Commercial speech: Tribute to Steve Shiffrin

Commercial Speech: Past, Present & Future: A Tribute to Steven Shiffrin, sponsored by the Loyola Law School Los Angeles and the Loyola Law Review

Opening roundtable discussion, Ronald Collins, First Amendment Center, moderator.

Collins: Three questions to structure our discussion. Does the identity of a speaker as a corporation matter? Can lines be drawn between political and commercial speech? Can progressives endorse freedom of commercial speech?

Steven Shiffrin: Commercial speech should be lower in our hierarchy than other forms of speech because dissent should be higher. Other First Amendment theories also produce this result. In some circumstances, particularly informational advertising, there should be a measure of protection.

Erwin Chemerinsky: Disagrees with it all. Dissent is not the central/only purpose of the First Amendment; speech is also protected if it supports government or consists of art/music that is not about dissent. Even hate speech and sexually degrading speech are protected. Also disagrees with the idea of having a hierarchy or distinguishing speakers. The only relevant question: is there a compelling reason to ban speech? One can find such interests in many situations, and indeed in Nike v. Kasky. But we must remain focused on that question. (Isn’t that a hierarchy without the name? I suppose its benefit is that if your reason for a ban isn’t the usual reason for disfavoring a category of speech – e.g., Discovery Networks – then the regulation gets stricter-than-usual scrutiny.)

Kathleen Sullivan: She is closer to Chemerinsky than Shiffrin. Fear of government is an extra reason to protect commercial speech. We fear government more than markets, for antipaternalistic reasons specific to speech. We fear thought control more than wage and hour laws. (Why don’t we fear Enron’s paternalism and attempts to control our thoughts?) There may be good reasons to regulate, such as information asymmetries, but the solution is disclosure rather than leveling down through silencing.

Shiffrin: The SEC engages in paternalism – it doesn’t trust consumers in the absence of a policed market. The FTC engages in paternalism, and the FDA. When we talk about false statements, paternalism is at the center of what we do, not the margin. Why do we need a compelling state interest? NYT v. Sullivan involved balancing the interests in reputation with the needs of the press, which is a good strategy. It would radically change First Amendment doctrine to say there’s no hierarchy. He agrees with Chemerinsky that multiple values underlie the First Amendment that can’t be reduced to one. Protecting the practice of dissent is extremely significant, though, and commercial speech doesn’t maximize that.

Sullivan: The Sistine Chapel wasn’t created by a single artist, it came only from sponsorship. NYT v. Sullivan arose from an advertisement. Advertising is a late 20^th-century art form. Commercial speech is continuous with and perhaps indispensible to the rest of speech. Virginia Pharmacy recognizes that commercial speech is useful to people – economic decisions are important and commercial speech has a role in providing relevant information. It’s not for government to decide what matters. (Though she agrees on the potential for harm, so it apparently is for government to decide what harms, if not what helps.)

Liptak: Define commercial speech.

Chemerinsky: Bolger tried three factors – not exhaustive, but it’s a good starting point and shows that speech isn’t commercial just because it comes from a corporation.

Sullivan: Commercial speech is an offer of goods for a price. It’s not anything said with a motive of commercial gain.

Shiffrin: Media speech is not, with narrow exceptions, commercial speech. Ed Baker has it right: for media, the product is the speech, unlike Virginia Pharmacy where the product is drugs. Also, the press has a checking function that makes it special. He distinguishes informational advertising that’s true from false advertising – commercial speech encompasses many different kinds of problems, and is broader than just proposing a commercial transaction. The bigger question (which is not entirely overlapping because non-corporate entities run ads) is how to deal with corporate speech in general. Corporate participation in political campaigns is limited, even though that’s core political speech.

He also notes that Virginia Pharmacy is atypical of cases – you have an aged person who needs cheap drugs, versus an alcoholic looking for the cheapest high in a case like 44 Liquormart. John Stuart Mill, invoked by many (including Sullivan), didin’t think commercial speech should be protected.

Chemerinsky: He’s skeptical of distinguishing media from nonmedia corporations. Which is Time Warner? Media companies advertise to get you to consume more of their programs. Separately, he wants to emphasize that he might find a compelling interest in banning corporate campaign contributions, and definitely does in banning false advertising. Finally, cheap alcohol may be a valuable choice. It’s paternalistic to say it’s not valuable.

Shiffrin: On the compelling interest question – look at tobacco ads. Tobacco kills 400,000/year; ads reach children and create preferences in them. Do we have a compelling interest? As for distinguishing media/nonmedia: of course there are linedrawing problems. That doesn’t mean you give up.

Sullivan: The government shouldn’t be allowed to regulate truthful ads about lawful products. More speech drives out bad speech. Right of reply requirements on TV drove cigarette ads off TV. (Isn’t that silencing? Even intentionally discriminatory silencing, if the requirements are targeted at smoking? She quickly added that equal time requirements were compulsion.) Where government can provide contrary messages, it shouldn’t regulate. Also, we should regulate the product directly through bans and taxes. That’s always an alternative, so the state shouldn’t be able to prohibit truthful advertising.

Shiffrin: When 400,000 people die every year, efforts to prevent that are good even if you call them paternalistic. The alternatives have costs, such as black markets. It would be more effective to have counterspeech and ban ads.

Chemerinsky: Banning ads isn’t necessary to serve a compelling interest. The evidence doesn’t show that ad bans work. Also, he’s concerned about a slippery slope. What about liquor ads? Fast food/potato chip ads? If this were necessary, maybe he’d go along, but the evidence isn’t there.

Shiffrin: $265 billion is spent on ads in a year, contibuting to the creation of an apathetic, hedonistic citizenry. It’s problematic to find value in that. Would a ban on cigarette ads stop smoking by all kids? No. Would it help? Well, why do cigarette companies advertise? They think it works. As for the slippery slope: Many of these ads are targeted to kids, and Shiffrin sees no right to advertise to kids. Beyond that, corporate power will take care of itself. If bans did spread, he doesn’t see the harm.

Liptak: Another consideration: Corporate speech is powerful and can overwhelm counterspeech by repetition, according to the pro-regulation story.

Sullivan: She doesn’t start from the individualistic/dissent notion of speech. The First Amendment protects other values, including a system of free flow of information determined through private interactions. Markets are regulated but ideas aren’t. Regulation and taxation should be lexically prior to advertising bans and we haven’t exhausted the non-speech regulatory possibilities with respect to tobacco. We should protect advertising unless and until particular harms manifest. (The reverse precautionary principle! A couple of side notes: This discussion makes crystal clear why lots of people see the First Amendment as the new substantive due process. Also, I just read Shiffrin’s The First Amendment, Democracy, and Romance on the way out, and one of its many strengths is that it emphasizes that “dissenting” and “individualistic” are not synonyms. Dissent is often participatory, communal, and engaged – a point I’ve tried to make, though less well than Shiffrin, when discussing how free speech principles have been translated into fair use doctrine.)

Liptak: Given what Chemerinsky has said so far, why was he on Kasky’s side?

Chemerinsky: Nike was engaged in selling a particular product and was allegedly speaking falsely. Analogies: “dolphin-safe tuna,” “organic lettuce,” “not tested on animals.” These are important claims to consumers. California has other relevant laws, like those governing false “union-made” claims.

Sullivan: Nike went far beyond simple branding – its communications covered labor conditions and sweatshops and used long infomercials. It made broader claims about corporate behavior as part of a debate about exporting US labor standards. (So is “organic” part of a broader debate over agricultural policy. Kasky wasn’t alleging that any of Nike’s normative claims were false.) Nike deserved a chance to fight back against the anti-sweatshop campaign. There are other ways to stop a company’s false claims than suing – run a counter-ad or do an investigative report.

(This is one of the most unpersuasive parts of the Nike-side argument. You can run a counter-ad if you can afford to, and if a media outlet will run it, which they often won’t. Nike reaches a heck of a lot more people than a NYT investigative report. It’s often noted that lies can get around the world while the truth is still putting on its shoes (no pun intended), and that’s without considering resource disparities. Note also that Sullivan appears to be saying here that “not tested on animals” is also a claim that must be free from government regulation. That’s getting pretty extreme.)

Chemerinsky: Nike ran an ad; you can embed a claim about animal testing in a long paragraph too. How are people to evaluate this claim? The company has information competitors and consumers lack.

Shiffrin: He agrees that the existence of alternatives to speech regulation aren’t dispositive. If the SEC were regulating, Nike’s statements would be subject to strict liability despite the fact that the statements were part of a “dialogue” with political aspects. Nike was describing what it was doing. That’s relevant to a debate, but it’s put forward to sell products.

A new question: Should Kasky have had to show that Nike acted negligently to win his case when the SEC could use strict liability to govern the same statements? There’s a legitimate concern that private plaintiffs could bring actions against Nike that could chill its speech, but it’s not in the record. The California statute was on the books for more than 70 years. Strict liability is appropriate in the absence of contrary evidence.

Sullivan: This relegates misleading speech to oblivion. Ordinary fraud statutes can cover falsity, at least with intent (big caveat!), but misleadingness is more. In politics, false statements like “I won’t draw a salary if elected” are protected against liability. (Why is this a relevant example if you’re trying to distinguish between false and misleading speech and argue that only the former can be banned for commercial speech?) Shiffrin and Chemerinsky are presuming the Nike statement was false. The misleadingness standard chills speech about, say, how a company performed in its last quarter. The statements here are different than saying “I’ll sell you X product for Y price.”

(Really? What does “X product” mean? What happens when we replace that with “a product that will kill cold germs”? Also, Sullivan’s example of a truly regulable ad is, perhaps ironically, one where government regulation might seem least necessary. It’s often relatively easy to confirm price, though there are bait and switch laws regulating misrepresentations regarding price. If we trust consumers so much, why not trust them to figure out price as well?)

Shiffrin: The FTC can go after misleading speech, not just false speech.

Sullivan: Yes, but that applies to speech that’s not presumptively protected – advertising. You’re broadening that speech beyond consumer sales to anything designed to increase sales, which is everything a corporation says because it’s always designed to create goodwill.

Shiffrin: Note that the statements Sullivan worries about have to be included in SEC filings, and strict liability applies. (Sullivan is no longer worried about democratically/demagogically imposed government thought control, but government enforcement of a private party’s false advertising claim as well.)

Chemerinsky: Factual statements made to increase sales are commercial speech. Not all corporate statements are like this. That’s what makes Nike an easy case. Nike took out ads saying it didn’t use sweatshops. We aren’t presuming that Nike was speaking falsely: There was never a trial, but basic civil procedure is that you take the statements in the complaint as true for evaluating a demurrer. As for the SEC, it has a compelling interest in protecting investors.

Liptak: Isn’t the Shiffrin/Chemerinsky position viewpoint discrimination? And should we care?

Shiffrin: It’s often said that viewpoint discrimination is never allowed, and yet obscenity can be banned. Appeals to healthy sexual interest are ok, but not appeals to prurient and depraved interest. Judges are licensed to determine literary, artistic, political and scientific value. Copyright’s fair use test distinguishes viewpoints. (This is a debatable claim– there’s a good argument that even the transformativeness evaluation is more content- than viewpoint- based – but I’m with him on the bigger point.) The free speech exceptions are riddled with viewpoint discrimination.

Chemerinsky: Viewpoint aside, there’s a compelling interest: consumers can’t find out for themselves that Listerine doesn’t kill cold germs. Competitors may have no incentive to correct the falsehood (e.g., tobacco companies’ shared interests in ignoring health harms).

Liptak: But Consumer Reports could do a study on Listerine and get actual malice protection.

Chemerinsky: Yes, because the speaker – not the viewpoint – has different interests and incentives.

Audience questions: Bruce Johnson: Kasky and Nike’s representative both give interviews to the NYT. Commercial speech?

Chemerinsky: No.

Johnson: But under the California Supreme Court’s test?

Chemerinsky: Nike took out ads – start there. Statements to intermediaries are arguably commercial speech, but we need not get there.

Martin Redish: Should we adhere to Bolger? If Nike wanted to sue Bob Herbert, who works for a powerful corporation, Herbert gets NYT v. Sullivan protection. But Nike doesn’t get the same protection. This is viewpoint discrimination and manipulation. Nobody is on the other side of obscenity in the same way. (Really? What about producers of R-rated movies, who get to put out their view of proper social mores without regulation?) Judith Miller’s false reporting on Iraq did more harm than Listerine ever did.

Chemerinsky: Nike wasn’t engaged in a debate when it made false factual statements. Also, the most your argument can prove is that NYT v. Sullivan applies, and Kasky’s allegations included actual malice.

Charles Fried: The two leading cases, Virginia Pharmacy and 44 Liquormart, are not as they’re represented here. They didn’t serve interests in protecting professionalism or temperance. In both cases, they were protecting mom & pop stores who had state legislatures in their pockets. The regulations were corrupt. When we do theory, remember that.

Sullivan: Virginia Pharmacy also destabilized attorney fee schedules set by the bar. Lochner with respect to this type of corruption is entirely appropriate. (Here, I think, is a key source of my disagreement with Sullivan. I do think that regulating truthful advertising is different than regulating false and misleading advertising. But I include “misleading” in the regulable category, which leaves room for arguments about what is misleading – none of which were particularly persuasive, or even seriously offered, in the two named cases.)

James Weinstein: Equalizing protection for commercial and political speech would be dangerous, because then we’ll start to use Chemerinsky’s “soft” compelling interest test – allowing punishment of speech when it causes harm, which political speech often does.

Chemerinsky: We all agree the First Amendment involves value choices. Even false statements about the Iraq war are protected, and some advertising claims aren’t. How will we define the lines? He wants to do it openly, whereas predefined categories of speech seem to him to be a bad solution. Let’s have the value discussion and say that political speech is more important than the harm it causes even if the harm is big. The categories just hide that analysis.

Shiffrin: All of us on the panel think that truthful advertising should get some First Amendment protection. For Shiffrin, it’s because it furthers some but not all relevant First Amendment values. Commercial speech has importance in people’s lives and that’s what gives us reason to protect it, not because it’s the same as political speech.

Sullivan: She wouldn’t assimilate commercial to political speech, but would protect it all strongly, distinguishing content-based from content-neutral regulation. Copyright’s fair use doctrine, by the way, isn’t about viewpoint discrimination, it’s about transaction costs. (Even Wendy Gordon’s strong account doesn’t easily admit of this interpretation, because she counts certain noneconomically-based refusals to license as transaction failures, which is a viewpoint-based aspect of the analysis.) Sullivan is willing to tolerate more compulsion with commercial speech, not leveling down but leveling up through disclosure. Compelled disclosure is the greatest regulatory success of the 20^th century. (My lungs might vote for the Clean Air Act.) She would allow compelled disclosure as speech-enhancing as long as it doesn’t chill speech. (Another big caveat!)

Question: Is there any way to distinguish Nike’s defense from an attack? If I attack Nike because I have an economic interest in another shoe company, that’s not commercial speech. (The questioner seems not to know about the Lanham Act. Cases have applied the Act to statements by individuals within a corporation, at least, and the standard would be strict liability, not actual malice.)

Chemerinsky: Maybe we should use the same scienter standard. Nike, however, wanted absolute protection for its speech; at most it should get NYT v. Sullivan.

An amazing start to what promises to be a challenging conference.