POM Wonderful, LLC v. FTC

Among the types of speech that the First Amendment protects is commercial speech, such as advertising. But commercial speech that’s false or misleading isn’t constitutionally protected: you may be liable for defrauding someone through various communications. But what is “false” or “misleading,” and who decides? The Federal Trade Commission brought claims against POM Wonderful—you may know them as the producer of various pomegranate beverages in distinctive curved bottles—for consumer deceptive advertising. The agency determined that some of POM’s health‐​supplement ads were misleading. But this decision was appealable only to the FTC itself, which becomes judge, prosecutor, and jury in an arrangement blessed by the U.S. Court of Appeals for the D.C. Circuit. That court declined to second‐​guess the FTC’s rulings on the ground that the agency should be given broad deference in its adjudicative factual and legal findings. But when the standard of review for First Amendment claims varies between courts and administrative agencies, constitutional protections become vulnerable to inconsistencies. And even more concerning than inconsistencies are the conflicts of interest inherent in the FTC’s internal hearings, which lack substantial judicial review. This situation leaves businesses subject to FTC actions with no viable means to check their accuser’s determination that its speech is misleading or fraudulent. It’s no coincidence that over the past two decades, the FTC hasn’t lost a single deceptive‐​advertising case it has administratively initiated. To correct this state of affairs, Cato has joined the Alliance for Natural Health‐​USA on an amicus brief urging the Supreme Court to take POM’s case. The Supreme Court has repeatedly held that determining whether the Constitution protects particular speech is the quintessential function of Article III courts, not federal agencies. Yet this directive has become increasingly observed in the breach with respect to commercial speech, ever since the Supreme Court’s unsatisfying ruling in Bose Corporation v. Consumers Union (1984). The POM predicament presents an optimal opportunity for the Court to address the question left open in Bose and wrest decisions regarding First Amendment doctrine away from the executive branch.