Restrictions on Commercial Speech

It was not until the 1970s that the Supreme Court decided that the First Amendment protects commercial speech. The first two cases were considered positive from a public health perspective. In Bigelow v. Commonwealth of Virginia, a newspaper editor had been convicted of violating a Virginia law that made it a misdemeanor to publish an advertisement for abortion services (even though the advertisement in question was for services available in New York State). The Supreme Court overturned the conviction. In doing so, the Court for the first time moved away from its earlier statement that, “the Constitution imposes no such restraint on government as respects purely commercial advertising.” ⁷ In Bigelow, the Court found that the fact that newspaper advertisements had commercial aspects or reflected advertisers’ commercial interests, “did not negate all First Amendment guarantees.” ⁸

One year later, in VA State Pharmacy v. VA Citizens Consumer Council, the Supreme Court confirmed that commercial speech, which it described as speech that “does no more than propose a commercial transaction,” was protected under the First Amendment. ⁹ In that case, a licensed pharmacist had been found guilty of unprofessional conduct in Virginia for advertising prescription drug prices. The Court established the beginning of the commercial speech doctrine and held that the Virginia law violated the First Amendment. In doing so, it explained that, a “consumer’s interest in the free flow of commercial information … may be as keen, if not keener by far, than his interest in the day’s most urgent political debate.” ¹⁰ The Court determined that false commercial speech would not be protected (unlike false political speech which is protected) and that the government can still regulate deceptive or misleading commercial speech to ensure “that the stream of commercial information flow cleanly as well as freely.” ¹¹

Over the years, the Court has explained that commercial speech includes all forms of marketing, such as advertising, ¹² labeling, ¹³ and price information. ¹⁴ In the 1980 case, Central Hudson Gas & Electric Corp. v. Public Service Commission, the Supreme Court established the Central Hudson test that at the time was considered an intermediate level test to determine if government restrictions on commercial speech are constitutional. ¹⁵ Under this test, courts first determine (1) whether the expression is protected by the First Amendment, meaning that it must relate to a lawful activity and not be false, deceptive, or misleading. If it is found to be protected, the court must ask whether (2) the government asserted a substantial interest to be achieved by restricting commercial speech; (3) the regulation directly advances this interest; and (4) the restriction is not more extensive than necessary to serve this interest. ¹⁶

Compulsions of Speech in the Commercial Context

In the context of most consumer products, government frequently requires the disclosure of factual information on product labels (and sometimes on advertisements). Such disclosures can take the form of purely factual data to provide consumers with clear information about the products for sale (e.g., the information panel on food packaging which includes the Nutrition Facts label, ingredient list, and common food allergens). A second type of disclosure includes warnings about products, for example, warnings on tobacco and alcohol labels about potential health and safety concerns associated with consumption. As opposed to restrictions on commercial speech, the Supreme Court found that compulsions of factual information in the commercial context were subject to a different test and level of scrutiny.

In 1985, the Court established the test to determine whether government requirements to disclose factual information in the commercial context were constitutional. In Zauderer v. Office of Disciplinary Counsel, the Court held that disclosure requirements, including warnings and disclaimers, are constitutional if they are “reasonably related” to the “government’s interest in preventing deception of consumers,” they are “purely factual and uncontroversial,” and not “unjustified or unduly burdensome.” ¹⁷ This is called the Zauderer test and was considered akin to a rational basis test. In Zauderer itself, the Court did not provide any type of explanation of the requirements of the test.

The Supreme Court expounded on the last clause of the Zauderer test in a subsequent 1994 case, Ibanez v. Florida Dept. of Business & Professional Regulation. In this case, the government had tried to require a professional’s business cards to include a long disclaimer that would essentially make using a business card prohibitive. First, the Court stated that to justify a disclosure requirement, the government needed evidence to show that the harm it seeks to address “is potentially real,” and “not purely hypothetical.” ¹⁸ The Court found that the disclosure requirement at issue was “unduly burdensome” because it was so long and detailed that it effectively drowned or ruled out the commercial communication in the first place. ¹⁹ Despite this case, courts still struggled to determine what constituted a burdensome requirement, often focusing on font size.Reference Pomeranz, Wilde, Mozaffarian and Micha ²⁰ The burdensome requirement therefore developed into somewhat of a subjective test.

Lower court seeking to apply Zauderer generally expect the government to amass evidence to support its requirement. ²¹ But a lack of clarity remained about the rest of the test. Courts generally concluded that the “uncontroversial” language in Zauderer referred to uncontroversial facts (e.g., a product either contains mercury or it does not ²² ). And that the government’s interest in “preventing deception of consumers” was a description of the government’s interest in the Zauderer case itself, rather than the sole governmental interest that could be used to justify disclosure and warning requirements. For decades courts determined that that government could require factual disclosures and warnings based on government interests beyond preventing deception of consumers, including health, safety, and the environment. ²³ (But they did find that an interest in satisfying consumer curiosity was not enough.Reference Pomeranz ²⁴ ) Thus, lower courts generally upheld disclosure requirements passed to protect public health.

Summary

Thus, the Supreme Court initially seemed to establish three levels of scrutiny for speech regulations. Strict scrutiny has always applied to restrictions and compulsions of fully protected expression such as political speech, protests, religious speech, and artistic expression. The Central Hudson test, which evaluates restrictions on truthful commercial speech was deemed an intermediate test. And for factual disclosure requirements in the commercial context (including both warnings and factual information), the Court initially established the “reasonable basis” test, which was deemed to be akin to rational basis in other constitutional contexts.

However, both the Central Hudson and Zauderer tests have been interpreted with increasingly “stricter” scrutiny and thus, more difficult for the government to pass than perhaps was originally envisioned. ²⁵ No commercial speech restriction has passed the Central Hudson test in decades, and it is now unclear whether a restriction on non-deceptive commercial speech can ever pass this test. Further, a recent case that was not necessarily a commercial speech case altered courts’ interpretation of the Zauderer test.

Commercial Speech Restrictions

Several cases decided under Central Hudson that directly relate to products associated with public health harm reveal that no matter how strong the government interest, how much evidence it amassed that the product harms health or that restricting speech is a method to address potential health harms, the government cannot restrict non-deceptive commercial speech about products legally for sale in the marketplace. In the context of alcohol, in Rubin v. Coors Brewing Company, the Supreme Court struck down a federal law that prohibited beer labels from displaying alcohol content to prevent “strength wars” among manufacturers competing on the basis of high potent alcoholic beverages. ²⁶ Although the Court agreed the government’s interest was “substantial,” it held that the law unconstitutionally restricted truthful speech and thus failed the Central Hudson test. This holding is not entirely surprising because it is contrary to First Amendment values for the government to prohibit the disclosure of factual data about a product for sale. But the opinion is important for how it helped usher in the ultimate trajectory of First Amendment analysis under the Central Hudson test.

Writing for the majority, Justice Thomas explained that to pass the “last two steps of the Central Hudson,” there must be a “‘fit’ between the legislature’s ends and the means chosen to accomplish those ends.” ²⁷ This statement was originally part of a broader statement in a previous case that had a liberal meaning: “a fit that is not necessarily perfect, but reasonable; that represents not necessarily the single best disposition but one whose scope is ‘in proportion to the interests served.’” ²⁸ Nonetheless, the second part of this statement has now become something repeated by dissenting opinions when the majority finds the fit to be improper. The “fit” requirement means that the government must show that its interest is proportionate to the burden placed on speech; ²⁹ however, given the increased protection for commercial speech, the governments is not able to meet this burden. Thus, the question over fit has ultimately become a signal that a speech restriction cannot meet both parts three and four of Central Hudson simultaneously.

The majority in Rubin v. Coors Brewing also questioned whether the ban on alcohol content would directly advance the government’s interest (and noted that the rest of the regulatory scheme was irrational because it also applied to wine and spirits and had exceptions for state laws). Importantly, the Court then pointed to alternatives to meet federal goals without burdening speech, including directly limiting the alcohol content of beers. This signaled that regulated entities may need to only come up with alternative methods to address the government’s concern without implicating speech, and this would show the speech restriction was not proportionate to the government’s interest.

One year later in 1996, the Court struck down a state law banning the advertisement of alcohol prices. The Court explained that “bans against truthful, nonmisleading commercial speech … usually rest solely on the offensive assumption that the public will respond ‘irrationally’ to the truth.” ³⁰ It also confirmed there is no “vice” exception to the commercial speech doctrine for products that pose a threat to public health. ³¹

In 2001, the Court went a step beyond previous decisions to strike down Massachusetts’ regulations that aimed to protect children — who cannot legally purchase tobacco products — from seeing tobacco advertisements. ³² In Lorillard v. Reilly, the Court first found that the state had amassed adequate evidence to further its “substantial” and perhaps “even compelling” interest in preventing tobacco use by minors. ³³ Nonetheless, the Court found the regulation prohibiting tobacco advertising within a 1,000-foot radius of a school or playground violated the fourth part of Central Hudson. It explained that in some areas in Massachusetts, this restriction would constitute “nearly a complete ban on the communication of truthful information” about tobacco products to adult consumers. This, the Court found, would violate the First Amendment interests of “tobacco retailers and manufacturers [who] have an interest in conveying truthful information about their products to adults,” and adults who “have a corresponding interest in receiving truthful information about tobacco products.” ³⁴

In Lorillard v. Reilly, the Supreme Court characterized the Central Hudson test as “a framework for analyzing regulations of commercial speech that is ‘substantially similar’ to the test for time, place, and manner restrictions.” Nonetheless, it did not flesh out this conceptual overlap. ³⁵

The Court also started to take more seriously industry arguments to apply strict scrutiny to commercial speech restrictions. ³⁶ Justice Thomas wrote a concurring opinion, in which he reiterated his argument in the Rubin v. Coors Brewing Company, that the government should consider alternatives to limiting speech:

These specific suggestions are especially intriguing because they are not evidence-based and in fact are contrary to the public health evidence on punishing minors for tobacco use. This underscores the reality in the US court system that social science evidence is given little weight in First Amendment cases.

In his concurring opinion, Justice Thomas also explicitly stated that he would subject advertising restrictions to strict scrutiny and weaved into his argument the idea of “content-based” restrictions which was historically only discussed in the context of fully protected speech. ³⁸ He questioned whether it was even possible to draw a “coherent distinction between commercial and noncommercial speech.” Justice Thomas argued that since the regulations sought to suppress speech about tobacco because the state objected to the “content of that speech,” they were content-based regulations of speech which should be subject to strict scrutiny. ³⁹ This perspective is concerning because all commercial speech restrictions are “content-based.” Nonetheless, less than two decades later, the Supreme Court seems to have embraced Justice Thomas’ views on commercial speech.

In 2011 ⁴⁰ and 2020, ⁴¹ the Court analyzed two regulations under the First Amendment that the government argued were economic regulations that happen to have a speech component, but where the majority found the regulation imposed “content-based” burdens on speech and struck them down. In Sorrell v. IMS Health Inc., a Vermont law restricted the sale, disclosure, and use of pharmacy records that revealed prescriber-identifying information. ⁴² The Court found the law imposed content-based and speaker-based burdens on protected expression, finding that “heightened judicial scrutiny” was warranted. ⁴³ It relied on cases in the commercial speech context and in the context of fully protected speech and did not explain exactly what “heightened” scrutiny meant. The Court stated that under either test (intermediate or strict scrutiny) the regulation violated the First Amendment.Reference Pomeranz ⁴⁴

Importantly, the dissent considered the Vermont law to be an economic regulation that should have been subjected to, and pass, rational basis review. The dissent explained the significance of this case and highlighted a changing tide for First Amendment jurisprudence:

In 2020, the Court issued a similar decision on the topic of cell phone-based robocalls, again with the majority finding the regulation was content-based and subject to strict scrutiny, under which it failed. ⁴⁶ The dissent again argued that applying the strictest level of scrutiny to an “ordinary commercial regulation” was “divorced from First Amendment values” as it had “next to nothing” to do with the marketplace of ideas. ⁴⁷ At this point, although the Supreme Court had not expressly stated it, the majority opinions have evidenced a departure from the origins of the commercial speech doctrine.

Commercial Disclosure Requirements

While the Supreme Court has pioneered First Amendment jurisprudence with respect to commercial speech restrictions (and thus analysis of the Central Hudson test), federal appellate courts have generally interpreted Zauderer without Supreme Court guidance for decades. This changed with a 2018 Supreme Court decision, discussed below. Before this decision, lower courts upheld commercial disclosure requirements in the context of environmental regulations (e.g., to require the disclosure of mercury in products to aid with proper disposal ⁴⁸ ), tobacco (e.g., textual health warnings for tobacco products ⁴⁹ ), nutrition (e.g., calorie ⁵⁰ and sodium ⁵¹ warning labels on restaurant menus), and radio-frequency radiation exposure notices at the point of sale. ⁵²

Lower courts did strike down disclosure requirements that were not based on evidence (i.e., “unjustified”) or that were non-factual (e.g., finding there was no factual definition of “conflict- free” minerals ⁵³ ). Perhaps the most important case from an international perspective was the case where a federal appellate court struck down graphic warning requirements for tobacco products, a labeling strategy widely accepted in countries world-wide. ⁵⁴ In 2012, the DC Circuit found the FDA’s proposed graphic tobacco warning labels were unconstitutional, stating:

Moreover, the court questioned the government’s ability to make “every single pack of cigarettes in the country a mini billboard for the government’s anti-smoking message.” ⁵⁶ The FDA has since created new graphic warning labels and has been sued by two tobacco manufacturers. The cases are pending in federal court as of the time of this writing.

The Supreme Court took on Zauderer in the 2018 case, Nat’l Inst. of Family & Life Advocates (NIFLA) v. Becerra. ⁵⁷ Rather than clarify the test, the case created upheaval in how to interpret the government’s ability to require disclosures or warnings in the commercial context. This case stemmed from California’s disclosure requirements for clinics that serve pregnant women. It is unclear to some extent whether this case should be interpreted as a speech case about abortion, a case about fully protected speech, or a case about commercial speech.Reference Pomeranz ⁵⁸ In NIFLA, the Court examined two notice disclosure requirements which it characterized as “content-based” and “speaker-based.” It struck down the two requirements as violating the First Amendment and seemed to clarify parts of the Zauderer test in the opposite direction than lower courts had taken it. It is important to note that Justice Thomas authored the NIFLA opinion; he had previously stated that he is “skeptical of the premise on which Zauderer rests — that, in the commercial-speech context, ‘the First Amendment interests implicated by disclosure requirements are substantially weaker than those at stake when speech is actually suppressed.’” ⁵⁹

First, the Supreme Court explained that Zauderer only applies to disclosure requirements that are purely factual and uncontroversial. In interpreting the term “uncontroversial,” the majority found that the disclosure requirement at issue was not subject to Zauderer because it mentioned abortion which is “anything but an ‘uncontroversial’ topic.” ⁶⁰ However, abortion is a politically controversial topic; the existence of the medical procedure of abortion is not. This is contrary to how lower courts have analyzed the “uncontroversial” requirement. Moreover, since companies have equal political speech rights as individuals, ⁶¹ a finding that a disclosure requirement related to abortion is controversial for First Amendment purposes is a deeply concerning interpretation of the First Amendment. Most public health regulations are controversial because they evoke competing values of community health versus individual or business interests. Further, companies that produce harmful products have the First Amendment right to create political controversy over any topic at any time.

Second, the Court disapproved of the fact that the disclosure at issue was “government-scripted.” (This is reminiscent one of Justice Thomas’s previous opinions where he stated: “even under Zauderer, we ‘have not presumptively endorsed’ laws requiring the use of ‘government-scripted disclaimers’ in commercial advertising.” ⁶² ) Yet, essentially all warning requirements are government scripted (e.g., “WARNING: Cigarettes cause cancer”). Ostensibly understanding the difficulty that government will have drafting, and courts will have evaluating disclosure requirements based on this decision, the majority added: “we do not question the legality of health and safety warnings long considered permissible, or purely factual and uncontroversial disclosures about commercial products.” ⁶³ However, it did not flesh out which disclosures and warnings fall under this category.

The Court did not decide whether other interests besides “preventing deception of consumers” can support disclosures or warnings; and only stated that the notice requirement was “wholly disconnected from California’s informational interest.” ⁶⁴ The Court also found that the state did not amass evidence that pregnant women did not already know the information sought to be disclosed, and therefore the notice requirement was “unjustified.” This was a confusing finding because all health and safety warnings provide information about which certain consumers may already be familiar. In fact, Congress requires a health and safety warning on alcoholic beverage labels for the exact purpose of providing “a clear, nonconfusing reminder of such hazards” to the American public. Lastly, the Court found that the requirement to disclose the notice in up to 13 languages — which California envisioned would be tailored to the particular community — was unduly burdensome. Although it is clear that requiring a disclosure in 13 languages at once is burdensome under Ibanez given the amount of space it would require, it is unclear how many languages at once would not be burdensome.

In NIFLA, the majority used similar language as in the IMS Health, stating that one notice requirement imposed a “speaker-based disclosure requirement,” ⁶⁵ while the second notice was a “content-based regulation of speech” that compelled the regulated entity “to speak a particular message.” ⁶⁶ This latter statement captures every single disclosure and warning requirement currently in place in the US commercial marketplace. Moreover, writing for the majority, Justice Thomas made clear that California should have found an alternative to regulating speech; the opinion suggested that California “could inform the women itself with a public-information campaign” or by using public property to convey its message. ⁶⁷

Reminiscent of the dissent in Sorrell v. IMS Health, the dissent in NIFLA similarly warned about the repercussions of striking down disclosure requirements aimed at supporting informed consumer decision-making:

A subsequent Ninth Circuit case highlights judges’ difficulty in evaluating warning or disclosure requirements post-NIFLA. In 2019, the Ninth Circuit analyzed San Francisco’s requirement that outdoor advertising for sugary beverages must include a warning on 20% of the advertisement that stated: “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.” ⁶⁹ The Ninth Circuit struck down the law under Zauderer. ⁷⁰ The majority found the 20% size requirement to be unduly burdensome because the state did not show that it would not “drown out” the advertiser’s message, which would “effectively rule out the possibility” of advertisements in the first place. ⁷¹ The court acknowledged that the Sixth Circuit previously upheld a similar requirement in the context of tobacco advertisements, but pointed to a study in the context of sugary beverages found that warnings that were half the size would be similarly effective. ⁷² The court went on to say that it was not holding that a warning that was 10% of the size of the advertisement would be constitutional, further confirming the lack of an objective requirement for this part of the Zauderer test.

The concurring opinions revealed much conflict over how to interpret NIFLA. One concurring opinion stated that only “health and safety warnings [that] date back to [the year] 1791” would qualify as “long considered permissible” under the NIFLA standard. ⁷³ This is an untenable position given that all current warnings have been created since 1791 and the government could not address newly invented threats (e.g., toddler milks, electronic cigarettes) or products for which the science has evolved (e.g., sugar-sweetened beverages).Reference Pomeranz, Mozaffarian and Micha ⁷⁴ Another concurring opinion argued that the proposed warning language was factually inaccurate because the FDA previously declared added sugars as “generally recognized as safe,” and stated that they “can be a part of a healthy dietary pattern” when not consumed in excess. ⁷⁵ Another concurring opinion questioned the application of Zauderer at all, stating they “disagreed with applying Zauderer outside the context of false and misleading speech.” ⁷⁶