Court Pops San Francisco Officials’ Bubble

Prohibiting speech or compelling speech in the marketplace is not the way to deal with products or services that lawmakers do not like. It is an easy way to get sued and to have one’s regulation blocked on protected commercial speech grounds. This recently occurred in American Beverage Association v. City and County of San Francisco.

In June 2015, San Francisco passed an ordinance that required every outdoor advertisement for sugar-sweetened beverages (SSBs) to include a prominent warning regarding the health effects of sugary drinks. In a black box taking up 20% of the label, the disclaimer had to say: “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.” This warning applied to any beverage with added sweeteners that contained more than 25 calories per 12 ounces.

The American Beverage Association (ABA) challenged the ordinance in court. The district court did not grant a preliminary injunction because it did not think the plaintiffs would succeed. The case then went to the Ninth Circuit Court.

On September 19, 2017, a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit Court issued its ruling that the ordinance violated the plaintiffs’ free speech rights on two grounds: the warning it required was both controversial and unduly burdensome.

First, the court said that the warning was controversial and even misleading. A government can require companies to include “purely factual and uncontroversial” information on advertising and labels (e.g. an ingredients list). The court said that “the factual accuracy of the warning is, at minimum, controversial” because it offers an unqualified statement and thus conveys that the consumption of sugar-sweetened beverages contributes to diabetes, obesity, and tooth decay regardless of the quantity consumed or other lifestyle choices. The court concludes, “In short, rather than being ‘purely factual and noncontroversial’ the warning requires the Associations to convey San Francisco’s disputed policy views.”

Moreover, the court added that the ordinance is misleading because “By focusing on a single product, the warning conveys the message that sugar-sweetened beverages are less healthy than other sources of added sugars and calories and are more likely to contribute to obesity, diabetes, and tooth decay than other foods.”

Second, the court explained that the ordinance placed an undue burden on speech. Because the ordinance requires a black-box bold warning that takes up 20 percent of the advertising space, the court determined that the warning “overwhelms other visual elements in the advertisement” and thus unduly burdens and chills protected commercial speech. The speaker’s First Amendment right to be silent was violated by the ordinance because the speaker was compelled “to tailor its speech to an opponent’s agenda” and to use what little space it had to counter the message the speaker was forced to include when the speaker would have opted for silence. The court noted “even though advertisers would be free to engage in counter-speech, countering San Francisco’s misleading message would leave them little room to communicate their intended message. This would defeat the purpose of the advertisement, turning it into a vehicle for a debate about the health effects of sugar-sweetened beverages.”

Ultimately, the court ruled “Because the ordinance is not purely factual and uncontroversial and is unduly burdensome, it offends the Associations’ First Amendment rights by chilling protected commercial speech.” Therefore the district court’s findings were overturned, the preliminary injunction was granted, and the case was remanded to the U.S. District Court of San Francisco.

This case illustrates an important point: public officials should not use speech regulations to push their own agendas. Ideas should win on their merits, not through government coercion. The advertisement or label that a company is paying for is not the place to hold a debate regarding the merits or lack thereof of the product.

Public officials considering legislative measures regulating speech regarding a product need to consider a couple of questions: Is the message controversial? Will it be unduly burdensome to the business required to include it?

If so, think carefully before proceeding. Such speech regulations can be very costly, as San Francisco is now discovering.