Raging Bitch Lawsuit: Liquor Control Commissioners “In Heat” Over Flying Dog Label Rejection

Michigan Liquor Control Commissioners "in heat" over recent Sixth Circuit decision regarding a 2009 rejection of this Flying Dog Brewery label.
Liquor Control Commissioners “in heat” over recent Sixth Circuit decision regarding a 2009 rejection of this Flying Dog Brewery label. Click for full size.

Does the First Amendment extend to your brewery’s beer labels? You bet. Congratulations goes to Maryland’s Flying Dog Brewery for a big win this month. Unlike the brewery trademark disputes we’re used to seeing hit headlines, this brewery lawsuit involves Flying Dog’s rights to express itself on its labels. Like many cases tend to do, this one has been going on for quite some time. In fact, we reported on it here back in 2011. The background is that in 2009, Flying Dog sought to register its “Raging Bitch” beer label with the Michigan Liquor Control Commission. You can click the picture for a full-size version of the label. The MLCC did not approve the label, claiming it was offensive. In particular, it seems the MLCC took objection to language on the label that it found would be “detrimental to the health, safety, or welfare of the general public.”

The procedure gets a little messy. But, hang with me, because the outcome is important. When the MLCC denied the label, and Flying Dog lost its administrative appeal, Flying Dog filed a lawsuit pursuant to a federal statute, alleging the individuals at the MLCC had violated the brewery’s Freedom of Speech rights protected by the First Amendment. It’s not an unusual kind of lawsuit, except perhaps for the beer world. It’s the same kind of lawsuit involving government action that you’d see in headlines where a private citizen alleges that the police used excessive force. Constitutional violation. Keep in mind, however, that government actors can have different degrees of immunity from these kinds of lawsuits. It’s why you don’t see judges being sued every time they make a decision that impacts an individual’s rights. It’s prudent. We wouldn’t want a judge to be worried about being sued, for example, when trying to make the right, albeit unpopular, decision in a case. More on that soon.

At any rate, the MLCC Commissioners alleged that they had immunity, and put forth a couple of different theories, one being that their actions were quasi-judicial. The federal district court agreed, granting the Commissioners partial summary judgment. According to the court, it was the first time a court in the Sixth Circuit had decided whether members of a state administrative body who had the authority to make licensing decisions are entitled to quasi-judicial immunity. The district court thought so.

Flying Dog Brewery appealed the summary judgment ruling, and so the case went to the Sixth Circuit Court of Appeals. In reviewing the case, the Sixth Circuit observed that to determine whether an individual is entitled to quasi-judicial immunity, the court would consider factors like the nature of the government official’s functions, and how being exposed to various forms of liability for those decisions would affect the appropriate exercise of those functions. Here are some factors that are characteristic of the judicial process:

  • the need to assure that the individual can perform his functions without harassment or intimidation;
  • the presence of safeguards that reduce the need for private damages actions as a means of controlling unconstitutional conduct;
  • insulation from political influence;
  • the importance of precedent;
  • the adversary nature of the process; and
  • the correctability of error on appeal.

Through a measured analysis, the Sixth Circuit found that the factors divided evenly both for and against a grant of quasi-judicial immunity. For those interested, the opinion is here, and it’s worth a read. The court decided to call the close question in favor of Flying Dog, whose constitutional rights were at stake. No quasi-judicial immunity.

The court next analyzed whether the Commissioners had a different type of qualified immunity. That is, the MLCC’s commissioners would be protected against a lawsuit, only if the brewery’s freedom of speech right was clearly established, in light of the context of the case. A right is clearly established if a reasonable official would understand that what he or she was doing would violate the right.

The Commissioners urged that the right was not clearly established. It is true that “commercial speech” is afforded less protection than, say, the content of your favorite film. When evaluating whether commercial speech falls within the ambit of the First Amendment, courts apply what’s known as the Central Hudson test. First, the speech must concern lawful activity and not be misleading. Next, the asserted government interest (here, the health, safety, and welfare of the people of Michigan) must be substantial. If both answers are yes, the court asks whether the regulation directly advances the governmental interest asserted, and whether the regulation is more extensive than it needs to be to serve that interest.

The Sixth Circuit reached back to a notable case the Supreme Court took on called Rubin v. Coors Brewing Co., 514 U.S. 476 (1995). That case involved the federal government’s regulation on alcohol content on beer labels. Yes, a couple of decades ago, federal statute 27 U.S.C. § 205(e) prohibited brewers from putting any ABV information on their labels, unless state law required it. (The concern was that brewers would get into “strength” wars.) The Supreme Court applied commercial speech principles and found the whole regulatory scheme irrational, especially because the same statute required alcohol content on wine and spirits labels. The following year, the Supreme Court decided yet another brew-centric case. Rhode Island had banned ads that displayed accurate information about the retail prices of alcohol. The Court determined that Rhode Island’s ban was not justified by the Twenty-first Amendment, and that the Twenty-first Amendment does not “diminish the force” of a battery of constitutional protections, including the First Amendment.

This beer label was at issue in Bad Frog Brewing Co. v. New York State Liquor Authority.
This beer label was at issue in Bad Frog Brewing Co. v. New York State Liquor Authority.

The Commissioners pointed to a case in the Second Circuit, where state liquor commissioners had been granted qualified immunity when they banned a vulgar beer label (the aptly named Bad Frog Brewery had a label with a frog giving the finger), and where on appeal the Second Circuit determined that the commissioners reasonably believed they were entitled to reject the application. The Sixth Circuit found that, if anything, that case put all state liquor authorities on notice that banning a beer label for vulgarity does violate the First Amendment. Thus, a reasonable official would understand that his or her actions would violate the right. No qualified immunity.

So, the outcome of the Raging Bitch case. It’s not a complete win, it’s a win of a case within a case. That is, the Sixth Circuit determined that the Commissioners were not entitled to any form of immunity. However, because the district court had never reached the issue of whether the MLCC commissioners violated Flying Dog’s clearly established First Amendment rights, the case gets kicked back down to the district court, where we can only imagine the commissioners are hoping to settle. This is especially so because a dissenting judge on the Sixth Circuit thought that the factual record was developed enough that Flying Dog should be entitled to summary judgment in its favor as a matter of law! It’s worth noting here that the federal statute permitting Flying Dog’s claim has a fee-shifting provision, whereby a court may allow Flying Dog Brewery to recover its attorneys’ fees if it prevails. Those fees would be in addition to any judgment Flying Dog received for its constitutional injury. Keeping in mind that this dispute has been alive since 2009, you can do the math.

If you made it this far, you’re either a lawyer or a truly brave and persevering soul. Ultimately, I’ve gotten so deep into this case today because (1) I love a good Con Law session and (2) because there’s no doubt now that, thanks to one Ragin’ Bitch, state authorities are firmly on notice that a brewery’s beer labels have significant constitutional protections. I’ll raise a beer to that.

Read More

Avoiding a Brewery Trademark Dispute: Here’s How.

You know what they say about an ounce of prevention. This latest trademark dispute highlights again why proactive trademark clearance practices are a must.
You know what they say about an ounce of prevention. This latest brewery trademark dispute highlights again why proactive trademark clearance practices are a must.

The latest brewery trademark dispute has the same notes, just a different rhythm. This time the matter involves Austin, Texas-based brewery Oasis and the much larger New Belgium. I spoke with Ronnie Crocker at the Houston Chronicle, who wrote this insightful article covering the latest dispute. As I noted to Ronnie in the article, and I note here quite frequently, these matters are largely preventable. Here’s how.

If there is any brand material you would be upset to change, conduct a full clearance search and file an intent-to-use trademark application before you adopt the mark. Don’t wait. Indeed, as this matter highlights, a mark you might think is clear can become fraught with problems in just a couple of weeks. Your filing date is the basis for your federal rights. Without a federal priority date, you might wind up locked out of using that brand name anywhere but your hometown. There’s no reason for that, especially if the brand in question is your brewery’s name or main logo.

Today, if you’re investing in a brand, especially if you’re getting packaged branded material to the shelves and have any aim to expand, file. Clear today, file today. File. The up-front investment is minimal compared to the costs to your brand and to your budget if you bump into issues with another beverage company. Put a little more into your start-up budget. Make proactive brand protection a part of your ongoing recipe-production and beer-release strategy.

I don’t know anyone who has regretted having the registration.

Read More