Ninth Circuit revisits Actmedia: Heightened Scrutiny Applies to B&P Code Advertising Restrictions

Thirty years ago, the Ninth Circuit rejected a First Amendment challenge to a California statute which prohibits paid advertising of alcoholic beverages at retail outlets. In Actmedia Inc. v. Stroh (9th Cir. 1986) 830 F.2d 957, the court applied the four-pronged test of Central Hudson Gas & Electric Corp. v. Public Service Comm’n of New York (1980) 447 U.S. 557 to assess the constitutionality of a law that burdened commercial speech. That test asks: (1) whether the speech concerns a lawful activity and is not misleading; (2) whether the government has a substantial interest in regulating the speech; (3) whether the regulation serves to directly advance the asserted governmental interest; and (4) whether the regulation “is not more extensive than necessary.” The law at issue in Actmedia was Business & Professions Code, § 25503(h), which prohibits manufacturers and wholesalers, as well as their agents, from giving anything of value to a retailer in exchange for on-site advertising. Actmedia was a corporation which leased advertising space on shopping carts. It challenged the law as an impermissible restriction on commercial speech in violation of the First Amendment. Applying the Central Hudson factors, the Ninth Circuit concluded the law was constitutional. The advertising of alcoholic beverages concerned a lawful activity and was not misleading, but California had a…