United States: Ninth Circuit Reconsidering San Francisco Soda Health Warning

One of the latest efforts by a municipality to address public health concerns by requiring warnings on certain products may be revived depending on the outcome of a recent rehearing before an 11-judge en banc panel of the Ninth Circuit. The en banc panel is reconsidering its 2017 decision blocking on First Amendment grounds a San Francisco ordinance that would require soda and other sugary drink sellers to provide a prominent health warning on billboard and other outdoor advertising.

Background

San Francisco enacted the challenged health ordinance in June 2015 requiring certain sugary beverage advertisements to include the statement: "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 required that the warning cover at least 20 percent of the ad space and be set off with a rectangular border.

The American Beverage Association, California Retailers Association, and California State Outdoor Advertising Association sued San Francisco seeking a preliminary injunction. The district court denied plaintiffs' motion for a preliminary injunction because it found San Francisco's health warning was a factual and accurate disclosure, would not place an undue burden on commercial speech, and was rationally related to a government interest.

The Ninth Circuit reversed in Am. Beverage Ass'n v. City & Cnty. of San Francisco, holding that plaintiffs had shown a likelihood of success on their claims of First Amendment injury. The Court held that the warning was not purely factual and uncontroversial because consumers could read it to convey a direct correlation between consumption of these beverages and the named health conditions, regardless of the amount consumed or other lifestyle choices. The Court also held that the warning unduly burdened and chilled protected speech because its large size and prominence would thwart the beverage sellers from conveying their messages. In making this determination, the Court relied on sworn representations by relevant beverage company executives stating that they would stop advertising in covered media in San Francisco if the ordinance took effect. The Court granted San Francisco's petition for an en banc rehearing in January of this year.

Panel's Questioning Centered on Recent Supreme Court Case

At the September 25, 2018, rehearing, the panel hinted that it may remand the case to the district court to consider, in light of a recent U.S. Supreme Court case, National Institute of Family Life Advocates (NIFLA) v. Becerra, whether the warning is underinclusive. In that case, the Supreme Court reversed another closely-watched Ninth Circuit case concerning First Amendment protection for commercial speech. Supreme Court justices ruled 5-4 in the NIFLA decision in favor of a First Amendment challenge to a California law requiring anti-abortion crisis pregnancy centers to post information regarding abortion options. The Supreme Court found that anti-abortion crisis pregnancy centers were likely to prevail on their argument that the law violates the First Amendment because the notice required is necessarily content-based, which normally is subject to strict scrutiny. It further held that the law would not pass muster under a less exacting standard of review because, inter alia, the law with respect to licensed centers is "wildly underinclusive" in not applying to many clinics and the law with respect to unlicensed centers unduly burdens protected speech in that California had only demonstrated a "purely hypothetical" justification for the law.

At the rehearing, the industry argued that the City cannot, consistent with the First Amendment, force businesses to convey the view that drinking beverages with added sugar contributes to obesity and related conditions more so than consuming equivalent calories from other foods and beverages. The industry argued that the warning is wildly underinclusive and that, to be factually accurate and not mislead consumers, the warning would need to apply to all caloric foods and beverages rather than just certain sugary beverages. When probed repeatedly as to whether there was any modification to the warning that would make it literally accurate in his view, the industry suggested the following revision and reiterated that it had to apply across all food and beverage product categories: "Consuming more calories than you expend risks obesity and diabetes. Balance what you eat, drink, and do."

The City argued that San Francisco can engage in public information campaigns with respect to potential health risks and that the warning at issue accurately informs the public that sugary drinks can contribute to these health conditions. The City asserted that many disclosures would be invalidated if the Court adopted the industry's position, including the FDA's rule that requires an added sugar declaration on product labels. The City additionally argued that sugary beverages are distinct from other food and beverage product categories in that no evidence shows that other products deliver the amount of added sugar contained in sugary beverages or that other products are consumed in such high quantities.

When asked whether San Francisco's health warning is also underinclusive under NIFLA because it only applies to billboard and outdoor advertising and not to other media, the City responded that the warning is not underinclusive and that NIFLA's concern with respect to the exclusion of certain clinics related to viewpoint discrimination.

Upon questioning, the City conceded that the warning was not literally accurate in one respect: the warning gives the impression that consumption of sugary beverages contributes to both Type 1 and Type 2 diabetes. The City said that it would be willing to revise the warning to specify that it only pertains to Type 2 diabetes. The City also noted that tobacco warnings similarly state that tobacco causes cancer but do not specify which types of cancer.

When probed on whether the size of the warning is unduly burdensome, the City said that the size is necessary to convey the information to the public. The City noted that the 20 percent size comes from research about how to effectively convey a warning and has to do specifically with how people process information. The industry responded that there was no evidence in the record that the City ever looked at whether a smaller warning would work and also questioned the use of the word "WARNING,"  as an odd signal word to use for products that the FDA generally recognizes as safe.

The judges took the case under submission.

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