Commercial Speech: The Definition Matters
Moderators: Chris Beall, Levine Sullivan Koch & Schulz LLP and Bruce Johnson, Davis Wright Tremaine LLP
Steven G. Brody, Morgan, Lewis & Bockius LLP: We barely spoke about the definition of commercial speech. Why? Is it b/c Reed has left us in the dust? Or is it something more than that? Background: gov’t usually loses if the speech is noncommercial, but if it’s commercial, courts are much more likely to allow regulation. Central Hudson has become tougher over time, but still has a lot of leeway within it for judges to uphold restrictions. Yet 40+ years since Va. Pharmacy, we still don’t know which communications fall within commercial speech category and which are fully protected noncommercial speech.
Treated as commercial: solicitation of employment on public speech; gripe websites; itemization of tax on medical forms.
Noncommercial: fortunetelling for a fee; advertising for a school; public ratings of corporate debt.
Keeps lawyers employed but doesn’t advance the rule of law. Focus on two inconsistent definitions of commercial speech: Bolger & Va. Pharmacy. SCt has vacillated, but relied more heavily on the latter. Va. Pharmacy: speech that does no more than propose a commercial transaction. “No more than” test. Say that it serves the underlying purpose of the doctrine; receives less protection b/c inextricably tied to commercial transactions. So it’s logical that it should extend only to proposals of commercial transactions. Opponents say that’s too broad; advertisers can avoid speech restrictions by including discussions of public policy or unrelated images. Such ads “do more than” propose a transaction.
Bolger: A message may be considered commercial speech by asking (1) is it in the form of an ad; (2) does it refer to specific product; (3) does speaker have economic motivation? One alone isn’t enough, but a combination of the factors could be enough. Opponents argue that fundamental 1A values are risked by this definition.
Two other definitions of note: (1) Central Hudson itself defines commercial speech as expression related solely to the economic interests of the speaker and its audience. Close cousin of “no more than” test—keep an eye on it. (2) Nike v. Kasky, Cal. SCt definition: consider the speaker, the intended audience, and the content of the message. Would include practically any statement of a corporation about itself.
Joshua M. King, Chief Legal Officer, Avvo, Inc.: Avvo was sued on launch, taking issue with profiles of lawyers. Argued that rating was defamatory, and that the profiles were commercial speech, making us in violation of unfair trade practices. Court concluded that profiles weren’t commercial speech even though we had an economic motivation—akin to traditional form of publishing. It’s something that keeps coming back. Two class actions allege that profiles are commercial speech violating attys’ publicity rights, b/c we’re monetizing w/advertising. Cuts to core of how media works. Commercial/noncommercial can be the difference b/t dismissal on the pleadings and a long, expensive fight.
Most of lawyers who use Avvo deal w/consumer issues, and are keenly aware of att’y advertising regs. Bar regulations are so far afield from strict scrutiny! Att’y ads were mostly banned until 1977; begrudging acceptance of 1A right of att’ys to advertise by state bars. Many bar regulators aren’t even willing to engage w/commercial speech doctrine, having mostly kept pre-Bates rules (can’t give someone something of value for a recommendation etc., except for paying reasonable costs of advertising). Bars are struggling w/social media, new forms of advertising: an att’ys own blog? Pay per click ads? Almost w/o exception, the bars don’t even pay attn to 1A, just apply their own rules as conservatively as possible. Unfortunate b/c this is not changing despite Sorrell and Reed etc. Advisory opinions from bars—Cal. is the only state that pays attn to 1A doctrine when coming up with advisory opinions. Doesn’t slow down lawyers who are skirting ethics anyway, but it does chill more cautious lawyers from engaging in social media or writing for publication.
Denise Esposito, Covington & Burling and Former Chief of Staff to the Commissioner of the U.S. Food and Drug Administration (FDA): Food & drug lawyer. Overall question: whether a regulatory program can exist in the context of a 1A challenge if strict scrutiny applies to food & drug law. Implications for tobacco, all medical products, and foods. FDA is charged w/premarket review, determining whether a drug is safe and effective for intended use. Historically required 2 adequate clinical trials; expensive and extensive. Labeling is approved, which is supposed to explain what it means that the drug is safe & effective. Some believe that if you apply strict scrutiny, there will be no FDA; any pharmaco can do a study and say “my study shows it’s safe and effective.” That raises the question: who is the arbiter of good science? A judge can use Daubert to keep science out of the courtroom. FDA believes it’s the arbiter of safety and effectiveness.
Amarin case: off-label marketing. FDA’s position was that off-label marketing was evidence that you intended it to be used for an off-label purpose, and thus mislabeling. Caronia: court disagreed. Off-label marketing restrictions have also been challenged: sending doctors reprints of studies that discussed unapproved indication. FDA tried to change its policies, but Sorrell intervened; the FDA wasn’t paying much attention b/c it looked like a data sales case. But then the SCt said unconditionally that pharma ads were commercial speech subject to different levels of scrutiny depending on what opinion you’re looking at.
At the end of the day, if FDA can’t ban truthful and nonmisleading speech, what can it do? If it puts a drug on the market, can it do any regulation of the advertising as long as the company has evidence to back up its claim b/c FDA is no longer the arbiter of what’s truthful and nonmisleading? FDA says: we’re still the arbiter; proceed at your own risk. If we find your studies to be poorly designed/misleading of doctor or patient, we can still ban your speech.
Caronia: DoJ decided to test pure ban on off-label statements. There were a number of false statements as well; the rep said to doctors, on tape, “this drug is safer than aspirin,” but it’s the date rape drug. DoJ didn’t pursue those claims b/c it wanted to test the waters on whether rep could say “we are studying the drug for X, Y, Z (unapproved) and our studies suggest that it works.”
Amarin: A company that promotes fish oil, which has a very good safety profile. The public health argument was a little weaker b/c drug was relatively safe, and the evidence was strong. Amarin had approval for product for lowering high triglycerides, and wanted next level of approval for mid-level triglycerides. FDA wanted a supplemental application, and Amarin did an adequate clinical trial whose design FDA approved, and the clinical endpoints showed what they wanted. FDA denied approval based on subsequent science suggesting there was no clinical benefits to lowering triglycerides in that group of patients b/c it didn’t seem to affect cardiac events. But Amarin said: we’re willing to say “FDA doesn’t agree w/us that this should be approved.”
Amarin has threaded through the industry in unhealthy ways. Clients say “I’ve read Amarin, I can say anything as long as I do a 10-person study.” Instead: be tempered, esp. w/public health interest. Live w/fact that advertising is commercial speech, but can’t say whatever they want based on any study, even w/disclaimers; FDA can’t say “you can’t say X until we review and approve.” All the action will be about what’s misleading, even if not false. Caronia quote: sales rep says marketing is part of strategy to manipulate doctors. FDA plays a role here. DTC ads to consumers are also a big deal, can be manipulated by complex data.
Rebecca Tushnet, Professor of Law, Georgetown Law School: I’m one of the people Professor Redish labeled pathological in the previous panel. Just note about the First Amendment as the new Lochner: the example Redish gave of a city that bars its parking lot to cars with Trump bumper stickers is structurally identical to the FDCA regime: you can sell anything you want, but if you say it’s for diagnosing/treating a medical condition, then the FDCA has jurisdiction and you can’t sell it while making those representations. You might think that the FDCA is better justified, but the point is that it’s really easy to make modern economic regulation look like speech regulation.
From my area, advertising law: Ford sucks said by GM is regulated the same way as Ford is great said by Ford. And gov’t’s having a viewpoint, even if it were anticapitalist (which I strongly doubt) doesn’t mean that laws it enacts reflecting that viewpoint constitute viewpoint discrimination for 1A purposes. If you want to call perjury laws and fraud laws viewpoint discrimination, you can do that—they do reflect the government’s view that those lies are particularly bad, and they do penalize speech that would be blameless if uttered on stage or to a spouse—but I think that concept muddies viewpoint discrimination into meaninglessness.
My preferred approach to commercial speech is that advocated by Justice Stevens: the distinction is government’s regulation of commercial transactions in order to protect the parties to the transaction should generally be treated like any economic regulation, even if the regulation operates by way of speech. Consumer Reports isn’t making the exact same speech as Hoover, and Hoover’s relationship to the transaction makes an important difference just as lawyer-client privilege makes an important difference to how one can and should regulate speech between lawyers and clients. That means that the gov’t’s reason to regulate is important, though it is often possible to identify a consumer protection purpose for many regulations. Stevens’ perspective also helps us identify what is commercial speech: when it is sufficiently associated with a relevant transaction.
Notably, Kasky definition is for the purpose of applying false advertising laws. Full quote: (1) Because the messages in question were directed (a) by a commercial speaker (b) to a commercial audience, (2) and because they made (c) representations of fact (d) about the speaker’s own business operations (e) for the purpose of promoting sales of its products,
(3) we conclude that these messages are commercial speech (f) for purposes of applying state laws barring false and misleading commercial messages.
[Reed is unsustainable: I too find it notable that Scalia’s own opinion listed as ok some clearly content-based restrictions that he didn’t even bother to correct in response to the concurrences pointing that out. I do agree that watering down of strict scrutiny is one likely result, as well as invalidating very desirable regulations—worst of both worlds.]
Outside the Supreme Court, the distinction between commercial and noncommercial speech remains vital on a day to day basis. Lanham Act: Critics v. competitors—commercial speech provides a dividing line b/t defamation law and false advertising law, which is strict liability for very good historical and theoretical reasons. Also need to warn media lawyers specifically, who think that Sorrell and Reed are great news: be careful what you wish for. Worse w/o the doctrine: Second Circuit: can infringe TM by content of expressive work; right of publicity cases—recent 9th Circuit case applying Reed to strike down right of publicity as applied to noncommercial works like movies, but what if you can’t make that distinction.
Q: Microsoft just bought LinkedIn: how much do developments in social media bear on what’s commercial speech. E.g., what is a like on Facebook—commercial speech?
Brody: Social media is good b/c combines commercial and noncommercial speech. Buzz marketing, stealth marketing, blogs—very hard to pull them apart. Inextricably intertwined doctrine: 9th Cir. supports that.
King: We see a lot of bar regulators who think any use of social media is subject to att’y advertising rules: can do it, but you must retain copies for years, use disclaimers, etc. I always tell att’ys that you shouldn’t be marketing on social media b/c people don’t want that. You should just be having a conversation. Test is still maddeningly unclear.
Esposito: FDA’s world, warning letters are one enforcement mechanism. Interesting social media warning letters, including Kim Kardashian’s Instagram. But when does she stop being a paid spokesperson? Social media: FDA requires fair balance, which means you need to talk about risks as well as benefits.
RT: Social media offer new methods for manipulation: called “stealth” marketing for a reason—that’s the advertiser’s own paternalistic assumption that though you would ignore marketing if you knew it was marketing, you’ll be happy to receive the information if you don’t know. Another example: my competitor has people posing on social media as disappointed customers.
Q: are video games commercial speech?
Brody: No. Art/game.
RT: Right now, it doesn’t matter for the ROP. FTC standard: if there’s a paid-for factual representation by the seller, then substantiation required just for that; doesn’t allow FTC to regulate any other aspect of the game.
Q: don’t assume that all media lawyers welcome Reed. Instead a consensus that a tight definition of commercial speech from SCt would solve a lot of problems.
Beall: uncertainty of what constitutes commercial speech allows collateral effects of either watering down strict scrutiny or deterring speech. Rogers v. Grimaldi rule depends on commercial/noncommercial divide. The advertising of the expressive work can then use name/likeness and is not actionable appropriation of celebrity name. The problem is what is actually the commercial part of the speech?
Piety: guidelines on native advertising?
Beall: Reed and questions of imposing gov’t regulation on the basis of content is deeply problematic for FTC regulations; FTC is all about regulating the content of commercial speech.
Esposito: Breyer’s Sorrell dissent discusses this: if you have a regulatory system, it will “discriminate” based on content & speaker. Definition is less important than pragmatics.
Brody: Reed goes toward enhanced commercial speech protection, but Zauderer and its progeny moves in another direction.
Johnson: Zauderer plays a role in FDA b/c of compelled speech.
Esposito: FDA has tried to force graphic warnings on tobacco label; doesn’t happen in drug world, where companies often want tort protection by using disclaimers.
King: Lawyers love disclaimers, even though people don’t read them. Bars love to come up with disclaimer requirements and that’s under litigation now—they should only get reasonable basis if necessary to cure deceptive speech, but other courts take position that
Q: Derogatory statements based on social network from competitor who pretends to be dissatisfied consumer. Why wouldn’t defamation take care of that?
RT: B/c it might not be defamatory. “The technician was rude and I felt uncomfortable”—even though that was totally false, falsity isn’t enough unless it’s defamatory, under defamation law as opposed to false advertising law.