Compelled advertising

Friday, September 13, 2002

What do California tree fruits, mushrooms, alligators, milk, almonds, avocados and beef have in common? The answer is that they all have been the subject of First Amendment disputes over compelled commercial speech.

An intriguing free-speech issue arises when the government forces producers of various products to fund group-based advertising. Food producers and others argue that the First Amendment prohibits a government agency from forcing them to fund a message that they oppose. They allege that programs requiring them to fund generic advertising that conflicts with their own messages unconstitutionally compels them to speak. The Supreme Court has dealt with compelled-speech issues in cases involving:

Federal and state regulators insist the matter is one of economic regulation, not speech restriction or forced speech. The generic ads, they say, simply stimulate interest in a particular product. More recently they have also alleged that the mandatory assessments are a form of government speech immune from First Amendment review.

The issue has so divided the lower courts that the U.S. Supreme Court has issued three decisions on this issue over the past eight years.

California tree-fruits case
In 1997, the U.S. Supreme Court sided with the regulators in Glickman v. Wileman Bros. & Elliott, Inc. On a 5-4 vote, the Court upheld a federal program forcing fruit producers to pay for generic ads to promote their industry. The high court noted that the mandatory assessments forced by federal marketing orders were part of a comprehensive statutory scheme designed to regulate economic products. The Court determined that the program was a program of economic regulation, not speech compulsion.

“The fact that an economic regulation may indirectly lead to a reduction in a handler’s individual advertising budget does not itself amount to a restriction on speech,” Justice John Paul Stevens wrote for the majority.

Instead of applying the standard test for examining the constitutionality of regulations infringing on commercial speech in the 1980 Central Hudson Gas & Electric Corp. v. Public Serv. Comm’n, the Wileman Court majority ruled there was no First Amendment issue raised by the fruit-advertising program. Instead, the majority said that it was “simply a question of economic policy for Congress and the Executive to resolve.”

Stevens wrote that the marketing orders must not: (1) impose any restraint on the freedom of any producer to communicate any message to any audience; (2) compel any producer to engage in any actual or symbolic speech; or (3) compel the producers to endorse or finance any political or ideological views.

In dissent, Justice David Souter declared that the marketing orders in Wileman should have been analyzed under the Court’s commercial-speech test in the Central Hudson case.

The Court’s decision in Wileman led to several lower court decisions upholding marketing orders for other agricultural products, such as milk (Gallo Cattle v. California Milk) and almonds (Cal-Almond, Inc. v. U.S. Dept. of Agriculture). In the almond case, the 9th U.S. Circuit Court of Appeals wrote in a 1999 decision that Wileman “makes plain that such challenges to the wisdom or effectiveness of a promotional program raise questions of economic policy, rather than questions of constitutional import.”

Mushroom case
Wileman appeared to foreclose the success of challenges to compelled-advertising cases of agricultural products until a case developed involving a Tennessee mushroom producer. In 1999, the 6th U.S. Circuit Court of Appeals ruled unconstitutional portions of the Mushroom Promotion, Research, and Consumer Information Act of 1990 that authorize coercing individual mushroom producers to fund a nationwide mushroom-promotion campaign. That case was United Foods, Inc. v. United States.

United Foods Inc., a mushroom producer from Tennessee, claimed that other mushroom producers were shaping the content of the advertising to its disadvantage. The 6th Circuit agreed with United Foods’ arguments. It distinguished its case from Wileman by comparing the “unregulated” nature of the mushroom market to the highly regulated fruit industry.

In June 2001, the Supreme Court agreed with the 6th Circuit and sided with the mushroom producer in U.S. v. United Foods. Justice Anthony Kennedy explained that the forced funding of advertising in Wileman was part of a much broader scheme of economic regulation. He contrasted this with the mushroom case, writing that “for all practical purposes the advertising itself, far from being ancillary, is the principal object of the regulatory scheme.”

“We have not upheld compelled subsidies for speech in the context of a program where the principal object is speech itself,” Kennedy wrote. Justice Clarence Thomas went even further in his concurring opinion, writing: “Any regulation that compels the funding of advertising must be subjected to the most stringent First Amendment scrutiny.”

The Court noted that the commercial nature of the speech did not “deprive” the mushroom producer of First Amendment protection. But the Court decided the case on its compelled-speech line of cases rather than the Central Hudson commercial-speech test. In these cases, litigants who claim that they should not have to pay for generic advertising will likely still raise claims under both the compelled-speech and commercial-speech lines of cases.

Even though the Court in United Foods did not apply the Central Hudson test, some legal commentators view it as a victory for commercial speech. “The most significant gain provided by United Foods is the explicit attachment of First Amendment protections against compelled speech and compelled financing of speech posited in Wooley, Barnette, Abood and Keller to commercial speech,” write professors Edward J. Schoen, Margaret M. Hogan and Joseph S. Falchek.

However, the professors note that commercial-speech protections “might be better served by the heightened Central Hudson analysis than by the obfuscating United Foods analysis.”

Beef and the government-speech doctrine
The U.S. Supreme Court waded into these troubled waters again with the beef-oriented cases of Veneman (later changed to Johanns) v. Livestock Marketing Association and the related Nebraska Cattlemen Inc. v. Livestock Marketing Association. These cases asked whether it violates the First Amendment rights of beef producers to have to fund generic advertising under the Beef Promotion and Research Act.

Predictably, the challengers of the law, including the Livestock Marketing Association, claimed that the mushroom case was the controlling legal precedent.

The government disagreed, arguing that the case should be decided on the basis of the government-speech doctrine. The government-speech doctrine holds that the government has its own First Amendment rights to advance its own ideas and messages. Federal officials argued that advertising under the Beef Act is government speech that is immune from First Amendment scrutiny. In other words, the government asserted that it had its own First Amendment right to engage in certain expression.

Because federal officials did not assert the government-speech argument before the 6th Circuit in the United Foods case, the Supreme Court would not consider it.

However, the government-speech doctrine was properly put before the courts in the beef case. On May 23, 2005, the Supreme Court held that the government-speech doctrine prevailed in Johanns v. Livestock Marketing Association.

“The message set out in the beef promotions is from beginning to end the message established by the Federal Government,” Justice Antonin Scalia wrote for the majority. “As we hold today, respondents (the beef producers) enjoy no right not to fund government speech — whether by broad-based taxes or targeted assessments, and whether or not the reasonable viewer would identify the speech as the government’s.”

The decision appeared to leave a glimmer of hope for objecting beef producers, as Scalia said that if “individual beef advertisements were attributed” to certain beef producers, they might have a valid as-applied challenge. (An as-applied challenge is a legal term meaning that a regulation is unconstitutional not on its face but as it is applied in a specific situation or case.)

It remains to be seen whether the Court’s decision in Johanns invoking the government-speech doctrine will settle these cases or whether additional First Amendment arguments will be made.

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