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Write an analysis of the case of Bad Frog Brewery, Inc. v. New York State Liquor Authority, 134 F.3d 86 (1998), using the FIRAC (Facts, Issues, Rules, Application, Conclusion) method. Please use the template provided below to organize your analysis.

MAXIMUM 400 WORDS

THE CASE:

United States Court of Appeals, Second Circuit

BAD FROG BREWERY, INC., Plaintiff-Appellant,

NEW YORK STATE LIQUOR AUTHORITY, Defendants-Appellees.

134 F.3d 87 (1998)

Before: NEWMAN, ALTIMARI, and CALABRESI, Circuit Judges.

Background

Bad Frog is a Michigan corporation that manufactures and markets several different types of alcoholic beverages under its Bad Frog trademark. Each label prominently features an artist's rendering of a frog holding up its four-fingered right hand, with the back of the hand shown, the second finger extended, and the other three fingers slightly curled. Bad Frog does not dispute that the frog depicted in the label artwork is making the gesture generally known as giving the finger and that the gesture is widely regarded as an offensive insult. Versions of the label feature slogans such as He just don't care, An amphibian with an attitude, Turning bad into good, and The beer so good it's bad. Another slogan was He's mean, green and obscene.

In May 1996, Bad Frog made an application to the New York State Liquor Authority (NYSLA or the Authority) for brand label approval and registration pursuant to New York's Alcoholic Beverage Control Law. In September 1996, NYSLA denied Bad Frog's application. The Authority found that (a) the label encourages combative behavior; (b) the gesture and the slogan, He just don't care, close to a warning about potential health problems fosters a defiance to the health warning on the label; (c) the label entices underage drinkers; and (d) the label invites the public to ignore conventional wisdom and to disobey standards of decorum.

The Authority considered the label's adverse effects on a youthful audience and said that in New York, the gesture of giving the finger to someone means F**k You, or Up Yours, a confrontational, obscene gesture, known to lead to fights, shootings and homicides. The Authority concluded that encouraging the use of this gesture in licensed premises is akin to yelling fire in a crowded theatre, so to approve this obscene, provocative confrontational gesture would tend to adversely affect the health, safety and welfare of the People of the State of New York.

In October 1996 Bad Frog sought a preliminary injunction barring NYSLA from taking any steps to prohibit the sale of beer by Bad Frog under the controversial labels. The District Court found that the labels were commercial speech, related to a lawful activity and were not misleading. The Authority asserted two substantial interests supporting its decision to deny Bad Frogs application:(a) promoting temperance and respect for the law and (b) protecting minors from profane advertising.

As to the first interest, the District Court ruled that the Authority failed to show that the rejection of Bad Frog's labels directly and materially advances the substantial governmental interest in temperance and respect for the law. Other marketing gimmicks for beer such as the Budweiser Frogs, Spuds Mackenzie, the Bud-Ice Penguins, and the Red Dog of Red Dog Beer promote intemperate behavior in the same way that the Plaintiff's label would, therefore the regulation of the Plaintiff's label will have no tangible effect on underage drinking or intemperate behavior in general.

However, as to the second interest, the District Court agreed that the label rejection would advance the governmental interest in protecting children from advertising that was profane, in the sense of vulgar. The District Court concluded that prohibiting the use of the profane image on the label would limit the exposure of minors in New York to that specific profane image, thus directly and materially advancing the asserted government interest in protecting children from exposure to profane advertising.

Finally, the District Court ruled that rejection of the labels would completely foreclose the possibility of their being seen by youth, whereas other restrictions, such as point-of-sale location limitations would [still allow] exposure of youth to the labels. [The District Court upheld the NYSLAs refusal to approve the Bad Frog label and denied Bad Frogs claim for injunctive relief.]

Commercial or Noncommercial Speech?

In Bad Frog's view, commercial speech that receives reduced First Amendment protection is expression that conveys commercial information. The frog labels do not convey commercial information, but instead communicate expression of an idea in the form of a joke.As such, Bad Frog argues that the labels should get full First Amendment protection rather than the reduced protection given to commercial speech.

NYSLA agrees with the District Court that the labels enjoy some First Amendment protection, but are to be assessed by the somewhat reduced standards applicable to commercial speech.

The core notion of commercial speech is that it does no more than propose a commercial transaction. Outside this so-called core are various forms of speech that combine commercial and noncommercial elements. Whether a communication combining those elements is to be treated as commercial speech depends on factors such as (a) whether the communication is an advertisement; (b) whether the communication refers to a specific product; and (c) whether the speaker has an economic motivation for the communication. None of these factors alone would render the speech in question commercial, but the presence of all three factors provides strong support for such a determination.

Advertising, however tasteless and excessive it sometimes may seem, is dissemination of information as to who is producing and selling what product, for what reason, and at what price. Recent Supreme Court commercial speech cases upholding First Amendment protection have all involved the dissemination of information (emphasizing the consumer's interest in the free flow of commercial information).

Bad Frog's picture on a beer bottle label of a frog behaving badly can be understood, like a trademark, as trying to identify Bad Frog Brewery as the source of the product. But the label also serves to propose a commercial transaction. The label communicates no information beyond the source of the product, but we think that any information conveyed in the context of a proposed commercial transaction constitutes commercial speech for First Amendment purposes. However, Bad Frog argues that its labels deserve full First Amendment protection because the proposal of a commercial transaction is combined with what is claimed to be political, or at least societal, commentary.

We are unpersuaded by Bad Frog's attempt to separate the purported social commentary in the labels from the hawking of beer. Bad Frog's labels are a form of advertising, identify a specific product, and serve the economic interest of the speaker. Moreover, the purported noncommercial message is not so inextricably intertwined with the commercial speech as to require a finding that the entire label must be treated as pure speech. Even viewed generously, Bad Frog's labels at most link its product to a current debate, which is not enough to convert a proposal for a commercial transaction into pure noncommercial speech.

We thus assess the prohibition of Bad Frog's labels under the commercial speech standards outlined in Central Hudson.

Standard of Review: The Central Hudson Test

The case of Central Hudson Gas & Electric Corp. v. Public Service Commission (citation omitted) sets forth the analytical framework for assessing governmental restrictions on commercial speech. First, we must determine whether the expression is protected by the First Amendment. For commercial speech to come within that provision, it must concern lawful activity and not be misleading. Next, we ask whether the government has a substantial interest in regulating the speech. If both inquiries yield positive answers, we must determine whether the regulation directly advances the government interest asserted, and whether it is not more extensive than is necessary to serve that interest.

A.Lawful Activity and Not Deceptive

We agree with the District Court that Bad Frog's labels pass Central Hudson's threshold requirement that the speech must concern lawful activity and not be misleading. The consumption of beer (at least by adults) is legal in New York, and the labels cannot be said to be deceptive, even if they are offensive.

B.Substantial State Interests

NYSLA advances two interests to support its asserted power to ban Bad Frog's labels: (a) the State's interest in protecting children from vulgar and profane advertising; and (b) the State's interest in acting consistently to promote moderate and responsible use of alcohol among those above the legal drinking age and abstention among those below the legal drinking age.

Both of the asserted interests are substantial within the meaning of Central Hudson. The Supreme Court also has recognized that states have a substantial interest in regulating alcohol consumption.

C.Direct Advancement of the State Interest

To meet the direct advancement requirement, a state must demonstrate that the harms it recites are real and that its restriction will in fact alleviate them to a material degree. A restriction will fail this third part of the Central Hudson test if it provides only ineffective or remote support for the government's purpose.

(1)Advancing the interest in protecting children from vulgarity. In the pending case, NYSLA endeavors to advance the state interest in preventing exposure of children to vulgar displays by taking only the limited step of barring such displays from the labels of alcoholic beverages. In view of the wide currency of vulgar displays throughout contemporary society, including comic books targeted directly at children, barring such displays from labels for alcoholic beverages cannot realistically be expected to reduce children's exposure to such displays to any significant degree.

(2)Advancing the state interest in temperance. NYSLA maintains that the raised finger gesture and the slogan He just don't care urge consumers generally to defy authority and particularly to disregard the Surgeon General's warning, which appears on the label next to the gesturing frog. NYSLA also contends that the frog appeals to youngsters and promotes underage drinking. The truth of these propositions is not so self-evident as to relieve the state of the burden of presenting empirical evidence to support its assumptions. All that is clear is that the gesture of giving the finger is offensive. Whether viewing that gesture on a beer label will encourage disregard of health warnings or encourage underage drinking remain matters of speculation.

NYSLA has not shown that its denial of Bad Frog's application directly and materially advances either of its asserted state interests.

D.Narrow Tailoring

Central Hudson's fourth criterion, sometimes referred to as narrow tailoring, requires consideration of whether the prohibition is more extensive than necessary to serve the asserted state interest. Since NYSLA's prohibition of Bad Frog's labels has not been shown to advance the state interest in moderating alcohol consumption, we consider only whether the prohibition is more extensive than necessary to serve the asserted interest in insulating children from vulgarity.

Bad Frog has suggested numerous less intrusive alternatives, such as the restriction of advertising to point-of-sale locations; limitations on billboard advertising; restrictions on over-the-air advertising; and segregation of the product in the store. Even if we assume that the state interest is materially advanced by shielding children from viewing the Bad Frog labels, it is plainly excessive to prohibit the labels from all use, including placement on bottles displayed in bars and taverns where parental supervision of children is to be expected.

NYSLA's complete statewide ban on the use of Bad Frog's labels lacks a reasonable fit with the state's asserted interest in shielding minors from vulgarity. NYSLA did not adequately consider less intrusive alternatives to this blanket suppression of commercial speech.

Conclusion

The judgment of the District Court is reversed, and the case is remanded for entry of judgment in favor of Bad Frog on its claim for injunctive relief. The injunction shall prohibit NYSLA from rejecting Bad Frog's label application, without prejudice to such further consideration and possible modification of Bad Frog's authority to use its labels as New York may deem appropriate, consistent with this opinion.

Template:

CASE NAME:

CITATION:

FACTS:

ISSUE(S):

RULE(S):

APPLICATION:

CONCLUSION:

A = Affirmed

R = Reversed

O = Other result