First Amendment Principles in Practice, Moderator: Patrick Lynch, O'Melveny & Myers LLP
David Vladeck, Georgetown University Law Center: Why has there been so little post-Nike development in caselaw, despite predictions? Nike may have been an aberration, unlikely to recur. Most early commercial speech cases were brought against anticompetitive restraints on professionals and others that were unassailable under antitrust laws because of the state action bar. Virtually all commercial speech cases at the Court involve (1) regulation of professionals or (2) regulation of activities that were at one time thought to be sinful. Nike was the first private litigant case to reach the Court – the first without a specific government regulation.
One reason we haven’t seen more Nikes was that there was something aberrational about the commercial speech doctrine providing the rule in a private party v. private party case.
Also, commercial speech cases came in waves. Lawyers; then drugs and dietary supplements (a wave down in the DC Circuit). The FDA/FTC aren’t the pitbulls Shiffrin hopes they are; in response to evolving commercial speech doctrine – which is hardly “lite” – the regulatory agencies have retreated a lot. Sellers of food products can now make health claims that aren’t provably true, because the FDA doesn’t believe it could sustain those regulations.
Second reason for decline: the government is not trying all that hard to regulate commercial speech, Vladeck argues to our collective detriment. Also, the drug companies suffered enormous setbacks in what happened with their actual advertising – e.g., Celebrex. Now the drug industry asks the FDA to prescreen all direct to consumer ads, and is asking Congress to expand and accelerate FDA review, funded by the industry. (This is designed to get liability protection through preemption.)
There will be other waves. But the pace won’t be substantial.
Bruce Johnson, Davis Wright Tremaine LLP: Nike was odd; other reasons included (1) California’s consumer protection statute, since amended, allowing any consumer to sue without a purchase and without any damages, (2) Nike was subject to strict liability, (3) Kasky alleged misleadingness rather than falsity, and (4) Kasky’s allegations were largely based on press releases. This made Kasky’s claim very difficult to litigate for the defendant. ((2) and (3) are not at all unique to California law – state and federal advertising law, as well as the FTC/FDA regimes, have these features, which I think is often overlooked in discussions of Nike.)
The transactional test, requiring a connection to a proposed transaction before there's commercial speech, will force some discipline on these causes of action, as opposed to lawsuits based on feel-good corporate claims of being a “nice guy.”
Hon. Robert Lasnik, U.S. District Court for the Western District of Washington: These are difficult concepts to explain to a judge or a jury. Yet – when Bill Gates speaks about Microsoft, Lasnik has some skepticism about truth and motive, whereas when he speaks as the head of his foundation, Lasnik gives him more leeway. This is a commonsense rule, and judges and juries are always analyzing motives in this way. So when Amazon tells investment advisors that the company is doing really well, and the advisors talk to newspaper reporters, and the newspapers report it – where on that chain does the First Amendment kick in? Is there a kickback? What is really going on? That is the judge’s perspective.
Vladeck: Lasnik has laid out the underlying theory of commercial speech: commercial entities have a special incentive not to tell the truth. The doctrine is a sensible way to accommodate the enormous information value of advertising with the falsehoods and half-truths that permeate the market. The government alone can’t police the market; competitors and consumers also need to be able to enforce public norms, which is what drove the enactment of California’s consumer protection law.
Even with amendment, a new Kasky could sue if he actually bought the shoes and alleged that he acted in reliance. So the legal change isn’t a complete explanation for the lack of new cases.
Johnson: Six years into the Bush Administration, it’s odd to hear Vladeck speaking of commercial speakers’ peculiar incentives to lie. He also thinks there are problems with the indeterminacy of the test – did neo-Kasky really buy shoes in reliance on representations about labor practices? (Well, I do. I may be unusual but I’m not unique.) Commercial actors want to sell, not to further self-governance, so they will move on to the next sale rather than defend the last set of advertisements.
Lasnik: Companies want to get rid of bad publicity more than anything else. Likewise, the Nike plaintiffs were more concerned with making a political statement. Any company worth its salt is going to try to get this off the front page, regardless of the legal regime.
Johnson: There are two models of the First Amendment – marketplace and regulatory. (The marketplace doesn’t have regulators? Even the nightwatchman state has a nightwatchman.) They give different answers on how to control the market. Johnson sees the regulatory model as growing out of the guild system, and then the New Deal attempts to carve up the economy and allow corporations to regulate themselves. Deregulation coincided with the creep of the marketplace model into the First Amendment as well.
Lynch: But is the commercial speech doctrine keeping (good) information from the public that the public would otherwise get? Or is regulation too toothless now?
Johnson: Commercial speech surfaces in private cases in odd ways. That’s what’s next – copyright, trademark, false advertising all consider commercial use, which courts are now conflating with commercial speech. The Dustin Hoffman case, for example – Dustin Hoffman’s image altered to show off a dress in a magazine. If it was a regular feature, it was protected by the First Amendment and his right of publicity claim would fail; if an ad, he’d win. He lost. Book covers for the Beardstown Ladies Investment Guide promising investment returns that were, in fact, false – a New York court threw out a consumer lawsuit on First Amendment grounds, but a California court allowed an identical claim to succeed. The Tony Twist case, Doe v. TCI: the Missouri Supreme Court ruled that a comic book was commercial speech and Twist had a valid right of publicity claim. Either a comic book character is entitled to First Amendment protection or not, but there’s incoherence in the lower courts now.
Something is wrong when the First Amendment gives more protection to a comic book featuring half-worm creatures based on albino singers than to a letter to the editor debating working conditions in Southeast Asia.
We are now premising private causes of action on the commercial/noncommercial distinction, and commercial speech doctrine doesn’t match up well with the concerns of typical private cases.
Lasnik: Agrees. When even the judge seems to be floundering, litigants feel pressure to settle.
Vladeck: Let’s answer the question about the regulatory impact of commercial speech doctrine. Most of the statutes being enforced were written well before the doctrine existed, with no eye towards First Amendment review. This forces agencies to be gunshy. Also, those of us who worked on the early cases thought we were empowering consumers, not hamstringing government. There are problems in private cases, but more serious is the inability of the federal government to take regulatory measures to keep half-truths from taking over the marketplace. The pendulum has swung too far.
It’s true that Lanham Act cases have generated lots of confusion about commercial speech doctrine and its applicability in private cases. The Lanham Act simply federalizes common-law claims for product disparagement, and these problems predated it. That’s not a product of the commercial speech doctrine, but a longstanding problem that exists any time courts are asked to intervene and punish speech.
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