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Media Alerts - American Beverage Ass'n v. City & County of San Francisco
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November 10, 2017
  American Beverage Ass'n v. City & County of San Francisco
Headline: The Ninth Circuit panel found the City and County of San Francisco's ordinance that required warnings about the health effects from consuming certain sugar-sweetened beverages on specific types of fixed advertising within San Francisco was an unduly burdensome disclosure requirement that might offend the First Amendment by chilling protected commercial speech

Areas of Law: Constitutional Law

Issues Presented: Whether the ordinance enacted by the City and County of San Francisco requiring warnings about the adverse health effects of certain sugar-sweetened beverages on specific types of fixed advertising unduly burdened and chilled protected commercial speech under the First Amendment.

Brief Summary: Plaintiffs - the American Beverage Association, the California Retailers Association, and the California State Outdoor Advertising Association - filed suit against the City and County of San Francisco seeking injunctive relief to prevent implementation of a city ordinance requiring advertisers of certain sugar-sweetened beverages to post the following health effect warning on their advertisements: "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." The district court denied the Associations' motion for a preliminary injunction. Concluding that the Associations would not prevail on the merits of their First Amendment challenge the district court held that the warning was not misleading, would not place an undue burden on the Associations' commercial speech, and was rationally related to a government interest.

The Ninth Circuit panel reversed and remanded the district court's denial of the Associations' motion for preliminary injunction holding that the Associations would likely prevail on the merits of their First Amendment's claim. Applying the following analytical framework applicable to commercial speech announced by the Supreme Court in Zauderer v. Office of Disciplinary Counsel of Supreme Court of Ohio, 471 U.S. 626, 651 (1985) - "a commercial speaker's constitutionally protected interest in refraining from providing consumers with additional information is minimal if a required disclosure is 'purely factual and uncontroversial' and is not 'unjustified or unduly burdensome' so as to chill protected speech" - the panel found that the warning's message was controversial and not purely factual when the warning asserted that consuming certain sugar-sweetened beverages would contribute to obesity, diabetes, and tooth decay. The panel determined that this assertion is misleading since it is contrary to statements by the FDA that added sugars are "generally recognized as safe," and "can be a part of a healthy dietary pattern when not consumed in excess amounts." The panel also found that the ordinance placed undue burden on the Associations' commercial speech because the warning would overwhelm other visual elements of their advertisements and leave no room to convey their messages. Although the panel agreed that San Francisco has a substantial government interest in promoting the health of its citizens, it concluded that the Associations would likely prevail on the merits of their First Amendment challenge because the ordinance was not purely factual and was unduly burdensome. Additionally, the panel found that other factors of the preliminary injunction test weighed in the Associations' favor. Accordingly, the panel reversed and remanded the district court's judgment.

Significance: Applying Zauderer's analytical framework applicable to commercial speech, the Ninth Circuit panel concluded that "San Francisco has not carried its burden 'of demonstrating the legitimacy of its commercial-speech regulations,' because of substantial evidence in the record that the regulation is misleading and would chill the Associations' protected commercial speech.".

Extended Summary: In June 2015, the City and County of San Francisco ("San Francisco") enacted an ordinance requiring the advertisers of certain sugar-sweetened beverages to place a warning about the adverse health effects in their beverage advertisements. The mandatory warning included the following message, "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." Failure to include such warning would result in penalties imposed by the San Francisco's Director of Health.

According to San Francisco, the ordinance was intended to raise consumer awareness about the existence of added sugars in said beverages, and thus promoted public health and preserved economic resources.

In July 2015, prior to the ordinance's effective date, the American Beverage Association, California Retailers Association, and the California State Outdoor Advertising Association ("the Associations") filed suit seeking a preliminary injunction against implementation of the ordinance alleging that the ordinance would place an undue burden that would have a chilling effect on the Associations' protected commercial speech under the First Amendment.

In May 2016, the district court denied the motion on grounds that the Associations would not likely prevail on the merits of their First Amendment claim because the mandatory warning was not misleading, would not place an undue burden on their commercial speech, and was rationally related to a government interest.

On appeal, the Ninth Circuit panel addressed the issue whether the ordinance mandating disclosure was purely factual and uncontroversial, and whether it constituted an undue burden on commercial speech and thus violated the Associations' First Amendment rights.

The panel applied Zauderer's analytical framework in reviewing the Associations' First Amendment challenge. Zauderer v. Office of Disciplinary Counsel of Supreme Court of Ohio, 471 U.S. 626 (1985). Although Zauderer involved a government regulation intended to protect consumers from deceptive commercial advertisements, the panel joined other circuits in holding that Zauderer also applied to government regulation intended to promote public health. Applying Zauderer, the panel asserted that a disclosure requirement that is "purely factual and uncontroversial" and is not "unduly burdensome" would survive First Amendment scrutiny so long as it is "reasonably related to a substantial government interest."

First, the panel examined the character of the alleged ordinance and noted that a disclosure requirement is not "purely factual" when it is "literally true but nonetheless misleading and, in that sense, untrue." CTIA-The Wireless Ass'n v. City of Berkeley, 854 F.3d 1105, 1118 (9th Cir. 2017). The panel concluded that the ordinance's factual accuracy was questionable because the warning statement asserted that sugar-sweetened beverages contribute to obesity, diabetes, and tooth decay regardless of the quantity consumed and other lifestyle choices. In addition, the panel found that the statement was contrary to FDA guidelines, which provided that added sugars are "generally recognized as safe" and "can be part of a healthy dietary pattern when not consumed in excess amounts." While San Francisco's experts provided that there is a "clear scientific consensus" showing a direct link between excessive consumption of added sugar beverages and obesity and diabetes, the experts failed to negate the Associations' expert's assertion that consuming sugar-added beverages does not increase the risk of obesity or diabetes so long as the consumer maintains a healthy balance between their caloric intake and energy output. The panel also found that the warning was "misleading" for singling out sugar-sweetened beverages as less healthy than other sources of added sugars and calories, which was contrary to other FDA and the American dental Association's current research.

Next, in determining whether the ordinance placed undue burden on the Associations' commercial speech, the panel noted that "[a] required disclosure may be unduly burdensome if it 'effectively rules out' advertising in particular media." Ibanez v. Fla. Dep't of Bus. & Prof'l Regulation, 512 U.S. 136, 146 (1994). The panel concluded that the ordinance constituted an undue burden that chilled the Associations' protected commercial speech because the black box warning overwhelmed other visual elements in the advertisements and left no room for advertisers to convey their message. The panel concluded that the ordinance's burden would have a chilling effect on protected speech causing major manufacturers of said beverages to remove their advertising from covered media if the ordinance went into effect.

While agreeing that San Francisco had a legitimate government interest in promoting the health of its citizens, the panel concluded that San Francisco had not met its burden to prove the "legitimacy of its commercial-speech regulations" and, therefore, that the Associations met their burden to show that they would likely succeed on the merits of their First Amendment challenge.

The panel also found that the remaining factors of the preliminary injunction test weighed in favor of the Associations because they would likely suffer an irreparable harm if the ordinance became effective, the balance of hardship also tipped in their favor, and protecting a party's First Amendment rights has always been in the public interest.

Concluding that the district court abused its discretion in denying the Associations' motion for preliminary injunction against the ordinance the panel reversed and remanded the case for further proceeding.

To read the full opinion, please visit:
http://cdn.ca9.uscourts.gov/da...17/09/19/16-16072.pdf

Panel: Dorothy W. Nelson, Sandra S. Ikuta, and J. Michael Seabright, Circuit Judges.

Argument Date: April 17, 2017

Date of Issued Opinion: September 19, 2017

Docket Number: 3:15-cv-03415-EMC

Decided: Reversed and remanded the district court's denial of Associations' motion for preliminary injunction to enjoin the City and County of San Francisco from imposing ordinance requiring advertisers of certain types of sugar-sweetened beverages to include the health effect warnings on their advertisements within San Francisco.

Case Alert Author: Phuong Luong

Counsel:
Richard P. Bress (argued), Melissa Arbus Sherry, and Michael E. Bern, Latham &Watkins LLP, Washington, D.C.; James K. Lynch and Marcy C. Priedeman, Latham & Watkins LLP, San Francisco, California; for Plaintiff-Appellant American Beverage Association.

Thomas S. Knox, Knox Lemmon & Anappolsky LLP, Sacramento, California; for Plaintiff-Appellant California Retailers Association

Theodore B. Olson, Andrew S. Tulumello, and Helgi C. Walker, Gibson Dunn & Crutcher LLP, Washington, D.C.; Charles J. Stevens and Joshua D. Dick, Gibson Dunn & Crutcher LLP, San Francisco, California; for Plaintiff-Appellant California State Outdoor Advertising Association.

Christine Van Aken (argued), Jeremy M. Goldman, and Wayne Snodgrass, Deputy City Attorneys; Dennis J. Herrera, City Attorney; Office of the City Attorney, San Francisco, California; for Defendant-Appellee.

Author of Opinion: Judge Sandra S. Ikuta

Circuit: Ninth

Case Alert Supervisor: Professor Glenn Koppel

    Posted By: Glenn Koppel @ 11/10/2017 05:14 PM     9th Circuit  

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