United States: Ninth Circuit Delivers Sweet Victory To Soft Drink Advertisers

San Francisco found itself in a sticky situation after the Ninth Circuit struck down a city ordinance that would have required soda companies and other makers of sugar-sweetened beverages to place the following warning on their ads:

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.

Advertisers challenged the ordinance under the First Amendment and sought a preliminary injunction to halt its enforcement, but lost in the district court. The Ninth Circuit reversed, agreeing with advertisers that the ordinance unconstitutionally chilled their protected commercial speech because the warning was too one-sided and burdensome – constituting 20% of an ad's space – and that advertisers were likely to discontinue advertising completely.

In order to pass constitutional muster, the Ninth Circuit ruled that San Francisco was required to show that the ordinance met three criteria:

  1. the warning contained "purely factual and uncontroversial information";
  2. it was not "unjustified or unduly burdensome"; and
  3. it was "reasonably related to a government interest of sufficient [i.e., substantial] weight."

The Ninth Circuit held that San Francisco's sugar-sweetened beverage ordinance failed all three prongs. First, the court found that even if the warning were literally true (i.e., that sugary drinks do contribute to obesity, diabetes, and cavities), that statement was incomplete and misleading to consumers. Therefore, its factual accuracy was subject to dispute and controversy. The court found the warning incomplete because it attributed health maladies to the single act of consumption of sugary drinks, regardless of the quantity consumed or other lifestyle habits. The advertisers pointed to Food and Drug Administration (FDA) statements that added sugars are "generally recognized as safe" and "can be part of a healthy dietary pattern when not consumed in excess amounts." The court also found the warning misleading because it singled out sugary drinks, implying that they are unhealthier than other products with similar amounts of added sugar and calories, which the court found conflicts with FDA and American Dental Association statements.

Second, the court concluded that the warning imposed an "undue burden" on protected commercial speech because "the black box warning overwhelms other visual elements in the advertisement." Even though the district court held that the remaining 80% of the ad was sufficient to engage in counter-speech, the Ninth Circuit disagreed, finding that an advertiser's need to devote space to a counter-message would further shrink the space dedicated to communicating the originally intended message – the product advertisement itself. As a result, the court found the ads would devolve into "vehicle[s] for a debate about the health effects of sugar-sweetened beverages," and advertisers would simply cease advertising.

Third, the Ninth Circuit ruled that San Francisco's "substantial government interest in the health of its citizens" was insufficient to justify the imposition of a misleading warning that would chill protected commercial speech.

While the three judges on the Ninth Circuit were unanimous in their ruling, there was not universal agreement on the grounds for the decision. One of the three judges wrote that the court should have ruled solely on the basis that the required warning was too large, "without making the tenuous conclusion that the warning's language is controversial and misleading."

For now, the soft drink industry has avoided a label disclosure dictated by a government entity. This fight seems far from over, however, and other government entities and private litigants are likely to continue to try and challenge soft drink advertising.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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