Flying Dog Brewery applied to the North Carolina Alcohol Beverage Control Commission for approval of a label for its Freezin' Season Winter Ale. The label, created by the well-known illustrator Ralph Steadman, features a nude cartoon figure standing next to a campfire.

The North Carolina ABC's rules prohibit the use of a label that "depicts the use of alcoholic beverages in a scene that is determined by the [ABC] to be undignified, immodest, or in bad taste." The ABC rejected the label, saying the label was in "bad taste," explaining that it was "seen as inappropriate to many here."

Flying Dog brewery sued, arguing that its First Amendment rights were violated when the ABC rejected its label. The United States District Court for the Eastern District of North Carolina agreed, and granted summary judgment to the brewery. Here's why.

Since the beer label is commercial speech, the regulation must pass the intermediate scrutiny articulated by the U.S. Supreme Court in Central Hudson. Assuming that the expression is protected by the First Amendment and that the expression concerns lawful activity and is not misleading (which was all undisputed here), the critical questions came down to whether (1) the ABC has asserted a substantial government interest which is directly advanced by the challenged regulation and (2) the regulation is more extensive than necessary to serve the state's interest.

While the court bought the ABC's argument that it had a substantial government interest in "protecting the physical and psychological well-being of minors," it didn't believe that challenged regulation directly advanced that interest. The court wrote, "Defendants' argument that, absent the challenged regulation, children will be ambushed by vulgar and sexually explicit alcoholic beverage labels while 'shopping for the necessities of life' with their parents rings somewhat hollow in this day and age." Whatever the state's interest was in protecting minors, the court held that the regulation at issue "sweeps far too broadly in attempting to further that interest."

The court also held that the regulation was not reasonably tailored to serve the state's interest in protecting children. The court explained that, "the range of material that could be determined to violate the regulation is vast." Noting that the regulation could be used prohibit not only explicit images, but ones that are merely undignified, the court held that the ABC's regulation failed to satisfy Central Hudson's requirement that it "be no more extensive than necessary to serve the stated interest."

Flying Dog Brewery v. North Carolina Alcoholic Beverage Control Commission, No. 5:21-CV-343-BO (E.D.N.C. May 16, 2022).

"the range of material that could be determined to violate the regulation is vast"