# Appendix — Hospitality Investments of Philadelphia, Inc. v. Pennsylvania State Police > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385017_1239%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1996 - **Citation:** 517 U.S. 1206 ## Text In the Supreme Court of the RuitedStates OCTOBER TERM, 1994 941247 JAN 20 1995 HOSPITALITY INVESTMENTS OF PRULABEIGE i BE oes loner, Vv. PENNSYLVANIA STATE POLICE, BUREAU OF LIQUOR CONTROL ENFORCEMENT, Respondent. NIGHTTIME CONCEPTS, INC.., 7 Petitioner, PENNSYLVANIA STATE POLICE, BUREAU OF LIQUOR CONTROL ENFORCEMENT, Respondent. HOSPITALITY INVESTMENTS OF PHILADELPHIA, INC., 7 Petitioner, PENNSYLVANIA STATE POLICE, BUREAU OF LIQUOR CONTROL ENFORCEMENT, Respondent. Petition for a Writ of Certiorari to the Supreme Court of Pennsylvania APPENDIX TO PETITION FOR A WRIT OF CERTIORARI Of Counsel: JOHN J. WALSH * P. CAMERON DEVoRE STEVEN G. BRODY DAVIS WRIGHT TREMAINE MARY ELIZABETH TAYLOR 2606 Century Square CADWALADER, WICKERSHAM 1501 Fourth Avenue & TAFT Seattle, WA 98101 100 Maiden Laie (206) 622-3150 New York, NY 10038 (212) 504-6000 Gaky F. DIVITo 234 N. Columbus Boulevard Philadelphia, PA 19106 (215) 418-2600 Counsel for Petitioner * Counsel of Record | WILSON - Eras Printing Co., Inc. - 789-0096 - WAsHiNGTON, D.C. 20001 \\ 0 y TABLE OF CONTENTS Supreme Court of Pennsylvania Decision in Pennsyl- vania State Police, Bur. of Liquor Cont. Enforcement v. Hospitality Invs. of Phila., Inc. (No. 77 E.D. 1992) dated November 3, 1994 (“Hospitality I’’) .... Supreme Court of Pennsylvania Per Curiam Order in Pennsylvania State Police, Bur. of Liquor Cont. En- forcement v. Nighttime Concepts, Inc. (No. 78 E.D. 1992) dated November 3, 1994 (“Nighttime’’) ........ Supreme Court of Pennsylvania Per Curiam Order in Pennsylvania State Police, Bur. of Liquor Cont. En- forcement v. Hospitality Invs. of Phila., Inc. (No. 80 E.D. 1992) dated November 3, 1994 Air tess stond ge RSLS MRRN CEE EE. oe See Oe ee Pennsylvania Court of Common Pleas Memorandum Opinion in Hospitality IT (No. 9203-3772) dated June RS al Er Rs ee tits Pennsylvania Court of Common Pleas Memorandum Opinion in Hospitality I and Nighttime (Nos, 9104- $255, $256) dated June 26, 1992 .................................. Pennsylvania Court of Common Pleas Oral Ruling in Hospitality I and Nighttime (Nos. 9104-3255, 3256) RR aS: of Ee Pennsylvania Liquor Control Board Decision in Hos- pitality IT (No. 91-0519) dated March 11, 1992 ........ Pennsylvania Liquor Control Board Decision in Night- time (No. 90-0160) dated April 5, 1991... Pennsylvania Liquor Control Board Decision in Hos- pitality I (No. 89-2488) dated April 8, 1991 .............. Pennsylvania Liquor Control Board Administrative Law Judge Decision in Hospitality II (No. 91- Ee a oe Pennsylvania Liquor Control Board Administrative Law Judge Decision in Nighttime (No. ee dated January 28, 1991 ....................... Page la 17a 19a 2la 23a 87a 4la ii TABLE OF CONTENTS—Continued Pennsylvania Liquor Control Board Administrative Law Judge Decision in Hospitality I (No. 89-2488) dated January 10, 1991 .............:ccecceeceseesesseereseneeesseeees Pennsylvania Liquor Code, Pa. Stat. Ann. tit. 47, § 4-498 (1969 & Supp. 1994) 2.2... ccececececceeeeeeeneeneres Report to the Pennsylvania Liquor Control Board on Beer Price Advertising (Pa. Commw. Office of Att’y Gen. Antitrust Section, July 31, 1985) -....................... Pennsylvania Liquor Control Board Order re Regulations (1985) ....---.-----sessssseecsseenesennnsnnrennennnnes Pennsylvania Legislative Journal—Senate, June 17, 1987, Pp. T5961 .......-cecceececcceresessenennssenennsnnesnenensenssneennens Tennessee Court of Appeals Decision in Wise v. Ten- nessee Alco. Bev. Comm’n, No. 81-325-I dated April 18, 1982 ..........-....-<-a-crseccsorsssnresssesrenssarssnrenesssosssaronensesecees Page 45a 49a 50a la APPENDIX IN THE SUPREME COURT OF PENNSYLVANIA EASTERN DISTRICT J-197-1993 PENNSYLVANIA STATE POLICE, BUREAU OF LIQUOR CONTROL ENFORCEMENT, Appellant v. HOSPITALITY INVESTMENTS OF PHILADELPHIA, INC., Appellee No. 77 Eastern District Appeal Docket 1992 Appeal from the Order of the Court of Common Pleas of Philadelphia County, Entered at No. 9104-3255, Civil Division, on July 23, 1991 SUBMITTED: October 18, 1993 OPINION OF THE COURT MR. JusTICE PAPADAKOS DECIDED: NOVEMBER 3, 1994 This appeal arises from a finding by the Court of Common Pleas of Philadelphia County that Section 498 of the Pennsylvania Liquor Code, 47 P.S. § 4-498, is unconstitutional. This is an appeal as of right directly to this Court, as authorized by 42 P.S. § 722(7), since, under that section we have exclusive jurisdiction of appeal from final orders of courts of common pleas in cases 2a where such a court has held any statute to be unconstitu- tional. For the reasons set forth below, we reverse. Appellant, the Bureau of Liquor Control Enforcement (“Bureau”), is responsible for enforcing the Pennsylvania Liquor Code, 47 P.S. § 1-101, et seq. Appellee (herein- after the “Licensee”) is the holder of a restaurant liquor license issued by the Pennsylvania Liquor Control Board (“Board”). In late 1989, the Bureau issued a citation against the Licensee charging a violation of Section 498 of the Liquor Code. Section 498 prohibits a licensee from advertising in any manner whatsoever the price of any malt beverage, cordial, wine or distilled liquor offered for sale in this State. A hearing relative to the citation was held before an administrative law judge and the following fact was stipulated. A bureau enforcement officer read the Licensee’s advertisement in the October 26, 1989, edition of the daily Pennsylvania paper. The advertise- ment stated, in part: “$1.00 Regular Drinks 9-12 mid- night.” The Licensee admitted that its ad violated Sec- tion 498. The only argument that the Licensee raised was that Section 498 was unconstitutional. The administrative law judge who heard the case found that the Licensee had violated Section 498 and she im- posed a fine of $250.00 for this violation. She also found that she had no jurisdiction to address the constitutional issue. The Pennsylvania Liquor Control Board affirmed. The Licensee appealed to the Court of Common Pleas of Philadelphia County and oral argument was held on July 23, 1991. At that argument, the Licensee contended that the Bureau failed to establish that the policy behind the price advertising prohibition of Section 498 out- weighed its constitutional right to commercial free speech. The trial judge accepted this argument and, by order dated July 23, 1991, granted the Licensee’s appeal and reversed the order of the Board. On June 26, 1992, the trial judge issued a one page memorandum opinion con- cluding that Section 498 violated the Pennsylvania Con- " WiMenx 3a stitution. The trial judge otherwise noted that his reason- ing appeared on the record.’ The Bureau appealed to the Commonwealth Court and the matter was subsequently transferred to this Court pursuant to our exclusive jurisdiction under 42 P.S. § 722 (7), as noted above. The Licensee herein argues that its right to commer- cial free speech as guaranteed under the First Amendment to the United States Constitution, is set forth in Central Hudson Gas & Electric Corp. v. Public Service Commis- sion of New York, 447 U.S. 557, 100 S.Ct. 2343, 65 L.Ed.2d 341 (1980); Virginia Pharmacy Board vy. Vir- ginia Citizen Consumer Counsel, Inc., 425 U.S. 748, 96 S.Ct. 1817, 48 L.Ed.2d 346 (1976); Pennsylvania State Board of Pharmacy v. Pastor, Pa. , 272 A.2d 487 (1971).* However, none of those cases involved the sale of alcohol or alcoholic beverages. The sale or con- sumption of alcohol or alcoholic beverages in this country is governed initially by the Twenty-First Amendment to the United States Constitution which repealed prohibition. Regulation of the sale and consumption of alcohol is left to the state under that amendment. A state has the power to ban the purchase and sale of alcoholic beverages within its borders. The manufacture, gift, purchase, sale, possession or transportation of alcoholic beverages may be prohibited. However, once having granted to its citi- zens the privilege of selling and buying alcoholic bever- ages, the state cannot impose restrictions which strangle the trade. Restrictions may be imposed so long as they bear a reasonable relation to the evil sought to be con- trolled. 1A review of the record shows that the Judge's few remarks are inadequate and contain no reference to any section of the Pennsyl- vania Constitution. 2The Pennsylvania Constitution’s guarantee of free speech is involved in the Pastor decision. 4a In Tahiti Bar, Inc. Liquor License Case, 395 Pa. 355, 150 A.2d 112, appeal dismissed, 361 U.S. 85, 80 S.Ct. 159, 4 L.Ed.2d 116 (1959), this Court held that an individual has no constitutionally protected right to en- gage in the business of selling alcoholic beverages. Rather, the authority to sell alcoholic beverages is a privilege granted by the State. Accordingly, a state may impose conditions and limitations on that privilege. We held that regulation of the liquor business is required only to bear a reasonable relation to the evil sought to be con- trolled. Since an individual who accepts the privilege of holding a liquor license is deemed to consent to the con- ditions and restrictions attached to that license, the usual tests, still applicable in other situations and used to evalu- ate constitutional challenges, are not involved. See also, Replogle v. Commonwealth, Pa. Liquor Control Board, 514 Pa. 209, 523 A.2d 327 (1987). It is clear here that Section 498, which prohibits price advertising of alcoholic beverages, is reasonably related to permissible goals of the legislature in the area of alcohol control. The Bureau argues, and we have no reason to doubt their contention, that Section 498, along with other sections of the Liquor Code, is intended to restrain and discourage the consumption of alcoholic beverages. This is a legitimate legislative purpose. It is reasonable to accept that banning price advertising is prima facie con- sonant with such a purpose. By its very nature, price advertising (typically discount price advertising) is de- signed to encourage consumption by promoting and in- creasing the sale of alcoholic beverages. A string of wit- nesses or statistical studies are not needed to prove this point. In short, we find that Section 498 bears a reason- able relation to legitimate legislative goals in the area of alcohol control and since this is so, the incidental curtail- ment of the right of commercial free speech is justified where acquisition of a liquor license is a privilege and not a right. A careful balancing of competing interests as is usually done in free speech cases is not required. 5a Three United States Supreme Court cases in the area of liquor license control clinch the argument. In Califor- nia v. LaRue, 409 U.S. 109, 93 S.Ct. 390, 34 L.Ed.2d 390 (1972); New York State Liquor Authority v. Bel- lanca, 452 U.S. 714, 101 S.Ct. 2599, 69 L.Ed.2d 357 1981); and City of Newport, Ky. v. lacobucci, 479 U.S. 92, 107 S.Ct. 383, 93 L.Ed.2d 334 (1986), the United States Supreme Court was faced with a challenge to a local liquor licensing law or regulation prohibiting live sexual entertainment or nude dancing in establishments licensed to sell liquor. In each case, the court rejected the licensees’ arguments based on the free speech guaran- tees of the First and Fourteenth Amendments and the court did not engage in the traditional First Amendment analy- sis. Rather, the relevant liquor regulation was held not to be irrational (LaRue); was held to be a valid attribute of the state’s power to ban the sale of alcoholic beverages entirely (Bellanca); or was held to be presumptively valid (lacobucci). The case instantly before this Court involves a restric- tion on commercial speech as implicated in the enforce- ment of the Liquor Code and we do not intend to dep- recate the importance of the constitutionally protected right to commercial speech in appropriate cases. Although neither LaRue, Bellanca nor lacobucci involved such a restriction, the applicability of those cases to the case sub judice is most compelling because commercial speech is generally accorded less protection than other forms of expression. Central Hudson Gas & Electric Corp. v. Pub- lic Service Commission of New York, supra. It seems un- necessary to apply a rigorous First Amendment analysis where a liquor regulation is attacked on commercial speech grounds when such an analysis has not been uti- lized relative to speech which is usually accorded greater protection. The United States Supreme Court has held that “the Twenty-first Amendment shields restrictions on speech from full First Amendment review.” Jacobucci, 479 US. at 97. 6a. In conclusion, upon carefully reviewing LaRue, Bel- lanca and Iacobucci, two points stand out. First, the Twenty-First Amendment gives a state broad authority and, hence, there is an “added presumption of validity” when the state regulates in the area of liquor sales. Second, the reasonable relationship test is relevant to determining constitutionality. Constitutionally protected speech may be restricted because the law in question is related to the regulation of liquor. Accordingly, we find Section 498 to be a valid exercise of Pennsylvania’s right to regulate the sale and consump- tion of alcohol. The order of the Court of Common Pleas of Philadelphia County is reversed. MR. JUSTICE FLAHERTY files a Dissenting Opinion. MR. JUSTICE CASTILLE files a Dissenting Opinion. MR. JUSTICE MONTEMURO is sitting by designa- tion. Judgment entered Dated: November 3, 1994 /s/ Patricia Johnson PATRICIA JOHNSON Chief Clerk Supreme Court of Pennsyivania Eastern District 7a DISSENTING OPINION Mr. JUSTICE CASTILLE DECIDED: Noverber 3, 1994 I respectfully dissent. The majority opinion cites to In re Tahiti Bar, Inc., 395 Pa. 355, 150 A.2d 112 (1959), to support its theory that since an individual who accepts the privilege of holding a liquor license is deemed to consent to the conditions and restrictions attached to that license, the usual tests, still applicable in other areas and used to evaluate constitutional challenges, are not involved. The majority opinion goes on to assert that the Twenty-first Amendment to the United States Con- Stitution allows the Commonwealth to substantially regu- late liquor advertisement in Pennsylvania without mean- ingful regard for the free speech interests of those en- gaged in the business. The majority opinion asserts that because the U.S. Supreme Court in Newport v. Iacobucci, 479 U.S. 92 (1986), New York State Liquor Authority v. Bellanca, 452 U.S. 714 (1981) and California v. La Rue, 409 U.S. 109 (1972) failed to engage in a First Amendment analysis for challenges to local liquor licens- ing regulations prohibiting live sexual entertainment in es- tablishments licensed to sell liquor, then no First Amend- ment analysis is required here for a regulation limiting pure commercial speech (“[i]t seems unnecessary to apply a rigorous First Amendment analysis where a liquor reg- ulation is attacked on commercial speech grounds when such analysis has not been utilized relative to speech which is usually accorded greater protection (i.e., live, sexually-explicit entertainment).” Majority Opinion at 6). The majority opinion would have the Court uphold the challenged regulation merely because it is reasonably re- lated to the regulation of liquor. Restrictions on commercial speech, however, are gen- erally much more rigorously scrutinized than the majority opinion seems willing to concede. Commercial speech, such as advertising, has been given substantial protection under the First Amendment to the U.S. Constitution and under Article 1, Section 7 of the Pennsylvania Constitu- tion. See, e.g., Virginia Pharmacy Bd. v. Virginia Con- sumer Council, 425 U.S. 748 (1976); Insurance Adjust- ment Bureau v. Insurance Commissioner, 518 Pa. 210, 542 A.2d 1317 (1988). A constitutional free speech analysis, then, is likewise required of us in the instant matter. Prior to 1976, Tahiti Bar, supra, was in keeping with the traditional view that purely commercial advertising was not entitled to any First Amendment protection and could therefore be subjected to governmental regulation in the same way as any other type of business activity. See Valentine v. Chrestensen, 316 U.S. 52 (1942) (the Constitution imposes no restraint on government with re- spect to commercial advertising). However, after the U.S. Supreme Court expressly extended rigorous First Amendment protection to commercial speech in its 1976 Virginia Pharmacy decision, supra, the proposition as- serted by this Court’s 1959 Tahiti Bar decision that reg- ulation of the liquor business is required only to bear a reasonable relation to the evil sought to be controlled is therefore constitutionally suspect in the instant context. To the extent Tahiti Bar is not in accordance with U.S. Supreme Court caselaw, it should be overruled. In short, a careful reading of that federal caselaw makes clear that there is little basis to follow the majority opinion’s aban- donment of the constitutional analysis in which this Court would otherwise engage but for the implication of the Twenty-first Amendment. First, the Supreme Court has repeatedly affirmed the principle that neither the text nor the history of the Twenty-first Amendment suggests that it in any way limits the exercise of established individual constitutional rights where the sale or use of liquor is concerned. Craig v. Boren, 429 U.S. 190 (1976) (equal protection rights not limited by the implication of the Twenty-first Amend- ment); Wisconsin v. Constantineau, 400 U.S. 433 (1971) 9a (the Twenty-first Amendment does not permit a state to regulate alcohol consumption at the expense of procedural due process). Indeed, the Twenty-first Amendment was intended simply to insulate state regulation of liquor from potential federal Commerce Clause objections: “[o]nce passing beyond consideration of the Commerce Clause the relevance of the Twenty-first Amendment to other constitutional provisions becomes increasingly doubtful.” Craig at 205-06. Further, in the cases cited by the ma- jority opinion (La Rue, lacobucci and Bellanca, supra), the Twenty-first Amendment served only to buttress the States’ standing to regulate live, explicitly sexual enter- tainment at establishments licensed to dispense liquor; the Twenty-first Amendment did not function in those cases to enhance the states’ ability to curtail expressly protected contitutional rights. Jd. at 207 (distinguishing La Rue, supra) .* Second, the U.S. Supreme Court has never expressly evaluated the impact of the Twenty-first Amendment on the constitutional validity of state-imposed limitations on liquor advertising. Therefore, the majority’s analysis in the instant case is supported only by very rough analogy to La Rue, lacobucci and Bellanca, supra. Moreover, the majority opinion misinterprets the application of the 1The other cases upon which the majority relies (lacobucci (1986) and Bellanca (1981), supra), in no way undermine this notion that the Twenty-first Amendment is not an independent repository of state power to abridge established First Amendment protections. Like La Rue, the U.S. Supreme Court cases lacobucci and Bellanca merely involved state regulation of live sexual enter- tainment taking place in liquor establishments. Therefore, the Craig Court’s assertion that La Rue did nothing to enhance the states’ power to curtail explicitly protected constitutional rights pursuant to the Twenty-first Amendment is still valid today. Moreover, although this Court expressly upheld the regulation of lewd, immoral ov improper entertainment on licensed premises in Tahiti Bar, supra, that decision is not strictly in accordance with the U.S. Supreme Court’s commercial speech caselaw. See discussion supra. 10a Twenty-first Amendment in those cases. La Rue, laco- bucci and Bellanca, supra, merely stand for the proposi- tion that the states have sufficient police power under the Twenty-first Amendment to override the relatively weak First Amendment interests of those providing sexually provocative entertainment in a facility operating with a liquor license. See Bellanca, 452 U.S. at 718 (whatever artistic or communicative value may attach to topless dancing is overcome by the state’s exercise of its broad power arising under the Twenty-first Amendment). See also Hude vy. Commonwealth, 55 Pa. Commw. 1, 423 A.2d 15 (1980) (liquor regulation preventing the use of a loudspeaker whereby the sound of the music ema- nating therefrom can be heard on the outside of liquor- licensed premises did not operate to breach freedom of expression in that the enjoyment of loud music in a tavern is not a fundamental right of free expression).* In none of those federal cases did the Supreme Court rely exclusively on the state’s authority under the Twenty- first Amendment to uphold the challenged regulations. Notwithstanding this fact, however, the majority opinion in the instant matter asserts the validity of the challenged regulation precisely because it is reasonably related to the Commonwealth’s authority to regulate liquor commerce pursuant to the Twenty-first Amendment. Furthermore, the regulations in La Rue, lacobucci and Bellanca, supra, functioned primarily only as conditions upon the sale of alcohol that only incidentally burdened expression. The challenged regulation in the instant case, however, directly targets otherwise constitutionally-protected expression it- self. The regulations in the cases cited by the majority sought to burden conduct containing only a minimal com- municative element: i.e., live, sexually explicit entertain- 2 Hude is significant because it highlights the notion that in liquor control cases, Pennsylvania courts must first determine the in- herent value of the speech at issue and then evaluate whether the state’s authority to regulate liquor commerce is sufficient to over- ride that particular class of speech. lla ment. See Craig at 207 (distinguishing La Rue as a case where conduct consisted “more of gross sexuality than of communication”). In the instant case, however, the chal- lenged regulation seeks to suppress constitutionally pro- tected commercal information, or “pure” speech.* Accordingly, the regulation in the instant case should be analyzed no differently than are other governmental burdens on commercial speech. See Posadas de Puerto Rico Associates v. Tourism Company of Puerto Rico, 478 U.S. 328 (1986) (applying customary commercial speech standards to casino gambling advertising.) In /nsurance Adjustment Bureau, supra, this Court analyzed a com- mercial speech constitutional challenge to an amendment to the public adjuster and public adjuster solicitor law prohibiting solicitation of business by public adjusters or public adjuster solicitors within 24 hours of a disaster or fire. The Court developed a method of analysis by which it first scrutinized the challenged regulations pursuant to the minimum standards of analysis and substantive pro- tection as required by the U.S. Supreme Court and the federal constitution. /d. at 215, 542 A.2d at 1319. The Court then examined whether the resolution of the par- ticular issue in question is more appropriately treated pursuant to the Pennsylvania constitution or the United States Constitution. /d.* 8 The majority opinion’s assertion that live, sexually-explicit entertainment is generally accorded greater constitutional protec- tion than commercial speech profoundly misinterprets federal case- law. See Brian S. Steffey, Recent Development: Tension Between the First and Twenty-first Amendments in State Regulation of Alcohol Advertising, 87 Vand. L. Rev. 1421, 1448 (1984). 4 The Court determined that Article I, Section 7 of the Pennsyl- vania constitution does not allow the prior restraint or other re- striction of commercial speech by any governmental agency where the legitimate, important interests of government may be accom- plished practicably in another, less intrusive manner. /d. at 225, 542 A.2d at 1824. The Court applied that standard to strike down 12a Proceeding with the I/nsurance Adjustment Bureau Court’s method of analysis, the First Amendment requires that the party seeking to uphold a restriction on com- mercial speech carries the burden of justifying it. Bolger v. Youngs Drug Products Corp., 463 U.S. 60, n.20 (1999) [sic]. The First Amendment also requires courts to subject state limitations on commercial speech to an intermediate standard of review and uphold those limita- tions only if the state carries its burden of proving that (1) the challenged regulation directly advances (2) a substantial governmental interest (3) in a way that is no more restrictive than necessary to achieve that objective. Central Hudson Gas & Electric Corp. v. Public Service Commission, 447 U.S. 557 (1980). Conceding the sec- ond prong of the test that the Commonwealth has a sub- stantial interest in promoting the public health, safety and welfare, the Commonwealth in the instant case must first have shown that the advertising limitation at issue directly advances that interest. To succeed, the Commonwealth must have demonstrated that its ban on advertising the price of any malt beverage, cordial, wine or distilled liquor directly reduces the consumption of such liquor and, thereby, the evils associated with such consumption. To satisfy the third prong of the Central Hudson test, the Commonwealth must have shown that the regulation is written or applied no more restrictively than necessary to achieve its asserted interest. In the instant case, however, a review of the record shows that the Commonwealth merely made the bald assertion that a ban on advertising liquor prices reduces the consumption of such liquor; it offered no empirical evidence or any other evidence to buttress its argument. As such, the Commonwealth failed to carry its burden on the first prong of the Central Hudson test. On the other hand, the licensee challenging the regulation offered evi- the prohibition of solicitation of business by public adjusters or public adjuster solicitors within 24 hours of a disaster or fire as violative of Pennsylvania constitutional free speech protections. /d. l3a dence to the contrary, showing that there is no direct link between liquor advertising bans and reduced liquor consumption. Moreover, the Commonwealth failed to argue, much less prove, that the regulation is written or applied no more restrictively than necessary to achieve its asserted interest. As such, the Commonwealth failed to carry its burden on the third prong of the Central Hudson test as well. In short, the Commonwealth failed to shoulder its burden regarding even the minimum standards of analysis and substantive protection as required by the U.S. Su- preme Court and the federal constitution. Accordingly, at a minimum, this case should be remanded back to the trial court to allow the Commonwealth to develop the record, if it can, with evidence that (1) a ban on adver- tising liquor prices directly reduces the consumption of such liquor and (2) the regulation is written or applied no more restrictively than necessary to achieve its as- serted interest. Moreover, the litigants should utilize the analytical tool defined by this Court in Commonwealth v. Edmunds, 526 Pa. 374, 586 A.2d 887 (1991) in order to allow the trial court to thoroughly determine whether the resolution of the particular issue in question is more appropriately treated pursuant to the Pennsylvania constitution or the United States constitution. Accordingly, the litigants should brief and analyze (1) the text of Article I, Section 7 of Pennsylvania constitution; (2) the history of that provision; (3) relevant caselaw from Pennsylvania and from other jurisdictions regarding commercial speech and state regulation of liquor advertising; (4) policy consid- erations, including unique issues of state and local con- cern; and (5) the impact on modern Pennsylvania juris- prudence. Id. at 390, 586 A.2d at 895. If indeed the Pennsylvania constitution should protect the speech at issue in the instant matter more stringently than does the federal constitution, the consideration of that proposition should be thoroughly analyzed. l4a The majority opinion simply goes too far in sustaining the challenged regulation without an analysis of the free speech protections afforded the licensee under the First Amendment of the federal constitution or under Article I, Section 7 of the Pennsylvania constitution. Commercial free speech warrants more protection than the majority wishes to confer. EOE ee 15a DISSENTING OPINION Mr. Justice FLAHERTY DECIDED: NOVEMBER 3, 1994 I dissent. The majority holds that a state has the power under the Twenty-first Amendment to the United States Constitution to regulate the sale and consumption of alco- hol; that there is no constitutional right to engage in the business of selling alcoholic beverages; that the state may impose reasonable conditions and limitations on the sale of alcoholic beverages; and that “the usual tests” concern- ing the constitutional validity of these conditions and limitations are not involved because “an individual who accepts the privilege of holding a liquor license is deemed to consent to the conditions and restrictions attached to the license.” Since discouraging consumption of alcoholic beverages is a legitimate legislative purpose, and since banning price advertising “bears a reasonable relation to legitimate legislative goals,” any curtailment of free speech which results, the majority reasons, is “justified where acquisition of a liquor license is a privilege and not a right.” While it is true that there may be no federally protected right of commercial speech on the facts of this case under the First Amendment to the United States Constitution, it is equally certain under our decision in Insurance Ad- justment Bureau v. Insurance Commissioner that there are rights under Article I, Section 7 of the Fennsylvania Constitution: We hold, therefore, that the Pennsylvania Consti- tution, Article I, Section 7, will not allow the prior restraint or other restriction of commercial speech by any governmental agency where the legitimate, im- portant interests of government may be accomplished practicably in another, less intrusive manner. l6a 518 Pa. 210, 225, 542 A.2d 1317, 1324 (1988) (Em- phasis added.) This holding is relevant to a considera- tion of the majority’s view that the statute at issue in this case is reasonably related to a legitimate governmental purpose. In Pennsylvania, the reasonableness of tne rela- tionship between the statute and the governmental purpose must be answered within the context of the protections the Pennsylvania Constitution provides to commercial speech. And those protections, in a word, are that any regulation restricting commercial speech must involve legitimate, important governmental interests and that there must be no less intrusive way practically to protect those interests. Moreover, there is no presumption of validity of a liquor regulation or any governmental regulation which restricts commercial speech. In Insurance Adjustment Bureau, we stated: We note our agreement with the Bureau that in cases involving the constitutional challenge to a re- striction on commercial speech which is not false or deceptive, “The party seeking to uphold a restriction of commercial speech carries the burden of justifying it.” Id. at 219, n.5, 542 A.2d 1321, n.5. (Citations omitted. ) Thus, I would remand the case for a determination of whether the Commonwealth has met its burden of justify- ing its regulation of commercial speech by establishing that there is no less intrusive way in which its legitimate and important purpose practically can be achieved. 1 Article I, Section 7 provides, in pertinent part: The free communication of thoughts and opinions is one of the invaluable rights of man, and every citizen may freely speak, write and print on any subject, being responsible for the abuse of that liberty. ‘17a SUPREME COURT OF PENNSYLVANIA PENNSYLVANIA STATE POLICE, BUREAU OF LIQUOR CONTROL ENFORCEMENT, Appellant, v. NIGHTTIME CONCEPTS, INC., Appellee. Submitted Oct. 18, 1993 Decided Nov. 3, 1994 Appeal No. 78, Eastern District Appeal Docket 1992 from the Order of the Court of Common Pleas of Philadelphia County, Entered at No. 9104-3256, Civil Division, on July 23, 1991 Before NIX, C.J., and FLAHERTY, ZAPPALA, PAPADAKOS, CAPPY, CASTILLE and MONTE- MURO, JJ. ORDER PER CURIAM. The order of the Court of Common Pleas of Philadel- phia County is REVERSED. See, Pennsylvania State Police, Bureau of Liquor Control Enforcement v. Hos- pitality Investments of Philadelphia, Inc., Pa. ’ A.2d (1994), (slip opinion filed at No. 77 E.D. Appeal Docket 1992, on November 3, 1994). FLAHERTY, Justice, dissenting. I dissent based on my dissenting opinion filed in Penn- sylvania State Police, Bureau of Liquor Control Enforce- 18a ment v. Hospitality Investments of Philadelphia, Inc., —— Pa. (No. 77 E.D. Appeal Docket 1992). CASTILLE, Justice, dissenting. I respectfully dissent based on my dissenting opinion filed in Pennsylvania State Police, Bureau of Liquor Con- trol Enforcement v. Hospitality Investments of Philadel- phia, Inc. (No. 77 E.D. Appeal Docket 1992). 19a SUPREME COURT OF PENNSYLVANIA PENNSYLVANIA STATE POLICE, BUREAU OF LIQUOR CONTROL ENFORCEMENT, Appellant, Vv. HOSPITALITY INVESTMENTS OF PHILADELPHIA, INC., Appellee. Submitted Oct. 18, 1993 Decided Nov. 3, 1994 Appeal No. 80 Eastern District Appeal Docket 1992 from the Order of the Court of Common Pleas of Philadelphai County, Entered at No. 9203-3772, Civil Division, on May 11, 1992 Before NIX, C.J., and FLAHERTY, ZAPPALA, PAPADAKOS, CAPPY, CASTILLE and MONTE- MURO, JJ. PER CURIAM. The order of the Court of Common Pleas of Philadel- phia County is REVERSED. See, Pennsylvania State Police, Bureau of Liquor Control Enforcement v. Hos- pitality Investments of Philadelphia, Inc., Pa. . — A.2d —— (1994), (slip opinion filed at No. 77 E.D. Appeal Docket 1992, on November 3, 1994). ORDER 20a FLAHERTY, Justice, dissenting. I dissent based on my dissenting opinion filed in Penn- sylvania State Police, Bureau of Liquor Control Enforce- ment v. Hospitality Investments of Philadelphia, Inc., Pa. (No. 77 E.D. Appeal Docket 1992). CASTILLE, Justice, dissenting. I respectfully dissent based on my dissenting opinion filed in Pennsylvania State Police, Bureau of Liquor Con- trol Enforcement v. Hospitality Investments of Philadel- phia, Inc. (No. 77 E.D. Appeal Docket 1992). 21a IN THE COURT OF COMMON PLEAS OF PHILADELPHIA COUNTY FIRST JUDICIAL DISTRICT OF PENNSYLVANIA CIVIL TRIAL DIVISION No. 9203-3772 PENNSYLVANIA STATE POLICE, BUREAU OF LIQUOR CONTROL ENFORCEMENT Ve HOSPITALITY INVESTMENTS OF PHILADELPHIA, INC. MEMORANDUM AVELLINO, J. The Pennsylvania State Police, Bureau of Liquor Con- trol Enforcement (“PSP”) has appealed from my order dated May 11, 1992, which granted the appeal of Hos- pitality Investments of Philadelphia, Inc. (“Hospitality”). This case was transferred to me from Judge Edward Bradley, because it involved an issue that I had previously decided which is currently on appeal to the Common- wealth Court. That issue is whether Section 498 of the Liquor Code, 47 P. S. § 4-498, which prohibits the adver- tising of liquor prices, violates the Pennsylvania Constitu- tion. In Pennsylvania State Police, Bureau of Liquor Control Enforcement v. Hospitality Investments of Phila., Inc., Commonwealth Court No. 1861 C.D. 1991, I de- cided that the statute was invalid and that ruling is con- trolling here. Because the reasons for my decision appear of record in the aforementioned case, N. T. 26-31, July 23, 1991, 22a and because the record in this case is mercifully brief, I won't bother filing a formal opinion. See Pa. R. App. ¢ 1925 (sparing common pleas from having to file formal opinions ). By THE CourRT: /s/ Bernard J. Avellino Dated: 6-26-92 23a IN THE COURT OF COMMON PLEAS OF PHILADELPHIA COUNTY FIRST JUDICIAL DISTRICT OF PENNSYLVANIA CIVIL TRIAL DIVISION No. 9104-3255 No. 9104-3256 PENNSYLVANIA STATE POLICE, BUREAU OF LIQUOR CONTROL ENFORCEMENT Vv. HOSPITALITY INVESTMENTS OF PHILADELPHIA, INC. and NIGHTTIME CONCEPTS, INC. MEMORANDUM AVELLINO, J. The Pennsylvania State Police, Bureau of Liquor Con- trol Enforcement (“PSP”) has appealed from my orders dated July 23, 1991, which granted the statutory appeals of Hospitality Investments of Philadelphia, Inc. (“Hos- pitality”) and Nighttime Concepts, Inc. (“Nighttime”). The Hospitality and Nighttime cases involved the same issue, namely, whether or not Section 498 of the Liquor Code, 47 P. S. § 4-498 (“Section 498”), which prohibits the advertising of liquor prices, contravenes the Pennsyl- vania Constitution. On July 23, 1991, I entertained argu- ment and, after contemplating the question over the lunch hour, concluded that Section 498 was, in fact, invalid. 24a Because the reasons for my decision appear of record, N. T. 26-31, and because the record in these cases is mercifully brief, I won’t bother filing a formal opinion. See Pa. R. App. P. 1925 (sparing common pleas from having to file formal opinions when the reasons for a rul- ing appear of record). By THE CourT: /s/ Bernard J. Avellino Dated: 6-26-92 25a LCB APPEALS: CITATIONS No. 9104-3255 No. 9104-3256 HOSPITALITY INVESTMENTS and NIGHTTIME CONCEPTS vs. P.S.P. JULY 23, 1991 HONORABLE BERNARD AVELLINO '*! ROOM 904 FIVE PENN CENTER * * * * [26] THE COURT: I thought about cases number ! and 2 and I am ready to make a ruling. I had an op- portunity to review the Supreme Court decision in the Pharmacy Board case. And there are two things about the case that I think are worth mentioning. First and most importantly the Supreme Court decided to base its decision upon the Pennsylvania constitution as opposed to the federal constitution. As the court suggested very plainly I think, Pennsylvania probably provides all of us {*} Petitioner has reproduced the Court Reporter’s original text, without edits. 26a with more rights and more process than the federal con- stitution does. I’m happy about that. I’m happy about that. The second comment I want to make is that by making its decision under the Pennsylvania constitution, there is no higher authority on this subject. This decision is bind- ing upon you. It’s simply beyond the scope of any other court to reverse or modify a federal decision on the same subject. It is simply unthinkable. The federal courts have no authority to interpret the Pennsylvania constitution. Thirdly, intriguingly I mentioned this because Gary posited his argument on First Amendment grounds. At the time the Pharmacy case was decided by the Pennsyl- vania Supreme Court, commercial speech, [27] if I can use that expression, was generally regarded as being be- yond the pale of the First Amendment. It was simply not protected. Commercial speech was not protected. The doctrine of commercial free speech began to evolve, I believe, in the mid 70’s in the United States Supreme Court. Perhaps for that reason the Pennsylvania Supreme Court conducted a routine due process inquiry. It simply examined the regulations prohibiting the pharmacists throughout Pennsylvania from telling the public the price of which they were prepared to sell prescription drugs. Took that regulation and simply compared it to the purposes for which it was ostensibly designed. The regu- latory board had no reasonable relationship to those pur- poses. At least none that was worth m-~tioning. None that could outweigh the benefit to the consumers. The court stressed the consumers. I think the consumers are stressed in the federal cases that deal with commercial free speech. The Bates decision, for example, which authorized the lawyers to advertise their prices and so on all stressed the consumer in this calculus, this complicated constitutional calculus or scrutiny to which a law is subjected. The court gave the [28] example. I happen to be using the 27a A.2d citation because that’s the one that Gary had given me. He gave an example at page 494 in the A.2d. in court of a survey that showed that the prices for the same 30 capsules of a well known antibiotic may range from 79 cents to $7.45. Gave that by way of an illustration. I only mention that to emphasize that the court does care about consumers. It does care about consumers. I think the analogy is complete. I think it’s fair to draw principles from this case ard apply them to the prices of liquor. I think it’s fair because the same controls are in place. The licensee like the pharmacist is heavily reg- ulated. He is looked at in every conceivable direction. It is illegal, for example, for a licensee to serve more of a beverage regardless of its price to a person than a person can fairly consume. By that I mean the licensee may never serve a person who is visibly intoxicated. The same prohibitions apply to a pharmacist in that he or she may not give out drugs without a prescription. So for these reasons I do think the analogy is a very fair analogy. Having said all of this, let me approach if I can just for a moment the First Amendment argument. The argu- ment has been made and rejected at least with [29] two cases that I know of dealing with liquor. The Ohio Su- preme Court upheld a restriction analogous to this one, the one in Pennsylvania: prohibition against off-site pric- ing. And also the Fifth Circuit in a 1983 decision, Duna- gin v. City of Oxford, 518, A.2d [sic] 738, 1983. This is the 5th Circuit. Examined Mississippi statutes against a First Amendment inquiry. It concluded the Mississippi statutes are analogous in the sense that they prohibited— actually they went beyond pricing. There were certain things. They included the prohibition against price ad- vertising as well. The court concluded that those statutes could withstand a First Amendment analysis. This decision, of course, made under the federal con- stitution whereas the decision of the Pharmacy Board case was made under the Pennsylvania constitution. I should 28a have mentioned, perhaps, that the Pharmacy court case is hardly surprising in the sense that it goes off and finds more protection in the Pennsylvania constitution than are found in the federal constitution. I think that’s true almost across the board. I can think of countless illus- trations in matters of privacy. For example, the Pennsylvania constitution [30] pro- vides a great deal more privacy than you and I are en- titled to under the federal decisions. The federal de- cisions are babies as compared to the Pennsylvania de- cisions on that subject. I could go on and on and on, but I think I’ve said enough to explain the reasons for my decision. I’m only the appellate court. I cannot afford the luxury of spending nine months or the rest of my career addressing those decisions. This is the best decision I can make. I made it. Now we will go onto the next case. MR. DIVITO: I may have missed something. You've upheld the ALJ? THE COURT: No. MR. DIVITO: I wasn’t clear. I’m sorry. THE COURT: I’m bound by the Pharmacy decision. I’m going to strike the statute. I just wanted to address the First Amendment argument you made briefly by say- ing that the federal—it’s been made in one state case that I know of in Ohio and in one federal case that I know of, the Fifth Circuit in 1984. Each time it failed. As near as I can tell, the United States Supreme Court has never addressed the subject. It had an opportunity to address it in the Ohio case, but in substance de.zied to entertain the case. It simply denied to entertain the case. [31] It said in substance it was not a substantial question. It’s almost inmaterial. It just doesn’t happen. (Off the record discussion occurs. ) (Proceeding adjourned. ) 29a Mailing Date: March 11, 1992 PENNSYLVANIA LIQUOR CONTROL BOARD HARRISBURG, PA 17124 Case No: 91-0519 PENNSYLVANIA STATE POLICE BUREAU OF LIQUOR CONTROL ENFORCEMENT vs. HOSPITALITY INVESTMENTS OF PHILADELPHIA, INC. 1701 Locust STREET PHILADELPHIA, PA 19103 License No: R-AP-6205 OPINION Hospitality Investments of Philadelphia, Inc. (Licen- see), appealed from the Opinion and Order of Adminis- trative Law Judge Tania E. Wright (ALJ), wherein the ALJ sustained the Citation and imposed a fine of Four Hundred Dollars ($400.00). Count | charged the Licensee with violation of Sections 471 and 493(24) of the Liquor Code [47 P.S. §§ 4-471 and 4-493(24)] and Section 5 of the Pennsylvania Hu- man Relations Act [43 P.S. § 955] in that on November 14, 1990, the Licensee by its servants, agents or em- ployes, offered and/or gave inducements to certain per- sons by allowing them privileges not permitted to the general public. Finding a violation, the ALJ imposed a fine of Two Hundred Dollars ($200.00). 30a Count 2 charged the Licensee with violation of Section 498 of the Liquor Code [47 P.S. § 4-498] in that on November 14, 1990, the Licensee by its servants, agents or employes, advertised or permitted the advertising in any manner whatsoever, the price at which alcoholic beverages would be sold. Finding a violation, the ALJ imposed a fine of Two Hundred Dollars ($200.00). Pursuant to Section 471 of the Liquor Code [47 P.S. § 4-471], the Appeal in this case must be based solely on the record before the ALJ. Where the decision of the ALJ is based upon substantial evidence, the Board must affirm the decision. The Commonwealth Court defined “substantial evi- dence” to be such relevant evidence as a reasonable person might accept as adequate to support a conclusion, requir- ing something more than a scintilla creating mere sus- picion of the fact to be established. McCauley vs. Penn- sylvania Board of Probation and Parole, 98 Pa. Cmwith. 28, 510 A.2d 877 (1986); Chapman vs. Pennsylvania Board of Probation and Parole, 86 Pa. Cmwlth. 49, 484 A.2d 413 (1984). The facts in this case were stipulated as follows: On November 21, 1990, a Pennsylvania State Police, Bureau of Liquor Control Enforcement (Bureau) officer reviewed an advertisement which appeared in the Philadelphia Daily News on November 14, 1990. The advertisement read: “Attention Hy Lit fans. Every Wednesday for the first time in Center City, Legendary Radio Personality Hy Lit will be appearing at Poio Bay tonight. No cover and 50 cent drinks for the ladies, 10 to 12 midnight.” The name, location and phone number of the Licensee’s prem- ises were noted in the advertisement. The Appeal of the Licensee lacks any specificity, at- tacking generally the ALJ’s decision. The record, as stip- ulated, is clear that the Licensee committed sex discrim- ination by offering inducements (no cover charge and discounting the price of drinks), wthout offering these 3la same privileges to men in violation of the Pennsylvania Human Relations Act. Finally, it is beyond question that liability attaches to Count 2 for directly advertising the price at which drinks would be sold. The ALJ’s decision was supported by substantial evi- dence, and is correct as a matter of law. ORDER The decision of the ALJ is affirmed. The Appeal of the Licensee is dismissed. The Licensee is ordered to pay a fine of Four Hundred Dollars ($400.00) within twenty (20) days of the mail- ing date of this Order. Failure to do so will result in a suspension or revocation of this license with Bond For- feiture. Licensee must adhere to all other conditions set forth in the ALJ’s Order. /s/ John Allen Reilly Board Secretary 32a Mailing Date: April 5, 1991 PENNSYLVANIA LIQUOR CONTROL BOARD HARRISBURG, PA 17124 Case No.: 90-0160 PENNSYLVANIA STATE POLICE BUREAU OF LIQUOR CONTROL ENFORCEMENT vs NIGHTTIME CONCEPTS, INC. 600 SPRING GARDEN STREET PHILADELPHIA, PA 19123 License No.: R-2039 OPINION Nighttime Concepts, Inc. (Licensee), appealed the Opinion and Order of Adm nistrative Law Judge Tanya E. Wright (ALJ), wherein the ALJ sustained the Cita- tion, and imposed a Fine of Two Hundred Dollars ($200.00). Licensee was charged with violation of Section 498 of the Liquor Code [47 P.S. § 4-498] in that on October 19, 1989, Licensee, by its servants, agents, or employes, ad- vertised or permitted advertising in any manner whatso- ever the price at which alcoholic beverages would be sold. Pursuant to Section 471 of the Liquor Code [47 P. S. § 4-471], the Appeal in this case must be based solely on the record before the ALJ. Where the decision of the 33a ALJ is based upon substantial evidence, the Board must affirm the decision. The Commonwealth Court defined “substantial evi- dence” to be such relevant evidence as a reasonable per- son might accept as adequate to support a conclusion, requiring something more than a scintilla creating mere suspicion of the fact to be established. McCauley vs. Pennsylvania Board of Probation and Parole, 98 Pa. Cmwith. 28, 510 A.2d 877 (1986); Chapman vs. Penn- sylvania Board of Probation and Parole, 86 Pa. Cmwith. 49, 484 A.2d 413 (1984). In its Appeal, Licensee generally argues that the deci- sion of the ALJ was contrary to the weight and sufficiency of the evidence, and contrary to law. At the hearing, Licensee’s counsel argued that Section 498 constituted an abridgment of the Licensee’s First Amendment rights of commercial free speech. This Board does not have the power and authority to constitutionally interpret its own statutes and regulations. Notwithstanding, Section 468(d) specifically provides that the license is a privilege and not a property right, the latter conferring expanded constitutional rights. More- over, the ALJ was correct in holding that promoting con- sumption through off-premise advertising is inconsistent with the purpose of the Liquor Coe in restraining the sale of liquor. Pennsylvania Liquor Control Board vs. Borough Food Systems, Inc., 508 A.2d 1308 (1986). ORDER The decision of the ALJ is affirmed. The Appeal of the Licensee is dismissed. The Licensee has paid the fine of Two Hundred Dol- lars ($200.00). Licensee must adhere to all other conditions set forth in the ALJ’s Order. /s/ John Allen Reilly Board Secretary 34a Mailing Date: April 8, 1991 PENNSYLVANIA LIQUOR CONTROL BOARD HARRISBURG, PA 17124 Case No.: 89-2488 PENNSYLVANIA STATE POLICE BUREAU OF LIQUOR CONTROL ENFORCEMENT vs. HOSPITALITY INVESTMENTS OF PHILADELPHIA, INC. 1701 Locust Street Philadelphia, PA 19103 License No.: R-6205 OPINION Hospitality Investments of Philadelphia, Inc. (Licensee), - appealed the Opinion and Order of Administrative Law Judge Tanya E. Wright (ALJ), wherein the ALJ sus- tained the Citation and imposed a Fine of Two Hundred and Fifty Dollars ($250.00). Licensee was charged with violation of Section 498 of the Liquor Code [47 P.S. § 4-498] in that on October 26, 1989, Licensee, by its servants, agents or employees, ad- vertised or permitted advertising in any manner whatso- ever the price at which alcoholic beverages would be sold. Pursuant to Section 471 of the Liquor Code [47 P. S. § 4-471], the Appeal in this case must be based solely 35a on the record before the ALJ. Where the decision of the ALJ is based upon substantial evidence, the Board must affirm the decision. The Commonwealth Court defined “substantial evi- dence” to be such relevant evidence as a reasonable per- son might accept as adequate to support a conclusion, requiring something more than a scintilla creating mere suspicion of the fact to be established. McCauley vs. Pennsylvania Board of Probation and Parole, 98 Pa. Cmwith. 28, 501 A.2d 877 (1986); Chapman vs. Penn- sylvania Board of Probation and Parole, 86 Pa. Cmwith. 49, 484 A.2d 413 (1984). In its Appeal, Licensee generally argues that the decision of the ALJ was contrary to the weight and sufficiency of the evidence, and contrary to law. At the hearing, Licensee’s counsel argued that Section 498 constituted an abridgement of the Licensee’s First Amendment rights of commercial free speech. This Board does not have the power and authority to constitutionally interpret its own statutes and regulations. Notwithstanding, Section 468(d) specifically provides that the license is a privilege and not a property right, the latter conferring expanded constitutional rights. More- over, the ALJ was correct in holding that promoting con- sumption through off-premise advertising is inconsistent with the purpose of the Liquor Code in restraining the sale of liquor. Pennsylvania Liquor Control Board vs. Borough Food Systems, Inc., 508 A.2d 1308 (1986). ORDER The decision of the ALJ is affirmed. The Appeal of the Licensee is dismissed. The Licensee is ordered to pay a fine of Two Hundred Fifty Dollars ($250.00) within Twenty (20) days of the mailing date of this Order. Failure to do so will result 36a in a suspension or revocation of this license with Bond Forfeiture. Licensee must adhere to all other conditions set forth in the ALJ’s Order. /s/ John Allen Reilly Board Secretary 374 Mailing Date: July 18, 1991. COMMONWEALTH OF PENNSYLVANIA OFFICE OF ADMINISTRATIVE LAW JUDGE FOR PENNSYLVANIA LIQUOR CONTROL BOARD Citation No. 91-0519 PENNSYLVANIA STATE POLICE, BUREAU OF LIQUOR CONTROL ENFORCEMENT Vv. HOSPITALITY INVESTMENTS OF PHILADELPHIA, INC. 1701 Locust Street Philadelphia, PA 19103 Philadelphia County License No. R-AP-6205 BEFORE: WRIGHT, J. ADJUDICATION BACKGROUND: This proceeding arises out of a citation that was issued on March 12, 1991, by the Bureau of Liquor Control En- forcement of the Pennsylvania State Police (hereinafter “Bureau of Enforcement”) against Hospitality Investments of Philadelphia, Inc., License Number R-AP-6205 (here- inafter “Hospitality Investments” ). An Administrative hearing was held on Tuesday, May 7, 1991, pursuant to requisite and appropriate hearing 38a notice. The parties stipulated to the service and receipt of the notice letter and the citation, and to the summary of the facts. The citation contains two counts. The first count charges “Hospitality Investments” with violation of Sections 471 and 493(24) of the Liquor Code, 47 P.S. Sections 4-471 and 4-493(24) and Section 5 of the Pennsylvania Human Relations Act, 43 PS. Section 955, in that on November 14, 1990, “Hospitality Investments,” by its servants, agents or employes, offered and/or gave inducements to certain persons by allowing them privileges not permitted the general public. The second count charges “Hospitality Investments” with violation of Section 498 of the Liquor Codc, 47 P.S. Section 4-498, in that on November 14, 1990, “Hos- pitality Investments,” by its servants, agents or employes, advertised or permitted the advertising in any manner whatsoever the price at which alcoholic beverages would be sold. COUNT NOS. 1 AND 2 FINDINGS OF FACT: 1. On November 21, 1990, Enforcement Officer Sam-. uel Yurich reviewed an advertisement which ap- peared in the Philadelphia Daily News on Novem- ber 14, 1990. The advertisement read, “Attention Hy Lit fans. Every Wednesday for the first time in Center City, Legendary Radio Personality Hy Lit will be appearing at Polo Bay tonight. No cover and 50¢ drinks for the ladies, 10 to 12 midnight.” (N.T. 4 and Exhibit B-3). 2. The name, location and phone number for the li- censed premises was noted in the ad (N.T. 4 and Exhibit B-3). 39a CONCLUSIONS OF LAW: Count No. 1—On November 14, 1990, “Hospitality Investments,” by its servants, agents or employes, offered inducements to certain persons by allowing them privileges not permitted the general public, in violation of Sections 471 and 493(24) of the Liquor Code, 47 P.S. Section 4-471 and 4-493(24) and Section 5 of the Pennsylvania Human Relations Act, 43 P.S. Section 955. Count No. 2—On November 14, 1990, “Hospitality Investments,” by its servants, agents or employes, adver- tised or permitted the advertising of the price at which alcoholic beverages would be sold, in violation of Section 498 of the Liquor Code, 47 P.S. Section 4-498. PRIOR RECORD: According to information received from the PSP, Bureau of Liquor Control Enforcement, as provided by the PLCB, Bureau of Licensing, of which we hereby take administrative notice, “Hospitality Investments” was first licensed on March 15, 1988, and has had no record of prior offenses. DISCUSSION: This licénse was first issued on March 15, 1988. Under _ the circumstances of this case, the “Bureau of Enforce- ment” recommended a monetary fine. That recommenda- tion shall be accepted by the Court. PENALTY: Section 471 of the Liquor Code, 47 P. S. Section 4-471, prescribes a penalty of suspension or revocation of license or imposition of a fine of not less than $50.00 nor more than $1,000.00, or both, for violations of the type found in this case. Therefore, penalties shall be assessed as follows: 40a Count No. 1—$200.00. Count No. 2—$200.00. Accordingly, we issue the following ORDER THEREFORE, it is hereby ordered that Licensee, Hos- pitality Investments of Philadelphia, Inc., License Number R-AP-6205, pay a fine of Four Hundred Dollars ($400.00) within twenty (20) days of the mailing date of this Order. In the event the aforementioned fine is not paid within twenty (20) days from the mailing date of this Order, Licensee’s license shall be suspended or revoked and the bond forfeited. The fine must be paid by Treasurer’s Check, Cashier’s Check or Certified Check. Personal Checks are not ac- ceptable. Make check payable to the Commonwealth of Pennsylvania and mail to: PLCB—Office of Administrative Law Judge 2973 Jefferson Street, Suite A Harrisburg, PA 17110-2119 Dated this 9th day of July, 1991. -/s/ Tania E. Wright TANIA E. Wricur, J. 4la Mailing Date: Jan. 28, 1991 COMMONWEALTH OF PENNSYLVANIA OFFICE OF ADMINISTRATIVE LAW JUDGE FOR PENNSYLVANIA LIQUOR CONTROL BOARD Citation No. 90-0160 PENNSYLVANIA STATE POLICE. BUREAU OF LIQUOR CONTROL ENFORCEMENT Vv. NIGHTTIME CONCEPTS, INC. 600 Spring Garden Street Philadelphia, PA 19123 Philadelphia County License No. R-2039 BEFORE: WRIGHT, J. ADJUDICATION BACKGROUND: This proceeding arises out of a citation that was issued on January 31, 1990, by the Bureau of Liquor Control Enforcement of the Pennsylvania State Police (herein- after “Bureau of Enforcement”) against Nighttime Con- cepts, Inc., License Number R-2039 (hereinafter “Night- time”). 42a The citation charges “Nighttime” with violation of Sec- tion 498 of the Liquor Code, 47 P.S. Section 4-498, in that on October 19, 1989, “Nighttime,” by its servants, agents or employes, advertised or permitted the adver- tising in any manner whatsoever the price at which alco- holic beverages would be sold. FINDINGS OF FACT: 1. On October 19, 1989, an ad appeared for the licensed premises in a local newspaper. The ad read, in part, “ALL BEVERAGES $1” (N.T. 4 and Exhibit B-3). CONCLUSIONS OF LAW: On October 19, 1989, “Nighttime,” by its servants, agents or employes, advertised or permitted the adver- tising of the price at which alcoholic beverages would be sold, in violaton of Section 498 of the Liquor Code, 47 P.S. Section 4-498. PRIOR RECORD: According to information received from the PSP, Bur- eau of Liquor Control Enforcement, as provided by the PLCB, Bureau of Licensing, of which we hereby take administrative notice, “Nighttime” was first licensed on September 9, 1988, and has had no record of prior offenses. DISCUSSION: Counsel for licensee argues that Section 498 of the Liquor Code constitutes an abridgement of the licensee’s First Amendment rights of commercial free speech, both under the United States Constitution and the Pennsylvania Constitution. Counsel argues that the licensee has a con- stitutionally protected right to advertise prices, and that Section 498 is an abridgement of that right. He further argues that it has no rational basis or connection to the health and welfare of the general public, such that it 1 | . sii 43a would exempt the state statute from constitutional scrutiny. Section 498 of the Liquor Code prohibits advertising in any manner whatsoever the price of any malt, bever- age, cordial wine or distilled liquor offered for sale in Commonwealth. This Section does not apply to price, signs or tags attached to or placed on merchandise for sale within the premises. Further, Section 498(c) spe- cifically exerapts licensees from the provision of this sec- tion where advertisement is done in trade journals which are duly recognized and authorized by the Board. In a decision by a panel of Administrative Law Judges, State Street Beer and Soda Discounters, Inc., Citation Nos. 88-1972 and 88-2538 (as consolidated), Judge Thau indicates that the restriction of price advertising was born out of a belief that price advertising promoted consump- tion. See The Legislative Journal—Senate, June 17, 1987 p.p. 759-761. Promoting consumption of alcohol is in- consistent with the purpose of the Liquor Code, which is to regulate and restrain the sale of liquor. See P.L.C.B. v. Burrell Food Systems, Inc., 508 A.2d 1308 (1986). The twenty-first Amendment to the Constitution conferred on the state’s extensive authority relative to public health, welfare and morals. The legislature deemed it appropriate to exercise this power by prohibiting the advertisement of prices of alcoholic beverages. This Court does not presume to have the authority to find the statute unconstitutional: The language of the statutory provision is clear and unequivocable as it is written, and the licensee is in ciear violation. Therefore, a penalty shall be imposed. PENALTY: Section 471 of the Liquor Code, 47 P.S. Section 4-471, prescribed a penalty of suspension or revocation of license or imposition of a fine of not less than $50.00 nor more than $1,000.00, or both, for violations of the type found in this case 44a According! - we issue the following ORDER: THEREFORE, it is hereby ordered that Licensee, Nighttime Concepts, Inc., License Number R-2039, pay a fine of Two Hundred Dollars ($200.00) within twenty (20) days of the mailing date of this Order. In the event the aforementioned fine is not paid within twenty (20) days from the mailing date of this Order, Licensee’s li- cense shall be suspended or revoked and the bond forfeited. The fine must be paid by Treasurer’s Check, Cashier’s Check or Certified Check. Personal Checks are not ac- ceptable. Make check payable to the Commonwealth of Pennsylvania and mail to: PLCB—Office of Administrative Law Judge 2973 Jefferson Street, Suite A Harrisburg, PA 17110-2119 Dated this 16th day of January, 1991. /s/ Tania E. Wright TANIA E, WRIGHT, J. 45a Mailing Date: Jan. 10, 1991 COMMONWEALTH OF PENNSYLVANIA OFFICE OF ADMINISTRATIVE LAW JUDGE FOR PENNSYLVANIA LIQUOR CONTROL BOARD Citation No. 89-2488 PENNSYLVANIA STATE POLICE, BUREAU OF LIQUOR CONTROL ENFORCEMENT v. HOSPITALITY INVESTMENTS OF PHILADELPHIA, INC. 1701 Locust Street Philadelphia, PA 19103-6118 Philadelphia County License No. R-6205 BEFORE: WRIGHT, J. ADJUDICATION BACKGROUND: This proceeding arises out of a citation that was issued on December 19, 1989, by the Bureau of Liquor Control Enforcement of the Pennsylvania State Police (hereinafter “Bureau of Enforcement”) against Hospitality Invest- ments of Philadelphia, Inc., License Number R-6205 (hereinafter “Hospitality Investments” ). An Administrative hearing was held on Thursday, Oc- tober 4, 1990, pursuant to requisite and appropriate hear- ing notice. The parties stipulated to the service and re- 46a ceipt of the notice letter and the citation, and to the summary of the facts. However, licensee’s counsel argued that the facts did not rise to a violation of the law based on constitutional defects in the statute. The citation charges “Hospitality Investments” with vio- lation of Section 498 of the Liquor Code, 47 P.S. Section 4-498, in that on October 26, 1989, “Hospitality Invest- ments,” by its servants, agents or employes, advertised or permitted the advertising in any manner whatsoever the price at which alcoholic beverages would be sold. FINDINGS OF FACT: 1. Officer Casiano noted that on October 26, 1989, an advertisement appeared in the “Daily Pennsyl- vania” for the licensed premises which read in part “$1.00 for regular drinks, 9:00 until midnight” (N.T. 4 and Exhibit B-3). CONCLUSIONS OF LAW: On October 26, 1989, “Hospitality Investments,” by its servants, agents or employes, advertised or permitted the advertising of the price at which alcoholic beverages would be sold, in violation of Section 498 of the Liquor Code, 47 P.S. Section 4-498. PRIOR RECORD: According to information received from the PSP, Bu- reau of Liquor Control Enforcement, as provided by the PLCB, Bureau of Licensing, of which we hereby take ad- ministrative notice, “Hospitality Investments” was first licensed on March 15, 1988, and has had no record of prior offenses. DISCUSSION: Counsel! for the licensee indicated that the licensee’s free speech was abridged and that Section 498 of the Liquor Code is unconstitutional and should not be ap Os 47a plied to the licensee. This Court does not have jurisdic- tion to find a statute unconstitutional; however, the words of the statute are clear and indisputable. No licensee shall cause or permit the advertisement in any manner whatsoever the price of any malt beverage, cordial wine or distilled liquor offer for sale in the Commonwealth. The sole exception is outlined in Section 4-498(c) wherein it provides that this Section shall not apply to any trade journal which is duly recognized and authorized to be exempt from the provision by the Board. Under the circumstances of this case, there is a clear violation of the Code and a monetary penalty shall be imposed. PENALTY: Section 471 of the Liquor Code, 47 P.S. Section 4-471, prescribes a penalty of suspension or revocation of license or imposition of a fine of not less than $50.00 nor more than $1,000.00, or both, for violations of the type found in this case. Accordingly, we issue the following ORDER: THEREFORE, it is hereby ordered that Licensee, Hos- pitality Investments of Philadelphia, Inc., License Number R-6205, pay a fine of Two Hundred Fifty Dollars ($250.00) within twenty (20) days of the mailing date of this Order. In the event the aforementioned fine is not paid within twenty (20) days from the mailing date of this Order, Licensee’s license shall be suspended or revoked and the bond forfeited. The fine must be paid by Treasurer’s Check, Cashier’s Check or Certified Check. Personal Checks are not ac- ceptable. Make check payable to the Commonwealth of Pennsylvania and mail to: 48a PLCB—Office of Administrative Law Judge 2973 Jefferson Street, Suite A Harrisburg, PA 17110-2119 Dated this 2nd day of January, 1991. /s/ Tania E. Wright TANIA E. WriGHr, J. 49a PENNSYLVANIA STATUTE Pennsylvania statutes annotated Title 47, § 4-498: Unlawful advertising (a) No manufacturer, wholesaler, retailer or shipper whether from outside or inside this Commonwealth and no licensee under this act shall cause or permit the ad- vertising in any manner whatsoever of the price of any malt beverage, cordial, wine or distilled liquor offered for sale in this Commonwealth: Provided, however, That the provisions of this section shall not apply to price signs or tags attached to or placed on merchandise for sale within the licensed premises in accordance with rules and regula- tions of the board. (b) Any person who violates any of the provisions of this section commits a misdemeanor and shall, upon con- viction, be sentenced to pay a fine of fifty dollars ($50) for the first offense and for each additional offense there- after shall be sentenced to pay a fine of one hundred dollars ($100). Publication or broadcast by any person in violation of the provisions of this section shall also be subject to injunctive proceedings in a court of competent jurisdiction on a complaint brought by a retail licensee or an association of retail licensees. (c) The provisions of this section shall not apply to any trade journal which is duly recognized and authorized to be exempt from the provisions of this section by the board. 50a REPORT TO THE PENNSYLVANIA LIQUOR CONTROL BOARD ON BEER PRICE ADVERTISING COMMONWEALTH OF PENNSYLVANIA OFFICE OF ATTORNEY GENERAL ANTITRUST SECTION July 31, 1985 OOO OEE S5la Introduction The question before the Pennsylvania Liquor Control Board (LCB) is: Should Pennsylvania consumers have access to beer price information through advertising? In this Report, the term “advertising”, unless the context in- dicates otherwise, refers to advertising presently banned by LCB regulations, such as media advertising. The Office of Attorney General, Antitrust Section, sup- ports the proposed amendment by the LCB of 40 Pa. Code § 13.41(a) because price advertising generates greater competition and benefits consumers. More par- ticularly, beer price advertising should be allowed be- cause: I. Beer Price Advertising Has Substantial Economic Advantages. II. Disadvantages, If Any, Of Beer Price Advertising Are Minimal. A. Excessive Consumption Of Beer Will Not Result. B. Beer Industry Participants Are Not Harmed By Beer Price Advertising. (Expressions of con- cern that beer price advertising will adversely affect beer distributors or other beer industry participants assumes that the business survival of industry participants is a relevant LCB is- sue, which it appears not to be.) Ill. Concerns Expressed About The Effects Of Beer Price Advertising Can Be Addressed By Alterna- tives Which Are Less Restrictive Than Banning Beer Price Advertising Altogether. Each of these is separately discussed following this intro- ductory section. In order to present reliable economic analysis to the LCB, the Office of Attorney General, Antitrust Section, 52a retained Dr. Jon Nelson of the Economics Department of Pennsylvania State University, to search for economic stud- ies and literature relevant to the question before the LCB, to locate relevant data, and to organize and make, if possible, economic and statistical analyses of that data. Dr. Nelson’s qualifications are set forth in Exhibit “A.” Dr. Nelson was requested to examine three particular relationships: 1. The relationship between price advertising and beer consumption. 2. The relationship between price advertising and price itself. 3. The effect of beer price advertising on the business survival of industry participants. Dr. Nelson’s analysis was in part subject to the availability of data with which to make statistical studies. Accord- ingly, Dr. Nelson’s conclusions varied in the extent to which he could definitively come to conclusions on these questions. Dr. Nelson’s study results are incorporated in this Report. I. Beer Price Advertising Has Substantial Economic Advantages Advertising, including price advertising, provides con- sumers with the information necessary to make informed purchasing decisions. The United States Supreme Court recognizes this when addressing the significance of com- mercial speech (advertising) : Even though the [advertiser’s] interest is largely eco- nomic, the Court has protected [commercial] speech in certain contexts. The [consumer’s] interest is sub- stantial... . [C]Jommercial speech serves to inform the public of the availability, nature, and prices of products and services, and thus performs an indis- pensable role in the allocation of resources in a free enterprise system. In short, such speech serves in- 53a dividual and societal interests in assuring informed and reliable decisionmaking. Bates the State Bar of Arizona, 433 U.S. 350, 364 (1977) (citations omitted) (emphasis added). The fact that advertising is important to competition is evident in federal and state court decisions. For example, self-imposed restrictions among competitors not to adver- tise prices violates the antitrust laws. See United States v. Gasoline Retailers Association, Inc., 285 F.2d 688 (7th Cir. 1961). This illustration is applicable, because the law of Pennsylavnia is that basic federal antitrust law principles reflect the law which governs trade practices in Pennsylvania. Collins v. Main Line Board of Realtors, 452 Pa. 342, 304 A.2d 493 (1973). Actions of the LCB itself show that there is nothing inherently wrong with price advertising of alcoholic bever- ages. For example, taverns may advertise six pack prices. Beer distributors are permitted to post prices in their stores. The Commonwealth itself advertises liquor prices. See Exhibit “B” (copy of ad appearing in Pittsburgh Post Gazette, May 16, 1985, p. 28). Further, beer prices are conveyed by word of mouth, another method of distribut- ing information. Past economic studies for products and services rang- ing from eye care to gasoline support the proposition that price advertising will result in lower prices to consumers. See, Bond, Kwoka, Phelan and Whitten, Staff Report on Effects of Restrictions on Advertising and Commercial Practice in the Professions: The Case of Optometry, Fed- eral Trade Commission, 1980, Washington, D.C.; Cady, Advertising Restrictions and Retail Prices. 16 J. OF ADVERTISING 27 (1976); Steiner, Does Advertising Lower Consumer Prices, 37 J. OF MARKETING 19 (1976); Benham, The Effect of Advertising on the Price of Eyeglass, 15 J. OF LAW & ECON. 337 (1972); and Maurizi, The Effect of Laws Against Price Advertising: The Case of Retail Gasoline, WESTERN ECON. J. 321 54a (September 1972). While Dr. Nelson’s own preliminary economic analysis found no direct relationship between advertising and beer prices, his analysis could only be based on the limited data available, which were the prices of six packs. See Exhibit “C” (table listing average six pack beer prices on state-by-state basis). The limited preliminary analysis results were unexpected by Dr. Nel- son, because of the substantial amount of evidence (see above) showing that, as to other products, price advertis- ing reduces prices. (Dr. Nelson’s computer-assisted eco- nomic studies on all questions he investigated are available to the LCB for its examination). There are other economic costs to the public which come into play if there is no price advertising. For ex- ample, without price advertising, comparison shopping costs will be substantially increased for consumers inter- ested in price information. If consumers want to know current prices, they must shop the stores in their neighbor- hood. Further, because prices are constantly changing, consumers must revisit stores on a regular basis if they want current price information. The advantage to con- sumers of “specials” is lost unless the consumer happens to visit a store featuring a “special” at that time. These comparison shopping costs could be substantially reduced if price advertising is allowed. Price advertising will pro- vide consumers who are interested in the price of beer with a readily accessible source of that information. See R. Boynton, B. Blake, and J. Uhl, Retail Price Reporting Effects in Local Fruit Markets, 65 AM. J. OF AGRI- CULTURE ECON. 20 (1983). Dr. Nelson concludes that, considering all factors, consumers clearly gain when price information is readily available. 55a II. Disadvantages, If Any, Of Beer Price Advertising Are Minimal. A. Excessive Consumption Of Beer Will Not Result. Price advertising does not increase beer consumption, according to Dr. Nelson’s statistical analysis. Dr. Nelson was able to arrive at a firm conclusion on this point be- cause of the availability of data. States allowing price advertising had no higher rates of consumption than states prohibiting it. New Hampshire, which prohibits price ad- vertising of beer, had the highest per capita consumption of beer in the nation. See Exhibits “D” and “E” (tables listing state per capita consumption by rank and adult per capita consumption provided by 1984 Brewer Almanac, United States Brewers Association, Washington, D.C., p. 72). Demand for beer is influenced by several factors: price, income, tourism, legal drinking age and the price of soft drinks. The demand for beer is inelastic meaning a decrease in price will not bring about a corresponding increase in consumption. This is a result of Dr. Nelson’s study. The price inelasticity for beer has been proven by other studies. See Hogarty, Elzinga, The Demand For Beer, 54 REV. OF ECON. & STATISTICS 195 (May 1972); and Ornstein, Control of Alcohol Consumption Through Price Increases, 41 J. OF STUDIES OF ALCO- HOL 807 (Sept. 1980). \ B. Beer Industry Participants Are Not Harmed By Beer Price Advertising. Price advertising increases competition which has the effect of constantly redistributing market shares among competitors. This economic process represents a healthy marketplace. See Y. Brozen, Concentration, Mergers & Public Policy (\st Ed. 1982); and M. Abion, Advertis- ing’s Hidden Effects: Manufacturers Advertising and Re- tail Pricing (1st Ed. 1983). In many other retail markets —drug stores, shoes, clothing, photography—retailers have faced increased competition from chain or discount 56a stores entering their markets. The evidence is that the markets have not been monopolized by the new entrants. Stores which do not discount have remained successful in all those markets. Some distributors assert that price advertising will cause business failures. It is not at all clear that the LCB has any responsibility to assure the profitability of beer dis- tributorships. It may not have any such responsibility and the business survival of industry participants may not be an appropriate LCB issue. Be that as it may, as an economic matter, distributors cannot be ensured a prosperous future. Some distributors should probably not be in business. There are many factors which may separately or in combination cause business failure, none of which have to do with price advertising. Some distributors may be economically in- efficient; location may be important; the nature of local markets may change so that local demand drops; the rate of beer consumption, on a nationwide basis, is de- creasing. Price advertising is only one competitive factor which alone may not be significant. Distributors are already facing increased competition from discounters. Word of mouth advertising and com- parison shopping presently disseminate price information. Since there appears to be nothing inherently wrong with beer price advertising and there are means by which con- sumers can obtain price information, consumers should not be blocked from securing the same information by a more efficient means, price advertising. Price advertising efficiencics substantially benefit consumers by reducing shopping costs—such as gasoline, time, higher prices paid because of consumer decisions not to travel or spend time —associated with purchasing a product. Since the beer distribution market is generally price competitive, price advertising may not result in a substantial increase in competition from the distributors’ point of view, but at 57a the same time it may be a substantial benefit to consumers by giving them the opportunity to reduce shopping costs. In some cases, price advertising may be a business tool which distributors can use to correct misconceptions about their pricing structure. The widespread belief that there is a significant difference between prices charged by dis- count distributors and other distributors is not necessarily accurate. See Exhibit “F” (chart comparisons of price of several distributors). (Information believed available to the LCB will show that the distributors in this Exhibit who are “discount” distributors do not necessarily have sig- nificantly lower pric es. ) As competition develops, if some beer distributors do fail as the result of price advertising, the market will not become less competitive and prices to the public will not increase. Entry into the beer distribution market as a competitor is easy in economic terms. A warehouse, un- skilled labor and, perhaps, trucks, are necessary to enter the market. No specialized resources are required. While licensing is a barrier to entry, if distributors fail, their licenses are then available on the market. Dr. Nelson’s opinion is that even if some distributors fail, the market will thus not become less competitive and prices will not increase. III. Concerns Expressed About The Effects Of Beer Price Advertising Can Be Addressed By Alternatives Which Are Less Restrictive Than Banning Beer Price Advertising Altogether. The main concerns about the adverse effects of beer price advertising seem to be alcohol abuse, resulting from increased consumption, and distributor failures. Portions of the preceding discussion respond to these concerns and were intended to provide information showing that these concerns are either not well founded or are minimal. However, assuming these concerns have merit, there are less restrictive alternatives to respond to these concerns than the total prohibition of price advertising. 58a As to alcohol abuse, tighter enforcement of existing safeguards, such as under age drinking laws and regula- tions and increasing the awareness of the consequences of alcohol abuse, should be considered. It is widely believed that a factor contributing to the decrease in alcohol con- sumption has been the impact of new drunk driving laws and the heightened public reaction to drunk driving. As to distributor failures, there are well known legal tools available both to private parties and public agencies to deal with predatory pricing practices. Reductions in price which substantially lessen competition, that is, pred- atory pricing, are unlawful. See Anheuser Busch, Inc. v. FTC, 289 F.2d 835 (7th Cir. 1961). There is a differ- ence between low prices, which reflect competition and benefit consumers, and predatory prices, that is, selling below cost, which eventually destroys competition. It is important to understand this difference because predatory pricing, feared by some distributors, is unlawful under section 2 of the federal Sherman Act, 15 U.S.C. § 2. If predatory pricing is present, direct action can be taken against it under the Sherman Act. This is a less restric- tive and more direct means of dealing with predatory pricing—which can occur with or without price adver- tising—than by banning price advertising altogether. Conclusion Since beer price advertising has substantial economic advantages and benefits consumers, since the disadvan- tages, if any, of beer price advertising are minimal, and since concerns about the effects of beer price advertising can be dealt with by alternatives which are less restrictive than banning beer price advertising altogether, the LCB’s proposal to amend 40 Pa. Code § 13.41(a) should be adopted. 59a EXHIBIT A VITAE May 1985 NAME: Jon P. Nelson BIRTH DATE: August 9, 1941 SOCIAL SECURITY NUMBER: 388-40-7663 MARITAL STATUS: Married (Naomi), Two children OFFICE ADDRESS: Department of Economics The Pennsylvania State Univ. University Park, PA 16802 (814) 865-8871 HOME ADDRESS: 708 W. Foster Avenue State College, PA 16801 (814) 237-0157 ACADEMIC DEGREES: B.S.—Economics—University of Wisconsin—1964 Ph.D.—Economics—University of Wisconsin—1970 DISSERTATION: “An Interregional Recursive Programming Model of the U.S. Iron and Steel Industry, 1947-1967.” HONORS: Senior graduation honors, 1964 Ford Foundation Fellowship, 1967-68 American Iron and Steel Institute Fellowship, 1968-69 National Academy of Sciences Committees, 1976-77, 1979-80 National Science Foundation Panel, 1978 Liberal Arts Research Recognition Award, 1980 60a EMPLOYMENT: Professor, The Pennsylvania State University, 1978- Graduate Officer, Pennsylvania State Univ., 1985- Associate Professor, Pennsylvania State Univ., 1973-78 Assistant Professor, Pennsylvania State Univ., 1969-73 Research Fellow, University of Wisconsin, 1967-69 OTHER EXPERIENCE: Consultant, Pennsylvania Department of Justice (1980-85); U.S. Department of Labor (1974-76); Department of Transportation (1973-74); National Science Foundation (1972-83); various private or- ganizations. Research Assistant, State of Wisconsin (1964-67). COURSES TAUGHT: Industrial organization, antitrust and regulation, microeconomics, environmental economics. RESEARCH AREAS: Market structure and performance, technological change, regulation, environmental economics, invest- ment demand, pricing behavior, cost-benefit analysis. RESEARCH GRANTS: NSF and Pennsylvania Science and Engineering Foundation (1970-72); U.S. Department of Labor (1974-75); U.S. Department of Transportation (1973, 1974-75, 1977-78); U.S. Bureau of Mines (1975-77). Author or co-author of ten final research reports. SELECTED PUBLICATIONS: “An Interregional Recursive Programs Model of Production, Investment, and Technological Change,” Journal of Regional Science, April 1971, pp. 33-47. 6la “Regional Concentration in the Steel Industry,” Northeast Regional Science Review, Spring 1972, pp. 218-225. “An Interregional Recursive Programming Model of the Iron and Steel Industry,” in G. Judge and T. Takayama (eds.), Studies in Economic Planning Over Space and Time (North-Holland, 1973), chap- ter 20 (pp. 368-393). “A Class of Dynamic Models for Describing and Pro- jecting Industrial Development” (with R. Day), Journal of Econometrics, June 1973, pp. 155-190. “Forecasting Aggregate Supply of Coal Miners” (with E. Cohn and G. Neumann), Socio-Economic Planning Sciences, October 1974, pp. 293-299. “Energy Conservation Policies of the Federal Energy Office” (with T. Ferrar), Science, February 1975, pp. 644-646. “Forecasting Aggregate Demand for Coal Miners” (with E. Cohn and G. Neumann), Applied Eco- nomics, June 1975, pp. 81-92. “The Demand for Space Heating Energy,” Review of Economics and Statistics, November 1975, pp. 508-512. “Climate and Energy Demand: Fossil Fuels,” in T. A. Ferrar (ed.), The Urban Costs of Climate Modifi- cation (Wiley Inter-Science, 1976), Chapter 5 (pp. 123-137). “Accessibility and the Value of Time in Commut- ing,” Southern Economic Journal, January, 1977, pp. 1321-1329. Summarized in W. Nicholson, /nter- mediate Microeconomics and Its Applications, 3rd edn. (1983), p. 450. “Cost-Benefit Analysis: Some Illustrations,” in Na- tional Academy of Sciences, Noise Abatement: Pol- 62a icy Alternatives for Transportation (1977), Chapter 9 (pp. 183-206). Economic Analysis of Transportation Noise Abate- ment (Ballinger Publishing Company, 1978), 265 PP: “Residential Choice, Hedonic Prices, and the De- mand for Urban Air Quality,” Journal of Urban Economics, July 1978, pp. 357-369. “Behavioral, Suboptimizing Models of Industrial Pro- duction, Investment and Technological Change” (with R. Day, et al.), in R. H. Day and A. Cigno (eds.), Modelling Economic Change: The Recursive Programming Approach (North-Holland, 1978), Chapter 4 (pp. 55-118). “Airport Noise, Location Rent, and the Market for Residential Amenities,” Journal of Environmental Economics and Management, December 1979, pp. 320-331. “Airports and Property Values: A Survey of Recent Evidence,” Journal of Transport Economics and Policy, January 1980, pp. 37-52. “A Comparison of Alternative Econometric Models of Iron and Steel Investment Behavior” (with G. Neumann and R. Crandall), Review of Economics and Statistics, February 1980, pp. 122-127. “Tax Policy and Steel Industry Investment Behavior: An Econometric Analysis’ (with G. Neumann), Quarterly Review of Economics and Business, Au- tumn 1980, pp. 19-34. “Measuring Benefits of Environmental Improve- ments: Aircraft Noise and Hedonic Prices,” in V. K. Smith (ed.), Advances in Applied Microeconomics (JAI Press, 1981), Chapter 4 (pp. 51-75). “Three Mile Island and Residential Property Values: Empirical Analysis and Policy Implications,” Land 63a Economics, August 1981, pp. 363-372. Summarized in W. Nicholson, Intermediate Microeconomics and Its Applications, 3rd edn. (1983), p. 451. “Highway Noise and Property Values: A Survey of Recent Evidence,” Journal of Transport Economics and Policy, May 1982, pp. 117-138. “Safety Regulation and Firm Size: Effects of the Coal Mine Health and Safety Act of 1969” (with G. Neumann), Journal of Law and Economics, October 1982, pp. 183-199. Summarized in American Enter- prise Institute, Regulation (Jan. 1983), pp. 46-48. “Real Income, Grade Inflation, Simultaneity, and Teaching Evalutions” (with K. Lynch), Journal of Economic Education, Winter 1984, pp. 21-37. “Housing Values, Census Estimates, Disequilibrium | and the Environmental Cost of Airport Noise: A ) Case Study of Atlanta” (with P. O’Byrne and J. Seneca), Journal of Environmental Economics and Management, forthcoming. WORK IN PROGRESS: “Multiplant Operation and Unionization.” “Entry, Exit and Sunk Costs.” RECENT PROGRAM APPEARANCES: Appeared on the program of the AISI Steel Econom- ics Seminar (1973, 1979) Eastern Economics Asso- ciation (1974, 1977, 1982), Econometric Society (1970, 1975, 1984), Southern Economic Associa- tion (1978, 1980, 1985), Western Economic Asso- ciation (1974, 1979), and at various other profes- sional conferences and meetings. REFEREE: Regular basis for Journal of Environmental Eco- nomics and Management, Land Economics, and Re- view of Economics and Statistics. 64a Occasional referee for American Economic Review, American Real Estate and Urban Economics Asso- ciation Journal, Business Economics, Cato Review, Eastern Economic Journal, Economic Inquiry, En- gineering Economist, Journal of the Air Pollution Control Association, Journal of Economic Behavior and Organization, Policy Analysis, and Southern Economic Journal. Manuscript reviewer for American Enterprise Insti- tute, Harvard University Press, JAI Press, Penn State University Press, Resources for the Future, Transpor- tation Research Board, and various commercial book publishers. Proposal and report reviewer for the Na- tional Science Foundation. GRADUATE STUDENT RESEARCH DIRECTED: Ph.D. dissertations (6); M.A. essays (13). PROFESSIONAL AFFILIATIONS: American Economic Association, Association of En- vironmental and Resource Economists, Industrial Organization Society. ADDITIONAL PUBLICATIONS: “A Note on the Economics of Metallurgical Coke Production,” Management Science, December 1971, pp. 237-239. “The Economic Costs of Airport Noise: Theory and Measurement” (with I. Feller), in Interagency Sym- posium on University Research in Transportation Noise Proceedings, Stanford University, March 1973, pp. 727-743. “Residential and Commercial Demand for Space Heating Energy,” in Proceedings of the Pennsylvania Conference of Economists, Bloomsburg State Col- lege, April 1975, pp. 1-20. 65a “Energy Conservation Policies of the Federal Energy Office: Reply” (with T. Ferrar), Science, 19 Sep- tember 1975, p. 1015. “Econometric Analysis of the Effects of Climate on Energy Demand,” in Economic and Social Measures of Biologic and Climate Change, Institute for De- fense Analyses, September 1975, Ch. 3 (65 pp.). Review of The Economics of Professional Team Sports (by H. G. Demmert), Antitrust Bulletin, Win- ter 1975, pp. 939-942. “Economic Considerations of Highway Noise Impact on Land,” in Final Report of the Highway Noise Research Workshop, Florida Atlantic University, August 1977, pp. 60-63. “Accessibility and the Value of Time in Commuting: Reply,” Southern Economic Journal, July 1978, pp. 298-300. Review of Steel Production: Processes, Products, and Residuals (by C. S. Russell and W. J. Vaughan), The Engineering Economist, Spring 1979, pp. 191- 192. “Tax Policy, Capital ‘Shortages,’ and Iron and Steel Investment Behavior” (with G. Neumann), in Steel Industry Economics Seminar Proceedings, University of Washington, June 1979, pp. 43-63. “Estimating Demand Functions for Product Charac- teristics: Comment,” Journal of Consumer Research, September 1982, pp. 219-20. Review of Clean Coal/Dirty Air (by B. A. Acker- man and W. T. Hassle), Southern Economic Journal, October 1982, pp. 587-89. Review of Energy, Economics and the Environment (by H. E. Daly and A. F. Umana), Natural Re- sources Journal, October 1982, pp. 1186-88. 66a “Comment on ‘Can Government Regulate Safety? The Coal Mine Example’” (with G. Neumann), American Political Science Review, December 1982, pp. 876-78. “The Monetary Evaluation of Noise Nuisance: Com- ment,” in T. O’Riordan and R. K. Turner (eds.), Progress in Resource Management and Environ- mental Planning (John Wiley, 1983), pp. 201-09. 67a EXHIBIT B NNOD OUOALMVH “ON NIS NSH S961 > AG O3rOdrw sO0td C3 ANSIHM NYIOYNYD O30N5 19 . ANS, S3YQLS WONON avis YINYTATASNNG Ly AWO INL 4435 NAVOHS S33!bd EUR.) WINS JAPA HRT — EE - 4 < ** - . : ‘ , A . . & id . - ide > *. _o ‘ ££. ~ Fe : a ~- “et - - > - - . . ° : b s - 4 7 , 4 ; ° Seal ¢ 4 -, . “+ £ . f - ‘ ‘ 3 . : S ; ¥ “~-* - . . F re - : _* a 7 R i < 7 P a2 : “SB > aa ae rts ‘ ,' > ed ‘_ =e. o,.= ” A _ Sasi rok ~~ oo”, & sano \g pos +19 'FIS SVM NGLIT SET’. _Se~e” ee. BEakt roe os er: a. 86 wien % awe? * ae ‘. — api ¥ eor*t otp* * % % , 7 - = o- t. pod t - . ".J.. ¢ - 4 7 _ * ——— . , * —_eas « ‘ 3 “Gee F : * We ad f , “e -> 2.4 om Re ° Se - = > ‘, -” aie: . a Co » I ‘ - P ve “ < a *5 g %§ ‘ , ae oe ©. .24;) 6 -"e ware i. s Pee et ~ ‘a? 3 wfe “ r & are : i" ee ao * 6 whee + “te . , ney tr oon, Sh OE" 8 hag -£yu0 siep ¢ SSE] 2IRS : ‘sec B¥8f AQy ‘4783.ued nod puy *ayse} yOOWS © $ SUIRRoIQ 328 ues OK WONT yO] patamo] u3aq oMe tn Seu uete v2aT2A Pre uo doud aul ; ' > 2” °s fe m8 + 2 4 7*e ‘ o - . > ° +", « * Reape” 8 .* Beek Sos tae ce wh ~ot =°9 \ > j ' 5 i a a = = P aa a ‘“e — 7 ! ~ : ’ ‘ a é a4 =F, : Es 4 A a 7" . ’ : ar .. , i « bed Fr, - « 4 - 5 ) ° 69a EXHIBIT C AVERAGE PRICE ON STATE BY STATE BASIS (1) (a) (2) (b) (3) (ce) ACCRA BLS Real Price State Price Cost of Living (1/2) 1. Alabama 2.9500 .90000 3.2778 2. Alaska 0 1.2600 0 3. Arizona 2.5000 .98000 2.5510 4. Arkansas 2.8300 .89000 3.1798 5. Cali. ornia 2.4700 .98000 2.5204 6. Colorado 2.5900 .98000 2.6429 7. Connecticut 3.0500 1.1100 2.7477 8. Delaware 2.5700 1.0400 2.4712 9. Dist. of Columbia 2.8400 1.0800 2.6296 10. Florida 2.4900 .91000 2.7363 11. ‘Georgia* 3.3100 .90000 3.6778 12. Hawaii 0 1.2600 0 13. Idaho 2.7900 .96000 2.9063 14. Illinois 2.4900 .98000 2.5408 15. Indiana 2.2100 .97000 2.2783 16. Iowa 2.4600 .93000 2.6452 17. Kansas 2.6600 .94000 2.8298 18. Kentucky 2.6900 .92000 2.9239 19. Louisiana 2.6000 .90000 2.8889 20. Maine 3.0400 1.0200 2.9804 21. Maryland 2.7800 .98000 2.8367 22. Massachusetts 2.7600 1.1300 2.4425 23. Michigan 2.8000 .98000 2.8571 24. Minnesota* 2.5200 .98000 2.5714 25. Mississippi* 2.7900 .86000 3.2442 26. Missouri 2.5700 .94000 2.7340 27. Montana 2.7000 .96000 2.8125 28. Nebraska 2.6100 .91000 2.8681 29. Nevada 2.6000 1.0500 2.4762 80. New Hampshire* 2.5000 1.0200 2.4510 81. New Jersey 2.6100 1.1500 2.2696 32. New Mexico 2.4700 .97000 2.5464 33. New York 3.0400 1.1500 2.6435 34. North Carolina 2.5300 .89000 2.8427 35. North Dakota 2.5400 .91000 2.7912 36. Ohio* 2.6000 .99000 2.6263 37. Oklahoma* 2.5600 .90000 2.8444 38. Oregon 2.9900 1.0000 2.9900 70a (1) (a) (2) (b) (3) (c) ACCRA BLS Real Price State Price Cost of Living (1/2) 39. Pennsylvania(d)* 2.3300 1.0400 2.2404 40. Rhode Island* 2.9000 1.1500 2.5217 41. South Carolina 2.8700 .86000 3.3372 42. South Dakota 2.7400 .91000 3.0110 43. Tennessee 2.9900 .86000 3.4767 44. Texas 2.6200 .88000 2.9773 45. Utah 2.2400 .96000 2.4375 46. Vermont 3.0500 1.0200 2.9902 47. Virginia* 2.7500 1.0000 2.7500 48. Washington 2.7800 1.0000 2.7800 49. West Virginia 2.9300 .90000 3.2556 50. Wisconsin 2.3300 1.0100 2.3069 51. Wyoming 3.4400 .96000 3.5833 * States which prohibit price advertising. (a) Prices are from the American Chamber of Commerce Re- search Association (ACCRA) price lists for the second and third quarters of 1982. Average prices for each state were calculated by weighing prices recorded in cities in each state. ACCRA collects prices for six packs of Budweiser and Schlitz 12 oz. cans less any container deposits. (b) Cost of living index derived from Bureau of Labor Sta- tistics indexes for cities and rural areas within each state. (c) The ACCRA price as modified by the cost of living index for that state. (d) Pennsylvania’s six pack market is sale from taverns and other eating places, different from most other states. Pennsyl- vania’s ACCRA prices were accordingly adjusted by Dr. Nelson to permit a comparison. Fla EXHIBIT D STATE PER CAPITA CONSUMPTION BY RANK 1982-1983 (in gallons) 1983 Per Capita 1982 Per Capita State Rank Consumption Rank Consumption New Hampshire 1P 38.7 3 33.8 Nevada 2 36.0 1 35.5 Wisconsin 3 34.0 2 34.1 Hawaii 4 32.6 5 31.2 Montana 5 30.9 4 31.3 Texas 6 29.7 6 31.0 Arizona 7 29.3 8 29.2 New Mexico 8 29.1 11 28.0 Alaska 9 29.0 9 28.6 District of Columbia 10* 28.7 12 27.7 Florida 10 * 28.7 10 28.4 Wyoming 12* 27.6 7 29.6 Delaware 12 * 27.6 13 27.4 Vermont 14* 27.0 17 26.1 Rhode Island 14*P 27.0 25 24.5 Colorado 16 26.5 14 27.3 Nebraska 17 26.1 16 26.2 North Dakota 18 25.8 15 26.5 Pennsylvania 19P 25.5 19 25.9 Illinois 20 * 25.0 21 * 24.8 Massachusetts 20 * 25.0 18 26.0 Maryland 22 24.9 21 * 24.8 : California 23 24.7 23 24.7 Hy Iowa 24 24.6 26 * 24.4 Missouri 25 * 24.2 26 * 24.4 Louisiana 25 * 24.2 20 25.1 Minnesota 27 * 24.1 28 * 23.9 Ohio 28 P 23.9 24 24.6 Idaho 29 23.8 28 * 23.9 Michigan 30 23.6 30 23.6 Maine 31 23.4 33 23.2 Oregon 32 23.1 $1 * 23.3 Washington 33 22.7 $1 * 23.3 Virginia 84P 22.5 36 22.2 South Dakota 35 * 22.3 37 22.1 New York 35 * 22.3 34 22.6 Indiana 35 * 22.3 $5 22.5 72a 1983 Per Capita 1982 Per Capita State Rank Consumption Rank Consumption New Jersey 38 21.9 38 22.0 South Carolina 39 21.8 40 21.3 Kansas 40 21.0 39 21.4 Georgia 41P 20.8 42 20.2 Connecticut 42 20.2 46 * 19.3 West Virginia 43 * 20.1 46 * 19.3 Mississippi 43 *P 20.1 43 * 19.8 North Carolina 45 19.6 48 19.0 Kentucky 46 * 19.5 45 19.7 Tennessee 46 * 19.5 43 * 19.8 Oklahoma 48 P 18.5 41 20.4 Arkansas 49 17.9 49 17.8 Alabama 50 17.7 50 17.3 Utah ° 51 13.5 51 15.4 * Tied. P=States which prohibit beer price advertising. 73a EXHIBIT E ADULT PER CAPITA CONSUMPTION 1982-83 State 1983 1982 1. Alabama 24.6 24.2 2. Alaska 40.3 42.8 8. Arizona 40.8 42.2 4. Arkansas 24.9 25.0 5. California 33.4 83.5 6. Colorado 36.2 37.8 7. Connecticut 26.6 25.5 8. Delaware 37.1 37.0 | 9. Dist. of Columbia 36.7 35.0 10. Florida 37.2 37.2 11. Georgia* 29.0 28.5 | 12. Hawaii 45.0 43.4 , 13. Idaho 35.1 35.7 | 14. Tilinois 34.3 34.2 15. Indiana 30.8 81.4 16. Iowa 33.8 33.6 17. Kansas 28.7 29.2 18. Kentucky 27.1 27.8 19. Louisiana 34.9 36.4 20. Maine 82.0 31.9 21. Maryland 33.4 33.5 22. Massachusetts 82.9 34.2 23. Michigan 32.6 32.9 24. Minnesota* 33.2 33.0 25. Mississippi* 29.0 29.1 26. Missouri 82.9 33.3 27. Montana 43.3 44.2 28. Nebraska 36.0 36.4 | 29. Nevada 48.5 47.8 30. New Hampshire* 52.4 45.9 ) 31. New Jersey 29.2 29.5 82. New Mexico 42.0 40.9 | 88. New York 29.8 30.2 84. North Carolina 26.7 25.9 35. North Dakota 36.2 37.3 36. Ohio* 82.8 33.9 74a State 1983 1982 37. Oklahoma* 25.6 28.6 38. Oregon 31.5 32.0 39. Pennsylvania (d) * 33.9 34.7 40. Rhode Island* 35.4 32.3 41. South Carolina 80.5 80.2 42. South Dakota 31.5 31.2 43. Tennessee 26.6 27.3 44, Texas 42.2 44.2 45. Utah 21.6 24.8 46. Vermont 36.9 36.2 47. Virginia* 30.3 30.0 48. Washington 30.9 32.0 49. West Virginia 27.7 26.9 50. Wisconsin 46.7 46.9 51. Wyoming 40.0 43.5 cosh Gob 68°L 02°L coh suvo *ZO GI neiqieysieW Lot 60°ST eo'eT 0S'FT 08'ST 89[}}0q "20 ZT peayesooy SIT r6'01 66°01 gc'0T g6"0T SuBd “ZO ZI ear] J2q(tW 09°8 e¢°8 66°L 68°8 0r'6 SUB “ZO ZI ypraryog ¥9°6 ¥8'6 68°6 crs 0r'6 SUBD °ZO ZI - yooy Surjoy Ka Lo‘01$ 6r'0r$ e9'01$ ec'0r$ e9°01$ Sued “ZO ZI Jesiempng {Seog UMOPMEN SIH SSejzteq = SIT SSPATB = UMOWIAPT =—»-«- WMOYATADT 13104 eSBIsAsgd UMOJMON P[INO SJoMoIg $,u00q qUyL-uueg $ Ja3ny XBL, SATVS %g Opnypouy seolig [[V _@S6T ‘Ez ANE ope suostredul0H AyUNOD syong 1aK0T NOSINVdWOO WOldd JI LIGInxa 76a PRICE COMPARISON Harrisburg—Scranton—Williamsport—Pittsburgh Comparisons made July 25 and 26, 1985 All Prices Include 6% Sales Tax George’s Beer Craig’s Beverage Barn Distributors Distributors Store Williamsport Pittsburgh Pittsburgh Prices: Budweiser (12 oz. cans) $ 9.79 $10.50 $ 9.75 Rolling Rock (12 oz. cans) $ 9.29 $ 9.25 $ 8.75 Schmidts (12 oz. cans) $ 7.69 $ 8.35 $ 8.75 Miller Lite (12 oz. cans) $ 9.99 $10.25 $ 9.75 Moosehead (12 oz. bottles) $15.19 N/A $15.95 Meisterbrau (12 oz. cans) $ 7.59 $ 7.90 $ 7.50 cé'L $ V/N 86L $ 60°L $ GaL $ (suwd “20 ZT) NB1IG194S19 VT 00° LTS V/N LL LTS LLST$ Gz'9T$ (suBo "20 ZT) pesyesooW 20° TTS 966 $ Te‘ 11$ eo'6 $ Os TT$ (suBd “Z0 ZT) OWT A211 A V/N g3'8 $ CLs $ eeL $ oss $ (suBo "ZO ZT) SPprUy IS V/N 016 $ $2 OT$ eo'8 $ gz’ 0T$ (SUBd "ZO ZT) S yooy Sur[joy V/N ~ 86 $ 00° TTS eo'6 $ OO TTS (suBd “20 ZT) aestempng : 88011 prodswmrelyiIM Uu0JUBIIG Binqsomeyoo Binqsiiiey Binqsiisie Hy 78103$ ‘02 eBB19A0g §,U0PS ULI S1OPNGIABSIG sia, UNOISIG 129g -O-O8eD qrodsure"1 MA Jeg poomA|[oH O2TS 9984S | XBL SeTBS %g Opnpuy] seit [[V y8ings}}ig—Wodsurety| M—uoj UBS —Sangst11eH] NOSIUVdWOO AOId 78a COMMONWEALTH OF PENNSYLVANIA Order Adopting Regulations Pennsylvania Liquor Control Board (Name of subordinate unit, if any, adopting order) Date of Order: September 4, 1985 Before (Members: Daniel W. Pennick, Chairman): Ralph Barnett, Member—Mario Mele, Member (Insert names of agency members participating in action or order. ) Caption of Agency Proceeding (if any): Agency Docket No. or File No. (if any): Brief Descriptive Title of Order: Beer Price Advertising Insert here (and continue on additional sheets la, 1b, Ic, etc., as required) a brief narrative discussion of the back- ground leading up to the agency decision to adopt the subject order: As the result of a court challenge to the regulation in question, the Liquor Control Board’s Chief Counsel reviewed the regulation and determined that its constitutionality (both under Pennsylvania and United States constitutions) was questionable, and recommended rescission of the regulation. The Independent Regulatory Review Commission, as well as the Office of the Attorney General, concurred, and also found that it would be in the j Z . 4 / . Tad el pete < y 3 2 : 79a best interest of the citizens of the Commonwealth to per- mit the advertising of malt and/or brewed beverage prices. It was noted by all of the foregoing that there are no similar prohibitions against the advertising of other alco- holic beverage prices. The Board conducted a lengthy public hearing and after a review of all the relevant data and testimony, voted unanimously to rescind the regulation. It was further de- termined that it would be in the best interest of the citi- zens to make the rescission effective as of the date of the vote, and issued a press release announcing this decision. The release received wide general distribution. (2) Public comments were received by the Liquor Con- trol Board and a public hearing was held by the Board on July 31, 1985. Thirteen letters were received by the Ex- ecutive Director and/or Members of the Liquor Control Board relative to beer price advertising during the 30-day comment period. Ten expressed opposition to the pro- posal to rescind the regulations and three expressed sup- port of the Board’s proposal. In addition, an extensive report written by a Pennsylvania State University Econo- mist was received. This report supported the proposed regulatory amendment. Ten persons appeared and testified at the public hear- ing. Arguments presented on both sides of the issue can be broadly categorized as follows: 1) Economic considera- tions, 3) legal considerations, and 3) social considerations. Related to economic considerations, an economist retained by the Office of the Attorney General, Anti-Trust Divi- sion, examined the effect of price advertising on beer prices, the effect of price advertising on consumption, and the effect of beer price advertising on business survival of in- dustry participants. Based on the available data, the econ- 80a omist concluded that price advertising does not increase beer consumption and beer industry participants are not harmed by beer price advertising. It was pointed out that beer price advertising offers substantial economic advan- tages. Those opposed to the regulatory proposal raised the issue of the impact of increased competition from “dis- counters”. The Board recognizes that some economic in- fluence has been and probably will continue to be felt as some distributors are offering discount prices to consum- ers. Price advertising may cause additional consumers to become aware that lower prices are available, possibly creating more economic hardship for those distributors who do not participate in the discount pricing measures. While the Board is concerned for the economic survival of industry participants, it also recognizes that a license to sell malt or brewed beverages does not necessarily guaran- tee success in the industry. There are many factors which impact upon the success and/or competitiveness of busi- ness including location, demand, product lines carried and demographics of the market-place. The Board was not convinced that price advertising is the sole determinant of the business success rate. Testimony was offered to indicate that price advertising was responsible for the closings of several distributors over the past year. Since price adver- tising was permitted only for a short time, it must be assumed that the distributors that have closed, did so for reasons other than price advertising per se. Regardless of the reason for the success or failure of any business ven- ture, the Liquor Control Board’s statutory authority and regulatory responsibility does not encompass the guarantee of licensee profitability. Regarding legal considerations, the Liquor Controi Board felt that the testimony of the Chief of the Anti-Trust Sec- tion of the Attorney General’s Office and the advice of it’s own Chief Counsel was valid and outweighed the legal 8la objectives raised by those seeking to keep the regulation intact. With regard to social/other considerations, the Board heard concern expressed over the possibility of additional consumption and abuse of alcoholic beverages should beer price advertising be permitted. In evaluating this issue, the Board recognized the types of advertisements currently permitted under the Liquor Code and its regulations. It is felt that since advertisements which glamorized the use of malt beverages are already permitted, the addition of price advertising would not itself stimulate additional consump- tion or abuse. If the purpose of price prohibition is to protect the consumer, no case was made to indicate that it does. On the contrary, it appears that the consumer would be best served by being permitted to be informed of the prices of the beverages. Further, the Board notes that no other form of alco- holic beverage price advertising is prohibited in the Com- monwealth. Thus, it appears to be inconsistent with gov- erning law as well as PLCB policy to support a prohibi- tion against beer price advertising by manufacturers and distributors. Insert here (1) a brief narrative description of the notice of proposed ruiemaking action taken by the agency, in- cluding a reference to the volume, page and date of publi- cation of the issue or issues of the Pennsylvania Bulletin in which the proposed administrative regulation or change therein was noticed for public comment, (2) a brief dis- cussion of the comments and suggestions, if any, received from the public in response thereto, and (3) a brief sum- mary or any modifications in the originally proposed regu- lations embodied in the final text as adopted by the subject order: (1) Pursuant to Section 5(a) of the Regulatory Review Act of 1982 (P.L. 633, No. 181), on June 17, 1985 and the regulation was submitted to the Independent Regula- tory Review Commission and the standing House and Sen- 82a ate Committees for review and comment. The Notice of Proposed Rulemaking was published in 15 PA Bulletin, page 2397, on July 29, 1985. Within the review period, the regulation was disapproved by the House Liquor Con- trol Committee and the Senate Law and Justice Commit- tee. The Independent Regulatory Review Commission met on July 3, 1985 and approved the regulation. The various oversight requirements of the Regulatory Review Act have been fulfilled. (2) Please see attached. (3) The regulation is rescinded as indicated in Annex A. The (regulations) hereby (rescinded) are (adopted) pur- suant to (Insert here a statement of the statutory or other authority for the adoption by the agency of the subject order, including a paralle! citation to Purdon’s Statutes): Liquor Code, Act 21, of April 12, 1951, P.L. 90, Section 207(t); 47 P.S. §2-207(1). (The “authorizing §stat- ute(s)”). The Pennsylvania Liquor Control Board finds: (1) That public notice of intention to (rescind) the ad- ministrative regulations (rescinded) by this order has been duly given pursuant to Sections 201 and 202 of the Com- monwealth Documents Law (45 P.S. §§ 1201 and 1202) and the regulations thereunder, 1 Pa. Code §§ 7.1 and 7.2. (2) That the (rescission) of the (regulations) of the Pennsylvania Liquor Control Board in the manner pro- vided in this order is necessary and appropriate for the administration (and enforcement) of the authorizing stat- ute (s). The Pennsylvania Liquor Control Board acting pursuant to the authorizing statue (s), orders: (A) The (regulations) of the Pennsylvania Liquor Control Board, 40 Pa. Code Chapter 13 are amended by (deleting) and [sic] Sections 13.41(a) and adopted to read as set forth in Annex A to this order. 83a (b) The Chairman of the Pennsylvania Liquor Control Board shall submit this order and Annex A hereto to the Department of Justice for approval as to legality as re- quired by law. (C) The Chairman of the Pennsylvania Liquor Control Board shall duly certify this order and Annex A hereto and deposit the same with the Legislative Reference Bu- reau as required by law. (D) (If the order is to take effect at a time subsequent to publication in the Pennsylvania Bulletin.) This order shall take effect immediately. By the Pennsylvania Liquor Control Board /s/ [Illegible] Signature of Certifying Officer Daniel W. Pennick Name of Certifying Officer Chairman Title of Certifying Officer [Affix agency seal, if possible] 84a FACE SHEET FOR FILING DOCUMENTS WITH THE LEGISLATIVE REFERENCE BUREAU (Pursuant to Commonwealth Documents Law) Copy below is hereby approved as to form and legality. Attorney General By: Deputy Attorney General Date of Approval L) Check if applicable Copy not approved. Objections attached. Copy below is hereby certified to be a true and correct copy of a document issued, prescribed or promulgated by: Pennsylvania Liquor Control Board Document/Fiscal Note No. 54-16 Date of Adoption: By: /s/ [Illegible] Title: Chairman (Executive Officer, Chairman or Secretary) Copy below is hereby approved as to form and legality. Executive or Independent Agencies. By: /s/ [Illegible] 10-24-85 Date of Approval (Chief Counsel) (Strike inapplicable title) C) Check if applicable. No Attorney General approval or objection within 30 days after submission. 85a ANNEX A SECTION 13.41. MALT OR BREWED BEVER- AGES.— [(a) Manufacturers, importing distributors and distribu- tors of malt or brewed beverages may advertise the brand names of such beverages in, on, or by billboards, news- papers, magazines, radio, and television, provided such advertisements make no direct or indirect reference to the price at which such manufacturer, importing distributor or distributor sells the beverages, or imply an inducement by the use of words or expressions, such as “special,” “save,” “big value,” get acquainted offer,” etc.] [(b)] Manufacturers and importing distributors of malt or brewed beverages, may include the names and ad- dresses of all distributors and importing distributors to whom they sell in the locality covered by such advertising. No discrimination may be shown to one distributor or importing distributor over another, and where more than one distributor or importing distributor purchases the products from the manufacturer or importing distributor in the area covered by such advertisement, the names and addresses of all who purchase the product directly from the advertiser shall be displayed or mentioned in equal prominence. Where this is not done, none may be dis- played or mentioned. 86a LEGISLATIVE JOURNAL—SENATE Senator WILLIAMS. Mr. President, I made a mis- take. I think I was heard in voting in the negative. That actually was the affirmative. The PRESIDENT. The Clerk will report and record Senator Williams in the affirmative. Senator JONES. Mr. President, I, too, would like my vote changed from “no” to “aye.” The PRESIDENT. The Clerk will record Senator Jones in the affirmative. The yeas and nays were required by Senator RHOADES and were as follows, viz: YEAS—21 Afflerbach Jones Armstrong Madigan Bell Mellow Bodack Pecora Brightbill Rhoades Corman Stewart Greenleaf Stout Greenwood Tilghman Hankins Wenger Hess Williams Hopper NAYS—28 Andrezeski Lincoln Fisher Loeper Fumo Lynch Helfrick Moore Holl Musto Jubelirer O’Pake Kelley Peterson Lemmond Regoli Lewis Reibman a ee 87a Rocks Shumaker Romanelli Stapleton Ross Stauffer Salvatore Wilt Shaffer Zemprelli Less than a majority of the Senators having voted “aye,” the question was determined in) the negative. And the question recurring, Will the Senate agree to the bill on third consideration, as amended? MADIGAN-WILT-ROMANELLI AMENDMENT Senator MADIGAN, on behalf of himself and Senator WILT, by unanimous consent, offered the following amendment: Amend Bill, page 198, by inserting between lines 27 and 28: Section 86. The act is amended by adding a section to read: Section 498. Unlawful Advertising —(a) No manu- facturer, wholesaler, retailer or shipper whether from out- side or inside this Commonwealth and no licensee under this act shall cause or permit the advertising in any man- ner whatsover of the price of any malt beverage, cordial, wine or distilled liquor offered for sale in this Common- wealth: Provided, however, That the provisions of this section shall not apply to price signs or tags attached to or placed on merchandise for sale within the licensed premises in accordance with rules and regulations of the board. (b) Any person who violates any of the provisions of this section commits a misdemeanor and shall, upon con- viction, be sentenced to pay a fine of fifty dollars ($50) for the first offense and for each additional offense there- after shall be sentenced to pay a fine of one hundred dol- 88a lars ($100). Publication or broadcast by any person in violation of the provisions of this section shall also be subject to injunctive proceedings in a court of competent jurisdiction on a complaint brought by a retail licensee or an association of retail licensees. (c) The provisions of this section shall not apply to any trade journal which is duly recognized and authorized to be exempt from the provisions of this section by the board. On the question, Will the Senate agree to the amendment? Senator MADIGAN. Mr. President, on behalf of my- self and the gentleman from Mercer, Senator Wilt, I am offering an amendment which would provide adding Sec- tion 498, which would prohibit the advertising of price. The amendment states, “. . . No manufacturer, whole- saler, retailer or shipper whether from outside or inside this Commonwealth and no licensee under this act shall cause or permit the advertising in any manner whatsoever of the price of any malt beverage, cordial, wine or dis- tilled liquor offered for sale in this Commonwealth. . . .” I know the issue is debatable. Many people in the Bible Belt of this state who support liquor control feel that such advertising would have an impact on the consumption of alcohol and, therefore, I am pleased to urge support for this amendment. LEGISLATIVE LEAVE CANCELLED The PRESIDENT. Prior to the roll call, the Chair recognizes the presence on the floor of Senator Salvatore and his temporary Capitol leave will be cancelled. And the question recurring, Will the Senate agree to the amendment? es Soak iar Sh siete se hie inel tee ROe es 4 ; 89a Senator ROMANELLI. Mr. President, I would ask the maker of the amendment to add my name to the amend- ment. I would also add support for it. I would ask my colleagues to support it. I have an identical amendment and, therefore, I will not have to offer it if this one passes. The PRESIDENT. Would the gentleman from Brad- ford agree to list Senator Romanelli as a cosponsor of the amendment? Senator MADIGAN. Mr. President, I am pleased to add the gentleman from Allegheny as a cosponsor to my amendment and sincerely appreciate his support. The PRESIDENT. The Clerk will make notation of the sponsorship. Senator ROMANELLI. Mr. President, I, too, feel that if we are ever going to put these Beer Worlds of Pennsy]l- vania out of existence, the ones that are wrecking our small distributors, this is the way to do it; curb their advertising. Senator MELLOW. Mr. President, I find myself in the very uncomfortable position of having to take a position against a Member of my own caucus, he being the gentle- man from Allegheny, Senator Romanelli, who has just actively stated his support for the amendment. I think, Mr. President, this is probably one of the most important parts of House Bill No. 1000 that we can deal with today because it basically has a direct dealing with the people’s right to know. It has basically little to do with putting anybody out of business or establishing business interest for any particular individual or corporation. What this amendment does, Mr. President, is it perpetuates the system as we have it today with regard to advertising. We add nothing new in the Liquor Code by continuation of advertising or by opposing the amendment that has been offered by the gentleman from Bradford, Senator Madigan. 90a Mr. President, basically, I do not think there is any reason why we should deny the consuming public-—the consumer who is not sitting in this room today—the op- portunity to be able to pick up a newspaper and be able to read what serves their best interest with regard to the purchasing of spirits, liquor or beer because of advertis- ing. I think when you talk about consumer interest, when you talk about credit card purchasing and you talk about advertising, you basically hit the two strong points of this particular proposal. I would very strongly oppose the amendment that has been offered by the gentleman from Bradford, Senator Madigan, with support of the gentle- man from Mercer, Senator Wilt, and the gentleman from Allegheny, Senator Romanelli, because by and large what this does is it returns us to the point we were at some twenty months ago before regulations were adopted that made advertising possible in the best interest of the con- sumer. I do not view this particular amendment, Mr. President, or the prohibition of advertising, as a way of putting any particular group out of business, because I would be totally opposed to putting anybody out of busi- ness who is runing a legitimate operation in Pennsylvan [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385017_1239%3A2. Public record. Not legal advice.