44 Liquormart, Inc. V. Rhode Island - Background

Background

In 1956, the Rhode Island Legislature passed two regulations. The first prevented both in and out-of-state manufacturers, wholesalers, and shippers from “advertising in any manner whatsoever” the price of any alcoholic beverage offered for sale in Rhode Island. The second prevented Rhode Island news media from “mak reference to the price of any alcoholic beverages” under any circumstances.

In 1985, a liquormart brought a suit against the liquor control commissioner, arguing, among other things, that the first regulation, which prevented the liquormart from advertising its prices, was unconstitutional. The Rhode Island Supreme Court, however, held that the regulation did not violate the First Amendment, the Commerce Clause, the Equal Protection Clause, or the Sherman Anti-Trust Act.

In the same year, the Rhode Island Liquor Stores Association filed a suit that attempted to enjoin a local Rhode Island newspaper, the The Call, from advertising prices of liquor outside of the state. In that case, the Rhode Island Supreme Court held that the second regulation was constitutional, and enjoined the newspaper from advertising out-of-state liquor prices.

In 44 Liquormart, the company 44 Liquormart Inc. owned liquor stores in Rhode Island. The other petitioner, Peoples Super Liquor Stores, Inc., operated several liquor stores in Massachusetts, which Rhode Islanders used. The complaint original began, because 44 Liquormart attempted to run an advertisement, which the Supreme Court of the United States described as:

The advertisement did not state the price of any alcoholic beverages. Indeed, it noted that “State law prohibits advertising liquor prices.” The ad did, however, state the low prices at which peanuts, potato chips, and Schweppes mixers were being offered, identify various brands of packaged liquor, and include the word “WOW” in large letters next to pictures of vodka and rum bottles —Justice Stevens, 44 Liquormart, 517 U.S. at 492

Because the advertisement implied that 44 Liquormart had low prices, the Rhode Island Liquor Control Administrator fined the store $400.00. After being assessed the fine, the petitioners brought the suit, alleging that the regulation was unconstitutional. The District Court found the regulation banning advertisements unconstitutional, because the state did not prove that the law directly advanced its interest in reducing alcohol consumption, and because the law's reach was unnecessarily extensive.

The First Circuit Court of Appeals reversed the lower court, ruling that an increase in alcohol advertisements would lead to an increase in alcohol sales and that the Twenty-first Amendment gave Rhode Island's ban a presumption of validity.