What are the constitutional limits on compelled commercial speech?

April 7

On March 28, the U.S. Court of Appeals for the D.C. Circuit rejected the American Meat Institute’s statutory and constitutional challenges to the USDA’s revised country-of-origin labeling (COOL) rules for meat.  In American Meat Institute v. USDA, AMI had argued that these compelled disclosures violate the First Amendment.  It also maintained that the rules exceeded the agency’s authority under the authorizing statute.  The D.C. Circuit rejected both claims. Specifically, the D.C. Circuit concluded that retailers have a “minimal” First Amendment interest in refusing to disclose purely factual information, and on this basis, the COOL requirements were easily upheld.

The basis for the D.C. Circuit’s holding was the Supreme Court’s decision in Zauderer v. Office of Disciplinary Counsel (1985).  In Zauderer, the court held that a requirement that the purveyor of a good or service disclose factual information is constitutional so long as the requirement is not unduly burdensome, and the requirement is “reasonably related to the State’s interest in preventing deception of consumers.”  Even though the requirements at issue in AMI are not related to the state’s interest in preventing deception of consumers, the D.C. Circuit held Zauderer applied because the rules at issue only require the disclosure of factual and uncontroversial information.  As Judge Stephen Williams explained, the court found “that Zauderer is best read as applying not only to mandates aimed at curing deception but also to ones for other purposes.”  Although this conclusion is arguably consistent with the conclusions reached by two other circuits, it represents a misreading of Zauderer and effectively eliminates meaningful constitutional protection for compelled commercial speech.

This past Friday, only one week after the initial panel opinion, the D.C. Circuit announced that it would rehear the AMI case en banc in order to reconsider the basis for its holding.  At the suggestion of the original three-judge panel, a majority of the judges on the court voted to rehear the case and asked the parties for supplemental briefing to address the following question:

Whether, under the First Amendment, judicial review of mandatory disclosure of ‘purely factual and uncontroversial’ commercial information, compelled for reasons other than preventing deception, can properly proceed under Zauderer v. Office of Disciplinary Counsel, or whether such compelled disclosure is subject to review under Central Hudson Gas & Electric v. PSC of New York (1980).

This framing of the question on rehearing — presenting a choice between Zauderer and Central Hudson – is consistent with how most courts and commentators characterize existing doctrine, but it unnecessarily complicates the question of constitutional protection for compelled commercial speech.  Central Hudson and Zauderer are best understood not as alternatives, but as two aspects of the same underlying doctrine.  That is, there is no conflict between Central Hudson and Zauderer, and courts need not choose between them.

Zauderer, properly understood, fits comfortably within the Central Hudson framework.  First, recall (as the court has reiterated time and again) that the First Amendment provides equivalent protection for both the right to speak and the right not to speak.  Thus there is no reason to assume that mandatory disclosures get a pass, even in the commercial context.  Next, recall that under Central Hudson, commercial speech is only eligible for heightened protection if the speech concerns lawful activity and is not misleading.  Thus the Zauderer court’s holding that mandatory disclosures will be readily upheld so long as they are “reasonably related to the State’s interest in preventing deception of consumers,” was nothing new.  Rather it was a straightforward application of Central Hudson (even if the Zauderer Court did not say as much).  To reiterate: misleading speech does not receive Central Hudson‘s enhanced protection, so mandatory disclosure requirements related to the government’s interest in preventing deception need not satisfy Central Hudson‘s requirement of a substantial governmental interest.

When Central Hudson and Zauderer are reconciled in this way, it can be seen why the D.C. Circuit was mistaken to hold that mandatory disclosure requirements, such as COOL, need not satisfy Central Hudson.  Misleading speech is not entitled to Central Hudson‘s protection at all.  Further, even if potentially misleading speech were to be protected by Central Hudson — say, speech that has the potential to mislead some consumers in some contexts – the government clearly has a substantial governmental interest in preventing consumer deception or confusion.   Thus applying Central Hudson does not prevent the government from adopting all manner of rules designed to ensure consumers are not defrauded or unduly confused by commercial messages.

The question in AMI should not be whether the USDA gets to avail itself of an easier constitutional test but whether the government has any interests that are substantial enough to justify this labeling requirement — interests that go beyond simply satisfying consumer curiosity.  For reasons I discuss in this essay on GMO labeling and this book chapter on nanotechnology labeling (and an as-yet-to-be-completed article manuscript on “Compelled Commercial Speech and the Consumer Right to Know”) consumer curiosity or some asserted “right to know” is insufficient to satisfy Central Hudson, not least because such a standard is infinitely malleable and would justify any potential disclosure requirement, effectively eliminating constitutional protection for compelled commercial speech. But many other government interests, such as protecting consumers from harm, protecting public health, or facilitating other regulatory goals, are often sufficient.

In upholding the USDA’s COOL requirements, the D.C. Circuit wrote:

we can see non-frivolous values advanced by the information. Obviously it enables a consumer to apply patriotic or protectionist criteria in the choice of meat. And it enables one who believes that United States practices and regulation are better at assuring food safety than those of other countries, or indeed the reverse, to act on that premise.

Under the D.C. Circuit’s expansive application of Zauderer, these interests easily justified the COOL requirements.  Under a proper reading of the doctrine — one that recognizes how Central Hudson and Zauderer fit comfortably together — the constitutionality of COOL should be a closer question.

Jonathan H. Adler teaches courses in constitutional, administrative, and environmental law at the Case Western University School of Law, where he is the inaugural Johan Verheij Memorial Professor of Law and Director of the Center for Business Law and Regulation.
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