American Beverage Ass'n v. City & County of San Francisco
871 F.3d 884
| 9th Cir. | 2017Background
- San Francisco enacted an ordinance requiring certain outdoor ads for sugar-sweetened beverages (SSB Ads) to include a boxed warning occupying 20% of the ad: "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."
- The ordinance applies to fixed outdoor media (billboards, walls, vehicles, transit shelters) and prescribes form, size, placement, and penalties for noncompliance.
- Trade associations representing beverage manufacturers and retailers (the Associations) sued, arguing the warning compels misleading, non-factual commercial speech and unduly burdens advertising, violating the First Amendment; they sought a preliminary injunction.
- The district court denied the preliminary injunction on the merits but granted an injunction pending appeal; the Associations appealed interlocutorily.
- The Ninth Circuit majority reviewed de novo whether the compelled disclosure is "purely factual and uncontroversial" under Zauderer and whether it is unduly burdensome, and concluded the Associations were likely to succeed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the compelled warning is "purely factual and uncontroversial" under Zauderer | The warning is misleading and controversial because it states SSBs "contribute" to obesity, diabetes, and tooth decay irrespective of quantity/behavior and singles out beverages while excluding other sugary products. | San Francisco contends the warning states factual public-health conclusions and may be applied piecemeal to address a discrete problem; relies on public-health expertise. | Court: Warning is reasonably disputed and misleading; not purely factual/uncontroversial under Zauderer. |
| Whether the disclosure is "unjustified or unduly burdensome" (chill on commercial speech) | A 20% boxed warning in many ad formats overwhelms advertiser messaging, effectively rules out use of covered media and will cause advertisers to cease using them. | City argued advertisers can use remaining 80% for counter-speech and the burden is not undue. | Court: The size/format unduly burdens speech, likely chills advertising; Associations showed advertisers would stop using the medium. |
| Appropriate standard of review for compelled commercial disclosures | Plaintiffs urged Zauderer applies but that this disclosure fails Zauderer because it is not factual/uncontroversial and is unduly burdensome. | City relied on Zauderer or Central Hudson as appropriate and argued requirement is reasonably related to substantial government interest in public health. | Court applied Zauderer but found the warning fails that test; also noted failure would follow under Central Hudson. |
| Preliminary injunction factors (irreparable harm, balance, public interest) | First Amendment injury is irreparable; balance and public interest favor injunction pending resolution. | City emphasized its public-health interest and harms from enjoined enforcement. | Court: Associations showed likelihood of success and irreparable harm; balance of hardships and public interest favor injunction. |
Key Cases Cited
- Zauderer v. Office of Disciplinary Counsel of Supreme Court of Ohio, 471 U.S. 626 (1985) (lesser scrutiny for compelled disclosures that are purely factual and uncontroversial; disclosure must not be unjustified or unduly burdensome)
- Central Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n, 447 U.S. 557 (1980) (intermediate scrutiny for restrictions on nonmisleading commercial speech)
- Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7 (2008) (standard for preliminary injunctions requires likelihood of success, irreparable harm, balance of equities, and public interest)
- Hurley v. Irish-Am. Gay, Lesbian & Bisexual Grp., 515 U.S. 557 (1995) (appellate courts must review de novo mixed First Amendment questions of law and fact)
- Ibanez v. Fla. Dep’t of Bus. & Prof’l Regulation, 512 U.S. 136 (1994) (disclaimer requirements can be unduly burdensome if they effectively rule out certain forms of advertising)
- CTIA—The Wireless Ass’n v. City of Berkeley, 854 F.3d 1105 (9th Cir. 2017) (applied Zauderer framework to compelled commercial disclosures beyond deception context)
- Milavetz, Gallop & Milavetz, P.A. v. United States, 559 U.S. 229 (2010) (clarifies standards for compelled commercial disclosures and scope of Zauderer)
- Sorrell v. IMS Health Inc., 564 U.S. 552 (2011) (discusses differing scrutiny for commercial regulation and the value of commercial information)
- Pac. Gas & Elec. Co. v. Pub. Utilities Comm’n, 475 U.S. 1 (1986) (compelled speech cannot force corporations to carry antagonistic ideological messages)
- Dwyer v. Cappell, 762 F.3d 275 (3d Cir. 2014) (disclosure so onerous it effectively prevents advertising can be treated as a restriction and struck down)