Wine and Spirits Retailers, Inc. and John Haronian v. State of Rhode Island

Of the Eleventh Circuit, sitting by designation. *
United States Court of Appeals
For the First Circuit
No. 05-1549
WINE AND SPIRITS RETAILERS, INC. AND JOHN HARONIAN,
Plaintiffs, Appellants,
v.
STATE OF RHODE ISLAND ET AL.,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. Ernest C. Torres, U.S. District Judge]
Before
Selya, Circuit Judge,
Hill, Senior Circuit Judge, *
and Lynch, Circuit Judge.
Evan T. Lawson, with whom Robert J. Roughsedge, Michael
Williams, and Lawson & Weitzen, LLP were on brief, for appellants.
Rebecca Tedford Partington, Deputy Chief, Civil Division,
Department of Attorney General, with whom Patrick C. Lynch,
Attorney General, was on brief, for state appellees.
Joseph S. Larisa, Jr., with whom Larisa Law and Consulting,
LLC was on brief, for intervenor-appellee.
August 10, 2005

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Posturing this action as one brought by W & S against the 1
State is a harmless oversimplification. In fact, W & S's
principal, John Haronian, is also a plaintiff and Jeffrey J. Greer,
in his official capacity as associate director of Rhode Island's
Department of Business Regulation, is also a defendant. Because
their presence is essentially superfluous, we opt for simplicity
and proceed as if W & S and the State were the only parties.
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SELYA, Circuit Judge. Rhode Island, like many states,
regulates the intrastate channels through which alcoholic beverages
may be manufactured, imported, and sold. One recently enacted
piece of this regulatory mosaic prevents any franchisor or
franchisee from holding a Class A retail liquor license. See R.I.
Gen. Laws § 3-5-11.1. Another piece, enacted at the same time,
amended a related statute, which prohibits any "chain store
organization" from holding such a license, id. § 3-5-11(a), so that
it explicitly encompasses package stores that engage in certain
coordinated business activities, see id. § 3-5-11(b).
Plaintiff Wine & Spirits Retailers, Inc. (W & S), a
franchisor of package stores, brought this action against the State
seeking, inter alia, to enjoin the enforcement of those new
enactments. W & S premised its suit on the thesis that the two 1
statutes, singly and in combination, violate (i) its First
Amendment rights to speech and association and (ii) its Fourteenth
Amendment right to equal protection.
In this early chapter of the litigation, W & S appeals
from the district court's denial of its motion for a preliminary
injunction. Having weighed the considerations relevant to the

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preliminary injunction balance, we conclude that the district court
did not abuse its discretion in determining that W & S failed to
show a likelihood of success on the merits of its claims and,
therefore, did not demonstrate an entitlement to preliminary
injunctive relief.
I. BACKGROUND
Under Rhode Island law, any individual or entity engaged
in the manufacture, sale, or importation of alcoholic beverages
must hold a valid license issued by the Department of Business
Regulation (DBR). See R.I. Gen. Laws § 3-5-1. A Class A retail
license entitles the holder to obtain alcoholic beverages from
licensed wholesalers and to operate a retail package store, from
which the beverages may be sold in sealed containers. See id.
§§ 3-7-1, 3-7-3. Since 1933, the State has prohibited chain store
organizations from holding Class A liquor licenses. See 1933 R.I.
Pub. Laws ch. 2013, § 6 (current version at R.I. Gen. Laws § 3-5-
11). This enactment gave the DBR full discretion to determine
whether an entity fell into the "chain store" category. Id.
The ingenuity of lawyers is nearly endless and, recently,
franchised package stores began to crop up throughout Rhode Island.
In an apparent effort to block this easy evasion of the chain store
prohibition, the Rhode Island General Assembly amended section 3-5-
11 to identify a set of licensee activities that would allow the
DBR to find that an entity was in fact a chain store organization.

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The new statute, enacted July 8, 2004 and effective April 1, 2005,
expanded the term "chain store organization" to encompass:
Any group of one or more holders of Class A
liquor licenses who engage in one or more of
the following practices with respect to the
business conducted under such licenses, either
directly or indirectly, or have any direct or
indirect beneficial interest in the following
practices:
(i) Common, group, centralized or coordinated
purchases of wholesale merchandise.
(ii) Common billing or utilization of the
services of the same person or the same entity
in the management or operation of more than
one liquor licensed business.
(iii) Participation in a coordinated or common
advertisement with one or more liquor licensed
business in any advertising media.
(iv) Coordinated or common planning or
implementation of marketing strategies.
(v) Participation in agreed upon or common
pricing of products.
(vi) Any term or name identified as a chain or
common entity.
R.I. Gen. Laws § 3-5-11(b)(1). By its terms, this statute
restricts a holder of a Class A liquor license from participating
in many business activities that are typical of a franchise
relationship.
Simultaneous with the enactment of section 3-5-11(b), the
General Assembly passed what is now section 3-5-11.1. This
provision has a similar but more direct effect: it explicitly
excludes franchisees from holding Class A liquor licenses. The
amended statute reads in pertinent part:
To promote the effective and reasonable
control and regulation of the Rhode Island
alcoholic beverage industry and to help the

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consumer by protecting their choices and
ensuring equitable pricing. Class A liquor
license[s] authorized by this title shall not
be granted, issued, renewed or transferred to
or for the use of any liquor franchisor or
franchisee. Class A liquor license holders
are expressly prohibited from utilizing the
provisions of the Franchise Investor [sic]
Act, [R.I. Gen. Laws] § 19-28-1 et seq.
Id. § 3-5-11.1(a). The latter statute also nullifies all franchise
agreements involving the retail sale of alcoholic beverages, id.
§ 3-5-11.1(b); stipulates that any franchisor or franchisee who is
a party to such an agreement must terminate it within thirty days
of the statute's effective date, id. § 3-5-11.1©); and empowers the
DBR to fine violators (including franchisors) and to revoke or
suspend a transgressor's liquor license and/or franchise
registration, id. § 3-5-11.1(d).
At the time these bills were passed, W & S had been
operating for roughly seven years as a franchisor of independently
owned Class A liquor retailers. It had a portfolio of eleven
franchise agreements in Rhode Island, all of which were registered
under the Franchise Investment Act, R.I. Gen. Laws §§ 19-28.1-1 to
19-28.1-34. These franchisees conducted business under names owned
by W & S (seven under the name "Douglas Wine & Spirits" and four
under the name "People's Liquor Warehouse").
In general, W & S's franchise agreements provided that,
for an annual fee, royalties, a commitment to maintain certain
quality standards, and a pledge to pay into a joint advertising and

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promotion fund, the franchisee would receive an exclusive franchise
territory. The franchisee also would receive the right to use
either the Douglas or People's trade name and other proprietary
marks, and would be given access to a compendium of marketing,
advertising, training, accounting, purchasing, and consulting
services. Additionally, the franchise agreements authorized W & S
to require the franchisees to carry certain products, to designate
vendors for those items, and to dictate the layout of each retail
store (including product placement).
In July of 2004 (when sections 3-5-11(b) and 3-5-11.1
were enacted), W & S was negotiating with two more potential Rhode
Island franchisees. Recognizing the relevance of the new statutes
to its operation, W & S wrote to the DBR on August 12, 2004, asking
whether it would be permissible to register those two new
franchises prior to the statutes' effective date. The DBR
responded on September 1, 2004, explaining that W & S would have to
submit applications in order for any new franchise registrations to
be considered. The DBR's letter left no doubt that this would be
an exercise in futility; the epistle declared the DBR's position to
be "that as of April 1, 2005, all store franchise agreements as of
that time will become null and void and it [thereafter] will be
illegal for a Class A package store to operate under a franchise
agreement."

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II. TRAVEL OF THE CASE
With the death knell set to toll, W & S filed this action
on September 29, 2004. Its complaint set forth eight statements of
claim. On January 18, 2005, W & S moved to enjoin enforcement of
the challenged provisions throughout the currency of the
litigation. In the motion for preliminary injunctive relief, it
relied on only three of its eight claims: (i) that sections 3-5-11
and 3-5-11.1 prohibit it from engaging in expression protected by
the First Amendment; (ii) that the laws violate its First Amendment
right to association; and (iii) that the laws violate the Equal
Protection Clause of the Fourteenth Amendment by treating it
differently from others who are similarly situated. The State
opposed the motion. The United Independent Liquor Retailers of
Rhode Island (UILRRI), an association of Class A licensees that had
lobbied for passage of the challenged laws, successfully moved to
intervene as a party defendant and sided with the State.
Following a hearing, the district court denied the
request for a preliminary injunction, principally on the ground
that W & S had not demonstrated a likelihood of success on the
merits. See Wine & Spirits Retailers, Inc. v. Rhode Island, 364 F.
Supp. 2d 172, 176-83 (D.R.I. 2005). W & S filed a timely notice of
appeal. See Fed. R. App. P. 4(a); 28 U.S.C. § 1292(a)(1). We
granted expedited review.

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In the meantime, the district court had granted an
injunction pending appeal, see Fed. R. Civ. P. 62©), to prevent the
State "from enforcing R.I. Gen. Laws § 3-5-11 to the extent that
the enforcement action is based solely on a Class A licensee's use
of a name similar to or the same as that of another licensee."
Wine & Spirits Retailers, Inc. v. Rhode Island, No. 04-418 (D.R.I.
April 29, 2005) (unpublished order). At W & S's request, we
extended that injunction to the date of the issuance of our mandate
but, like the lower court, denied other requested relief. See Wine
& Spirits Retailers, Inc. v. Rhode Island, No. 05-1549 (1st Cir.
May 23, 2005) (unpublished order); see also Fed. R. App. P.
8(a)(2). We heard oral argument on June 7, 2005 and took the
matter under advisement. We now affirm.
III. JUSTICIABILITY
W & S maintains that the district court wrongfully denied
its request for a preliminary injunction against the enforcement of
sections 3-5-11 and 3-5-11.1. Both the State and UILRRI assert
that W & S lacks Article III standing to challenge those laws.
It is axiomatic that Article III standing is a
constitutional precondition to a federal court's power to
adjudicate a case. Osediacz v. City of Cranston, ___ F.3d ___, ___
(1st Cir. 2005) [No. 04-2673, slip op. at 2]; R.I. Ass'n of
Realtors, Inc. v. Whitehouse, 199 F.3d 26, 30 (1st Cir. 1999).
When standing is put in issue, a reviewing court is warranted in

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confirming its existence before proceeding to tackle the merits of
the case. We do so here.
The burden of establishing standing lies with the party
invoking federal jurisdiction. Osediacz, ___ F.3d at ___ [slip op.
at 3]. Accordingly, W & S "must show that (1) it personally has
suffered some actual or threatened injury, (2) the injury fairly
can be traced to the challenged conduct, and (3) a favorable
decision likely will redress [the injury]." R.I. Ass'n of
Realtors, 199 F.3d at 30.
W & S easily satisfies these requirements with respect to
section 3-5-11.1. After all, it alleges that section 3-5-11.1's
prohibition on liquor franchises nullifies its franchise agreements
with no fewer than eleven franchisees and subjects it, as a
franchisor, to monetary penalties should it attempt to maintain its
franchise relationships. See R.I. Gen. Laws § 3-5-11.1(b), (d).
Those imminent consequences satisfy the requirement of an injury in
fact. That injury, in turn, is fairly traceable to the statute and
redressable in a federal court proceeding. Consequently, W & S has
standing to press its constitutional claims insofar as those claims
implicate section 3-5-11.1.
With respect to section 3-5-11, the defendants' cardinal
contention is that W & S cannot meet the standing requirement
because it does not itself hold a Class A liquor license and,
therefore, is not subject to any enforcement action or penalty

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under the statute's terms. This contention has a patina of
plausibility. Section 3-5-11 does not carry any direct penalties
applicable to franchisors but, rather, applies directly to holders
of Class A liquor licenses. Thus, it cannot be enforced against a
franchisor, like W & S, which does not itself possess such a
license.
In the end, however, this statutory configuration does
not undermine the allegation that W & S has suffered an injury that
is fairly traceable to the statute. That allegation draws its
essence from W & S's claim that section 3-5-11, by restricting the
holders of Class A liquor licenses from engaging in certain
business activities vital to franchise arrangements, infringes on
a franchisor's First Amendment rights of speech and association and
thereby causes W & S economic harm. No more is exigible to clear
the standing hurdle.
The requirement that an alleged injury be fairly
traceable to the defendant's action does not mean that the
defendant's action must be the final link in the chain of events
leading up to the alleged harm. See Bennett v. Spear, 520 U.S.
154, 168-69 (1997). Nor does that requirement exclude injuries
produced by "coercive effect upon the action of someone else." Id.
at 169. Given these principles, the fact that the deleterious
effect of a statute is indirect will not by itself defeat standing.
See Becker v. FEC, 230 F.3d 381, 387 (1st Cir. 2000); see also

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There is no suggestion here that any of W & S's franchisees 2
plan to terminate the franchise relationships for reasons unrelated
to the threatened enforcement of the new statutory provisions.
Therefore, this is not a case in which "the injury complained of is
'th[e] result [of] the independent action of some third party not
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Eulitt v. Me. Dep't of Educ., 386 F.3d 344, 353 (1st Cir. 2004)
(holding that parents had sufficiently alleged an Article III
injury even though "it [was] the educational institution, not the
parent[s]," that was denied access to certain tuition payments
under the challenged statute); Houlton Citizens' Coalition v. Town
of Houlton, 175 F.3d 178, 183 (1st Cir. 1999) (finding that trash
hauler had standing to assert a constitutional challenge to an
ordinance mandating residents' use of a town-designated
competitor); Wash. Legal Found. v. Mass. Bar Found., 993 F.2d 962,
972 (1st Cir. 1993) (finding that client had standing based on
alleged injury to her constitutional rights that was fairly
traceable to a rule, enforceable only against attorneys, that
required them to place client funds in a pooled interest-bearing
account).
These precedents are determinative here. Section 3-5-
11(b)(1) has an obviously coercive effect on W & S's franchisees;
under its terms, those franchisees either must desist from engaging
in certain collective business activities with W & S or forfeit
their Class A liquor licenses. Either way, W & S's business
relationship with the franchisees, which it claims to be
constitutionally protected, is damaged. Consequently, the 2

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before the court.'" Bennett, 520 U.S. at 169 (alterations and
emphasis in original) (quoting Lujan v. Defenders of Wildlife, 504
U.S. 555, 560-61 (1992)).
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economic harm that W & S alleges is fairly traceable to the statute
(and, thus, to the State).
To cinch matters, the threat to the franchisees is both
actual and imminent. It is undisputed that the DBR has taken
preliminary steps to enforce the statute against non-compliant
holders of Class A liquor licenses and has warned that it will
undertake such enforcement from and after the statute's effective
date. That is enough to show that the threatened harm is imminent.
See, e.g., Aroostook Band of Micmacs v. Ryan, 404 F.3d 48, 65-66
(1st Cir. 2005); Montalvo-Huertas v. Rivera-Cruz, 885 F.2d 971, 976
(1st Cir. 1989); see also Berner v. Delahanty, 129 F.3d 20, 24 (1st
Cir. 1997) (noting that to ground a claim of standing, harm must be
actual or imminent rather than conjectural or speculative).
Granting the requested declaratory and injunctive relief plainly
would palliate this threatened harm.
To say more on this point would be to paint the lily.
For the reasons elucidated above, we conclude, without serious
question, that W & S has alleged an injury fairly traceable to each
of the challenged statutes and redressable by the federal courts.
Accordingly, it has standing to pursue the claims that it asserts.

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IV. THE PRELIMINARY INJUNCTION STANDARD
We turn next to the legal standards that apply to the
grant or denial of preliminary injunctions. A district court must
weigh four factors in determining whether to issue a preliminary
injunction:
(1) the likelihood of success on the merits;
(2) the potential for irreparable harm [to the
movant] if the injunction is denied; (3) the
balance of relevant impositions, i.e., the
hardship to the nonmovant if enjoined as
contrasted with the hardship to the movant if
no injunction issues; and (4) the effect (if
any) of the court's ruling on the public
interest.
Bl(a)ck Tea Soc'y v. City of Boston, 378 F.3d 8, 11 (1st Cir. 2004)
(citing Ross-Simons of Warwick, Inc. v. Baccarat, Inc., 102 F.3d
12, 15 (1st Cir. 1996)). "The sine qua non of this four-part
inquiry is likelihood of success on the merits: if the moving
party cannot demonstrate that he is likely to succeed in his quest,
the remaining factors become matters of idle curiosity." New Comm
Wireless Servs., Inc. v. SprintCom, Inc., 287 F.3d 1, 9 (1st Cir.
2002).
This court reviews the grant or denial of a preliminary
injunction for abuse of discretion. Bl(a)ck Tea Soc'y, 378 F.3d at
11; Ross-Simons, 102 F.3d at 16. Under that rubric, findings of
fact are reviewed for clear error and issues of law are reviewed de
novo. Air Line Pilots Ass'n, Int'l. v. Guilford Transp. Indus.,
Inc., 399 F.3d 89, 95 (1st Cir. 2005); New Comm Wireless Servs.,

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287 F.3d at 9. Judgment calls and issues that demand the balancing
of conflicting factors are reviewed deferentially. Bl(a)ck Tea
Soc'y, 378 F.3d at 11. In the last analysis, then, we will set
aside a district court's ruling on a preliminary injunction motion
only if the court clearly erred in assessing the facts,
misapprehended the applicable legal principles, or otherwise is
shown to have abused its discretion. McGuire v. Reilly, 260 F.3d
36, 42 (1st Cir. 2001).
V. THE FIRST AMENDMENT CHALLENGE
W & S asserts that sections 3-5-11 and 3-5-11.1 impair
its First Amendment rights to free speech and expressive
association by (i) constricting its ability to peddle marketing and
management advice, advertising services, and trade name protection
to holders of Class A liquor licenses and (ii) making it unlawful
to engage in a franchise relationship with those license holders.
We consider these assertions separately.
A. The Free Speech Claim.
The Free Speech Clause provides that "Congress shall make
no law . . . abridging the freedom of speech." U.S. Const. amend.
I. By incorporation through the Fourteenth Amendment, this
prohibition applies to states and their political subdivisions.
Knights of Columbus v. Town of Lexington, 272 F.3d 25, 30 (1st Cir.
2001).

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In this case, W & S directs its free speech claim to
section 3-5-11(b)(1). It asseverates that various provisions of
that section adversely affect its ability to sell business advice
(sub-paragraphs (i), (ii), (iv), and (v)), advertising design and
placement services (sub-paragraph (iii)), and trade name rights
(sub-paragraph (vi)) to the holders of Class A liquor licenses.
Thus, the law unduly infringes on W & S's right to communicate with
the license holders. We examine this asseveration.
As an initial matter, we assess each of the activities
identified by W & S in light of its allegation that section 3-5-
11(b)(1) operates to prohibit or unduly curtail the activity. We
then consider the contention that the activity constitutes
protected speech or expressive conduct.
1. Business Advice. W & S maintains that the provision
of business advice for a fee is speech protected by the First
Amendment. The advice in question takes the form of a marketing
and management plan (including recommendations about purchasing and
pricing). The Supreme Court has recognized that some profit-
directed speech, such as legal or medical advice, is entitled to
constitutional protection. See Bd. of Trs. of State Univ. of N.Y.
v. Fox, 492 U.S. 469, 482 (1989). Here, however, we need not
determine whether and to what extent the business advice offered by
W & S to Class A license holders fits within this taxonomy. The
plain, hard fact is that section 3-5-11(b)(1) simply does not

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A case like this one, in which the statute imposes no burden 3
on the communication between the speaker and the intended audience
but has the effect of decreasing the audience's demand for a
particular kind of business advice, is distinguishable from cases
dealing with the State's direct imposition of financial burdens on
the dissemination of particular kinds of speech. See, e.g., Simon
& Schuster, Inc. v. Members of N.Y. State Crime Victims Bd., 502
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prohibit the communication of advice between a franchisor and the
holders of Class A liquor licenses.
To begin, nothing in the statute prevents W & S from
selling or otherwise communicating its recipe for the operation of
a successful package store to a Class A license holder. Nor does
the statute forbid a license holder from purchasing or receiving
that information. While the statute prevents certain conduct — the
implementation of W & S's business model — that prohibition imposes
no legally cognizable burden on the exchange of information between
the speaker (W & S) and the invited audience (the holders of Class
A liquor licenses).
Stripped of rhetorical flourishes, W & S's real complaint
is that section 3-5-11(b)(1) will have the incidental effect of
suppressing or eliminating the market demand for the particular
type of business advice that W & S offers (that is, marketing and
management strategies whose successful implementation requires the
coordination of business activities with those of other market
players). That circumstance does not suffice to hoist the red flag
of constitutional breach: the First Amendment does not guarantee
that speech will be profitable to the speaker or desirable to its 3

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U.S. 105, 115-18, 123 (1991) (invalidating law requiring publisher
to place convicted criminals' income derived from publications
about their crimes into escrow for victim compensation);
Minneapolis Star & Tribune Co. v. Minn. Comm'r of Rev., 460 U.S.
575, 581-83 (1983) (finding that tax on paper and ink products
consumed in newspaper production imposed an unconstitutional burden
on freedom of the press). In such cases, the government, not
waning market demand, was directly responsible for the financial
disincentive to speak.
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intended audience. See AMSAT Cable Ltd. v. Cablevision of Conn.
Ltd. P'ship, 6 F.3d 867, 871 (2d Cir. 1993); see also Young v. Am.
Mini Theatres, Inc., 427 U.S. 50, 78 (1976) (Powell, J.,
concurring) (noting that "[t]he inquiry for First Amendment
purposes is not concerned with economic impact; rather, it looks
only to the effect of [the challenged] ordinance upon freedom of
expression").
By the same token, the First Amendment does not safeguard
against changes in commercial regulation that render previously
profitable information valueless. That is a commonplace occurrence
in today's fast-moving world (an example would be the closing of a
tax loophole that renders a previously profitable tax shelter
worthless). The First Amendment's core concern is with the free
transmission of a message or idea from speaker to listener, not
with the speaker's ability to turn a profit or with the listener's
ability to act upon the communication.
That ends this aspect of the matter. Because section 3-
5-11(b)(1), on its face, imposes no burden on the ability of a
business advisor to relay marketing and management advice to

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holders of Class A liquor licenses, W & S is unlikely to succeed on
this facet of its First Amendment claim.
2. Advertising Services and Trade Names. W & S
suggests that section 3-5-11(b)(1)(iii)'s proscription on the
ability of the holders of Class A liquor licenses to participate
jointly "in a coordinated or common advertisement" and section 3-5-
11(b)(1)(vi)'s prohibition on a license holder's use of "[a]ny term
or name identified as a chain or common entity" constitute undue
restraints on commercial speech. We take no view on that
suggestion for two reasons: first, it would require us to examine
the commercial speech rights of Class A licensees — none of whom
are before this court — and second, W & S has not established any
basis upon which it can assert those rights on behalf of third
parties (including its franchisees). The only question properly
before us is narrower: whether the joint advertising and common
naming restrictions infringe on any speech or expressive conduct of
W & S that is protected by the First Amendment. We answer that
question in the negative.
Let us be perfectly clear. We agree with W & S's
underlying premise that commercial speech, including truthful
liquor advertising, is entitled to a measure of protection under
the First Amendment. See 44 Liquormart, Inc. v. Rhode Island, 517
U.S. 484, 501, 516 (1996); Cent. Hudson Gas & Elec. Corp. v. Pub.
Serv. Comm'n, 447 U.S. 557, 566 (1980); Va. State Bd. of Pharmacy

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v. Va. Citizens Consumer Council, Inc., 425 U.S. 748, 770 (1976).
We nonetheless reject W & S's suggestion because, in performing its
role in the activities in question, it does not engage in
commercial speech.
The activities that W & S claims to be protected as
commercial speech are its provision of advertising services,
including designing advertisements, arranging for their placement
in various media, and licensing the common use of trade names that,
according to W & S, have become synonymous with quality and value.
See Appellants' Br. at 5, 8; see also Wine & Spirits, 364 F. Supp.
2d at 177. The commercial speech doctrine protects the
communication of truthful information to potential customers about
a proposed commercial transaction. See Fox, 492 U.S. at 482; Cent.
Hudson, 447 U.S. at 561-63. W & S's assertions do not amount to a
claim that the joint advertising and common naming restrictions
impede its right to communicate with its potential customers,
rather, the claim is that those restrictions interfere with a right
to provide certain services. The provision of advertising and
licensing services is not speech that proposes a commercial
transaction and therefore does not constitute commercial speech.
See Fox 492 U.S. at 482 (distinguishing between the proposal of a
commercial transaction, "which is what defines commercial speech,"
and the provision of certain services for a profit, which is not
commercial speech).

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Nor do these activities — W & S's creation of
advertisements, assistance in their placement, and facilitation of
the use of its trade names by franchisees — fall into the broader
category of expressive activity in which conduct itself can be said
to convey a particularized message and, thus, be entitled to
protection as symbolic speech. See United States v. O'Brien, 391
U.S. 367, 376-77 (1968); see generally Hurley v. Irish-Am. Gay,
Lesbian & Bisexual Group, 515 U.S. 557, 569-70 (1995) (discussing
instances in which the Supreme Court has found conduct to be
inherently communicative). It is the duty of the party seeking to
engage in allegedly expressive conduct to demonstrate that the
First Amendment applies to that conduct. Clark v. Cmty. for
Creative Non-Violence, 468 U.S. 288, 293 n.5 (1984). W & S has
offered no plausible argument as to why the provision of
advertising services is an inherently expressive activity.
Of course, W & S also complains that the advertising and
common naming restrictions infringe on the franchisees' rights
jointly to propose retail liquor sales through newspaper
advertisements and the like. Though loudly bruited, that complaint
lacks force because W & S has not established standing to pursue
it.
A party ordinarily has no standing to assert the First
Amendment rights of third parties. See Eulitt, 386 F.3d at 351.
While there is an isthmian exception that applies when some barrier

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or practical obstacle deters a third party from asserting its
rights, see, e.g., Powers v. Ohio, 499 U.S. 400, 414-15 (1991)
(allowing criminal defendant to assert rights of jurors because
they lack financial incentive to undertake the burden of
litigation), nothing in the record indicates that W & S's
franchisees are unable or unlikely to protect their own rights.
In some circumstances, out of concern that an overly
broad statute might chill constitutionally protected speech, the
Supreme Court has relaxed the prudential limitations on third-party
standing to permit a litigant to pursue a facial challenge to such
a statute on overbreadth grounds, even though the litigant's own
conduct could be regulated validly by a more narrowly drawn
statute. Broadrick v. Oklahoma, 413 U.S. 601, 612 (1973). Here,
however, any assertion that the advertising and common naming
provisions substantially overreach would fail because the
overbreadth doctrine is inapplicable in the commercial speech
context. See, e.g., Vill. of Hoffman Estates v. Flipside, Hoffman
Estates, Inc., 455 U.S. 489, 496-97 (1982); Bates v. State Bar of
Ariz., 433 U.S. 350, 380-81 (1977).
To recapitulate, W & S has not laid any groundwork
sufficient to establish third-party standing, so it cannot assert
the commercial speech rights of Class A license holders. W & S's
spavined attempt to assert a facial challenge affords no safety net
for this claim. Accordingly, we endorse the district court's

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conclusion that W & S's free speech claim has little chance of
succeeding on the merits.
B. The Freedom of Association Claim.
W & S strives to persuade us that the challenged
statutes, by directly and indirectly prohibiting the holders of
Class A liquor licenses from engaging in franchise relationships,
impinge on its First Amendment right to associate with its
franchisees for the purposes of joint advertising and development
of common management and marketing strategies. We are not
convinced.
The Supreme Court long has recognized that freedom of
speech embraces the "freedom to engage in association for the
advancement of beliefs and ideas." NAACP v. Alabama, 357 U.S. 449,
460 (1958). This freedom of expressive association emerges from
the insight that expressive rights explicitly guaranteed by the
First Amendment "could not be vigorously protected from
interference by the State unless a correlative freedom to engage in
group effort toward those ends were not also guaranteed." Roberts
v. U.S. Jaycees, 468 U.S. 609, 622 (1984). Because protection of
the right to associate evolves from the First Amendment's
guarantees of speech, assembly, petition, and free exercise, the
scope of protection for association corresponds to the
constitutional solicitude afforded to the mode of First Amendment

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expression in which a particular group seeks collectively to
engage. See id.
It follows logically that, in a free speech case, an
association's expressive purpose may pertain to a wide array of
ends (including economic ends), see id., but the embedded
associational right protects only collective speech and expressive
conduct in pursuit of those ends; it does not cover concerted
action that lacks an expressive purpose, see City of Dallas v.
Stanglin, 490 U.S. 19, 24-25 (1989). So viewed, the right to
expressive association does not confer a generalized freedom for
individuals or entities collectively to engage in activity that is
otherwise regulable when undertaken by a single individual or
entity. See id. As one treatise has noted, "[t]he Court has
tended to view the right of association as dependent on underlying
individual rights of expression; there is no right of association
in the abstract." Kathleen M. Sullivan & Gerald Gunther,
Constitutional Law 1337 (14th ed. 2001). Thus, W & S must
demonstrate that sections 3-5-11 and 3-5-11.1 unduly curtail its
associational right to engage in activities protected by the First
Amendment. Elsewise, it cannot prevail on its associational claim.
We already have explained why section 3-5-11(b)(1) does
not violate any of W & S's speech rights. See supra Part V(A).
The question, then, reduces to whether section 3-5-11.1 may be said
to work such a violation. To this end, W & S labors to

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characterize its concerted business activities as speech or
expressive conduct protected by the First Amendment. That effort
fails.
Business entities have no First Amendment right to
combine operations or coordinate market activities for the purpose
of obtaining a greater market share for each participant. The fact
that communication serves as the primary instrument of conducting
business among separate enterprises does not alter this conclusion.
The Supreme Court elaborated on this point more than half a century
ago in Giboney v. Empire Storage & Ice Co., 336 U.S. 490 (1949).
The Giboney Court acknowledged that, although courses of
conduct are, in most instances, effectuated by speaking or writing,
"it has never been deemed an abridgment of freedom of speech or
press to make a course of conduct illegal merely because the
conduct was in part initiated, evidenced, or carried out by means
of language." Id. at 502. Indeed, "[s]uch an expansive
interpretation of the constitutional guaranties of speech and press
would make it practically impossible ever to enforce laws against
agreements in restraint of trade as well as many other agreements
and conspiracies deemed injurious to society." Id.; see also
Calif. Motor Transp. Co. v. Trucking Unlimited, 404 U.S. 508, 513-
15 (1972) (explaining that while communication is an integral part
of joint conduct, that fact cannot be used as a pretext for
obtaining immunity from laws prohibiting anticompetitive commercial

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In pertinent part, that amendment prohibits "[t]he 4
transportation or importation . . . for delivery or use . . . of
intoxicating liquors [into any state]" in violation of state law.
U.S. Const. amend. XXI, § 2.
-25-
activities). After all, the Court has made clear that "the State
does not lose its power to regulate commercial activity deemed
harmful to the public whenever speech is a component of that
activity." Ohralik v. Ohio State Bar Ass'n, 436 U.S. 447, 456
(1978) (citing "the exchange of price and production information
among competitors" as an example of "communications that are
regulated without offending the First Amendment").
Against this backdrop, we turn to the case at hand. In
enacting section 3-5-11.1, Rhode Island exercised its police power,
including its power under the Twenty-First Amendment, to regulate 4
commercial transactions involving liquor and the organizational
structure of the market in which such transactions take place.
Seen in this light, the statute is tantamount to an antitrust law
— a category of regulation that recognizes the authority of the
State to adjust the distribution of market power among commercial
entities so as to prevent conditions that are, in its reasonably
held view, harmful to healthy competition and free trade.
It is black letter law that "the constitutionality of the
antitrust laws is not open to debate." Calif. Motor Transp., 404
U.S. at 515. Such laws, by definition, regulate the ways in which
market players may pool their capabilities to acquire market power.

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While the State cannot regulate the right of speakers to band
together to convey a common message in the marketplace of ideas, it
most assuredly can exercise control over the efforts of market
players to exploit the principle of strength in numbers in the
marketplace of goods. See U.S. Jaycees, 468 U.S. at 638 (O'Connor,
J., concurring) (positing that "there is only minimal
constitutional protection of the freedom of commercial
association," id. at 634, and that, in all events, "no First
Amendment interest stands in the way of a State's rational
regulation of economic transactions by or within a commercial
association"); Kathleen M. Sullivan, Free Speech and Unfree
Markets, 42 U.C.L.A. L. Rev. 949, 950 (1995) (observing that, in
the modern constitutional order, legislatures are free to pass laws
"that override private economic arrangements on allocative grounds
— such as correcting for collective action problems, externalities,
information asymmetries, or monopolies — or for reasons of
redistribution or paternalism").
The case law dealing with claimed exceptions to antitrust
or commercial conspiracy laws on First Amendment associational
grounds indicates that the State's right to enforce such laws
against collusive market behavior must abate only in instances in
which the joint activity constitutes an exercise of a core speech
right. In Eastern Railroad Presidents Conference v. Noerr Motor
Freight, Inc., 365 U.S. 127 (1961), the Supreme Court recognized

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that commercial actors' concerted petitioning for legislative
change was a form of political expression protected by the First
Amendment and, therefore, exempt from certain applications of the
antitrust laws. Id. at 136-38. In NAACP v. Claiborne Hardware
Co., 458 U.S. 886 (1982), where black citizens had banded together
to boycott white merchants as a means of protesting discriminatory
practices, the Supreme Court held that the merchants could not
premise liability for state antitrust violations and common law
conspiracy on the boycotters' collective exercise of First
Amendment rights. See id. at 890-92, 915, 933. Finding that the
boycott involved the exercise of core First Amendment rights
(speech, petition, and assembly), the Court ruled that the State's
right "to regulate economic activity could not justify a complete
prohibition against a nonviolent, politically motivated boycott
designed to force governmental and economic change and to
effectuate rights guaranteed by the Constitution." Id. at 914.
Several other cases in that lineage also turned on the fact that
the concerted activity implicated exceptions to the antitrust laws
designed to protect core speech rights. See, e.g., Prof'l Real
Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S.
49, 56-60 (1993) (explaining that antitrust liability cannot be
imposed upon entities that collectively pursue objectively
reasonable litigation, even when an anticompetitive intent
motivates the suit); United Mine Workers of Am. v. Pennington, 381

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U.S. 657, 669-70 (1965) (decreeing that antitrust laws cannot be
interpreted to prohibit joint efforts to influence public officials
through otherwise legal methods).
These cases must be contrasted with cases such as FTC v.
Superior Court Trial Lawyers Ass'n, 493 U.S. 411 (1990), in which
the Court upheld the imposition of an injunction under the Sherman
Act against a cadre of court-appointed lawyers that enjoined their
concerted refusal to accept further case assignments pending a
requested fee increase. See id. at 426-36. The Court explained
that "the undenied objective of [the] boycott was an economic
advantage for those who agreed to participate," id. at 426, and
that the lawyers' joint activity was aimed at "profit[ing]
financially from a lessening of competition in the boycotted
market," id. at 427 (internal quotation marks omitted). In those
circumstances, the Court refused to accept the lawyers' claim that
the law, as applied, violated their right to associate for
expressive purposes because to do so would be to "exaggerate[] the
significance of the expressive component in the [lawyers']
boycott." Id. at 430. In the absence of anything uniquely
expressive about the concerted commercial activity, no First
Amendment exception to the enforcement of an otherwise valid
antitrust law was warranted. Id. at 431 (noting that "[t]he most
blatant, naked price-fixing agreement is a product of
communication, but that is surely not a reason for viewing it with

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The conclusion that otherwise valid regulation of commercial 5
interactions between business entities does not offend the First
Amendment merely because such interactions have a communicative
component would apply with equal force to our analysis in Part
V(A)(1), had we found that the relevant sub-paragraphs of section
3-5-11(b)(1) did in fact impede communications between W & S and
the holders of Class A liquor licenses.
-29-
special solicitude"); accord Nat'l Soc'y of Prof'l Eng'rs v. United
States, 435 U.S. 679, 697 (1978) (upholding, against a First
Amendment challenge, an antitrust injunction that prohibited a
professional society "from adopting any official opinion, policy
statement, or guideline stating or implying that competitive
bidding is unethical").
Here, it is nose-on-the-face plain that W & S's
commercial conduct exhibits nothing that even the most vivid
imagination might deem uniquely expressive. Certainly, the mere
fact that the joint activities that define the business
relationship between the franchisor and its franchisees have some
communicative component cannot, in and of itself, establish an
entitlement to the prophylaxis of the First Amendment. See
Superior Court Trial Lawyers, 493 U.S. at 430. Consequently, that
conduct does not warrant overriding the State's historic right to
regulate market forces in the retail liquor industry.5
In sum, W & S has not established that the neoteric laws
prohibiting the holders of Class A liquor licenses from conducting
joint business activities infringe upon any right to advance its
beliefs or ideas by engaging in activities protected by the First

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Amendment. Accordingly, there is scant reason to believe
that W & S can succeed on the merits of its freedom of expressive
association claim.
VI. THE EQUAL PROTECTION CLAIM
As a last resort, W & S mounts an equal protection
challenge to sections 3-5-11 and 3-5-11.1. Its complaint is that
these statutes apply to package stores but not to other entities
licensed to sell alcoholic beverages at retail (such as restaurants
and bars). Its contrived attempt to tease an equal protection
violation out of this imperfect analogy is unpersuasive.
When economic legislation neither employs suspect
classifications nor infringes on fundamental rights, the
legislation need only survive rational basis scrutiny. Hodel v.
Indiana, 452 U.S. 314, 331 (1981). Under that standard, an
inquiring court must uphold the legislation as long as the means
chosen by the legislature are rationally related to some legitimate
government purpose. Id. In conducting that analysis, the State's
legislative choices "bear[] a strong presumption of validity."
Kittery Motorcycle, Inc. v. Rowe, 320 F.3d 42, 47 (1st Cir. 2003)
(internal quotation marks omitted). A challenger can overcome this
presumption only by "demonstrating that there exists no fairly
conceivable set of facts that could ground a rational relationship
between the challenged classification and the government's
legitimate goals." Eulitt, 386 F.3d at 356.

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To be sure, W & S contends that the challenged statutes 6
burden its fundamental rights of speech and association. We
dismiss that contention out of hand. See supra Part V
(establishing that the challenged statutes do not impermissibly
impinge upon W & S's First Amendment rights).
Even in the improbable event that the two markets were to be 7
deemed substantially similar, that showing alone would not ensure
W & S's success. Regulation must start somewhere. See FCC v.
Beach Commc'ns, Inc., 508 U.S. 307, 316 (1993) (explaining that
"the legislature must be allowed leeway to approach a perceived
problem incrementally").
-31-
These rules are dispositive here. The legislation at
issue is economic in nature. It neither utilizes suspect
classifications nor trenches upon fundamental rights. Its 6
purpose, as stated by the Rhode Island General Assembly, is to
protect consumer choice and ensure the equitable pricing of retail
liquor products. See R.I. Gen. Laws § 3-5-11.1(a). W & S has not
explained why, given the unexceptionable goal of maintaining a
competitive retail liquor industry, it is irrational for Rhode
Island to enact measures aimed at preventing anticompetitive
practices by ensuring that holders of Class A liquor licenses
operate independently. By like token, W & S has wholly failed to
show that restaurants and bars (which are licensed to sell
alcoholic beverages only for consumption on their licensed
premises) are similarly situated entities vis-à-vis package stores
(which are licensed to sell alcoholic beverages only in sealed
containers and for off-premises consumption). Finally, it has 7
failed to support its contention that Rhode Island's decision to

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devise a special regulatory scheme for the retail liquor market is
arbitrary; for example, it has not negated the possibility that
healthy competition already exists with respect to other sectors of
the liquor industry (thus rendering regulation unnecessary).
The short of it is that W & S has not demonstrated that
the challenged legislation lacks a rational basis. Accordingly,
the district court did not miscalculate in finding it improbable
that W & S would prevail on its equal protection claim.
VII. CONCLUSION
We need go no further. W & S has not shown that it is
likely to succeed on the merits of any of its claims. Since such
a showing is a precondition to the securing of a preliminary
injunction, New Comm Wireless Servs., 287 F.3d at 9, we need not
probe the other components of the applicable four-part test. It
suffices to say that the district court acted well within the
encincture of its discretion in denying W & S's request for
preliminary injunctive relief.
Affirmed.

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