TTB Proposed Labelling Rules Don’t Meet Constitutional Muster

The TTB recently published proposed regulations for alcoholic beverage labels and is accepting public comments through June 26, 2019. According to the TTB, these new rules will streamline TTB review of labels in the COLA process. Despite an attempt to incorporate First Amendment jurisprudence on commercial speech, the proposed rules fall short of such goal because they are not narrowly tailored to protect a legitimate government interest. The portions of their rules that prohibit labels (and advertisements) that contain disparaging, obscene or indecent statements do not meet Constitutional standards. Essentially these rules are aimed at restricting speech because the government does not like the message being conveyed (because it considers it offensive). The problem is how much subjectivity and discretion is involved in the review process. What may be offensive to some may be humorous to others. Where does the line get drawn?

The Supreme Court has made clear that “happy talk clauses” are not Constitutional when it struck down a similar provision in the federal trademark law in the Matal v. Tam case. The Supreme Court found that the federal trademark law went beyond the legitimate government interest in antidiscrimination and orderly commerce. The Supreme Court concluded that suppression of speech that may lead to political or social “volatility” stifles the very free speech being protected by the First Amendment. In another pending case challenging the federal trademark law for the mark FUCT, In re Brunetti, I expect a similar outcome for immoral and scandalous marks.

Product labeling is essential to the craft beverage industry. Product sales are directly related to branding and product packaging. There must be certainty, and predictability, for the industry in order for it to design legally compliant labels and product packaging. There must be room for Free Speech and even creation of public discussion on commercial messages. If the public dislikes a message, it can boycott the product and speak with their wallets. The government does not need to police our public conscience.

Marc Robertson opined in his article Proposed Federal Alcohol Labeling Revisions Retain Constitutionally Suspect Review Standards ( April 8, 2019) that “product labelling and advertising is often what sets one wine, beer or spirit apart from another in a highly competitive market. A lack of consistency and clarity in the federal rules that govern such decisions can be ruinous, especially to smaller alcohol producers who can barely afford regulatory compliance counsel, let alone a constitutional expert.” He also warned that larger companies can use such vague laws to harm their competitors and make it too expensive for them to fight, inevitably stifling competition from the craft beverage industry.

I encourage industry members to submit comments to the TTB and seek clearer and more Constitutionally compliant rules for alcoholic beverage labels and advertising.