Food Advertising And Compelled Commercial Speech In 2017

by Foley Hoag LLP - Trademark, Copyright & Unfair Competition
Contact

According to the Hyper-Chicken, a lawyer from my favorite television show, “freedom of speech applies to what comes out of a mouth, not what goes in.” State of Alabama v. Giant Space Iguana, 273 U.S. Ω (2976) (chewing corners off Constitution deemed non-protected speech).

The Hyper-Chicken is a fictional cartoon alien from the future, and an incompetent attorney. However, he actually has a point, at least when it comes to commercial speech. The Supreme Court has treated prohibitions against commercial speech (e.g., “You can’t say that in your ad!”) differently than government mandates compelling certain speech (e.g., “You must say that in your ad!”).

If you need an example of compelled commercial speech, look no further than your kitchen. Food manufacturers are subject to multiple tiers of regulation requiring various health and safety disclosures on packaging and in advertisements. This year saw two high profile cases regarding such requirements, National Rest. Assn. v N.Y. City, 148 A.D.3d 169) (1st Dept. 2017) and Am. Bev. Assn. v San Francisco, 871 F. 3d 884 (9th Cir. 2017). One case involved sugar and one involved salt. Like sugar and salt, the two regulations bore superficial resemblances to each other. However, the outcomes of cases, both of which turned on the Supreme Court’s compelled commercial speech jurisprudence, could not have been more different.

Background: The Zaudurer Standard

The constitutional standard that generally applies to compelled food labeling derives from Zaudurer v. Office of Disciplinary Counsel, 471 U.S. 626 (1985). In Zaudurer, the Ohio Supreme Court held that an advertisement by attorney Philip Q. Zaudurer, which was intended to attract contingency fee cases from clients who had been injured by IUD contraceptive devices, violated Ohio disciplinary rules in two ways: First, it included speech that was prohibited; and second, it failed to include speech that was required.

As to the prohibited speech, Ohio’s disciplinary rules did not allow attorney advertisements to include illustrations, even accurate ones like those depicted in Zaudurer’s ads. The Supreme Court reviewed this rule using its Central Hudson test for commercial speech, sometimes referred to as “intermediate scrutiny.” Under this analysis, restrictions on commercial speech that is truthful (or at least not inherently deceptive) cannot stand unless they are in the service of a substantial governmental interest, and the means employed directly advance that interest. In Zaudurer, the prohibition against illustrations was found to violate the First Amendment because the Ohio authorities were unable to show how it directly advanced their stated goal (preserving the “dignity” of the legal profession).

But as to the second type of violation, Zaudurer’s failure to include certain required speech, the Supreme Court engaged in a different analysis. Ohio disciplinary authorities, concerned that consumers did not understand the difference between attorneys’ fees and costs, required that every contingency fee advertisement include a disclaimer explaining the difference and stating that the consumer may be liable for costs, win or lose. Zaudurer’s ad failed to make this disclosure.

The Supreme Court held that Zaudurer’s interest in not providing this factual information was minimal, and developed a separate test for reviewing compelled commercial speech. The Zaudurer test, described by some as “more lenient” than the Central Hudson standard, provides that the government may compel commercial speakers to make certain disclosures if:

  • The disclosure being required is of a factual, uncontroversial nature;
  • The disclosure is reasonably related to a non-speculative government interest (subsequent case law examined whether the only qualifying government interest was the avoidance of consumer deception, but the growing consensus, articulated in American Meat Inst. v. U.S. Dep’t of Agric., 760 F.3d 18 (D.C. Cir. 2014), is that any “adequate” government interest will do);
  • The requirement is not unduly burdensome.

Here, the Ohio compelled disclosure (regarding costs and fees) was considered purely factual and uncontroversial, the disclosure was reasonably related to a non-speculative interest in avoiding consumer deception, and it was not unduly burdensome. Therefore, Ohio’s compelled disclosures did not violate the First Amendment.

In 2017, the Zaudurer standard was applied by two different courts to regulations regarding salt and sugar, with very different results.

New York’s Salt Shaker Icon

First, let’s discuss National Rest. Assn. v N.Y. City, 148 A.D.3d 169 (1st Dept. 2017). The New York City Department of Health and Mental Hygiene added a “Sodium Warning” provision to the New York City Health Code, requiring that restaurant chains with 15 or more locations post a salt shaker icon next to any food item containing at least 2300mg of salt. According to the regulation, the salt shaker icon must be accompanied with language explaining that 2300mg exceeds the total daily recommended sodium limit and that:

High sodium intake can increase blood pressure and risk of heart disease and stroke.

The National Restaurant Association (“NRA”) challenged the compelled disclosure on various grounds, including the argument that it violated the First Amendment. The NRA argued that the disclosure was not reasonably related to the goal of providing consumer knowledge about health risks, and therefore did not pass the Zaudurer test, including because it applied only to chain restaurants. The New York Appellate Division disagreed, holding that the disclosure was factual and uncontroversial, and that its scope was reasonably related to government health concerns.

San Francisco’s Sugar Warning

So, if a regulation compelling disclosures about salt in food passes the Zaudurer test, surely a similar regulation compelling disclosures about sugar in beverages will also be permissible under the First Amendment. Right?

Wrong.

The city of San Francisco decided that it wanted to “inform the public of the presence of added sugars and thus promote informed consumer choice,” so it promulgated S.F. Health Code § 4203(a), which required that advertisements for sugar-sweetened beverages sold in San Francisco devote 20% of their space to the following disclaimer:

WARNING: Drinking beverages with added sugar(s) contributes to obesity, diabetes, and tooth decay. This is a message from the City and County of San Francisco

The American Beverage Association challenged this ordinance as a violation of the First Amendment, and the Ninth Circuit agreed in Am. Bev. Assn. v San Francisco, 871 F.3d 884 (9th Cir. 2017). How did the Ninth Circuit square its sugar decision with the New York state court’s salt decision? It didn’t; the Ninth Circuit ignored the New York decision. Nevertheless, if we had to distinguish the two cases, we would point to the following aspects of the Ninth Circuit’s opinion:

  1. Overconsumption. First, the New York salt disclosure emphasized the dangers of overconsumption (i.e., above 2300mg per day), whereas the San Francisco regulation ignored the volume of added sugar consumed. According to the Ninth Circuit, this created the controversial and potentially misleading implication that any amount of added sugar can cause health problems, not just overconsumption.
  2. Failure to include “may.” Second, the San Francisco sugar regulation also was considered “controversial” because of its failure to include qualifying language such as “can” or “may.” The New York salt disclosure was qualified with the word “can” (i.e., “high sodium intake can increase blood pressure …”), thus rendering the disclosure factually uncontroversial (because everyone agrees that salt “can” contribute to high blood pressure). But the San Francisco regulation, by failing to include the word “may” (e.g., “beverages with added sugar may contribute to obesity . . .), made the compelled disclosure controversial. Why? Because, according to the Ninth Circuit, obesity is a product of multiple bad lifestyle choices, not just sugary beverages. If you combine a few sugary beverages with regular exercise or an otherwise sugar-free diet, your risk for obesity may be very small compared with someone who drinks even fewer sugary beverages but doesn’t exercise or eat right. Thus, the unqualified statement that sugary beverages do (as opposed to “may”) contribute to obesity is controversial.
  3. Contradicting the FDA. Third, the Ninth Circuit held that, because of the regulation’s disregard for issues of lifestyle choice and overconsumption, it effectively compelled the delivery of a misleading disclosure that was contrary to multiple regulatory pronouncements by the FDA, which has decided that sugar is “generally recognized as safe” and “can be a part of a healthy dietary pattern when not consumed in excess amounts.”
  4. 20% requirement burdensome. Fourth, the New York salt regulation arguably gave restaurants some flexibility in terms of how to present the warning, provided that it appeared “conspicuously at the point of purchase.” But the San Francisco regulation prescribed a specific size for the disclosure, which was considered “so large that an advertisement can no longer convey its message,” thus forcing the advertiser “to tailor its speech to an opponent’s agenda.” The Ninth Circuit ruled that this was an undue burden on speech.

Because of these flawed aspects of the San Francisco regulation, the Ninth Circuit held that the compelled disclosure was not merely “factual and uncontroversial” (which meant that the Zaudurer standard did not apply) and that it was unduly burdensome (which meant that the regulation could not pass the Zaudurer test even if it did apply). So the Court dusted off the Central Hudson test and quickly concluded that the regulation, despite being based on a substantial government interest, did not directly advance that interest.

Forced Speech about Forced Labor? 

Another important recent development in the application of the Zaudurer standard to food advertising is the review of Court orders.  This issue first came on our radar in McCoy v. Nestle United States, Inc., 173 F. Supp. 3d 954 (N.D. Cal. 2016), in which a putative class action plaintiff argued that food manufacturers were unable to guarantee that their supply chain was free of forced labor and child labor. According to the plaintiff, California’s false advertising laws effectively compelled, and the Court should order, a label on Nestle’s products disclosing that they were “likely sourced from suppliers using child and/or forced labor.” Nestle argued that, even if such a disclosure were compelled by the California law, its constitutionality should not be reviewed under the more lenient Zaudurer standard, because it was a “controversial” disclosure. The Court ultimately avoided this issue by dismissing the case on other grounds.

But this year, the Court in Handsome Brook Farm, LLC v. Humane Farm Animal Care, Inc., 2017 U.S. App. LEXIS 15966 (4th Cir. 2017) didn’t avoid a similar application of the Zaudurer standard. In that case, the defendant, an organization that certified eggs as organic and pasture-raised, sent a disparaging and false email to third parties challenging the credentials of a competing organization. The District Court allowed the plaintiff’s motion for a preliminary injunction, and ordered the defendant to publish a retraction to the same third parties. The defendant appealed to the Fourth Circuit, arguing that the Court’s order was a violation of its First Amendment rights. However, the Fourth Circuit affirmed, applying the Zaudurer test to the retraction order. Although the Court did not expressly decide whether the compelled retraction was “controversial,” it held that the retraction email was ordered for the purpose of dispelling specific consumer-oriented deceptive statements by the defendant. Applying the Zaudurer reasonable, the Fourth Circuit easily found that the District Court’s order was reasonably related to an adequate government concern, and therefore it passed constitutional muster.

This article was adapted from the author’s presentation at the Food and Drug Law Institute’s Enforcement, Litigation and Compliance Conference on December 7, 2017 in Washington, D.C. Also on the panel, which was entitled “First Amendment Issues in Advertising and Product Packaging” were attorney August Horvath and Professor Jonathan Adler of Case Western Reserve University School of Law. Professor Adler’s article, “Compelled Commercial Speech and the Consumer Right to Know,” addresses in depth his views on the application of the Zaudurer standard to mandatory labeling. Professor Adler’s panel presentation on FDA regulations and cigarette marketing was summarized in an opinion piece in the Washington Post’s Volokh Conspiracy column on December 12, 2017.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Foley Hoag LLP - Trademark, Copyright & Unfair Competition | Attorney Advertising

Written by:

Foley Hoag LLP - Trademark, Copyright & Unfair Competition
Contact
more
less

Foley Hoag LLP - Trademark, Copyright & Unfair Competition on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.