Ninth Circuit Reverses Denial of Preliminary Injunction for Disclosure Requirements on Sugar-Sweetened Beverage Ads

September 20, 2017

Below is a write-up regarding an important advertising-related Ninth Circuit Court case by Bob Corn Revere and Ronnie London of Davis Wright Tremaine. Davis Wright Tremaine has provided strong support to ANA on this case through the drafting and filing of our amicus briefs.

On September 19, 2017, the U.S. Court of Appeals for the Ninth Circuit issued a decision protecting advertisers from forced disclosures in product advertising and curbing a recent trend in judicial decisions that had approved certain forms of compelled commercial speech.

In American Beverage Association v. City and County of San Francisco, — F.3d , 2017 WL 4126944 (9th Cir. 2017), a unanimous panel of the Ninth Circuit reversed the denial of a preliminary injunction for a San Francisco ordinance that sought to require sugar-sweetened beverage (“SSB”) warning requirements on display ads. The San Francisco ordinance requires billboards and other posted ads for SSBs, defined as sodas and other non-alcoholic drinks with added sweeteners and more than 25 calories per 12 ounces — but excluding other beverages (or foods) that may be highly caloric — to add a “Warning” that “Drinking beverages with added sugar(s) contributes to obesity, diabetes, and tooth decay.” The ordinance contains detailed instructions regarding the warning’s form, content and placement, including that it occupy 20 percent of the ad, set off with a rectangular border.

The American Beverage Association, the California Retailers Association, and the California State Outdoor Advertising Association challenged the ordinance as a violation of the First Amendment, but the federal district court for Northern California refused to enjoin the warning requirement, though it did stay enforcement pending appeal. Yesterday’s decision by the court of appeals reversed the district court’s order, requiring the entry of a preliminary injunction. ANA had filed friend-of-the-court briefs supporting the constitutional challenge in both the district court and the court of appeals.

Yesterday’s ruling held that the advertisers were likely to succeed on the merits of their First Amendment claim because the message San Francisco sought to require was not “purely factual and noncontroversial” and that it imposed too great a burden on  commercial speakers. In fact, the court observed that the compelled message was itself “misleading and, in that sense, untrue” because it singled out only certain sugar-sweetened products and failed to add that overconsumption of these or other  products not covered by the law may lead to adverse health effects. The court found it to be constitutionally problematic that the city was trying to force advertisers “to convey San Francisco’s disputed policy views,” and that Supreme Court precedent “does not allow the state to require corporations to provide one-sided or misleading messages” or “to use their own property to convey an antagonistic ideological message.” Finally, the court held that the size and format of the required warning was too burdensome because it “overwhelms other visual elements in the advertisement” and turns ads “into a vehicle for a debate about the health effects of sugar-sweetened beverages.”

The case now returns to the trial court with the advertisers entitled to a preliminary injunction and a holding that they are likely to succeed on the merits of their First Amendment challenge. The decision may have an impact on another closely-watched case involving forced commercial disclosures that involves a Berkeley ordinance requiring distribution of information about RF radiation from cell phone handsets at points of sale. CTIA-The Wireless Ass’n v. City of Berkeley, 854 F.3d 1105 (9th Cir. 2017). The court had declined to enjoin the Berkeley ordinance, but the Ninth Circuit is currently considering a petition for rehearing. ANA also filed a friend-of-the-court brief in that case.

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