With respect to warning labels and similar types of business regulations, there is an ongoing tension in the law between free speech and the interests of consumers and the public. Free speech is implicated because it has long been the law that one cannot be compelled to speak. That is, free speech is also the freedom to not speak. California is one of the most progressive states in the US with respect to labeling requirements. But a recent decision by the US Ninth Circuit Court of Appeals in San Francisco provides an example of where the labeling laws went too far and impermissibly violated free speech rights.

The decision was handed down in American Beverage Association v. City and County of San Francisco, Nos. 16-16072 and 16-16073 (US 9th Cir. January 31, 2019). City leaders in San Francisco (and many other California cities) are rightly concerned about the bad health effects of soda and other drinks full of sugar and syrups. To combat these adverse health effects, in 2015, the San Francisco Board of Supervisors passed an ordinance requiring labeling on outdoor advertisements (like billboards). The advertising was required to contain this wording that covered at least 20% of the area of the advertisement: “WARNING: Drinking beverages with added sugar(s) contributes to obesity, diabetes, and tooth decay. This is a message from the City and County of San Francisco.”

This is clearly compelled commercial speech. All labeling requirements are compelled speech. Under current legal precedents, compelled labeling is allowed under certain circumstances. We are all probably familiar with labels found on packages of cigarettes. The San Francisco ordinance is an extension of the same principle. Under what is called the Zauderer test, labeling can be compelled if the warning label is

• Purely factual
• Noncontroversial AND
• Is not unjustified or unduly burdensome

Following passage of the ordinance, a group of plaintiffs sued — the American Beverage Association, the California Retailers Association, and the California State Outdoor Advertising Association. The plaintiffs argued that none of the three Zauderer elements were met. First, the plaintiffs argued that sugary drinks were being unfairly targeted since many sugary products are on the market and there are many reasons for obesity, diabetes, and tooth decay. Further, scientific studies and common everyday experience show that sugar is not inherently unhealthy, only excessive consumption. Further, the label referenced “added sugar” but so-called “naturally” sugared drinks can have the same bad health effects. Second, the linkage between obesity and sugar is not noncontroversial since there is much scientific evidence suggesting that the culprit is other forms of carbohydrates such as those found in bread, potatoes, and pasta or an excess of fats such as those found in meats. Furthermore, lack of exercise has a significant impact on health issues. So, is the cause too much soda or too little exercise? Finally, the plaintiffs argued that the warning label requirements were unduly burdensome, particularly the 20%-of-total-area-requirement.

At the trial level, the plaintiffs were unsuccessful and the US federal court in San Francisco refused to strike down the ordinance.

However, the Ninth Circuit Court of Appeals reversed. To begin, the 9th Circuit held that the trial court had used the wrong standard. Then, the 9th Circuit held that the Zauderer test was not satisfied. The court focused on third element and highlighted the size of the warning label. The court deemed the 20% requirement to be far in excess of what might be reasonable. But the court also noted that the other two Zauderer elements were not satisfied either. Unlike the warning labels for cigarettes where the science is clear and even a small amount of smoking can be dangerous, the science is not undisputed with respect to soda and other beverages containing sugar.

Contact San Diego Corporate Law

For more information, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard provides a full panoply of legal services for San Diego and California businesses. Mr. Leonard can be reached at (858) 483-9200 or via email. Mr. Leonard has — for the fourth year — been honored as “Best of the Bar” by the San Diego Business Journal. Like us on Facebook.

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