Antitrust Law Daily Wrap Up, ADVERTISING—9th Cir.: Las Vegas Liquor ad ordinance could violate free speech, (Jul 23, 2015)

By Greg Hammond, J.D.

A City of Las Vegas ordinance that regulates liquor advertising on the Freemont Street pedestrian mall could violate the First Amendment. The U.S. Court of Appeals in San Francisco partially reversed and remanded an order denying shop owners’ motion for preliminary injunction, finding that the City has not demonstrated that the advertising restrictions directly and materially advance the City’s interests and whether any less-restrictive alternatives to the advertising restrictions are available (Crazy Ely Western Village, LLC v. City of Las Vegas, July 22, 2015, Per Curiam).

Crazy Ely Western Village, LLC and G&G Fremont, LLC own and operate souvenir and packaged liquor stores along the Fremont Street Experience. In an effort to reduce issues caused by high alcohol consumption near that area, the City passed Ordinance 6320, which: (1) applies to package liquor sellers adjacent to or on a pedestrian mall; (2) restricts the sale of single-serving alcoholic products, products with over 32 ounces, and products that have over eleven percent alcohol by volume; (3) places restrictions on window advertisements; and (4) requires sellers to post a sign disclosing that consumption of alcohol on the Fremont Street Experience is forbidden. The companies filed suit against the City, alleging violations of the First, Fifth, and Fourteenth Amendments, as well as Section 1 of the Sherman Act and plaintiffs’ civil rights under 42 U.S.C. § 1983.

The federal district court in Las Vegas denied a preliminary injunction, and Crazy Ely and G&G appealed, raising only their First Amendment challenge to the commercial speech restrictions contained in Ordinance 6320.

The appellate court determined that the plaintiffs met the first two factors of the four-part test for regulations of commercial speech, under Central Hudson Gas & Electric Corp. v. Public Service Commission of New York, 447 U.S. 557 (1980), including: (1) the commercial speech concerns lawful activity and is not misleading, and therefore receives First Amendment protection; and (2) the government’s interest in regulating the speech is substantial. However, based on the record, the City has not demonstrated that the advertising restrictions directly and materially advance the governmental interests asserted and that there are no less-restrictive alternatives to the restrictions—the third and fourth factors. The court therefore partially reversed and remanded the case.

Because the advertising regulations restrict the speech of only certain liquor stores, the City must—on remand—explain why the regulations are not impermissibly underinclusive. In addition, the City must show that it opted to restrict speech only after determining that its interests could not be sufficiently advanced by means of conduct-based restrictions, such as ticketing and arresting individuals who are intoxicated or drinking underage or banning alcohol consumption on Fremont Street.

The case is number 14-17208.

Attorneys: Tillman J. Breckenridge (Bailey & Glasser LLP) and Jeffrey F. Barr (Ashcraft & Barr LLP) for Crazy Ely Western Village, LLC and G&G Fremont, LLC. Philip Byrnes, Las Vegas City Attorney's Office.

Companies: City of Las Vegas; Crazy Ely Western Village, LLC; G&G Fremont, LLC

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