The tied house and commercial bribery provisions are those most frequently cited by regulators reviewing an advertisement or marketing campaign.

It shall be unlawful for any person engaged in business as a distiller, brewer, rectifier, blender, or other producer, or as an importer or wholesaler, of distilled spirits, wine, or malt beverages, or as a bottler, or warehouseman and bottler, of distilled spirits, directly or indirectly or through an affiliate…

(b) “Tied house”

To induce through any of the following means, any retailer, engaged in the sale of distilled spirits, wine, or malt beverages, to purchase any such products from such person to the exclusion in whole or in part of distilled spirits, wine, or malt beverages sold or offered for sale by other persons in interstate or foreign commerce, if such inducement is made in the course of interstate or foreign commerce, or if such person engages in the practice of using such means, or any of them, to such an extent as substantially to restrain or prevent transactions in interstate or foreign commerce in any such products, or if the direct effect of such inducement is to prevent, deter, hinder, or restrict other persons from selling or offering for sale any such products to such retailer in interstate or foreign commerce: (1) By acquiring or holding (after the expiration of any existing license) any interest in any license with respect to the premises of the retailer; or (2) by acquiring any interest in real or personal property owned, occupied, or used by the retailer in the conduct of his business; or (3) by furnishing, giving, renting, lending, or selling to the retailer, any equipment, fixtures, signs, supplies, money, services, or other thing of value, subject to such exceptions as the Secretary of the Treasury shall by regulation prescribe, having due regard for public health, the quantity and value of articles involved, established trade customs not contrary to the public interest and the purposes of this subsection; or (4) by paying or crediting the retailer for any advertising, display, or distribution service; or (5) by guaranteeing any loan or the repayment of any financial obligation of the retailer; or (6) by extending to the retailer credit for a period in excess of the credit period usual and customary to the industry for the particular class of transactions, as ascertained by the Secretary of the Treasury and prescribed by regulations by him; or (7) by requiring the retailer to take and dispose of a certain quota of any of such products; or

(c) Commercial bribery

To induce through any of the following means, any trade buyer engaged in the sale of distilled spirits, wine, or malt beverages, to purchase any such products from such person to the exclusion in whole or in part of distilled spirits, wine, or malt beverages sold or offered for sale by other persons in interstate or foreign commerce, if such inducement is made in the course of interstate or foreign commerce, or if such person engages in the practice of using such means, or any of them, to such an extent as substantially to restrain or prevent transactions in interstate or foreign commerce in any such products, or if the direct effect of such inducement is to prevent, deter, hinder, or restrict other persons from selling or offering for sale any products to such trade buyer in interstate or foreign commerce: (1) By commercial bribery; or (2) by offering or giving any bonus, premium, or compensation to any officer, or employee, or representative of the trade buyer; …

TTB, with the cooperation in some states of state alcohol agencies, is conducting a widespread investigation of supplier and retailer activities involving one or more of the following activities: “pay to play” tied house violations, exclusive outlet, commercial bribery consignment sales, slotting fees, illegal sponsorship arrangements, and improper use of third parties, to name a few. TTB is conducting widespread industry interviews and is serving both formal and informal document requests directed at identifying these activities. TTB may prosecute a violation of the Act if the agency can prove an illegal inducement or requirement which resulted in exclusion; put another way, in order to meet its burden of proof, TTB needs to show that the inducement or requirement of the retailer resulted in the retailer purchasing the offending supplier’s products to the exclusion of other brands.

This article is part of our Conference Materials Library and has a PowerPoint counterpart that can be accessed in the Resource Libary.

HospitalityLawyer.com® provides numerous resources to all sponsors and attendees of The Hospitality Law Conference: Series 2.0 (Houston and Washington D.C.). If you have attended one of our conferences in the last 12 months you can access our Travel Risk Library, Conference Materials Library, ADA Risk Library, Electronic Journal, Rooms Chronicle and more, by creating an account. Our libraries are filled with white papers and presentations by industry leaders, hotel and restaurant experts, and hotel and restaurant lawyers. Click here to create an account or, if you already have an account, click here to login.

After the Prohibition was repealed by the 21st Amendment, a complex web of alcohol beverage laws created a “three-tier system” in which independence must exist between alcohol beverage manufacturers, distributors, and retailers. The ways in which these three tiers can interact is strictly controlled by federal and state laws. Armed with an increased budget due to a 2017 congressional appropriation, the U.S. Alcohol and Tobacco Tax and Trade Bureau (the “TTB”) intensified its trade practice enforcement efforts, resulting in several permit suspensions and high fines for industry members (the latest was $1.5 million). This [article] provides some practical advice on how to limit trade-practice enforcement exposure for hospitality clients.

What is a “Tied-House,” and Why is it So “Evil”?

A “tied-house” refers to an impermissible tie between an alcohol beverage retailer, wholesaler, and supplier. The “evils” associated with these ties refer to the post-prohibition fears that cozy relationships between these tiers, or “houses” could lead to less consumer product choice, or to the type of “evils” that existed during and pre-prohibition, like consumer overconsumption, predatory marketing practices by alcohol manufacturers, or dominance by a single producer in the marketplace. The essence of federal and state tied-house laws is that a supplier or distributor cannot exert undue influence over a retailer, and generally cannot pay or credit the retailer for any advertising, display, sponsorship, or distribution service. Similarly, suppliers and distributors are generally prohibited from owning retailers (thus becoming tied-houses). There are general exceptions to these laws that allow a supplier or distributor to market their products to retailers, but those exceptions are extremely limited. For example, in most states a supplier can do a consumer wine tasting at a bar, restaurant, or supermarket, and provide free samples to consumers to encourage a consumer to buy its product. Suppliers and wholesalers can also provide things of nominal value to a retailer, like branded napkins, banners, keychains, etc.

Are things so “Evil” right now?

In order to drive sales and increase profitability, industry members are constantly trying to strike the delicate balance between respecting tied-house laws and making the margins work. At the state level, we have seen heightened action by local agencies to enforce tied-house laws, including a 2017 Pennsylvania Liquor Control Board action that resulted in fines of $9 million paid by two large distributors, a Maine distillery, and an importer, after these industry members purportedly took Liquor Control Board members on lavish vacations, dinners, etc., in exchange for favorable treatment of their products. More notably, the TTB has been visibly present in various markets across the country since 2017, conducting comprehensive investigations at retail accounts in Florida, Illinois, California, and other states.

Best Practices

Retailers can steer clear of trouble in a number of ways:

1. Know the Law on Tied-House Exceptions. This gets tricky, because each state has a separate list of what a retailer can lawfully accept from a supplier or distributor. The details matter. For example, some state laws do not allow an alcohol beverage manufacturer or distributor to do “bar spends” at licensed retail accounts, or only allow them in limited circumstances. In New York, a manufacturer can spend no more than $700 in a retail account to buy rounds of drinks for consumers. In other states, bar spends have no monetary limits, and some states outright prohibit them.
2. Document, Document, Document. When a regulator questions a retail account about having received certain “things of value” from a supplier or distributor, having proper documentation is imperative. As an example, retailers should keep track of every time a supplier or distributor conducts an on-site sampling event or promotion, including time the time of arrival/departure, the types of drinks that were sampled, the total amount spent on the drinks, tip left, etc. Always include a copy of the itemized receipt in your records. Regulators will be looking to the retailer to justify the financial support or item received.
3. Quid Pro NO! Retailers cannot accept even allowable items from an upper-tier industry member, like branded napkins or bar mats, when the gift is conditioned on bar or menu placement, shelf space, etc. This is called a “slotting fee,” and is a classic example of a tied house violation.
4. Management Companies & Event Venues: Even if they don’t hold the retail liquor license themselves, hotel management companies cannot violate beverage law without subjecting themselves to great risk. The TTB is increasingly scrutinizing payments by alcohol brands to unlicensed third parties, where the benefits are clearly passed through to the retail licensee. Not only could these types of violations result in steep fines, but criminal action is also possible, including conspiracy and money laundering charges. At venues like concert or sports arenas, sponsorship agreements with alcohol beverage brands’ need to be carefully scrutinized. The TTB’s current position is that the sponsorship should be for legitimate brand advertising only, but cannot be tied to the food and beverage concessionaire’s activities at the venue. Branded bar areas or lounges are often viewed unfavorably by regulators.

This article is part of our Conference Materials Library and has a PowerPoint counterpart that can be accessed in the Resource Libary.

HospitalityLawyer.com® provides numerous resources to all sponsors and attendees of The Hospitality Law Conference: Series 2.0 (Houston and Washington D.C.). If you have attended one of our conferences in the last 12 months you can access our Travel Risk Library, Conference Materials Library, ADA Risk Library, Electronic Journal, Rooms Chronicle and more, by creating an account. Our libraries are filled with white papers and presentations by industry leaders, hotel and restaurant experts, and hotel and restaurant lawyers. Click here to create an account or, if you already have an account, click here to login.

Large and even medium scale acquisitions in the hospitality industry trigger these important legal questions and more. Sometimes, however, the dealmakers overlook or delay one critical area: alcohol service! How will we make sure the hotel or restaurant will be able to serve alcohol on Day One?

Careful planning and precise timing are critical. If your transaction involves properties in multiple jurisdictions, you will need to understand the existing licensing structure of each property, and the requirements and procedures for transferring the license to a new owner, noting that the procedures for doing this will not be the same in every jurisdiction. The timelines in each location, dictated by the governing licensing authorities will be different; therefore, it is essential that you work backwards from your proposed closing date to guarantee yourself enough time for licensing. Here are some initial questions to consider:

• Does the jurisdiction require licensing on more than one level (state/local)?
• Does the jurisdiction allow the transfer of a license from the seller, or will new licenses be required?
• Does the jurisdiction’s licensing process include prerequisites with additional internal deadlines which must be adhered to (e.g., publication requirements)?
• Does the jurisdiction allow a procedure for temporary licensing if permanent licensing cannot be completed by the closing date?
• Does the jurisdiction allow a “master file” when there are multiple properties licensed to one entity inside the same jurisdiction?

The answers to these questions will provide you with a rough timeline to work with. The next thing you need to be prepared for, however, is the inevitable. Something will go wrong and you will need to adjust your timeline. That means that is even more important for you to build in extra time. For example:

• The kitchen failed the health inspection.
• The license cannot transfer because the seller has sales tax due and unpaid.
• The officers of your licensed entity have all gone overseas for vacation and cannot be fingerprinted.

Wait a minute….the officers need to be fingerprinted? What officers?

Liquor license applications in all states require some level of fingerprinting of the officers disclosed on the liquor license application, as well as disclosure of personal information like physical description (height, weight, eye color), bank account references, and social security numbers. Similar information may be required for spouses of the disclosed individuals. There are several reasons that government agencies request this information, but the most important one is that the state has an interest in knowing that the individuals running a regulated business are who they say they are. The number of individuals to be disclosed will depend on the corporate structure of the applicant, and, depending on the nature of the transaction and the enforcement policies of the licensing jurisdiction, the officers of parent companies or holding companies related to the applicant may also need to be disclosed. It will be important for you to understand at the beginning of the licensing process how many individuals need to be fingerprinted and submit personal questionnaires.

Timing is paramount when acquiring any business with a liquor license. These introductory tips apply in any jurisdiction; however, note that each licensing authority has different rules and communication with those government agencies about your transaction so that you understand the expectations will be key to a successful and timely transaction.

About GrayRobinson
GrayRobinson is a full-service corporate law firm with 300 attorneys and consultants throughout 14 offices across Florida. Our attorneys provide legal services for Fortune 500 companies, emerging businesses, lending institutions, local and state governments, developers, entrepreneurs and individuals across Florida, the nation and the world.

At GrayRobinson we offer not only breadth across a great many legal areas, but also depth and proficiency in each one. We have invented a better brand of law firm, counting creativity as a hallmark characteristic and insisting on ingenuity and innovation. At GrayRobinson, there is no such thing as “business as usual.” We are one of Florida’s fastest-growing law firms and are proud to be at the forefront of emerging legal issues.

Suppliers and retailers of alcoholic beverages advertise their respective products and offerings in a wide variety of digital outlets. Questions arise as to how the complex legal landscape of alcohol regulation applies in these digital spaces. Advertising media include social network services (e.g., Facebook), video sharing sites (e.g., YouTube), blogs, and smartphone applications. In addition to these types of media which engage consumers directly on their televisions and personal devices, other types of media target consumers in retail places. These media include digital screens which are physically present in store, as well as seemingly invisible technology which targets the consumer in store on his or her smartphone.

The Law Plays Catch-Up

Tied house laws, which address the financial relationships between supplier and retailer licensees, were enacted well before any digital media was invented. As a result, the alcohol laws have been playing catch up with this technology. Nevertheless, it is clear that social media qualifies as advertising for the purpose of alcohol beverage laws, and more and more jurisdictions are creating specific legislation to clarify this point. For example, Georgia, Kentucky, and Louisiana all now include social media in state definitions of advertising. On the federal level, the U.S. Tax and Trade Bureau (“TTB”) has confirmed that mandatory statements required in supplier product advertising are required in all forms of social media as well.

Paying for Technology: Compliance with State and Federal Tied House Rules

Technology can be expensive, and as a result retailers frequently wish to enlist supplier support to defray the cost of advertising both in and out of their premises. Generally, it is important to remember that the same rules which govern traditional advertising also govern these new technologies. Therefore, the same questions which come up in traditional advertising also apply here. For example, does the advertising involve the supplier paying for or buying advertising for the retailer in a manner that results in prohibited “cooperative advertising”? Does the technology involve the supplier providing or otherwise paying for a piece of equipment which is not covered by any applicable tied house exception?

The recent case of Retail Digital Network, LLC v. Prieto, 861 F.3d 839 (9th Cir. 2017), involved the issue of an impermissible payment for advertising. The plaintiff in the case installs liquid crystal displays for advertisements in retail outlets. Advertisers pay plaintiff for the opportunity to feature their brand advertising in the retail location. Plaintiff in turn then pays the retailer a percentage of the advertising fees generated by the display. Suppliers of alcohol beverages refused to do business with the plaintiff out of concern that California’s alcohol beverage laws prohibited them from paying to place advertising on a retail premises. The plaintiff sued the California Department of Alcoholic Beverage Control to enjoin enforcement of this particular part of the state tied house law. In short, the plaintiff argued that the suppliers’ proposed advertisements were protected commercial speech, and that the state interests and concerns inherent in the Twenty-first Amendment were outweighed by First Amendment interests. An en banc panel of the Ninth Circuit held that the California advertising prohibition directly and materially advanced the state’s interest in maintaining the three tier system, and therefore was sufficient to overcome First Amendment scrutiny.

Because digital advertising has become so popular, a cottage industry has developed for screens, closed loop televisions, and other devices that sit in retail places to stream digital content. Retailers frequently ask whether these items can be paid for or loaned by suppliers. This is a state specific issue, and the answer to the question will vary from one jurisdiction to another. One way to analyze the issue is to determine whether the item really a digital sign (likely covered under a tied house exception) or an illegal thing of value (a gift not covered by a tied house exception). The Texas Alcoholic Beverage Commission (“TABC”) has published two Marketing Practices Bulletins on this subject which provide helpful guidance. The TABC articulated questions to be used to determine the true nature of the item. They include:

• Is the primary purpose of the item to advertise a product?
• Is it a permanent fixture?
• Is it a thing of value?
• How long will the item stay in the retail premises?

Questions Raised by SmartPhone Applications

The uptick in digital advertising has also increased the number of smartphone applications directed at the marketing and sale of alcoholic beverages. Many retailers now have their own smartphone applications, and many interface with applications operated by non-licensees which drive traffic to the retail establishment.

Many of the best practices associated with applications which advertise alcohol are the same as the best practices for websites featuring alcohol products. These include, but are not limited to, age-gating and promoting responsible consumption. In addition, however, smartphone applications also raise several other legal issues in the alcohol space, depending on the functionality of the application. Consider the following issue-spotter questions:

• Does the app, if operated by an unlicensed third party, improperly use or avail itself of the retailer’s license to sell alcoholic beverages?
• Does the app facilitate an improper flow of funds between a supplier and a retailer?
• Does the app offer promotions which could result in violations of state happy hour or drink pricing rules?
• Does the app result in tied house exclusion by directing consumers away from one retailer and toward another?

Summary

Digital communications promoting alcohol present compliance challenges in terms of their jurisdictional reach, and to whom they may be directed. It is best for industry members to consult state law to determine which laws and regulations governing traditional advertising may also apply in the context of digital advertising. Furthermore, many states have developed enforcement policies and other opinion statements on social media and related issues; therefore, consulting state agency resources is recommended.

What types of establishments must comply?

The menu labeling requirements apply to retail food establishments that are part of a chain with 20 or more locations doing business under the same name and offering for sale substantially the same menu items. This includes bakeries, cafeterias, coffee shops, convenience stores, delicatessens, food service facilities and concession stands located within entertainment venues (such as amusement parks, bowling alleys, and movie theatres), food service vendors (such as ice cream shops and mall cookie counters), food takeout or delivery establishments (such as pizza takeout and delivery establishments), grocery stores, retail confectionary stores, superstores, quick service restaurants and table service restaurants.

What are covered establishments required to do?

As mentioned above, covered establishments must:

• • Clearly and conspicuously display calorie information for standard items on menus and menu boards, next to the name or price of the item.
  • Provide on the menu or menu board a succinct statement regarding recommend calorie intake.
  • Provide on the menu or menu board a statement regarding the availability of additional written nutritional information.
  • Develop and maintain written information for a standard menu item in a covered establishment which provides the amount of total calories, calories from fat, total fat, saturated fat, trans fat, cholesterol, sodium, total carbohydrate, dietary fiber, sugars, and protein in that item. It may be provided by counter card, sign, poster, handout, booklet, loose-leaf binder, menu, or electronic device or by other similar means.

Is this required for all menu items?

No. These requirements only apply to standard menu items. A standard menu item is a restaurant-type food that is routinely included on a menu or menu board or routinely offered as a self-service food or food on display.  These requirements typically will not apply to (i) seasonal menu items offered for sale as temporary menu items, (ii) daily specials or, (iii) condiments for general use typically available on a counter or table.

Does the rule apply to alcoholic beverages?

Yes. The menu labeling rule applies to alcoholic beverages that are standard menu items that are listed on a menu or menu board. However, the requirements do not apply to alcoholic beverages that are on display, but are not self-service foods. For example, bottles of alcohol that are on display behind a bar that a bartender uses to prepare drinks that are not listed on a menu or menu board are not covered. Similarly, the menu labeling requirements do not apply beers on tap that are not self-serve or listed as a standard menu item on a menu or menu board.

A standard menu item offered for sale in a covered establishment is deemed misbranded under the Food Drug and Cosmetic Act (FD&C Act) if its label or labeling does not conform to the FDA’s menu labeling rule. Similarly, if the calorie and additional nutrition information is not accurate, the foods would be considered misbranded. Foods found to be misbranded under the labeling rule are subject to the same penalties that misbranded packaged foods are subject to under the FD&C Act.

Although these requirements may appear straightforward, testing or otherwise developing the necessary basis for the calorie counts and nutritional information can be costly and time consuming. Additionally, redesigning and distributing properly labeled menus can be a time consuming process. With less than two months until FDA begins enforcement, time is of the essence and covered establishments should evaluate their menus and prepare for these changes.

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For a brief summary of this uber filled case:

“You live in Gainesville and need to book a party bus, or perhaps a non-party bus or a limo to take a number of people to an event. You run a Google search for ‘Gainesville party bus’ and, not satisfied with any of the offerings on page one of the results, turn to page two. There is a listing there for ‘UberPromotions.’ Thinking that perhaps this is somehow affiliated with Uber, a nationally known taxi-like service that has recently come to town, you click on the link. You are taken to a webpage with a bright green and purple ‘über PROMOTIONS’ logo. The crux of this trademark infringement case is (roughly speaking) whether you could reasonably conclude that Uber Promotions and Uber the taxi- like service are in some way connected.”

A local Florida company, with an unfortunate name, takes on the ever expanding ride-sharing beast seeking to keep “Tech” from operating in their hometown. With “Tech’s” newer service called “UberEVENTS”, offering users to purchase a ride for others that could be used at a particular time in the future, in addition to their already explosive ride-sharing service, “Promo” is definitely feeling the heat. Pollack, of Gray Robinson, shares the details of the preliminary injunction. As far as who will be left standing, in Pollack’s own words “this case is far from done.”

Read the full article here.

• Over 20 years ago, the state-by-state campaign to lower the official Blood Alcohol Content (BAC) threshold used to determine the legal limit for driving while intoxicated began; today, every state across America follows the 0.08 BAC standard.
• Ten years ago, a handful of states started creating special “DUI Courts” to process intoxicated and impaired driving arrests; today, the judicial systems in over 20 states maintain special DUI courts.
• Five years ago, New Mexico was the first state to impose a mandatory Auto Ignition Monitor (AIM) requirement on defendants convicted of their first DUI. Today, over 13 states have adopted similar requirements as a means of reducing the risk of recidivist DUI violators.

Each of these tools has been, and continues to be, instrumental in the fight against drunk driving. However, the ultimate safeguard against drunk driving remains actual law enforcement itself. The ability of police to identify and interdict intoxicated drivers has always been the frontline against drunk driving.

This year, The United States Supreme Court will examine how police exercise their powers to fight drunk driving. The high court’s decision in the case of Navarette v. State of California, Case No: 12-9490, likely will have a significant impact on traffic stop cases in state and federal courts.

The main question presented by Navarette is: Does the Fourth Amendment require an officer who receives an anonymous tip regarding a drunken or reckless driver to corroborate dangerous driving before stopping the vehicle?

The Relevant Facts

In 2008, Lorenzo and Jose Navarette were traveling on a California highway in a pickup truck with four large bags of marijuana in the bed. Unbeknownst to the brothers, an anonymous caller had alerted the California Highway Patrol (CHP) to a “reckless driver,” identifying the make and color of the pickup truck and providing license plate information.

A CHP officer spotted the Navarettes’ vehicle; however, the officer did not observe reckless driving or any other illegal activity while following the vehicle. Based solely upon the anonymous tip, the officer conducted a traffic stop.

The Navarette brothers were charged with transportation of marijuana. After losing a motion to suppress the marijuana evidence against them, the brothers pleaded guilty and were sentenced to
90 days in jail followed by an extensive probation.

The California appellate courts affirmed their conviction. The Navarette brothers subsequently sought review by the U.S. Supreme Court on constitutional grounds that the warrantless stop and seizure – based solely on an anonymous tip – constituted a violation of their Fourth Amendment rights.Certiorari review was granted, and the case is set to be heard on January 21, 2014.

How The U.S. Supreme Court Views How The U.S. Supreme Court Views Drunk Driving

The U.S. Supreme Court has recognized that drunk drivers constitute a serious danger to the public. See Virginia v. Harris, 558 U.S. 978, 978 (2009) (Roberts, C.J., dissenting from denial of certiorari); Colby J. Morrissey, Note, Anonymous Tips Reporting Drunk Driving: Rejecting a Fourth Amendment Exception for Investigatory Traffic Stops, 45 New Eng. L. Rev. 167, 190-194 (2010).

However, the Court also has established precedent defining what is needed for law enforcement to make a warrantless stop predicated on an anonymous tip. In Florida v. J.L., 529 U.S. 266 (2000), the U.S. Supreme Court reaffirmed that law enforcement may conduct a stop only where an anonymous tip has a “moderate indicia of reliability” and a “tendency to identify a determinate person.” The decision in J.L. also rejected the state’s request to adopt a “firearms exception” to this rule, based upon the dangerousness of an armed suspect. The Supreme Court in J.L. noted that such an exception would subject citizens to intrusive police searches based upon a mere “bare-boned tip about guns.”

However, that precedent has not proven to be as definitive as it might have looked when it was issued in 2000. Justice Kennedy noted in his concurrence in J.L. that while a truly anonymous informant has “not placed his credibility at risk and may lie with impunity,” even anonymous tips may “have certain features, either supporting reliability or narrowing the likely class of informants, so that the tip does provide the lawful basis for some police action.” 529 U.S. at 275 (Kennedy, J., concurring).

More to the point, since the Supreme Court’s decision in J.L., a number of federal and state courts appear to have fashioned a de facto “drunk driver” exception to the corroboration requirement. For example, only one year after J.L.’s unanimous rejection of seizures based on uncorroborated anonymous tips involving firearms, 529 U.S. at 272-273, the U.S. Court of Appeals in United States v. Wheat, 278 F.3d 722 (8th Cir. 2001) approved a vehicle stop without corroboration of an anonymous tip of reckless driving, largely due to the bomb-like danger of an “erratic and possibly drunk driver.” 278 F.3d at 736-737. The Eighth Circuit found that the danger justified an immediate stop of the vehicle without any corroboration of dangerous driving, but specifically noted that “when the officer does not effect an immediate stop of a potentially drunk driver, the force of this justification rapidly diminishes.” 278 F.3d at 724-725,737 n. 13 (emphasis in original).

Likewise, relying heavily on Wheat’s analysis of the dangers posed by drunk drivers, the California Supreme Court in People v. Wells, 38 Ca1.4th 1078, 45 Cal.Rptr.3d 8, 136 P.3d 810 (2006), also approved an officer’s immediate stop of a vehicle without any corroboration of dangerous driving, dismissing the officer’s failure to observe such driving as “not significant,” in part because “the officer in this case stopped defendant’s van immediately after spotting it.” Wells, 38 Ca1.4th at 1088.

In addition to federal appellate courts, state courts also have recognized a de facto drunk driver exception to J.L. The Supreme Courts of Vermont, Iowa and Wisconsin have held that J.L. does not prevent an anonymous tip from constitutionally justifying an immediate vehicle stop “even when the investigating officer is unable to corroborate that the driver is operating the vehicle recklessly and therefore unlawfully.” See State of Vermont v. Boyea, 171 Vt. 401, 765 A.2d 862 (Vt. 2000), State of Iowa v. Walshire, 634 N.W. 2d 625 (Iowa 2001), and State of Wisconsin v. Rutzinski, 241 Wis.2d 729, 623 N.W.2d 516 (2001). Since the Eighth Circuit decided Wheat in 2001, Tennessee, Delaware and Hawaii also followed suit and recognized drunk driving exceptions to J.L.. See State of Tennessee v. Hanning, 296 S.W. 44 (Tenn. 2009), Bloomingdale v. State of Delaware, 842 A.2d 1212 (Del. 2004), and State of Hawaii v. Prendergast, 83 P 74 (Haw. 2004). See also Melanie D. Wilson, Since When Is Dicta Enough To Trump Fourth Amendment Rights? The Aftermath of Florida v. J.L., 31 Ohio N.U.L. Rev. 225-229 (2005).

This new de facto exception for drunk driving stops was actually addressed by the Supreme Court’s current Chief Justice, John Roberts, in a 2009 dissent from the Court’s denial of certiorari in the case of Virginia v. Harris, where the Chief Justice identified not only the dangers posed by drunk driving, but also “the enhanced reliability of tips alleging illegal activity in public, to which the tipster was presumably an eyewitness…” Virginia v. Harris, 558 U.S. 978, 980 (2009)(Roberts, C.J., dissenting from denial of certiorari).

So, has the Court taken the Navarette case to overturn its prior precedent in J.L.?
Not necessarily.

Hotels and restaurants use social media to drive loyalty deals and promotions generally around all aspects of the business.  In the restaurant context, marketers see natural opportunities using social media to promote new menu items, special pricing, and food and beverage pairings, for example.  The opportunities in social media are many and they are exciting, but those who use this platform to promote alcohol need to understand that alcohol continues to be a regulated product and must be marketed as such, even in the social media context.  Many people mistakenly believe that because social media operates through the internet, social media is not subject to some of the same alcohol beverage laws and regulations which apply to more traditional means of marketing alcohol beverages.  This is in fact not the case: this “new world” is governed by “old laws,” and as operators and counselors to the industry, we need to learn to work within them.  Offering consumers a bucket of beer on Facebook is not the same as offering them a bucket of chicken wings.  Here are some basic pointers and issue spotters to get you started.

First Protect Your Brand

When building a social media identity for your brand, protect your own intellectual property and avoid infringing the intellectual property of others.  This is a threshold legal issue and is important in any social media campaign, even if alcohol beverages are not involved.  If you are building a fan page or a Twitter page, consider the graphic or any tag lines you use carefully.  Make them consistent with your branding in other media and make sure they are protected.  Be very careful that you do not inadvertently infringe upon the intellectual property of others.  Twitter, for example, has an “impersonation” policy, and also has a policy against “name squatting.”  Along the same lines, you may wish to perform periodic searches to monitor against third parties improperly imitating your brand in social media.

Multi-State Promotions Require Multi-State Legal Analysis

When planning an alcohol promotion, consider whether it is the type of promotion which would be regulated in traditional media.  For example, is it a sweepstakes, contest, coupon, happy hour deal, or similar?  Does it have elements of these things?  If so, remember that multi-state laws and regulations on promotions will still be relevant in the social media world.  Social media websites may be a completely new way to market, but promotional rules will still apply.  When planning advertising, sweepstakes, coupons, or other consumer premium offers, make sure that your campaigns comply with all applicable state laws and regulations.  If you operate a chain of hotels or restaurants, bear in mind that even though offers you plan to run through social media are national, they may need to be tweaked for consumers in different states if the same offers are not legal for all due to state law variations.  For example, if you intend to offer your restaurant’s Facebook fans happy hour specials at the bar between 5:00 and 7:00 p.m., you need to recognize that some of the fans live in states where this activity is legal, and some live in states where it is not.  As a result, you may need to consider technical tweaks to your social media campaign to create different legal offers for different consumers, i.e., appetizer specials only for some.  Alternatively, you may wish to tailor your offers so as to be consistent with the legal analysis, resulting in a “one size fits all” approach.

Direct Social Media Promotions Involving Alcohol to Legal Age Consumers Only

If you promote alcoholic beverages via social media, be mindful of your target audience.  Social media websites are open to consumers under twenty-one years of age, and therefore these individuals may be exposed to marketing of products they may not buy legally.  Build safeguards into your pages, and limit access to those sections involving alcoholic beverages to the twenty-one and over set.

Recently, the Distilled Spirits Council of the United States (“DISCUS”) published a Guidance Note on Responsible Digital Marketing Communications which provides standards for industry when advertising alcohol beverages through mobile and digital means, including social media.  DISCUS outlined several basic principles for responsible use of social media which are helpful to suppliers, retailers, and unlicensed advertisers of alcoholic beverages.  The basic principles articulated by DISCUS include, among other things: (1) limiting digital marketing of alcohol beverages to media where 71.6% of the viewing audience is of legal purchasing age; (2) requiring the user to affirm that s/he is of legal purchase age before allowing the user to proceed to the alcohol beverage advertisement; (3) monitoring user-generated content on a regular basis; (4) placing warnings about forwarding content to non-legal users.

These general principles can be implemented in a variety of ways.  For example, alcohol-related content on social media should contain a pop-up or other gatekeeper mechanism so as to require viewers to verify that they are of legal drinking age before proceeding to the content or offer.  This is currently industry standard on the websites and microsites of alcohol beverage suppliers, and should be integrated into social media sites representing these brands, or other sites which advertise alcohol beverages generally.  Once the “gate” is opened and users enter, site owners and operators (including the administrators of social media pages) should monitor the conversation for the purpose of responding to and removing inappropriate content about minors drinking or intemperance.  Finally, carry through age-gating to any “forwardable” content in the form of a download, “share”, or “like.”  Your alcohol-related social media advertisements are intended for legal users only, and so there must be a mechanism in place to prevent a legal user from forwarding content to a non-legal user.  Usually this takes the form of another pop-up requesting confirmation of legal age.

Before you use social media marketing to communicate with your fan base, make sure that any alcohol-related content is legal, contains appropriate disclaimer language if needed, and does not inappropriately target minors.

Promote Responsible Consumption and Protect Your Image

Finally, any social media campaigns involving alcohol should promote responsible consumption, not only through offers, but also in accompanying photographs, slogans, and postings, either by your company or by your fan base.  Remember that the social media pages maintained by your company are available for the world to see, including the plaintiffs’ bar!  In the unlikely event that your restaurant or bar becomes a defendant in a dram shop litigation matter, your social media pages will become exhibits.  Therefore, any offers or representations of your establishment should reflect the responsible service practices of your business and should not promote overconsumption in any way.  Furthermore, and as recommended by DISCUS, businesses should also consider monitoring any fan/consumer postings carefully and adopting an internal policy for how to remove and address any improper content or postings.

In addition to widening the boundaries and the reach of advertisers, social media has also changed the course of discovery in litigation dramatically.  Social media is in a sense a free discovery tool, and it goes both ways.  Consider the following hypothetical.  John Doe sues ABC Restaurant for dram shop liability, claiming that the employees served him while knowing that he was obviously intoxicated.  John Doe was involved in an automobile accident after leaving ABC Restaurant, and claims that he was injured and out of work for three weeks.  John Doe presents evidence including a printout of ABC Restaurant’s Facebook page.  The Facebook page shows posted content from patrons of ABC Restaurant who “like” it there, including postings that discuss how the fans got sloshed at ABC and corresponding photos which show them slumped over the bar.  ABC Restaurant’s attorney is disappointed that her client did not monitor these harmful posts and remove them so as to show that the restaurant does not approve of this kind of behavior.  She makes a note to review ABC Restaurant’s compliance practices with the management and to help the company develop a social media policy.  Then, she decides to review John Doe’s Facebook page to learn more about his activities.  Incredibly, she finds a post from John four days after the accident with a photo of John looking handsome and a status which says “[m]y boss is a slave driver man, he gave me an extra shift at work today.  I am going to tie one on tonight at Bango’s Bar.” Relieved, ABC Restaurant’s attorney confronts John Doe at his deposition about his claim that he was out of work for three weeks, and the case ultimately is dismissed.

Social media has now become mainstream and has changed the way on premises retailers speak to their customers with measurable results. As social media evolves further, the legal landscape will need to change to adapt to this new marketing force. Stay tuned!