The Rhode Island legislature wants to make it hard for shoppers in the state to find bargains in hard liquor, and the state Supreme Court recently said there's nothing wrong with that policy. In twin decisions handed down Aug. 26, the state's high court decided that Rhode Island can forbid liquor-price ads in Rhode Island newspapers placed by out-of-state stores and ads in out-of-state newspapers placed by Rhode Island stores.
The Woonsocket Call, which wanted to run ads from a Massachusetts retailer located near the state border, and S&S Liquor, a Westerly merchant who wanted to advertise in newspapers in nearby Connecticut, claimed that the ban on liquor-price advertising violated their First Amendment rights of free speech and a free press. But the state justices pointed to the 21st Amendment as giving support for the curbs on First Amendment rights. The 21st Amendment not only repealed national Prohibition, it also gave states the right to ban all alcoholic drinks and to regulate their sale in almost any way local legislators wish.
That doesn't mean, of course, that a state can run roughshod over individual rights, but it does give what one of the decisions called "an added presumption of validity" to any regulation being questioned. The First Amendment argument foundered as well because the "speech" the companies sought to protect was designed to promote sales. The U.S. Supreme Court has reasoned that such "commercial speech" is entitled to less protection under the First Amendment than speech about politics or social affairs, for example.
The U.S. Supreme Court ruled in 1980 that curbs on commercial speech are permissible if they directly advance a "substantial" governmental interest and if they infringe on freedom of expression only enough to serve that interest. That does not mean, the majority decided in the Rhode Island cases, that the curbs must be the best way to achieve the governmental purpose; it is enough that they be a reasonable method.
The government's goal in trying to curb liquor-price advertising is to promote temperance, the state court said; in theory, if people do not know where to get cheap booze, they might drink less. At the very least, the court said, no persuasive evidence exists to challenge the link between advertising and moderation. Finally, the court argued, the regulation is far from an absolute ban, and thus is far less of an infringement on First Amendment rights than an absolute ban on liquor advertising or a law forbidding in-store posting of price information.
The justices conceded that the rule could hurt Rhode Island dealers and newspapers, but that, they said, is not a Constitutional matter.
In other cases, courts ruled that:
*You can't sue a parent corporation for what an independent subsidiary has done. The U.S. District Court in Chicago threw out an antitrust case against United Artists that sought damages for the alleged involvement of a former subsidiary in a record-business priced-fixing conspiracy. Because UA and the record company were separate businesses, "and their separate corporate personalities were maintained," the parent is not liable for any illegal actions by the subsidiary, Judge Nicholas J. Bua decided. The operations were separate, Bua said, because they maintained headquarters a continent apart, had separate records, and the record company was treated as a profit center with its own performance goals. Bua based his decision on the law in California, where UA is incorporated.
(United National Records v. MCA, Sept. 3)
*A hospital had better warn patients being discharged of adverse side-effects of any drugs they have been given; otherwise, the insitution may be liable for injuries to a third party. The Illinois Appellate Court approved a suit against a prestigious Chicago hospital by a passenger injured in an auto accident caused when the driver became woozy from drugs given him earlier that day in the hospital. The hospital has a duty to warn patients about such adverse effects, the judges said. It makes no difference, they added, that the drugs' after-effects had been intensified by alcohol. Rather, they ruled, the hospital staff also should have warned the patient not to drink.
(Kirk v. Michael Reese Hospital, Aug. 28)
*Just because the Trademark Office made a mistake once doesn't mean it should make the same mistake again. That's what the U.S. Court of Appeals for the Federal Circuit said in endorsing the Trademark Office's refusal to register the name "Durango" as a brand of chewing tobacco. The judges considered reasonable the argument that the brand name might deceive customers into thinking the product was manufactured in the Colorado town for which it was named. Merely because the office earlier had registered the "Durango" name for cigars manufactured by the same company does not mean that the agency must accept the name for the new product, the judges decided.
(In re Loew's Theaters, Aug. 9)
*Lawyers should pay penalties when they wage frivolous legal battles on behalf of their clients. The Internal Revenue Service has been especially vigorous in seeking penalties from taxpayers who insist on going to court over matters already well settled by previous decisions, such as whether wages are actually income. In the most recent case, the dispute involved the deductibility of contributions to the Universal Life Church, a group that the IRS has maintained in case after case is not a proper charitable recipient. Nonetheless, the taxpayers took the government to court on the matter, and then to the U.S. Court of Appeals in San Francisco. That court not only told them to pay costs and an extra $500 in damages to the government, but also told their lawyer to come up with a like penalty. (Urban v. U.S., Sept. 11)