Court’s data-mining ruling: big change on commercial speech?

Friday, June 24, 2011

WASHINGTON — Something big happened in First Amendment law yesterday, when the Supreme Court ruled in the case of Sorrell v. IMS Health Inc. But it may take awhile to figure out exactly what that something is.

By applying “heightened scrutiny” to a law regulating commercial speech, did the Court take a big step toward giving commercial speech the same First Amendment protection as political speech, as Justice Clarence Thomas has urged? Or, as one lawyer put it, how high is “heightened?” No one seems quite sure.

By a 6-3 vote, the Court struck down, on First Amendment grounds, a Vermont law that restricted the flow of data about the prescribing practices of physicians — highly prized information that drug companies use to customize their sales pitches to doctors. The law was aimed at discouraging that kind of marketing, because in the state’s view it excessively promotes brand-name, rather than generic, drugs at greater cost to consumers.

“The law on its face burdens disfavored speech by disfavored speakers,” wrote Justice Anthony Kennedy for the majority.

In that formulation, and throughout the decision, the Court talked about data mining, a new form of commercial speech, in terms usually reserved for core expressive speech. In the roughly 40 years that the Court has viewed commercial speech or advertising in First Amendment terms, it has given it back-seat status, though with increasing respect. It has not applied the hard-to-survive “strict scrutiny” standard that it uses to judge restrictions on more classic forms of speech.

But Kennedy’s ruling in Sorrell often seemed to view commercial speech interchangeably with political speech. At one point, he compared the Vermont law to a hypothetical statute “demanding two years’ notice before the issuance of parade permits” passed to thwart a looming demonstration that the government wants to suppress.

In striking down the Vermont law, the Court also displayed the same distaste for government efforts to manipulate the marketplace of ideas in pursuit of government policy preferences that it has shown in recent campaign-finance decisions — far removed from the realm of commercial speech.

For example, in rejecting Vermont’s argument that its law prevents “unwanted pressure” on physicians to make certain prescription decisions, Kennedy invoked Snyder v. Phelps, the recent ruling that gave classic First Amendment protection to virulent protests at military funerals. Speech is protected, that ruling asserted, even when it “inflicts great pain.” Kennedy went on to say, “Absent circumstances far from those presented here, the fear that speech might persuade provides no lawful basis for quieting it.”

First Amendment expert Eugene Volokh saw significance in that aspect of the Court’s ruling. Writing on his Volokh Conspiracy blog, he noted that the classic “Central Hudson test” the Court has used since 1980 to evaluate restrictions on commercial speech allowed government to justify its regulations as a way of persuading people to follow valid government objectives.

“The Central Hudson approach, while not expressly overruled, has become the outlier” as a result of Sorrell, wrote Volokh, a UCLA law professor. “I would now feel much more comfortable arguing to lower courts that the government generally may not restrict commercial advertising out of a worry about its persuasive effects, at least unless the advertising is misleading or promotes an illegal commercial transaction (or perhaps involves some special circumstances, such as an underage audience).”

When Charles “Chip” English, a commercial-speech expert at Ober Kaler in Washington, D.C., read the Sorrell decision yesterday, he wasn’t surprised by the outcome. But was struck by the tone and language. “The majority opinion suggests a subtle but measurable shift,” said English. The tone seemed to echo Justice Thomas’ position that “the whole distinction between commercial and non-commercial speech is unworkable,” said English. “There is a significant chance that is what happened.”

English thinks the ruling’s language will provide ammunition to commercial speakers challenging all kinds of regulations that affect their ability to communicate. One possible example: tobacco companies that want to challenge the new, graphic, anti-smoking labels that the Food and Drug Administration wants them to slap on cigarette packs.

Another First Amendment lawyer, Andrew Tauber of Mayer Brown, was less sure that the Court had broken new ground. “This statute was so egregious, it was easy to strike down,” Tauber said. “The decision is within existing case law.”

Bert Rein of Wiley Rein, who wrote a brief in the case, took something of a middle ground. “Something is going on on the Court about the level of scrutiny” in commercial speech cases, he said. “But there isn’t a consensus. I don’t think the decision was revolutionary.”

But David Gans of the liberal Constitutional Accountability Center thinks Sorrell “lays the framework for a major expansion in the protection the First Amendment affords to commercial speech by corporations and other businesses.” He added, “Sorrell suggests that the Court’s commercial speech doctrine may be in a state of great flux in the years to come, and that Justice Kennedy and his colleagues are eager to expand, possibly quite substantially, the constitutional protections available to corporations and other businesses. This is an area that deserves to be closely watched.”

Another way to determine whether the Court majority has done something important is to read the dissent. By that measure, Sorrell represents a major shift.

Dissenting Justice Stephen Breyer went so far as to express fear that the ruling signals a return to an era almost no one wants to revisit: the so-called Lochner era, when the Court struck down all sorts of business regulations as infringements of economic liberty.

“At best the Court opens a Pandora’s Box of First Amendment challenges to many ordinary regulatory practices that may only incidentally affect a commercial message,” wrote Breyer. “At worst, it re-awakens Lochner’s pre-New Deal threat of substituting judicial for democratic decisionmaking where ordinary economic regulation is at issue.”

Tags: , , ,