Panel on practice, discussion

Redish: If the caselaw is so incoherent, why not turn to theory?

Johnson: The doctrine’s built by the Supreme Court, with major influence by academics. But that results in the 3- or 4-part test problem: looks great to a reviewing court, but hard to apply for a trial court. Example: forced assessments for agricultural products. The Court decides that it’s ok to assess for ads on plums and peaches, but not mushrooms. Practicing lawyers have difficulty articulating the difference. It may have depended on the quality of oral argument, which is distressing for the rest of us bound by the decisions in future cases. Another example: the Children’s Television Council says nasty things about wrestling; the wrestling show sues for Lanham Act violations, and the judge refuses to dismiss because the Council included a fundraising appeal and was thus engaged in commercial speech. Years later, the same judge throws out a false advertising claim against a diet book that includes pitches to buy diet products on First Amendment grounds.

Vladeck: But the CTC case involved allegations of deliberate falsehood that would have been actionable under common law – the plaintiff at least alleged it could meet NYT v. Sullivan standards.

Question: The Court, when it finds an issue too difficult and not sufficiently momentous, often just ducks. The justices didn’t realize that Nike was a case like that until after the argument. In the Tony Twist case, the petition for cert was very clear on the conflicts, but cert was denied – too difficult, and not important enough.

Eugene Volokh: Johnson is right to identify the slippage of commercial speech arguments into other contexts. Courts and law review articles routinely say that “this is commerce, therefore it is commercial speech.” Perhaps this is about the power of labels: maybe commercial speech doctrine should have been called advertising speech doctrine.

There are difficulties in saying advertising for a book is subject to the same standards as advertising for another product, as in the Buena Vista case – are they really the same standards? (I’d say yes, with the caveat that the puffery doctrine would do a lot of work in making most statements about books nonactionable.)

The Court tried to clarify what it meant by “misleading” by distinguishing actually and potentially misleading speech. But all speech misleads someone. This is undertheorized. If misleading 10% is enough, lots of speech is regulable; if 90%, it’s close to the common law standard for fraud.

Johnson: Classic case: a weekly newspaper runs a joke, with a straight face, claiming that a judge had done something really stupid, so stupid that the writer thought it should have been obvious that it was a parody. Many judges in Texas, however, thought that the newspaper should have made it more clear to even the stupidest reader. What we need is a reasonableness requirement, which is imposed in the securities field. (Frankly, I think Lanham Act caselaw has a much better handle on this problem than First Amendment law. At least it’s grappled with the appropriate percentages, though Volokh would probably argue that the bar’s been set too low.)

Volokh: Even if a statement would be misleading to a reasonable person, there are multiple types of reasonable people. If 20% are misled – they may be just skimming, and it’s often reasonable to skim – is that enough?

Vladeck: This is the next hard issue. Suppose you have a dietary supplement, with one not very good study suggesting it may grow hair. The FDA has regulatory authority over this claim – can the FDA prohibit it? Require disclaimers? Suppose there are 8-10 studies suggesting it doesn’t work at all. The FDA, with respect to dietary supplements and food, doesn’t regulate most of these claims even though the statute requires significant scientific agreement before health claims are allowed. Instead, the FDA merely requires a disclaimer. This comes from Pearson v. Shalala, which has caused a substantial change in enforcement, which has also spilled over to the FTC. These claims are confusing, or, while literally truthful, they omit salient facts. Commercial speech doctrine has thrown 60 years of case law upholding regulations of such speech into doubt.

Lasnik: It’s easy to mislead people, as with Orson Welles and the War of the Worlds broadcast. We have to resist going too far down that path.

Lots of people leave out “reckless disregard” from the actual malice discussion. Reckless disregard is easier to find, and in this day of saved emails there is often enough evidence to show disregard for certain information. Then the question is whether the disregard was reckless. So maybe an actual malice standard for all speech is really the way to go. (Including for products liability-type cases, e.g. drug cases?)

Post: Clarify the difference between false and misleading?

Lasnik: It’s not false for Amazon to say their revenues went up. It’s misleading, though, if they don’t say that their returns also went up so much that if you subtracted revenues, their revenues went down.

Post: Isn’t that false?

Lasnik: It depends on what you mean by false.

Johnson: It’s partly a burden of proof issue. Misleadingness is a regulatory approach, which doesn’t turn on how any individual reacts, but on which direction it pushes people because of facts that may have been omitted or unfairly distorted.

Post: So maybe misleadingness is about impact on audience, where as falsity/truth is about evaluating a state of the world?

Lasnik: That makes sense. We really care about the audience’s reaction in these cases – what would a reasonable investor want to know?

Vladeck: Literal truth may be misleading if it omits an important fact.

Post: In defamation, we’d say that’s a case of false innuendo.

Question: Likelihood of confusion surveys are used to deal with this at the trial level. Invariably, the control cell shows some ambient confusion. (This produced a great deal of laughter from the audience; I myself am pretty sympathetic to the occasionally confused.) Five percent of jurors are also going to be ambiently confused. These cases don’t get simpler in reality than in theory.

Shiffrin: We haven’t talked about what the value is of noninformational advertising – the sexy car driving down the road. That may be the overwhelming majority of broadcast ads.

Right of publicity: Suppresses truthful advertising – “Elton John didn’t authorize us to tell you this, but he drives a Mercedes” would violate John’s right of publicity if Mercedes put it in an ad, but Newsweek could put that on the cover and be perfectly safe. The Tony Twist case is a real oddball, and is dead wrong. But the field is pretty messed up, and the Court has only had one, unusual case early on, Zacchini.

Johnson: This is not unique: the whole commercial/noncommercial divide in private causes of action is a total mess. Rudy Guiliani sued a magazine that used his image to advertise on buses – is that noncommercial speech? Even if it isn’t, should Guiliani win? It may be harder and harder to distinguish ads from non-ad content, especially on the internet. The distinctions are breaking down.

Question: Kasky went out of his way to allege no harm. One of the core reasons for regulating commercial speech is to avoid harm, and so his suit seems deeply problematic. Assume that Nike says to the NYT: we aren’t guilty of these wrongs alleged. There are consumers who take this into account in purchase decisions. Assume it makes the exact same statement to its stockholders. It seems that the statement to the stockholders can easily be regulated without much controversy, and yet a lawsuit based on the same statement to the general public triggers huge First Amendment outcry.

Johnson: Point of sale discussions ought to be regulated. But Nike didn’t involve a point of sale discussion. (I don’t find this responsive. What’s a point of sale discussion for a stockholder?) Where there’s no damage, the government has no interest in regulating speech on matters of public concern.

Vladeck: Shares the concern about the abstract nature of the claimed injury in Nike. But there are many statutes that permit people who haven’t suffered direct injury to sue, and it’s not clear those are wrong. The state can decide that some false claims pose too great a risk, and we need to enlist private attorney generals to help the state enforce its law against false advertising. Suppose a publicly traded company makes a misleading claim: we expect FDA approval of our new drug. An investor doesn’t have to prove individual reliance on that statement.

David Skover: The nature of advertising has moved so far from fact-based claims of the 1900s that Nike became inevitable: that is, we are now blurring the commercial/political line by deciding who we are through what we buy. I am a member of the Pepsi Generation, and this is important to who I am. To consume is to be a citizen. Whether this is good or not, it is true. So, what is this corporate beast doing when it is claiming to be a good citizen in Southeast Asia?

Vladeck: If you look at the Court’s recent rationale for commercial speech protection, you see a seismic shift. The early cases were all audience-centered. In more recent cases, the Court’s all of a sudden talking about the autonomy/self-expression rights of the commercial speaker. Image advertising relates to that because corporations are constructing personae through such advertising. The Court is suggesting it will protect that even though it’s just the advertiser’s strategic positioning.

Johnson: Generally, the audience’s reaction is something we keep out of doctrine, and yet it’s very much a part of commercial speech doctrine. (This is misdescriptive: what is defamatory depends on the audience’s reaction, as does whether a statement is fact or opinion. Johnson says the speaker’s intent is relevant because of NYT v. Sullivan, but so is the audience’s reaction.)