3rd Circuit Rules in First Amendment Case
July 29, 2004. The U.S. Court of Appeals (3rdCir) issued its opinion [17 pages in PDF] in The Pitt News v. Pappert, a First Amendment challenge brought by a newspaper to a state statute that restrained certain speech -- paid advertising of alcoholic beverages. The Appeals Court held that statute is unconstitutional, but on narrow grounds specific to this restraint.
The plaintiff in this case is The Pitt News, a newspaper created by the University Board of Trustees of the University of Pittsburgh and operated as a student organization. All of its revenue is derived from payments for advertisements published in The Pitt News. The defendants are Gerald Pappert, who was sued in his capacity as the Attorney General of the state of Pennsylvania, and other state officials.
The statute, enacted by the state of Pennsylvania, applied to speech by newspapers and a broad range of communications media that are affiliated with educational institutions. It banned speech that constituted "any advertising of alcoholic beverages".
The statute applied to any "publication published by, for or in behalf of any educational institution". It broadly covered publication "through the medium of radio broadcast, television broadcast, newspapers, periodicals or other publication, outdoor advertisement, any form of electronic transmission or any other printed or graphic matter, including booklets, flyers or cards, or on the product label or attachment itself."
As a consequence, The Pitt News lost advertising revenue, not only from ads for alcoholic beverages, but from restaurants that held alcoholic beverage licenses, including restaurants whose ads that did not reference the sale of alcohol. Revenues decreased, and the newspaper was reduced in size. Competing newspapers and broadcast media that targeted the University of Pittsburgh community, but that were not affiliated with the University, were not affected by the statute.
The Pitt News filed a complaint in U.S. District Court (WDPenn) against Pappert and others alleging that the statute violates the First Amendment of the U.S. Constitution. The District Court upheld the statute.
The Court of Appeals held that the statute is unconstitutional because it is an impermissible restriction on commercial speech, and also because the law is presumptively unconstitutional because it targets a narrow segment of the media.
Pennsylvania argued that the statute does not restrain speech. That is, The Pitt News is free to publish information and advertisements for alcoholic beverages. The statute merely prohibits The Pitt News from receiving payment for such speech.
The Appeals Court rejected this argument. It wrote that "If government were free to suppress disfavored speech by preventing potential speakers from being paid, there would not be much left of the First Amendment. Imposing a financial burden on a speaker based on the content of the speaker’s expression is a content-based restriction of expression and must be analyzed as such." The Court cited, Simon & Schuster, Inc. v. Members of the New York State Crime Victims Bd., 502 U.S. 105 (1991), which held unconstitutional New York's Son of Sam law.
Impermissible Restriction on Commercial Speech. The Appeals Court's first of two reasons for overturning the statute is that it is an impermissible restriction on commercial speech. The Appeals Court concluded at the outset, without discussion, that this is a case involving "commercial speech", and therefore must be reviewed under court create standards for analyzing the constitutionality of restraints on commercial speech.
Hence, the Appeals Court applied the four prong test created by the Supreme Court in Central Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n of New York, 447 U.S. 557 (1980).
The Court summarized this test, quoting from Central Hudson: "First, ``we must determine whether the expression is protected by the First Amendment,´´ and this means that “it at least must concern lawful activity and not be misleading.´´ ... Second, ``we ask whether the asserted governmental interest is substantial.´´ ... If the first and second ``inquiries yield positive answers, we must determine whether the regulation directly advances the governmental interest asserted, and whether it is not more extensive than is necessary to serve that interest.´´"
The Court held that under the first prong, the expression is protected by the First Amendment. Second, it wrote that "preventing underage drinking and alcohol abuse" are substantial governmental interests under the second prong. However, the Court held, in applying the third prong, that the state has not shown that its statute alleviates the harm.
The Court explained that "We do not dispute the proposition that alcoholic beverage advertising in general tends to encourage consumption". But, it continued that the prohibition "applies only to advertising in a very narrow sector of the media (i.e., media associated with educational institutions), and the Commonwealth has not pointed to any evidence that eliminating ads in this narrow sector will do any good."
The Court also held that the statute fails to meet the fourth prong of the Central Hudson test. There is not a reasonable fit between the legislature's ends and the means chosen to accomplish those ends. The Court noted that 75% of the University of Pittsburgh community is above the legal drinking age.
Targeting a Narrow Segment of the Media. The Appeals Court's second of two reasons for overturning the statute is that it targets a narrow segment of the media. The Court discussed this concept at length. It outlined the concerns raised by statutes that target some but not all media, and suggested that "courts must be wary". In the end, it held that this particular Pennsylvania statute impermissibly targets a narrow segment of the media. However, there is no precise black letter statement of law in this opinion.
Perhaps, the reason for the Court's reluctance to articulate a specific principle is that the law abounds with disparate treatments of different segments of the information and communications media. The Communications Act and Federal Communications Commission (FCC) rules contain many such disparate treatments, as for example, in the different regulatory regimes for broadband access services provided over DSL and broadband access services provided by cable modem. Indeed, the FCC's existence, and communications law, are both premised on the notion that certain communications media (such as radio, television, cable, and satellite) should be subject to regulatory regimes that are not applied to certain other communications media (such as books, magazines, newspapers, pulpits, and lecterns). State and local governments also impose different tax and regulatory regimes on newspaper, telephone, cable and other types of companies.
Nevertheless, the Court did write that "laws that impose special financial burdens on the media or a narrow sector of the media present a threat to the First Amendment."
It added that "laws that impose financial burdens on a broad class of entities, including the media, do not violate the First Amendment", but, that "A business in the communications field cannot escape its obligation to comply with generally applicable laws on the ground that the cost of compliance would be prohibitive."
Finally, it wrote in vague terms that "courts must be wary that taxes, regulatory laws, and other laws that impose financial burdens are not used to undermine freedom of the press and freedom of speech. Government can attempt to cow the media in general by singling it out for special financial burdens. Government can also seek to control, weaken, or destroy a disfavored segment of the media by targeting that segment."
Commercial Speech. The Court did reject Pennsylvania's argument that there was no limitation on speech about alcoholic beverages. Pennsylvania had argued that the statute merely banned accepting payments from advertisers, which is not speech. The Court also rejected Pennsylvania's argument that it imposed no financial burden on a segment of the media. Pennsylvania had argued that it imposed no tax. The Court reasoned that banning payment for speech is like banning the speech, and that banning a type of advertising revenue, while not a tax, has the effect of imposing a financial burden.
The Court did not extend this type of analysis further. That is, newspapers do not publish alcoholic beverage ads in isolation. They publish them as part of a larger collection of content that includes current events, politics, social commentary, and other categories of speech that the Courts do no relegate to the less protected status of commercial speech. Moreover, limiting a newspaper's ability to derive revenue from one type of speech, can have the effect of limiting, or precluding, it from engaging in other, and more protected, types of speech. Thus, the Court might have viewed the statute as a restraint of more highly protected speech, and therefore, applied a strict scrutiny standard. But, it did not.
The Court also did not address whether or not
legislative and regulatory processes are used to attack the revenue streams of
publications, for the purpose of limiting political speech. For example,
Katherine Graham argued that this happened when her newspaper, The Washington
Post, published stories related to the Watergate scandal. She wrote in her
Personal History [Amazon], that friends of former President Richard Nixon
challenged the Washington Post's FCC television broadcast licenses for its
profitable stations in the state of Florida. Graham wrote that the filing of the
FCC license challenges cut the Post's market capitalization by half.