United States: Warning Labels Suit Not Suitable For Preliminary Injunction

In American Beverage Association v. City and County of San Francisco, No. 3:15-cv-03415-EMC, decided on May 17, 2016, Northern District Judge Edward Chen denied a preliminary injunction against enforcement of a San Francisco ordinance that requires a warning label on every advertisement for a sugar-sweetened beverage (SSB).  The ordinance requires that the warning be enclosed in a rectangular border, constitute at least 20 percent of the area of the printed advertisement, and read:  "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."  Plaintiffs'—three state and national trade organizations—brought suit, alleging that the ordinance violated their First Amendment rights.

Plaintiffs brought suit soon after the ordinance was enacted in 2015 and immediately moved for a preliminary injunction.  The court denied plaintiffs' motion, finding that plaintiffs were not likely to succeed on the merits, were not likely to suffer irreparable harm, and that the balance of hardships did not favor plaintiffs.  The court did grant an injunction pending appeal.

Facial Challenge Based on Non-commercial Speech

Judge Chen first rejected plaintiffs' argument that the ordinance covered both commercial and noncommercial speech and was therefore subject to strict scrutiny.  The court found that, even accepting plaintiffs' arguments that they engaged in some noncommercial speech that would be impacted by the ordinance, they had failed to establish that the ordinance would infringe a substantial amount of protected speech, as required for a facial challenge.

Facial Challenge Based on Commercial Speech

The court next turned to the more prevalent commercial speech that would be impacted by the ordinance, and applied the standard set forth in Zauderer v. Office of Disciplinary Counsel of the Supreme Court of Ohio, 471 U.S. 626 (1985), which is essentially a rational-basis test.  Under the Zauderer test, there is no First Amendment violation so long as the disclosure requirement is reasonably related to the state's interest, and the content of the compelled disclosure is factual.

Judge Chen found that the compelled disclosures under this ordinance were factual and accurate.  The court found that there was sufficient evidence that SSBs contribute to tooth decay, obesity, and diabetes, that the defendant City had a legitimate interest in protecting public health and safety relating to these issues, and that the ordinance was reasonably related to that interest.

No Chilling Effect on Speech

The court also rejected plaintiffs' argument that the ordinance would have a chilling effect on their speech.  Plaintiffs argued that the size of the warning would change the primary message of any advertising they engaged in, which would lead to no advertising at all, and that they could not practically engage in any counter-speech, given the size of the warning.  The court noted that both arguments were essentially based on the size of the required warning, and rejected both arguments.  Judge Chen further expressed skepticism over plaintiffs' claim that they would not engage in any advertising at all if the ordinance went into effect.  As the court noted, tobacco companies continued to advertise, even with similar compelled warning labels, and the idea that beverage companies would not do the same, strained credulity.

No Irreparable Harm

The court next turned to the irreparable-harm inquiry, and again rejected plaintiffs' arguments.  Judge Chen first noted that, to the extent the irreparable harm was a violation of plaintiffs' First Amendment rights, the fact that plaintiffs had failed to show a likelihood of success on the merits disposed of the issue.  The court also found unconvincing plaintiffs' arguments based on harm to goodwill and reputation.

Balance of Hardships

Finally, the court noted that plaintiffs had failed to show that the balance of hardships tipped sharply in their favor.  Judge Chen pointed to the City's interest in advancing public health, along with evidence that there was a serious obesity-related health problem facing City residents, attributable at least in part to consumption of SSBs.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

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