A Disclosure-Focused Approach to Compelled Commercial Speech Essay

A Disclosure-Focused Approach to Compelled Commercial Speech Essay

A Disclosure-Focused Approach to Compelled Commercial Speech Essay

In 2010, the Food and Drug Administration passed a rule revising compelled disclaimers on tobacco products pursuant to the Family Smoking Prevention and Tobacco Control Act. The rule required that tobacco warnings include something new: all tobacco products now had to bear one of nine graphic images to accompany the text. Tobacco companies filed suit contesting the constitutionality of the rule, arguing that the government violated their right to free commercial speech by compelling disclosure of the graphic content. Yet First Amendment jurisprudence lacks a doctrinally consistent standard for re- viewing such compelled disclosures. Courts’ analyses typically depend on whether the regulation compels or restricts speech, how far that regulation extends, and why the government chose to regulate in the first place. This Note seeks to articulate a coherent standard—a disclosure-focused approach—for reviewing compelled commercial speech under the First Amendment. Under this disclosure-focused approach, courts would adopt a lenient standard of re- view for compelled disclosures of factual, uncontroversial information while reserving more exacting scrutiny for restricted speech or compelled ideological disclosures. This approach centers on the structure and content of the regula- tion rather than the governmental motive. Accordingly, the disclosure-focused approach aligns with the goal of commercial speech protection—namely, max- imizing the information available to consumers.

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Table of Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1306 I. Legal Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1309

A. Commercial Speech Doctrine . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1309 B. Implementing the FSPTCA—Commercial Speech in the

Context of Tobacco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1313 II. A Disclosure-Focused Approach to Reviewing

Compelled Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1316 A. Two Approaches to Determining When Zauderer Applies . . 1317 B. The Superiority of the Disclosure-Focused Approach . . . . . . . 1319

1. Policy of the First Amendment . . . . . . . . . . . . . . . . . . . . . 1319 2. Tenets of Commercial Speech Jurisprudence . . . . . . . . . 1321 3. Normative Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1323

* J.D. Candidate, May 2014, University of Michigan Law School. Many thanks to Seth Bowers, Lee Crain, Hannah Miller, Jake Perkowski, and the Michigan Law Review Notes Office for their invaluable feedback, insight, and willingness to help.

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III. Applying the Disclosure-Focused Approach to the Graphic Warnings Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1325 A. Images as Disclosure and Truth . . . . . . . . . . . . . . . . . . . . . . . . . . 1326 B. Are the Graphic Warnings Factual and Uncontroversial? . . . 1330 C. The Governmental Motive—Applying the Zauderer

Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1333 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1335

Introduction

Does the Constitution prevent the government from requiring cigarette companies to tell the truth? In 2009, Congress passed the Family Smoking Prevention and Tobacco Control Act (“FSPTCA”).1 Pursuant to that legisla- tion, the Food and Drug Administration (“FDA”) began to toughen regula- tion of tobacco companies, particularly with respect to product marketing and packaging. As part of the crackdown on these companies’ commercial messaging, the FDA imposed a requirement that each package of cigarettes bear one of nine graphic images, each accompanied by a different written warning about the effects of tobacco use.2 The nine warnings selected by the FDA appear as follows3:

1. Pub. L. No. 111-31, 123 Stat. 1776 (2009). Within the FSPTCA, Congress directed the Food and Drug Administration to “issue regulations that require color graphics depicting the negative health consequences of smoking to accompany” the written warnings described ear- lier in the act. Id. sec. 201(a), § 4(d), 123 Stat. at 1845 (codified at 15 U.S.C. § 1333(d) (2012) (Graphic label statements)).

2. 21 C.F.R. §§ 1141.10(a), 1141.12 (2013); see also Cigarette Health Warning Images on Cigarette Packs, FDA, http://www.fda.gov/downloads/TobaccoProducts/Labeling/Labeling/Ciga retteWarningLabels/UCM259974.zip (last downloaded Nov. 23, 2013).

3. The images are reproduced at Betsy McKay & David Kesmodel, Labels Give Cigarette Packs a Ghoulish Makeover, Wall St. J. (June 22, 2011), http://online.wsj.com/article/SB10001 424052702303936704576399320327189158.html#slide/1.

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To ensure the message reached consumers, the FDA imposed additional requirements regarding the size and placement of the images on the package.4

Tobacco companies filed suit, arguing that the graphic warnings re- quirement violated their right to free speech and was therefore unconstitu- tional.5 The companies’ claims were rooted in First Amendment doctrine and its limited protection of “commercial speech,” or speech by a commer- cial vendor to a consumer.6 In Discount Tobacco City & Lottery, Inc. v. United States, the Sixth Circuit applied a rational basis standard to review com- pelled disclosures.7 The court found that the statutorily required graphic warnings reasonably related to the government’s interest in preventing con- sumer deception and did not unconstitutionally violate the companies’ right to free commercial speech.8 Months later, however, the D.C. Circuit, in R.J. Reynolds Tobacco Co. v. FDA, employed a more stringent intermediate scru- tiny that had been traditionally applied to restrictions on commercial speech.9 Applying that standard, the D.C. Circuit held that because the graphic warnings were unduly restrictive and did not directly advance a sub- stantial governmental interest, the rule violated the plaintiffs’ First Amend- ment rights.10 Accordingly, the D.C. Circuit invalidated the rule under the Administrative Procedure Act.11

4. 21 C.F.R. § 1141.10(a)(3)–(6).

5. Brief for Appellees at 20, R.J. Reynolds Tobacco Co. v. FDA, 696 F.3d 1205 (D.C. Cir. 2012) (No. 11-5532), 2012 WL 204198, at *20 (arguing that the restriction “forces [tobacco companies] to serve as unwilling spokesmen for the Government’s anti-smoking campaign”); Principal Brief of Plaintiffs-Appellants/Cross-Appellees, Disc. Tobacco City & Lottery, Inc. v. United States, 674 F.3d 509 (6th Cir. 2012) (No. 10-5234), 2010 WL 6510607, at *19–20 (“The record unequivocally demonstrates that the scale and intrusiveness of the new warnings far outweighs any legitimate interest in conveying factual information to prevent consumer confu- sion, particularly since consumers already overestimate these health risks. Indeed, the obtrusive new warnings serve only to market Congress’ subjective belief that tobacco products are so- cially unacceptable, in essence impermissibly forcing Plaintiffs to disseminate the stigmatizing anti-tobacco campaign slogan: ‘Don’t Buy This Product.’ ”), cert. denied, 133 S. Ct. 1996 (2013).

6. See, e.g., Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626, 637 (1985) (“There is no longer any room to doubt that what has come to be known as ‘commercial speech’ is entitled to the protection of the First Amendment, albeit to protection somewhat less extensive than that afforded ‘noncommercial speech.’ ”).

7. Disc. Tobacco, 674 F.3d at 558 (opinion of Stranch, J.).

8. Id. at 560–68.

9. R.J. Reynolds, 696 F.3d at 1217. First Amendment jurisprudence recognizes a differ- ence between prohibitions or restrictions on speech (“You may not say X.”) and compelled disclosure (“You must say Y.”). For a full discussion of the difference, see infra Section I.A.

10. R.J. Reynolds, 696 F.3d at 1221–22. 11. Id.

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In one sense, these two decisions address separate issues. Discount To- bacco upheld the FSPTCA provision requiring graphic warnings.12 R.J. Reyn- olds, by contrast, overturned the FDA’s implementation of that provision.13

But on one common question—which standard of review to use when eval- uating whether a compelled disclosure passes First Amendment scrutiny— the courts gave different answers: Discount Tobacco applied a variation of rational basis review while R.J. Reynolds employed a standard closer to inter- mediate scrutiny. There is no principled reason the answer to this question should be different when evaluating the constitutionality of legislation ver- sus the constitutionality of agency action—the standard should be the same.14 Yet the courts in these cases came to different conclusions.

The two opinions illuminate the doctrinal confusion surrounding the appropriate standard of review for compelled commercial speech. The deci- sions examined a variety of factors, including the format of the regulation (as a disclosure rather than restriction of speech), the content of the warn- ings, and the government’s reason for regulating. The R.J. Reynolds court, in particular, employed a deception-focused approach and placed enormous emphasis on whether the government acted to “prevent[ the] deception of consumers.”15 By contrast, the court in Discount Tobacco placed greater weight on the form and content of the regulation, moving closer to a disclo- sure-focused approach. Taken together, these opinions demonstrate that no clear framework exists to help courts apply the correct standard.

Thus, the controversy at issue in R.J. Reynolds and Discount Tobacco extends beyond cigarette packages. It implicates the authority of federal, state, and local governments to require more information about every prod- uct on the market. Indeed, the dispute calls into question the definition of “information” itself: To what extent do images convey a message? The FDA ultimately declined to appeal the R.J. Reynolds decision, opting instead to consider a new version of the rule.16 But the tobacco warning cases demon- strate the need for a clear, doctrinally consistent standard of review—a stan- dard lacking in First Amendment jurisprudence.

12. Disc. Tobacco, 674 F.3d at 518 (lead opinion of Clay, J.) (explaining that “Plaintiffs’ claim” was directed at “certain provisions of the Family Smoking Prevention and Tobacco Control Act”).

13. R.J. Reynolds, 696 F.3d at 1208 (describing the challenge to “the rule” and the “FDA’s proposed graphic warnings”).

14. Under the Administrative Procedure Act, courts reviewing agency action “shall hold unlawful and set aside” any rule that is “contrary to constitutional right.” 5 U.S.C. § 706(2)(B) (2012). And, of course, it is “emphatically the province and duty of the judicial department to say what the law is” and to overturn any “law repugnant to the constitution.” Marbury v. Madison, 5 U.S. (1 Cranch) 137, 177, 180 (1803). Thus, judicial review applies the same stan- dards of constitutional law in reviewing both agency action and congressional legislation, al- though the judiciary’s power of review derives from different sources.

15. R.J. Reynolds, 696 F.3d at 1213 (quoting Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626, 651 (1985)) (internal quotation marks omitted).

16. See Cigarette Health Warnings, FDA, http://www.fda.gov/TobaccoProducts/Labeling/ Labeling/CigaretteWarningLabels (last updated June 3, 2013).

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This Note seeks to articulate the appropriate legal standard for review- ing compelled commercial speech, advancing an approach that strikes a bal- ance between the public’s right to know what it is buying and the seller’s competing right to speak as it pleases. This Note argues that courts should adopt and apply a disclosure-focused approach to compelled commercial speech that gives the government wide discretion in mandating disclosure of factual information to consumers. Part I introduces commercial speech doc- trine, explains why compelled disclosure is different from other kinds of speech, and discusses how and why the FDA required tobacco companies to disclose graphic warnings. Part II critiques and rejects the deception-focused approach taken in Discount Tobacco and R.J. Reynolds, an approach that asks whether the disclosure specifically remedies deceptive advertising. Part II then argues for a disclosure-focused approach. Such an approach extends a lenient standard of review to regulations that compel disclosure of factual information and counsels courts to consider the government’s intent only when applying that standard. Finally, Part III applies the disclosure-focused approach in the context of the FDA’s graphic warnings rule. It also adds to compelled speech doctrine by showing how images, like text, can convey factual, uncontroversial information to consumers in furtherance of First Amendment principles.

I. Legal Background

The Supreme Court has established a separate line of cases relating to commercial speech that provides the foundation for reviewing compelled disclosures. Section I.A examines First Amendment doctrine, focusing on three seminal commercial speech decisions.17 This discussion illustrates the tools currently available to courts when reviewing commercial speech regu- lations and explains why compelled speech merits a different analysis than restricted or prohibited speech. Section I.B examines compelled speech in the case of tobacco products specifically, providing historical and legal con- text for Discount Tobacco and R.J. Reynolds.

A. Commercial Speech Doctrine

The First Amendment does not require that all forms of speech receive similar treatment. Some statements receive greater protection than others, depending on both the content of the speech and the context in which it was made.18 For example, courts vigorously guard a person’s right to advocate a

17. Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (1985); Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n, 447 U.S. 557 (1980); Va. State Bd. of Pharmacy v. Va. Citizens Consumer Council, Inc., 425 U.S. 748 (1976).

18. See, e.g., Va. State Bd. of Pharmacy, 425 U.S. at 761–62 (discussing the way in which content might determine whether speech is protected); Schenck v. United States, 249 U.S. 47, 52 (1919) (“[T]he character of every act depends upon the circumstances in which it was done.”).

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political position in furtherance of an “unfettered interchange of ideas.”19

Courts do not, however, protect a person’s right to yell “fire” in a crowded theater, which puts other attendees in “clear and present danger.”20 Thus, courts have looked not only at what the statement says but why the speaker said it and what effect it had on others.21

Commercial speech, or “expression related solely to the economic inter- ests of the speaker and its audience,”22 receives lesser protection than other constitutionally guaranteed forms of expression.23 In part, commercial speech is treated differently because of the “common-sense distinction”24

between speech initiating an economic exchange and other speech—namely, commercial speakers have a “purely economic” interest in making the state- ment.25 For example, a poster that urges support for a ballot measure is easily distinguishable from a poster that advertises for a local restaurant. The first poster attempts to convince the reader to take political action by casting her vote in a certain way—this is not commercial speech. The advertise- ment, in contrast, is an attempt to get the reader to spend money at a partic- ular establishment and is a prototypical example of commercial speech. While the differences between the content of these statements are easy to identify, the reasons for treating them differently are not nearly as appar- ent.26 Nonetheless, for decades, courts refused to extend First Amendment protection to commercial speech at all, largely holding that the First Amend- ment only protects matters of “public interest” and not those of “private profit.”27

The Supreme Court first extended protection to commercial speech in Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, Inc.28 In overturning a statute prohibiting pharmacists from publishing the

19. Roth v. United States, 354 U.S. 476, 484 (1957).

20. Schenck, 249 U.S. at 52.

21. See, e.g., Chaplinsky v. New Hampshire, 315 U.S. 568, 572 (1942) (affirming that the First Amendment does not protect statements that play “no essential part of any exposition of ideas, and are of such slight social value as a step to truth that any benefit that may be derived from them is clearly outweighed by the social interest in order and morality”).

22. Cent. Hudson, 447 U.S. at 561.

23. Id. at 563.

24. Id. at 562 (quoting Ohralik v. Ohio State Bar Ass’n, 436 U.S. 447, 455–56 (1978)) (internal quotation marks omitted).

25. Va. State Bd. of Pharmacy v. Va. Citizens Consumer Council, Inc., 425 U.S. 748, 762 (1976).

26. Indeed, some have concluded that the Court’s “common-sense distinction” language fails to explain why commercial speech should be treated differently at all. See generally Robert Post, The Constitutional Status of Commercial Speech, 48 UCLA L. Rev. 1 (2000). Absent sweeping jurisprudential changes, however, this Note accepts the distinction.

27. See, e.g., Valentine v. Chrestensen, 316 U.S. 52, 54–55 (1942) (refusing to extend First Amendment protection to “purely commercial advertising”), abrogated by Va. State Bd. of Pharmacy, 425 U.S. 748.

28. 425 U.S. at 762.

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price of prescription medications,29 the Court recognized a First Amend- ment interest in “intelligent and well-informed” private economic decision- making.30 Commercial speech furthers this interest by providing information to the marketplace,31 giving the consumer the tools necessary to make knowledgeable purchases. This justification makes sense—a consumer who knows, for example, that one business charges less than another for an identical product will almost surely choose the less expensive option. In that sense, she has made a more informed decision than if she had blindly pur- chased the product from either store. Virginia State Board extended First Amendment protection to commercial speech because such speech encour- ages informed consumer decisionmaking.

But Virginia State Board did not preclude all restrictions of commercial speech. For example, lawmakers are free to enact content-neutral “time, place, and manner” restrictions—that is, lawmakers can limit when, where, and how statements can be made, and those limitations apply regardless of the subject matter of the statement.32 Lawmakers are also free to place re- strictions on false or misleading commercial statements.33 Thus, the holding of Virginia State Board is limited to content-based restrictions on “conced- edly truthful information about entirely lawful activity,”34 leaving the gov- ernment well within its rights to regulate outside that domain.

The Court expanded commercial speech doctrine in Central Hudson Gas & Electric Corp. v. Public Service Commission,35 articulating a four-part test for evaluating the constitutionality of commercial speech restrictions. First, the court considers whether the commercial statement is misleading or re- lated to unlawful activity.36 As the Court held in Virginia State Board, the Constitution provides little protection for misleading or unlawful state- ments, and courts largely defer to a legislature’s decision to regulate these statements. Second, if the speech neither misleads nor promotes unlawful acts, the court asks whether the government’s asserted interest in restricting the speech at issue is “substantial.”37 Third, the measure must “directly ad- vance[ ]” the substantial interest and, fourth, it must do so no more intru- sively than necessary.38 Thus, overly broad restrictions on commercial speech will not stand, even where they directly advance a substantial state interest.