Retail Digital Network, LLC v. Prieto, No. 13-56069 (9th Cir. 2017)
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RDN filed suit challenging the constitutionality of California Business and Professions Code Section 25503(f)–(h), which forbids manufacturers and wholesalers of alcoholic beverages from giving anything of value to retailers for advertising their alcoholic products. The Ninth Circuit explained that it had considered the same challenge to section 25503(h) thirty years ago in Actmedia, Inc. v. Stroh, 830 F.2d 957 (9th Cir. 1986). The en banc court reaffirmed Actmedia's core holding that section 25503(h) withstands First Amendment scrutiny because it directly and materially advanced the State's interest in maintaining a triple-tiered market system, and because there was a sufficient fit between that interest and the legislative scheme. In rejecting the First Amendment challenge, the en banc court applied the four-part test established by Central Hudson Gas & Electric Corp. v. Public Service Commission of New York, 447 U.S. 557 (1980), for evaluating restrictions on commercial speech. However, the en banc court disapproved of Actmedia's reliance on California's interest in promoting temperance as a
justification for section 25503(h). Therefore,the en banc court affirmed the district court's orders granting summary judgment to defendant.
Court Description: Civil Rights. The en banc court affirmed the district court’s summary judgment in favor of the Acting Director of the California Department of Alcoholic Beverage Control in an action challenging, on First Amendment grounds, California Business and Professions Code § 25503(f)–(h), which prohibits alcohol manufacturers and wholesalers from providing anything of value to retailers in exchange for advertising their alcohol products. The en banc court first noted that thirty years ago, in Actmedia, Inc. v. Stroh, 830 F.2d 957 (9th Cir. 1986), this Circuit rejected a First Amendment challenge to the same California and Professions Code provision. The en banc court rejected plaintiff’s contention that Actmedia was no longer good law because the Supreme Court’s decision in Sorrell v. IMS Health Inc., 564 U.S. 552 (2011) fundamentally altered the four-part test for evaluating restrictions on commercial speech, established in Central Hudson Gas & Electric Corp. v. Public Service Commission of New York, 447 U.S. 557 (1980). The en banc court held that Sorrell did not modify the Central Hudson test that been applied in Actmedia. Although the en banc court disapproved of Actmedia’s reliance on California’s interest in promoting temperance as a justification for Section 25503(h), the court nevertheless RETAIL DIGITAL NETWORK V. PRIETO 3 held that Actmedia’s reliance on temperance did not negate the sound and well-reasoned conclusion that Section 25503(h) withstood First Amendment scrutiny. The en banc court agreed that (1) Section 25503(h) directly and materially advanced the State’s interest in maintaining a triple-tiered market system, by which manufacturing interests were to be separated from wholesale interests, and wholesale interests were to be segregated from retail interests; and (2) there was a sufficient fit between that interest and the legislative scheme. Dissenting, Chief Judge Thomas stated that he would hold that Actmedia is irreconcilable with Sorrell, expressly overrule Actmedia, and remand to allow the district court to conduct a purposive inquiry into the restricting statute, as required by Sorrell.
This opinion or order relates to an opinion or order originally issued on January 7, 2016.
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