Top Constitutional Lawyer Says TTB Label Functions Must Be Treated as Essential

by Robert C. Lehrman on January 30, 2019

We have kept a close watch on the Atlas v. Whitaker case because it’s so close to what we handle on a daily basis whether the government is open or not. We covered the federal shutdown generally on January 12th, here, and we covered the Atlas case 12 days later as here.

Today we have a dialogue with Alan Gura, the famous lawyer handling the Atlas case. Alan is famous for winning the Heller case in the U.S. Supreme Court, and also for winning the Flying Dog beer case (about Raging Bitch as a brand name for beer). Alan has been named among the 100 Most Influential Lawyers in America by the National Law Journal, and “has also argued cases before ten federal courts of appeals and numerous federal district courts throughout the country. … Gura also teaches strategic litigation as an adjunct Professor of Law at Georgetown University, and is proud to have litigated the demise of various unconstitutional statutes and ordinances.” He has served as counsel to the United States Senate Judiciary Committee, and as a Deputy Attorney General for the State of California. He has also worked at a big litigation firm and served as a clerk for a U.S. District Court judge. Earlier this week I sent Alan some questions about the case, by email, and his answers are below in blue print.

What’s the case about?

Under a 1935 law, enacted just after we exited Prohibition, no one can sell an alcoholic beverage in the United States without a government-approved label. The government has to sign off on each label for anything that contains beer, wine, or spirits, to ensure that it contains some information and doesn’t contain certain material. Some of the rules are straightforward, others are up to the government’s sometimes imaginative interpretation. But no label approval, no beverage.

With the shutdown, the Treasury Department office in charge of label approvals, the Alcohol Tobacco Tax and Trade Bureau – TTB – was shuttered. So Atlas Brew Works, like countless other beverage makers, was stuck with product that couldn’t be sold for lack of an approved label. And businesses couldn’t plan their production, because they had no way of knowing when they might get a needed label.

But beer labels are speech. They communicate information to people, and enjoy the First Amendment’s protection. The Supreme Court held as much decades ago, and federal courts do occasionally vindicate the speech rights of brewers who push back against unconstitutional label regulation. The shutdown effectively banned a category of protected speech for no reason. That’s a First Amendment violation. It also imposed a content-based prior restraint on speech, a censorship regime, without a brief, defined amount of time for the government to make its decisions. That’s also a First Amendment violation. Atlas sought the ability to publish its beer labels—and sell its beer—without approval, so long as the TTB is closed and incapable of approving anything.

Is it over?

The request for immediate injunctive relief is over because the shutdown ended, at least for now, and the government approved the most urgently-needed label, the keg collar for Atlas’s apricot-infused “The Precious One” IPA.

But the case is not over. Atlas has other labels in the system awaiting approval—and the government could easily shut down again in three weeks. More to the point, Atlas seeks a declaration of its First Amendment rights in this regard, because these shutdowns are, sadly, the new normal in Washington. We have shutdowns all too often. It’s a recurring issue. It happens with either party in either branch of government, and it can even happen when the same party controls everything. Nobody knows exactly when or why the next shutdown will occur—this time it was about a wall on the Mexican border, last time it was about Obamacare—but it will happen, silencing Atlas again. TTB has a policy of closing during shutdowns, and this isn’t the first time it’s done so. If the Court agrees with us that this situation is “capable of repeating,” it will reach the merits of Atlas’s First Amendment arguments.

What happened at the hearings?

The judge promptly scheduled a hearing on our request for a temporary restraining order. We filed on Tuesday, January 15, and were heard a week later, January 22, immediately after the Martin Luther King holiday weekend. Three days after the hearing, the shutdown finally ended, before the Court ruled. On Monday, with funding in place for at least three weeks, the government promised that it would pass on “The Precious One” application most likely within the next 24 hours. It did so, approving the label yesterday morning. With that label approved and the TTB functioning, the Court denied the request for injunctive relief as moot.

How many lawyers against you?

As far as I can tell, two. But it doesn’t matter. This case has no factual disputes. We don’t need a dozen expert witness depositions and review of a warehouse full of documents. The legal issues are important, and interesting, but they are discreet. It’s always nice to bounce ideas off of colleagues, and I’ve done that here, but there’s no need for anyone to staff up. If that changes, we’ll do that. I’ve done it before. But this isn’t Bleak House.

Did you sue TTB?

No. Atlas has no beef with TTB, and whatever TTB normally does isn’t an issue. The problem is not that TTB was up and running and doing terrible things, the problem is that TTB keeps shutting down. That’s not within TTB’s control. The only defendant here was the Acting Attorney General, in his official capacity. The only relief sought was to prevent the Justice Department from prosecuting Atlas for not having approved labels, if label approval, as a matter of law, does not exist. Note that the Attorney General could have still taken action against Atlas if the labels did, in fact, contain misleading information or failed to carry the required alcohol warning. The only issue was: can Atlas be prosecuted for publishing labels, without an approval that isn’t available? We think the answer to that is fairly straightforward.

What is the goal of this case?

Atlas has two main goals: to establish that Americans cannot be silenced just because the speech-licensing office is closed, and to help Atlas communicate with its consumers about the company’s products.

Is it only about Atlas or labels or beer?

In our legal system, cases are rarely limited to their facts. The concepts established here, one way or another, will be used by other people facing other issues. What those future cases might be, one can never fully tell. The closer the facts of these future cases to this one, the more relevant the precedent might be.

Is a beer label really speech?

Of course. The Supreme Court had no trouble with this concept, and neither have the other courts facing beer label First Amendment disputes. The label is a paper or other image, containing text and graphics, that communicates expression to people. It’s what we call commercial speech; it relates primarily to commercial transactions—here, the buying and selling of beer—but it’s speech all the same. The label expresses the beer’s name, its contents, and all kinds of important and useful information that consumers want to and should know. It also conveys the brewer’s image, its brand, its experience. If all consumer products came in plain brown paper bags with the products’ names typed in courier font, those paper bags would still be speech, though America would be a very different place.

What is the U.S. position?

The government said virtually nothing about the First Amendment. It argued almost exclusively on alleged lack of standing, or failure to exhaust administrative remedies—arguments that simply cannot fly under the circumstances. The government doesn’t have a defense on the merits, because Congress never intended that the labeling office would be unstaffed. They can’t justify something that they never intended to do. The government’s effort will now largely focus on arguing that this will never happen again. We all wish that were true, but it becomes a tougher sell with each passing shutdown.

Did this case make anything easier, for the next shutdown?

Yes. We hope to get a declaratory judgment, to the effect that Atlas cannot be required to obtain unavailable licenses in order to speak. The government would then have the option of determining that this licensing system is so essential to the preservation of human life that TTB’s licensing personnel are essential and cannot be furloughed, but it could not simply ban a category of protected First Amendment speech. In the unfortunate event that we don’t get a declaratory judgment, we’ll be better positioned to file the exact same case on day 1 of the next shutdown, and not on day 25. This issue will have to be decided sooner or later. It’s unavoidable. The best option—for Atlas, for the courts, and for the government—is to resolve this now.

Any other, similar cases about speech jammed up due to Shutdown?

I’m unaware of any—let me know if you have one!—but what we’ve learned about these shutdowns is that they have all kinds of bizarre and harmful unforeseen consequences. We have a highly interconnected and complex society. Pulling random regulatory apples from the middle of the pile, so to speak, can cause all kinds of collapse.

As we all know by now, the federal government did re-open a few days ago. And TTB approved the label at issue yesterday. So the judge mooted a big chunk of the case. But the principles are still under active consideration by the court. I will be more than happy to give equal time to the other side.