Marketing Community Wins Major Victory in Ad Disclosure Lawsuit

In a key victory for the ad community, a three judge panel of the U.S. Court of Appeals for the Ninth Circuit imposed a preliminary injunction on a San Francisco ordinance requiring health warnings on ads for certain sugar sweetened beverages. The court held that the industry groups challenging the ordinance were likely to succeed on their claim that the ordinance was an unjustified or unduly burdensome disclosure requirement which violates the First Amendment. The panel reversed a lower court decision which had denied the request for a preliminary injunction blocking enforcement of the ordinance. The three-judge panel agreed with the industry groups that the warning requirements – a black box warning that overwhelmed other visual elements of the ads – unduly burdened and chilled protected speech about those products. ANA had filed “friend of the court” briefs supporting the constitutional challenge in both the district court and the Court of Appeals.

Dan Jaffe, ANA’s Group Executive Vice President, stated: “If this ordinance were allowed to stand, it would set a very dangerous precedent for other products and services that fall into disfavor with some government body. The First Amendment protects marketers from these types of efforts by the government to require companies to vilify their own products.”

In 2015, the San Francisco Board of Supervisors passed an ordinance which restricts ads in certain locations for “sugar sweetened beverages” that contain more than 25 calories from sweeteners per 12 ounces. It requires “health warnings” taking up to 20 percent of the space on certain ads for these products. A lawsuit filed in federal court by the American Beverage Association, the California Retailers Association and the California State Outdoor Advertising Association challenged the ordinance on First Amendment grounds.  

ANA’s brief noted that if the ordinance is upheld, “there would be virtually no limit to similar efforts targeting other products and services at any level of government. Every sugary, fatty, salty, processed, or other food disfavored by the science of the moment – and every other product or service regulators view as creating a ‘risk’ – would be susceptible to having a significant portion of its advertising turned into a placard for government hectoring with which the advertiser not only disagrees, but for which there may be data controverting the government position.”  

“These industry concerns are not exaggerated,” said Jaffe. “Last year the Baltimore City Council considered similar warnings for sugar-sweetened beverages. These risks go far beyond the soft drink industry. The City of Berkeley recently passed a law requiring cell phone manufacturers and sellers to post a point of sale warning sign regarding radio frequency safety that contradicts findings by the Federal Communications Commission.  ANA also is supporting a challenge to that law.”

Jaffe concluded: “Fortunately, the First Amendment does not allow this type of regulatory nannyism. This case is critically important for the entire marketing community. Unless this type of restriction is defeated, the regulatory floodgates are certain to be opened. There are more than 30,000 local governments across the country which could try to commandeer space on ads whenever they feel like sending a government message.”