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Abstract

Online Supplement to: Green, K. C., & Armstrong, J. Scott. “Evidence on the Effects of Mandatory Disclaimers in Advertising” in Journal of Public Policy & Marketing, Autumn 2012
Have the Courts Protected Free Speech for Business People?
(Online Supplement to: “Evidence on the Effects of Mandatory Disclaimers in Advertising”
in Journal of Public Policy & Marketing, Autumn 2012)
Kesten C. Green
University of South Australia
kesten.green@unisa.edu.au
J. Scott Armstrong
University of Pennsylvania
armstrong@wharton.upenn.edu
The First Amendment to the U.S. Constitution states: “Congress shall make no law…abridging the freedom of
speech…”. The notion that speech should be subject to a government cost-benefit analysis and judicial opinion
strikes us as contrary to the principle of free speech as we understand it and as Benjamin Franklin expounded it.
The States ratified the U.S. Bill of Rights, which includes the First Amendment to the Constitution, on
15 December 1791. Two-hundred-and-twenty years later, in R.J. Reynolds v. FDA (2012), the judge upheld what
has become a more limited right to speech by granting an injunction against the FDA. Judge Leon granted the
injunction, and later granted the plaintiffs’ Motion for Summary Judgment, on the basis that the FDA rule
requiring tobacco companies to display disturbing color graphic images on the top 50% of the front and back of
cigarette packets was, in “substantial likelihood,” unconstitutionally compelled speech. He found the images did
not constitute “purely factual and uncontroversial information” narrowly tailored for the purpose of informing
consumers, but amounted to government advocacy.
The government advocacy in this tobacco case involved tampering with images in order to upset
viewers. Presumably it would be illegal for a firm to mislead consumers in this way. Judge Leon noted that the
government did not provide relevant scientific evidence. In November 2011, we sent an email request to the FDA
asking for its evidence that the new packaging regulations would result in a net social benefit. A copy of our
request can be found online1. Our requests were met with courteous replies, but scant substantive evidence. We
were referred to the Federal Register pages 36628 to 36777 for evidence2 and were told that no experimental
evidence was available. A key statistic, the percentage reduction in smoking was based on a single comparison
between Canada, in which a similar graphic warnings policy had been enacted in 2001, and the U.S., in which the
policy had not been enacted.
Early Commercial Speech Restrictions
Compelled speech in the form of mandatory warnings was introduced in the U.S. in 1927 with the Federal
Caustic Poisons Act (FCPA). Egilman and Bohme (2006) reported that prior to the Act, poisons were sold in
bottles of unusual shapes, colors, and textures (they showed an image of a dark-blue skull-shaped bottle) in order
to warn consumers, including the blind and illiterate, that the contents were dangerous.
After the passage of the FCPA in the U.S., manufacturers shifted to plain bottles in order to display the
mandated warning label. The authors observed that the pre-FCPA bottles were more effective at protecting at
least some people. The FCPA created the agency which three years later became known, as it is currently, as the
Food and Drug Administration.
Exceptions that limited freedom of speech identified as commercial began to be made following
Valentine v. Chrestensen (1942). The U.S. Supreme Court justices ruled that a New York City ordinance that was
used to prohibit the owner of a submarine from distributing advertising material (handbills) on the streets was not
a violation of the First Amendment right to free speecheven when the material included a statement of political
protest and no prices. Prior to this opinion, the court did not make a commercial speech distinction (Boedecker,
Morgan and Wright 1995).
2
Having created a commercial speech exception to free speech rights, the Supreme Court did not
specifically uphold the right to disseminate “truthful and nonmisleading commercial messages about lawful
products and services” until 1975. Subsequent judgments provided further clarification of this limited right
(Boedecker, Morgan and Wright 1995; 44 Liquormart Inc. v. Rhode Island 1996, 496). In contrast, citizens,
consumer groups, and lobby groupswhich often speak against commercial interests in order to further their
ownhave First Amendment protection to speak about products; protection that is denied to firms, even to the
extent that Nike was denied the right to speak in its own defense against media coverage of lobbyists (Shugan
2006).
The Central Hudson Test of Commercial Speech Restriction, and Subsequent Developments
Recall that in Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council (1976), the Supreme
Court Justices stated, “we see no satisfactory distinction between the two kinds of speech…As to the particular
consumer’s interest in the free flow of commercial information, that interest may be as keen, if not keener by far,
than his interest in the day’s most urgent political debate.”
Despite the Justices’ own concerns about the practical difficulties of holding to the concept of a
commercial speech distinction, the Supreme Court did not abandon the concept. Instead, from 1980 the Court
provided guidelines for making the distinction in ways that further reduced freedom by allowing considerable
discretion to governments and courts to judge the importance of regulating the speech in question (Boedecker,
Morgan and Wright 1995).
In Central Hudson v. Public Service Commission of New York (1980) the Supreme Court set out the
requirements that must be met in order to warrant government regulation of commercial speech. Namely, there
must be a substantial government interest that might be served by a restriction on speech, the regulation of the
speech must directly advance that interest, and the restriction of speech must be no greater than is necessary to
serve that interest. While concurring with the judgment, Justices Brennan, Blackmun, and Stevens variously
argued that the Court’s definition of commercial speech encompassed speech “entitled to the maximum
protection afforded by the First Amendment” (Stevens) and that the speech test was too permissive of
government regulation.
In relation to mandatory disclaimers and warnings, the U.S. Supreme Court stated, “We do not suggest
that disclosure requirements do not implicate the advertiser’s First Amendment rights at all. We recognize that
unjustified or unduly burdensome disclosure requirements might offend the First Amendment by chilling
protected commercial speech. But we hold that an advertiser’s rights are adequately protected as long as
disclosure requirements are reasonably related to the State’s interest in preventing deception of consumers”
(Zauderer v. Supreme Court of Ohio 1985). Justices Brennan and Marshall elaborated that the State must
“demonstrate that the advertising either ‘is inherently likely to deceive’ or must muster record evidence showing
that ‘a particular form or method of advertising has in fact been deceptive’… and it must similarly demonstrate
that the regulations directly and proportionately remedy the deception.” The Justices also noted that compelling
the publication of information that is large in quantity relative to the advertiser’s information “would chill the
publication of protected commercial speech and would be entirely out of proportion to the State's legitimate
interest in preventing potential deception.”
In SUNY v. Fox (1989), the Supreme Court weakened the Central Hudson condition that regulation of
speech should be “not too extensive”, requiring instead only that regulation should be “reasonable” and noted that
it would not hold government regulation of commercial speech to the “least restrictive means,” as the dissenting
Justices argued was required under Central Hudson.
The Florida Department of Business and Professional Regulation reprimanded a lawyer for “false,
misleading, and deceptive” advertising for advertising her Certified Public Accountant (CPA) and Certified
Financial Planner (CFP) credentials (Ibanez v. Florida 1994). In this case, which parallels the Ducoin v.
Viamonte Ros (2009) case for which we conducted our research, the CFP credential was conferred by a private
organization and the Department required Ibanez to display a form of the Florida Mandatory Disclaimer. The
Supreme Court held that the Board’s censure of Ibanez was “incompatible with First Amendment restraints on
official action.” In particular, the Court rejected the requirement for a disclaimer on the grounds that hypothesized
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possible deception was not sufficient grounds for rebutting “the constitutional presumption favoring disclosure
over concealment.” Further, Justice Ginsburg observed that “the detail required in the disclaimer currently
described by the Board effectively rules out notation of the ‘specialist’ designation on a business card or
letterhead, or in a yellow pages listing.”
Over the years since the review by Boedecker, Morgan and Wright (1995), more than a dozen U.S.
Supreme Court decisions have cited the key Central Hudson judgment, and seven of these were germane to this
paper.
In Rubin v. Coors (1995), Coors Brewing sought to include alcohol content on bottle labels. The
government sought to restrict Coors speech in order to keep consumers ignorant of the alcohol content of beer,
evidently for the sake of their own protection. The Justices found the Federal Alcohol and Tobacco
Administration Act clause that prohibits that practice violated the First Amendment right to free speech, because
it failed the Central Hudson test. Justice Stevens concurred that the labeling ban was unconstitutional but, in a
dissenting opinion, claimed that the Central Hudson test was not relevant when the legislation was a plain
attempt to suppress truthful information that was of interest to consumers.3
The Supreme Court found that a Florida Bar rule that prohibited injury lawyers from sending direct mail
solicitation to victims or their relatives before 30 days after the accident or disaster passed the Central Hudson
test for the restriction of commercial speech and did not therefore violate the First Amendment (Florida Bar v.
Went For It 1995). The Florida Bar rule was based on surveys of public opinion, complaints, newspaper
editorials, concerns that victims should not be exposed to invasion of privacy and undue influence, and concerns
that the reputation of the legal profession was harmed by the practice of soliciting recent victims. In the opinion
of the Court, delivered by Justice O’Connor, the nature of evidence that is needed to satisfy the Central Hudson
test is at the discretion of the Court, and may be none. The Court was concerned not so much with whether harm
was inflicted on the recipients of the advertising material, who could easily make the short trip from mailbox to
trashcan, but with the potential damage to the reputation of the legal profession.
Justice Kennedy’s dissent, with Justices Steven, Souter, and Ginsburg joining, was scathing of the
majority opinion upholding the prohibition. He wrote, “This scheme makes little sense. As is often true when the
law makes little sense, it is not first principles but their interpretation and application that have gone awry.” He
concluded:
Today’s opinion is a serious departure… from the principles that govern the
transmission of commercial speech. The Court’s opinion reflects a new-found and
illegitimate confidence that it… knows what is best… Self-assurance has always been
the hallmark of a censor. That is why under the First Amendment the public, not the
State, has the right and the power to decide what ideas and information are deserving
of their adherence.
In 44 Liquormart Inc. v. Rhode Island (1996), the Court followed Rubin v. Coors and found that the
government of Rhode Island had violated the First Amendment protection of free speech by banning the
advertising of alcoholic beverage prices. All Justices concurred but differed in their reasoning. Delivering the
Court’s opinion, Justice Stevens drew a distinction between State regulation of commercial messages for the
purpose of protecting or informing consumers and the complete prohibition on disseminating truthful and non-
misleading commercial messages for other reasons. He argued that the latter situation provided “far less reason to
depart from the rigorous review that the First Amendment generally demands” (p. 501). Justice Stevens warned
that commercial speech bans typically rested solely on the paternalistic premise that people will respond
“irrationally” to the truth and need to be kept in the dark for their own good. He further warned that banning
speech would conceal the government policy from the public and hence from debate. Justice Stevens rejected the
State’s claim that commercial speech about “vice” products were not entitled to First Amendment protection,
pointing out that such an exception would allow state legislatures to impose censorship on lawful activities by
characterizing them as vices.
Justice Thomas argued that the government has no legitimate interest in keeping purchasers ignorant in
order to manipulate their choices, and therefore the Central Hudson test did not apply. Moreover, Justice Thomas
professed skepticism over making a commercial speech distinction: “I do not see a philosophical or historical
4
basis for asserting that ‘commercial’ speech is of ‘lower value’ than ‘noncommercial’ speech” (p. 522). He
pointed out that application of the Central Hudson test, as interpreted by Justices Stevens and O’Connor in this
case, would stop the government from restricting commercial advertising except where it outlaws or otherwise
restricts the transactions themselves, because these measures would more effectively achieve the government
purpose.
Justice Scalia shared Justice Thomas’s “discomfort with the Central Hudson test” as seeming to “have
nothing more than policy intuition to support it” (p. 517). Justice Thomas observed that the Central Hudson test is
difficult to apply uniformly, given that it is subject to individual judicial preferences and judges opinions as to
which situations citizens cannot be trusted with information on and for which products consumption should be
discouraged. He suggested a return to the holding of Virginia Board of Pharmacy (1976).
In Greater New Orleans Broadcasting v. U.S. (1999), Justice Stevens presenting the opinion of the Court
acknowledged the difficulty of applying the Central Hudson test and that there were calls for its replacement by
“a more straightforward and stringent test for assessing the validity of governmental restrictions on commercial
speech.” The Court, however, decided that it was not appropriate to tackle the broader constitutional issue when
the test provided “an adequate basis for decision” for the case before it.
In presenting the Court’s opinion on Lorillard Tobacco Co. v. Reilly (2001), Justice O’Connor suggested
that the Court’s established position on the Central Hudson test’s requirement for empirical data to support
regulation of commercial speech is not an onerous one, but can be met with “studies and anecdotes” from
different situations, or even “history, consensus, and ‘simple common sense.’ In respect to the cost-benefit test,
the Court maintained that, “A careful calculation of the costs of a speech regulation does not mean that a State
must demonstrate that there is no incursion on legitimate speech interests, but a speech regulation cannot unduly
impinge on the speaker’s ability to propose a commercial transaction and the adult listener’s opportunity to obtain
information about products.”
In his partial concurrence, Justice Thomas reasserted his opposition to drawing a commercial speech
distinction, as he also did in Greater New Orleans Broadcasting v. U.S. He restated his position that there is no
historical or philosophical basis for assigning commercial speech a lower value than other speech and adding that
it is doubtful “whether it is even possible to draw a coherent distinction”. On the question of whether tobacco is a
product that is so exceptional as to be outside any First Amendment consideration, Justice Thomas concluded his
opinion with the following uncompromising statement about the intended scope of the First Amendment:
No legislature has ever sought to restrict speech about an activity it regarded as harmless and
inoffensive. Calls for limits on expression always are made when the specter of some threatened
harm is looming. The identity of the harm may vary. People will be inspired by totalitarian
dogmas and subvert the Republic. They will be inflamed by racial demagoguery and embrace
hatred and bigotry. Or they will be enticed by cigarette advertisements and choose to smoke,
risking disease. It is therefore no answer for the State to say that the makers of cigarettes are
doing harm: perhaps they are. But in that respect they are no different from the purveyors of
other harmful products, or the advocates of harmful ideas. When the State seeks to silence them,
they are all entitled to the protection of the First Amendment.
Pharmacists who wished to advertise that they could supply drugs in compounded and other convenient forms for
customer had their right to do so affirmed by the Supreme Court in Thompson v. Western States Medical Center
(2002). Justice O’Conner, delivering the majority opinion of the Court noted, “We have previously rejected the
notion that the Government has an interest in preventing the dissemination of truthful commercial information in
order to prevent members of the public from making bad decisions with the information.” In a dissenting opinion,
Justices Breyer, Stevens, and Ginsburg maintained that the Court’s opinion had given insufficient regard to the
government’s role as protector of consumers from untested products, citing evidence that physicians believe that
advertising leads consumers to pressure them to prescribe drugs they would not otherwise prescribe. The
dissenting justices argued that commercial speech should be subject to government policy objectives and to less
rigorous First Amendment protection.
In Milavetz, Gallop and Milavetz. v. United States (2010), the Court upheld a requirement for lawyers
who offer bankruptcy advise or assistance to include in their advertisements notice that their operation is a “Debt
5
Relief Agency” that “helps people file for bankruptcy”. The plaintiffs claimed that these statements would cause
confusion among consumers, but did not offer evidence. The majority opinion, delivered by Justice Sotomayor,
held that the likelihood that consumers would be misled if the mandated statements were absent was self-evident.
Acknowledgments: We are grateful to George Meros and Frank R. Recker (who represented the AAID in the
Ducoin v. Viamonte Ros case for which we conducted our research), and to Paul Sherman for helpful suggestions
on the legal aspects of this paper. Don Esslemont made helpful suggestions for improving our writing. Our
acknowledgments are not intended to imply agreement with any opinions we express in the paper. Responsibility
for errors or omissions belongs to the authors.
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1 http://kestencgreen.com/letter-to-fda.pdf
2 Available online at http://www.gpo.gov/fdsys/pkg/FR-2011-06-22/pdf/2011-15337.pdf
3 The same legislation required disclosure of alcohol content on wine and spirit labels.
ResearchGate has not been able to resolve any citations for this publication.
Article
During the past 15 years, the U.S. Supreme Court has used Central Hudson Gas v. Public Service Commission (1980) to expand significantly the power of the government at all levels to regulate advertising and other promotional activities. As a result, first amendment protection for commercial speech has steadily diminished. In this article, Supreme Court decisions subsequent to Central Hudson are reviewed to provide an update of Cohen's (1978) work. In addition, the current standard for identifying commercial speech is analyzed, and managerial recommendations are made to guide managers who are responsible for making promotional decisions in this increasingly restricted area.
Article
Despite the invaluable contribution of marketing folks (e.g., making markets work), they fail to enjoy the same freedom of speech as others. This fact is particularly egregious because unlike other groups that can use threats, force, or coercion, marketing folks rely only on speech. Although the U.S. Constitution never mentions commercial speech, the courts invented the concept to censor marketing folks. The cloudy rational was that consumers need special protection from marketing folks (e.g., advertising). Naturally, censorship leads to abuse. Powerful incumbents use censorship covertly against new entrants. Politicians use censorship surreptitiously to promote their own political goals. If consumers need protection, it is certainly from the misleading statements of those with freedom of speech—politicians, attorneys, the news media, and the censors.
Dr. Ana M. Viamonte Ros, in her official capacity as the State Surgeon General
  • Francis J Ducoin
Ducoin, Francis J., D.D.S., et al. v. Dr. Ana M. Viamonte Ros, in her official capacity as the State Surgeon General, et al. (2009), 2003 CA 696. [Available from http://www.aaidimplant.org/uploads/cms/documents/ducoin_final_judgment.pdf]
A Brief History of Warnings
  • David Egilman
  • Susanna Rankin Bohme
Egilman, David and Susanna Rankin Bohme (2006), "A Brief History of Warnings," in Handbook of Warnings, Michael S. Wogalter, ed. Mahwah, N.J.: Lawrence Erlbaum Associates. [Available from http://www.egilman.com/Documents/publications/Handbook%20of%20Warnings%20(Clean%20Copy).pdf]
Florida Department of Business and Professional and Professional Regulation
  • Silvia S Ibanez
Ibanez, Silvia S. v. Florida Department of Business and Professional and Professional Regulation (1994), 512 U.S. 136 [Available from http://laws.findlaw.com/us/000/u10369.html]
District Court for the District of Columbia
  • R J Reynolds Tobacco
  • Co
R.J. Reynolds Tobacco Co et al. v. U.S. Food and Drug Administration et al. (2012), U.S. District Court for the District of Columbia, No. 11-cv-1482. [Available from www.ana.net/getfile/16887]
Secretary of the Treasury, Petitioner v
  • Robert E Rubin
Robert E. Rubin, Secretary of the Treasury, Petitioner v. Coors Brewing Company (1995), 514 U.S. 476. [Available from http://laws.findlaw.com/us/514/476.html]
  • Secretary Thompson
  • Human Health
  • Services
Thompson, Secretary of Health and Human Services, et al. v. Western States Medical Center (2002), 535 U.S. 357 [Available from http://laws.findlaw.com/us/535/357.html]
Office Of Disciplinary Counsel of The Supreme Court of Ohio
  • Philip Q Zauderer
  • Appellant V
Zauderer, Philip Q., Appellant v. Office Of Disciplinary Counsel of The Supreme Court of Ohio (1985), 471 U.S. 626. [Available from http://www.law.cornell.edu/supremecourt//text/471/626]