.S. at 250.

receipts tax. Under the Arkansas scheme,

In Minneapolis Star, the Court general interest magazines were subject to

struck down a state law that required the tax but religious, professional, trade,

publications to pay a use tax if they and sports journals were exempt. Id. at

12

221, 226. Noting that the Arkansas 2.

scheme drew distinctions between

Under the above cases, laws that

publications based on content, the Court

impose financial burdens on a broad class

applied strict scrutiny and held that the

of entities, including the media, do not

scheme was unconstitutional. Id. at 231-

violate the First Amendment. “It is

32.

beyond dispute that the States and the

By contrast, in Leathers v. Federal Government can subject [the

Medlock, 499 U.S. 439 (1991), the Court media] to generally applicable economic

rejected the argument that the Arkansas regulations without creating constitutional

scheme violated the First Amendment by problems.” Minneapolis Star, 460 U.S. at

exempting newspapers but not cable 581. A business in the communications

television. The Court noted that the field cannot escape its obligation to

Arkansas tax was “a tax of general comply with generally applicable laws on

applicability” that applied to “receipts the ground that the cost of compliance

from the sale of all tangible personal would be prohibitive. As TPN I put it, “a

property and a broad range of services.” newspaper does [not have] a constitutional

Id. at 447. The Court further observed that right to a certain level of profitability, or

“[t]he tax does not single out the press and even to stay in business at all.” TPN I, 215

does not therefore threaten to hinder the F.3d at 366.

press as a watchdog of government

At the same time, however, courts

activity.” Id. Stating that “there [was] no

must be wary that taxes, regulatory laws,

indication that Arkansas ha[d] targeted

and other laws that impose financial

cable television in a purposeful attempt to

burdens are not used to undermine

interfere with its First Amendment

freedom of the press and freedom of

activities,” the Court continued: “Nor is

speech. Government can attempt to cow

the tax one that is structured so as to raise

the media in general by singling it out for

suspicion that it was intended to do so.”

special financial burdens. Government

Id. at 448. “Unlike the taxes involved in

can also seek to control, weaken, or

Grosjean and Minneapolis Star,” the Court

destroy a disfavored segment of the media

wrote, the Arkansas tax did not “select[] a

by targeting that segment. Speaking of

narrow group to bear fully the burden of

the difference be tween genera lly

the tax.” Id. In addition, the Court stated

applicable tax laws and tax laws that target

that the feature of the Arkansas scheme

the media or a segment of the media, the

that was then at issue was “structurally

Supreme Court has explained:

dissimilar” to the feature challenged in

Arkansas Writers’, where “only ‘a few’ A power to tax

Arkansas magazines paid the State’s sales differentially, as opposed to

tax.” Id. a power to tax generally,

gives a government a

13

powerful weapon against the unconstitutional if it is “structured so as to

taxpayer selected. When the raise suspicion that it was intended to

State imposes a generally [interfere with protected expression].”

applicable tax, there is little Leathers, 499 U.S. at 448. Once the

cause for concern. We need presumption of unconstitutionality arises,

not fear that a government it can be overcome only by showing that

will destroy a selected group the challenged law is needed to serve a

of taxpayers by burdensome compelling interest. Minneapolis Star, 460

taxation if it must impose U.S. at 582, 585.

the same burden on the rest 3.

of its constituency. . . .

Applying these standards, we hold

When the State singles out

that Section 4-498 violates the First

the press, though, the

Amendment. To begin, the Act’s structure

political constraints that

makes it presumptively unconstitutional.

prevent a legislature from

Like the provisions struck down in

passing crippling taxes of

Grosjean, Minneapolis Star, and Arkansas

general applicability are

Writers’, Section 4-498 singles out a

weakened, and the threat of

relatively “small group” of speakers.

burdensome taxes becomes

Leathers, 499 U.S. at 447. By its terms,

acute. That threat can

Section 4-498 is limited to media affiliated

operate as effectively as a

with educational institutions, and in

censor to check critical

practice the scope of the Act is

comment by the press . . . .

undoubtedly even narrower. Because

Minneapolis Star, 460 U.S. at 585. newspapers and other media affiliated with

elementary and secondary schools are most

To prevent such abuse, laws that

unlikely to seek to run alcoholic beverage

impose special financial burdens on the

ads, Section 4-498 in practice singles out

media or a segment of the media must be

med ia associated with the

caref ully exami ne d. A l aw is

Com mon wealth’s unive r sitie s a nd

presumptively invalid if it “single[s] out

colleges. Accordingly, the structure of

the press” or “a small group of speakers.”

Section 4-498 triggers the presumption of

Leathers, 499 U.S. at 447. This

unconstitutionality and thus requires the

presumption is not limited to instances in

Commonwealth to show that the Act is

which there is evidence that the law

“necessary” to achieve what the Court has

represents a “purposeful attempt to

described as “an overriding government

interfere with . . . First Amendment

interest” and an “interest of compelling

activities.” Id. at 448. Even “where . . .

importance.” Minneapolis Star, 460 U.S.

there is no evidence of an improper

at 582, 585.

censorial motive,” Arkansas Writers’, 481

U.S. at 228, a law is presumptively The Commonwealth has not

14

discharged that obligation. For the reasons financial burdens that may have the effect

already discussed, the Commonwealth has of influencing or suppressing speech, and

not shown that Section 4-498 is whether those burdens take the form of

“necessary” to discourage underage taxes or some other form is unimportant.

drinking or abusive drinking. The

The Commonwealth also suggests

Commonwealth has not demonstrated that

that the tax cases are inapplicable here

Section 4-498 has curbed or promises to

because the laws struck down in those

curb such drinking to any appreciable

cases imposed financial burdens directly

degree. Nor has the Commonwealth

on the media, whereas Section 4-498, as

shown that its worthy objectives cannot be

interpreted by the LCB, is directly

served at least as well by other means,

applicable only to advertisers. We reject

such as the diligent enforcement of the

this argument as well. Much like the

alcoholic beverage laws on and around

proffered distinction between taxes and

college campuses.

other financial burdens, this argument

The Commonwealth contends that disregards the reason for the presumptive

cases such as Grosjean, Minneapolis Star, unconstitutionality of laws that impose

and Arkansas Writers’ are inapposite disparate financial burdens on the media or

because they concerned laws that required segments of the media. As noted, such

publications to pay taxes, rather than laws schemes are suspect because they can

that deprived the publications of a source easily be used as a way of controlling or

of revenue, but this difference is suppressing speech. Because a law that

insignificant for present purposes. In imposes a significant, but indirect,

Simon & Schuster, the state noted that the financial burden on the media or a segment

Son of Sam law simply required that the of the media can be used in the same way

funds in question be held in escrow for and with the same effect, there is no

five years, and the state argued that the principled reason to draw a distinction

Son of Sam law was therefore quite between laws that impose direct and

different from a tax law , which indirect burdens of comparable practical

permanently deprives the taxpayer of the significance.9

money paid. See 502 U.S. at 116-17.

Rejecting this contention, the Court wrote

9

that “[b]oth forms of financial burden We also note that while the Twenty-

operate as disincentives to speak.” Id. at First Amendment provides the States with

117. Thus, the Supreme Court’s cases the authority to regulate alcohol, such

concerning disparate taxation of the media regulation is subject “to the same First

or of a segment of the media apply to other Amendment restrictions that apply to the

laws that impose other types of disparate Federal Government.” Rubin v. Coors

financial burdens. The threat to the First Brewing Co., 514 U.S. 476, 485-86

Amendment arises from the imposition of (1995); see also 44 Liquormart, Inc. v.

Rhode Island, 517 U.S. 484, 516-17

15

As did the TPN I panel, the law was part of the state’s overall effort to

Commonwealth relies on AM SAT Cable combat monopolies and there was nothing

Ltd. v. Cablevision of Connecticut, 6 F.3d about the structure of the law at issue in

867 (2d Cir. 1993), and Warner that case that gave rise to a presumption of

Communications, Inc. v. City of Niceville, unconstitutionality. As stated above,

911 F.2d 634 (11th Cir. 1990), but neither media are not exempt from generally

case supports the Commonwealth’s applicable laws or schemes simply because

position here. In AMSAT, a satellite they harm the media’s profit. Minneapolis

television company that had an exclusive Star, 460 U.S. at 581. Section 4-498,

agreement with some apartment buildings however, is specific to certain media

to provide television service to their content and specifically targets certain

tenants challenged a state law that required types of media. It is not part of a generally

apartment building owners to give access applicable scheme.

to cable and antenna companies that

The Eleventh Circuit’s decision in

wanted to service the tenants. The satellite

City of Niceville is even farther afield.

company argued that the state anti-trust

There, Warner, a leading cable provider,

law was unconstitutional because it would

claimed that the city’s entry into the

undermine the economic viability of

market as a competing cable provider

satellite companies. Id. at 871. Rejecting

violated Warner’s First Amendment rights.

this argument, the Second Circuit held that

The Eleventh Circuit rejected W arner’s

the satellite company had no First

claim, holding that the city was entitled to

Amendment right to an exemption from

enter the market and that Warner had no

the law simply because such a law would

First Amendment right to be free from

harm the company’s revenue. In AMSAT,

competition. Id. at 637-638. The

there was no evidence that it was a

argument that the Court rejected in City of

targeted attempt to suppress speech, rather

Niceville – that the First Amendment

than a generally applicable anti-trust

protec ts a med ia comp any from

scheme. Id.

com petition by a state -sponsore d

AMSAT plainly differs from the enterprise – simply has no relevance in the

present case in several respects. As far as present case. Here, the Commonwealth is

the AMSAT opinion reveals, the satellite not damaging The Pitt News by sponsoring

a competing publication; it is damaging

The Pitt News by preventing it, and a small

(1996)(“[W ]e now hold that the group of similarly situated media, from

Twenty-first Amendment does not qualify generating revenue from ads of specific

the constitutional prohibition against laws content. While there was no indication of

abridging the freedom of speech embodied intent to suppress speech or harm specific

in the First Amendment.”) media in City of Niceville, these elements

do exist in our case.

16

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.

17