Tag: commercial speech

Government Can’t Censor Book Promotion

This blogpost was co-authored by Cato legal associate Kathleen Hunker.

There’s a fine line between protecting the public from fraud and censoring unorthodox opinions—a line across which the government often stumbles. That was the case in September 2007, when the Federal Trade Commission filed a contempt motion against Kevin Trudeau, author of the best-selling book The Weight Loss Cure “They” Don’t Want You to Know About.

The FTC alleged that Trudeau had misrepresented the contents of his book in several “infomercials” by describing it as “easy” and claiming that dieters, by the end of the regimen, could eat anything they wanted without gaining weight. Despite the fact that Trudeau merely quoted the book when making these statements, the district court upheld the FTC’s findings and smacked Trudeau with a staggering $37.6 million fine. The court also imposed a rare “prior restraint” on speech, demanding that Trudeau post a $2 million bond before running any future infomercials.

The district court imposed these sanctions even though the FTC never proved that Trudeau misled a single consumer or violated any part of the FTC Act. On appeal, the Seventh Circuit affirmed the district court’s decision and ruled that Trudeau’s book promotion constituted misleading commercial speech and was therefore not entitled to any constitutional protection. If left unchallenged, the Seventh Circuit’s ruling would have a dire chilling effect on authors trying to promote their work and could give government officials broad censorial power, in effect permitting the FTC to tax fine through the backdoor what it could never regulate directly (sound familiar?).

Cato has thus filed an amicus brief supporting Trudeau’s request that the Supreme Court take the case and establish a constitutional standard that allows the FTC to protect consumers from fraud while respecting the First Amendment. We argue that courts should apply strict scrutiny to any government actions that restrict or punish advertisements that merely quote and summarize parts of a book (which enjoys full constitutional protection), as Trudeau’s infomercials did.

We note that the Supreme Court has held that commercial speech inextricably intertwined with otherwise protected speech deserves a high degree of First Amendment protection. Moreover, it is well-established that falsity alone may not remove speech from the shelter of the First Amendment.

Free speech loses its vitality when confronted with overzealous regulation; strict scrutiny of would-be government censors would give authors the necessary “breathing space” to publicize their work without the threat of exorbitant fines.

The Supreme Court will decide this fall whether to take the case of Trudeau v. FTC.

Court Extends Commercial Speech Protections

In an important but little-noted First Amendment case decided Thursday, Sorrell v. IMS Health Inc., the Supreme Court correctly invalidated a particular regulation of commercial speech but unfortunately left intact the general doctrine that distinguishes and privileges noncommercial speech.  Justice Kennedy authored the 6-3 decision (joined not just by the “conservatives” but also Justice Sotomayor) that struck down a Vermont law prohibiting the sale of information about doctors’ prescription histories as making viewpoint-based speech restrictions in violation of the First Amendment. 

In so ruling, the Court effectively affirmed a Second Circuit decision (involving a similar Connecticut law) I discussed previously.  Cato filed amicus briefs in both the Second Circuit and Supreme Court.

The Supreme Court first found that Vermont’s law is subject to heightened scrutiny—not simply the “intermediate” scrutiny typically applied to restrictions on commercial speech—because, on its face, it enacts content- and speaker-based burdens on protected expression.  It then rejected the two justifications for the statute the state had asserted: (1) that it is necessary to protect medical privacy, including physician confidentiality, avoidance of harassment, and the integrity of the doctor-patient relationship; and (2) that it is integral to the achievement of policy objectives—namely, improved public health and reduced healthcare costs.

That’s fine as far as it goes, but it leaves open the possibility for broader restrictions on speech, such as if a state wanted to prohibit all prescription-related speech, not just that by data-mining companies to pharmaceutical companies who would use it to tailor their marketing efforts.  Our Supreme Court brief, in contrast, argued that the Court should abandon the unworkable distinction between commercial and noncommercial speech established in the 1980 case of Central Hudson Gas & Electric v. Public Service Commission

The Central Hudson rule should be abandoned in favor of strict scrutiny of all speech restrictions because innovative and valuable commercial expression deserves full First Amendment protection.  For more on our preferred approach, see this blogpost.

Still, even as Sorrell v. IMS Health doesn’t entirely eliminate the commercial speech doctrine, the Court does make clear that information—even commercial information sold for commercial purposes—is more than a mere commodity (Vemont had likened it to beef jerky).  Commercial speech provides valuable information to the marketplace; by definition, the more such information consumers receive, the better-informed decisions they can make.

I could end my analysis there, but one amusing postscript is that the dissent, written by Justice Breyer and joined by Justices Ginsburg and Kagan, resorts to argument ad Lochneram.  That is, just as one should discount any political argument invoking Hitler and Nazis, a legal argument invoking the alleged horrors of the Lochner era (striking down regulations on economic liberty grounds) is inherently suspect.  Indeed, Justice Kennedy dismisses Breyer’s concern by noting that while the enactment of “Mr. Herbert Spencer’s Social Statics” is not at issue—alluding to Oliver Wendell Holmes’s Lochner dissent—the duly binding First Amendment is.

In any event, the battle line between the majority and dissent is clear—and it is telling that Justices Sotomayor and Kagan are on opposite sides.  (Recall that the scope of First Amendment protection was an issue in Justice Kagan’s confirmation hearings.)  If indeed Justice Breyer’s prediction that this decision “opens a Pandora’s Box of First Amendment challenges to many ordinary regulatory practices that may only incidentally affect a commercial message,” this case may have revealed not the views of Justice Kennedy—who is strongly libertarian on speech issues—but the true First Amendment colors of President Obama’s two appointees.

Thanks to Cato legal associate Caitlyn Walsh McCarthy for her help with our briefing and this blogpost.

The First Amendment Protects All Speech

Vermont passed a law prohibiting the exchange of a variety of socially important information. Most notably, the law outlaws the transfer of doctors’ prescription history to facilitate drug companies’ one-on-one marketing — a practice known as “detailing” — because it believes detailing drives up brand-name drug sales and, in turn, health care costs. The state knew that the First Amendment prevented it from banning detailing itself, so it made the practice more difficult indirectly.

Yet data collection and transfer are protected speech — think academic research, or the phone book — and government efforts to regulate this type of speech also runs afoul of the First Amendment. See, e.g., Solveig Singleton, Cato Policy Analysis No. 295, “Privacy as Censorship: A Skeptical View of Proposals to Regulate Privacy in the Private Sector” (January 22, 1998). The First Circuit had earlier upheld a similar New Hampshire law, somehow finding that the statute regulates conduct rather than speech and that, in any event, the judiciary should defer to the legislative branch’s judgment.

When the Supreme Court declined to review that case (which cert petition Cato supported), Cato joined the Pacific Legal Foundation and a number of individuals on a brief asking the Second Circuit to split with its First Circuit brethren and reject this dangerous narrowing of protection for free expression. The Second Circuit did just that and ruled that statutes restricting commercial speech about prescription drug-related data gathering are unconstitutional. The court emphasized that the First Amendment protects “[e]ven dry information, devoid of advocacy, political relevance, or artistic expression.”

Vermont filed a petition asking the Supreme Court to review the case, which its adversaries supported in order to more quickly resolve the circuit split. Cato, again joining PLF, filed a brief supporting the respondents, two companies that collect and sell health information and analysis. Our brief argues that the Second Circuit should be affirmed and the Court should abandon the unworkable distinction between commercial and noncommercial speech set out in a 1980 case called Central Hudson Gas & Electric v. Public Service Commission.  Specifically, the Central Hudson approach to commercial speech veers into viewpoint discrimination and should be abandoned in favor of strict scrutiny because innovative and valuable commercial expression deserves full First Amendment protection.

The Supreme Court will hear argument in this new case out of Vermont, Sorrell v. IMS Health, on April 26.  Thanks to legal associate Caitlyn McCarthy for her help with Cato’s brief and this blog post.