Grocery Manufacturers Assoc. v. Sorrell, 2015 WL 1931142, No.
5:14–cv–117 (D. Vt. Apr. 27, 2015)
Relax, we'll be here for a while.
Vermont passed a law, Act 120, requiring that manufacturers
and retailers identify whether raw and processed food sold in Vermont was
produced in whole or in part through genetic engineering (GE), and banning manufacturers
from labeling or advertising GE foods as “natural,” “naturally made,”
“naturally grown,” “all natural,” or “any words of similar import.” The court
largely got rid of the challenges to the GE disclosure rule, while finding
likely success on the merits of GMA’s Commerce Clause and First Amendment challenges
for the natural ban (though still refusing to grant a preliminary injunction).
Under Act 120, genetic engineering is defined as “a process
by which a food is produced from an organism or organisms in which the genetic
material has been changed” through the application of in vitro nucleic acid
techniques, fusion of cells, or hybridization techniques that overcome natural
barriers, “where the donor cells or protoplasts do not fall within the same
taxonomic group, in a way that does not occur by natural multiplication or
natural recombination.”
GE foods must be labeled clearly and conspicuously; if some
of the ingredients of processed food are made with GE ingredients, the food
must be labeled “partially produced with genetic engineering,” “may be produced
with genetic engineering,” or “produced with genetic engineering.” However, Act 120 “shall not be construed to
require” either “the listing or identification of any ingredient or ingredients
that were genetically engineered” or “the placement of the term ‘genetically
engineered’ immediately preceding any common name or primary product descriptor
of a food.” Also, the law bans GE
manufacturers from using labeling, advertising, or signage indicating that a GE
food product is “‘natural,’ ‘naturally made,’ ‘naturally grown,’ ‘all natural,’
or any words of similar import that would have a tendency to mislead a
consumer.”
Act 120 has a number of exemptions, including alcoholic
beverages and food not packaged for retail sale and food “served, sold, or otherwise provided in any
restaurant or other food establishment.”
The Vermont General Assembly made a number of findings as
part of its enactment of Act 120. Among
the findings: the FDA doesn’t independently test the safety of genetically
engineered foods, and most tests are financed or run by manufacturers. “The FDA
does not use meta-studies or other forms of statistical analysis to verify that
the studies it reviews are not biased by financial or professional conflicts of
interest.” There’s no consensus about
the validity of this research; “there are peer-reviewed studies published in
international scientific literature showing negative, neutral, and positive
health results.” There are no long-term
or epidemiologic studies in the US on the safety of human consumption of GE
foods.
Moreover, the General Assembly declared that GE foods
“potentially pose risks to health, safety, agriculture, and the environment.” It
cited conflicting studies on their health consequences; the possibility of unintended
consequences; the contribution of GE crops to genetic homogeneity, loss of
biodiversity, and increased vulnerability of crops to pests, diseases, and
variable climate conditions; the risks of cross-pollination or
cross-contamination of organic crops, affecting their marketability; and the
risks of cross-pollination for native flora and fauna.
Labeling, therefore, was justified as a way of letting consumers
make decisions about their purchases, including letting people with anti-GE
religious beliefs to avoid such food.
As for the “natural” restriction, the General Assembly found
that GE “involves the direct injection of genes into cells, the fusion of
cells, or the hybridization of genes that does not occur in nature,” so that
labeling foods produced with genetic engineering as “natural,” “naturally
made,” “naturally grown,” “all natural,” or other similar descriptors was “inherently
misleading, poses a risk of confusing or deceiving consumers, and conflicts with
the general perception that ‘natural’ foods are not genetically engineered.”
For the purpose of the motions before the court, the court
did not decide whether the General Assembly erred in finding that GE foods
posed potential risks to health, safety, agriculture, and the environment.
Plaintiffs claimed that compliance would be hugely costly;
because non-GE foods are often hard to find, most of their products would have
to be relabeled for sale in Vermont, and that creating a dual inventory with
Vermont-specific labels and distribution channels would also be required.
Smaller companies might not be able to compete, thus leading to reduced
competition.
The state’s declarants disagreed, pointing out that using
stickers, adding labels, or using separate packaging for products requiring a
GE disclosure would be less costly and time-consuming. Changing labels is
common, and the relabeling could be easily done in time: for example, Ben &
Jerry’s estimated that the “entire process” of changing its packaging would
cost $500 per SKU; that “a simple 4 to 6 word change to a label or package,”
including the design, production, and delivery to its manufacturing facility,
would be a “fairly easy” change that would take about six weeks; and that it
would take six months from “package redesign to store shelf.”
The law also allows the AG to adopt rules for
implementation. The rule adopted by the
AG stated that “[n]atural or any words of similar import” means “the words
nature, natural, or naturally.” It also limited Act 120’s “natural” restriction
on advertising or signage to a “retail premises” in Vermont. It confirmed that Act 120 didn’t bar
disclaimers that the FDA “does not consider food produced with genetic
engineering to be materially different from other foods.” It provided that the
law wouldn’t be construed to require the listing or identification of any GE
ingredients; to require the placement of the term “genetically engineered”
immediately preceding or following any common name or primary product
descriptor of a food; or otherwise to require adding to or amending the
information required by the FDA.
The court first turned to the dormant Commerce Clause
challenge, as to which the plaintiffs didn’t seek a preliminary injunction. Act
120 was not facially discriminatory, and thus there couldn’t be a facial
challenge. Nor did plaintiffs allege a discriminatory purpose of favoring
Vermont products over the same or similar products from other states. Thus, the
dormant Commerce Clause challenge depended on allegedly discriminatory
effect.
Plaintiffs alleged that the “natural” restriction reached national
and Internet communications that cannot lawfully be regulated by a single
state. The law itself didn’t define “signage”
or “advertising,” and applied to any non-exempt “[m]anufacturer” who produces,
sells, distributes, or licenses GE products that are sold in or into Vermont,
with no requirement that the signage and advertising occur in Vermont. The parties didn’t brief whether the AG’s
final rule purporting to limit Act 120’s reach to “advertising at or in the
retail premises” for food “offered for retail sale in Vermont” was lawful, so
the court focused on the text of Act 120 itself.
“A state law may burden interstate commerce when it ‘has the
practical effect of requiring out-of-state commerce to be conducted at the regulating
state’s direction.’” Because the internet (currently) lacks boundaries, it’s
difficult verging on impossible for a state to regulate internet activities
without projecting its legislation into other states. “Without limitation and
for no stated purpose, Act 120 purports to prohibit GE manufacturers’ use of
‘natural’ terminology in signage and advertising regardless of where or how
those activities take place,” which was sufficient to state a plausible per se
violation of the Commerce Clause based upon discriminatory effects.
However, the remaining Commerce Clause claims were
dismissed. To run afoul of the Commerce
Clause, a statute “must impose a burden on interstate commerce that is
qualitatively or quantitatively different from that imposed on intrastate
commerce.” Because Act 120 doesn’t “require manufacturers to label all
[products] wherever distributed,” there was no Commerce Clause violation: “[t]he
Vermont statute, by its terms, is indifferent to whether [products] sold
anywhere else in the United States are labeled or not.” “To the extent the
statute may be said to ‘require’ labels on [products] sold outside Vermont,
then, it is only because the manufacturers are unwilling to modify their
production and distribution systems to differentiate between Vermont-bound and
non-Vermont-bound [products].” Even if
the costs of compliance fell disproportionately on larger, out-of-state GE
manufacturers, the regulation was evenhanded in that both in- and out-of-state
producers had the same “putative need to develop separate production and
distribution systems to accommodate simultaneously the Vermont market and other
state markets.” They could pass costs on to Vermonters, and anyway the fact
that the regulation might mean lower profits doesn’t make it violate the
Commerce Clause. Further, the complaint alleged no actual conflict between Act
120 and any mandatory GE labeling law elsewhere, and “a potential statutory
conflict will not suffice.”
The court likewise largely rejected plaintiffs’ preemption
claims, based on the NLEA as well as the Federal Meat Inspection Act and the
Poultry Products Inspection Act (for “natural”). The NLEA has express preemption provisions
barring states from enacting food labeling requirements that are “not
identical” to certain mandatory food labeling requirements set forth in the
FDCA. To prevail, plaintiffs needed to
plausibly allege that Act 120’s disclosure requirement was “not identical” to a
mandatory requirement of the FDCA.
The FDA hasn’t promulgated any formal standards for GE
labeling, but it provides guidance for the voluntary disclosure of GE
ingredients. “This clearly implies that, at least from the FDA’s perspective,
GE ingredient information may be provided without violating federal law or
misbranding a food product.” There’s also pending federal legislation intended
to expressly preempt state GE disclosure requirements, and the court noted that
this fact suggested that no existing preemption applies. “It is in the midst of
this unpromising environment that Plaintiffs claim they can overcome the
presumption against preemption.”
Plaintiffs argued that the GE disclosure requirement would
force them to modify the “standard of identity” for some products, “the common
or usual name” for other products, and the “list of ingredients” for all
products. In order to be “not identical,” plaintiffs argued, all that must happen
is that the state law requires disclosure of additional or different labeling
information from the FDCA. There is a federal regulation that appears to
interpret “not identical” in this manner. But the courts “have rejected the proposition
that a federal regulation may extend preemption beyond NLEA’s express
preemption provisions.” Thus, not all
state labeling requirements of more or different information are preempted. Instead, for preemption to apply, the FDCA
must require the labeling at issue and Act 120’s disclosure requirement must
govern the same information. (Citing POM
Wonderful LLC v. Coca–Cola Co., 134 S.Ct. 2228, 2237 (2014) (“‘Congress did not
intend FDA oversight to be the exclusive means’ of ensuring proper food and
beverage labeling.”).)
The FDCA provides that where the FDA has established a
“standard of identity” for a food, the food product’s label “must bear[ ] the
name of the food specified in the definition.” Plaintiffs argued that, for
example, enriched corn meal, a product for there is a standard of identity,
must be labeled “enriched corn meal made from genetically engineered corn.” The plain language of the law rendered
plaintiffs’ interpretation implausible.
So too with plaintiffs’ argument about the impact of the law on a product’s
list of ingredients, since the law specifically said it shouldn’t be construed
to require “the listing or identification of any ingredient or ingredients that
were genetically engineered.” The AG’s final rule clarified that the GE
disclosure is also not required to be placed in a product’s “principal display
panel” or “information panel.” Thus, plaintiffs failed to establish that the GE
disclosure requirement was “not identical” to any mandatory labeling
requirement of the FDCA.
Nor was there conflict preemption. Plaintiffs argued that they were required to
label their products in a false and misleading manner by “convey[ing] an
overall impression” that GE ingredients were materially different from non-GE
ingredients and “not as safe as other foods” when the FDA refused to endorse
this message. It certainly wasn’t
impossible to comply with both state and federal law. The FDA allows voluntary GE disclosures, and
Vermont pointed to what it said was a dual-compliant label voluntarily used by
General Mills:
 |
| General Mills voluntary non-GE disclosure |
Nor did the law stand as an obstacle to Congress’s
purposes. The allegedly false or
misleading message of lack of safety wasn’t present on the face of the required
disclosure, which made no statement about food safety. “[A]ny ‘overall impression’ that GE
ingredients are ‘unsafe’ owes nothing to the purely factual information
provided by it.” Further, since “genetically engineered” is not federally
regulated or defined with respect to foods, “it can hardly be said that a state
definition that differs from definitions used in federal policy and guidance
statements is ‘false and misleading,’ or ‘stands as an obstacle to the
accomplishment and execution of the full purposes and objectives of Congress.’”
Plaintiffs’ strongest argument was that the FDCA/NLEA were
designed to promote national uniformity in food labeling, allowing efficient
and cost-effective marketing in all 50 states. Though that makes economic
sense, “it runs afoul of the presumption against preemption which ‘is
particularly [strong] where Congress has indicated its awareness of the
operation of state law in a field of federal interest, and has nonetheless
decided to stand by both concepts and to tolerate whatever tension there [is]
between them.’” And that’s the field of food and beverage regulation. So, the
conflict preemption claims based on the FDCA/NLEA were dismissed.
Plaintiffs also alleged that the FMIA and PPIA “expressly
preempt all state regulation of labeling of meat and poultry products,
including products Act 120 does not exempt.” They argued that some GE food
products that contain meat, poultry, and eggs didn’t fall within Act 120’s
exemption for products “consisting entirely of or derived entirely from an
animal,” are regulated for labeling purposes by the FMIA or the PPIA. However,
they failed to identify even one of their members who produced a non-exempt GE
food product covered by the FMIA or PPIA.
Still, plaintiffs alleged sufficient facts to give them standing at the
pleading stage. Both laws “contain substantially identical preemption language
which permits some concurrent state enforcement but prohibits state ‘[m]arking,
labeling, packaging, or ingredient requirements in addition to, or different
than, those’ mandated by federal law.” Act 120 would clearly impose additional
requirements, so was expressly preempted by the FMIA and PPIA for products
subject to those laws. However, without
more concrete evidence that plaintiffs’ members actually manufacture GE food
products that are non-exempt under Act 120 and subject to the FMIA or PPIA, the
court couldn’t find likely success on the merits. Moreover, the AG’s final rule
purported to exempt FMIA and PPIA products from Act 120’s embrace, “and thus
renders an enforcement action unlikely.”
Thus, Vermont’s motion to dismiss the FMIA/PPIA related claims was
denied without prejudice.
On to the First Amendment challenges! As above, the GE disclosure requirement fares
well and the “natural” ban does not. Plaintiffs argued that the GE disclosure
was inaccurate, confusing, and frightening: “Act 120 requires manufacturers to
use their labels to convey an opinion with which they disagree, and that the
State does not purport to endorse: namely, that consumers should assign
significance to the fact that a product contains an ingredient derived from a
genetically engineered plant.” Plaintiffs argued that strict scrutiny applied
because the law compelled political speech and discriminated on the basis of
viewpoint. Nope.
First, speech isn’t political just because it “emerged from
an allegedly GE-hostile and politically-charged legislative environment.” Many,
if not most, products can be tied to public issues about “the environment, energy, economic policy, or
individual health and safety.” This was still a food labeling requirement. Plus,
“objection and opposition, no matter however vehement, do not, without more,
convert a disclosure requirement about a food product into a political
statement.”
Nor was the regulation viewpoint discrimination just because
it failed to require the disclosure of the absence of GE ingredients. There was
no authority to support the proposition that, if presence of a substance is
disclosed, its absence must also be disclosed to be “even-handed.” States don’t have to regulate for nonexistent
problems. Nor did the mens rea requirement—exempting food produced “without the
knowing or intentional use of” GE ingredients—constitute viewpoint
discrimination. (Viewpoint and mental
state are very different things, invoked for different purposes.)
Content-based regulations are an inherent part of acceptable
speech regulations; the real question is whether the government has regulated
speech because of disagreement with the message it conveys. But virtually all mandatory disclosure
requirements force people to speak against their will based on the content of
their speech (commercial speech) and the identity of the people speaking
(commercial speakers). (Virtually?) As
the Second Circuit previously wrote, “[i]nnumerable federal and state
regulatory programs require the disclosure of product and other commercial
information” and that subjecting each to “searching scrutiny” is “neither wise nor
constitutionally required.”
Impermissible viewpoint discrimination is “based on
hostility—or favoritism—towards the underlying message expressed,” and “the
opinion or perspective,” or “the specific motivating ideology,” of the speaker.
But GE disclosure mandates disclosure of a fact. It doesn’t require sellers to
convey a “preferred message” about that fact, “and it applies regardless of a
manufacturer’s or retailer’s own view of GE and GE foods.” It’s not viewpoint discrimination just
because “it emerged from a contested legislative debate about the safety of GE
foods” or because “it reflects the State’s preference for a legislative
outcome.” The law allows sellers to add
information to correct any negative connotation—“the ability to convey
additional information reflecting the speaker’s own perspective and opinions
renders it unlikely that a statute reflects impermissible viewpoint
discrimination.”
Thus, strict scrutiny did not apply. On to intermediate scrutiny! Under Zauderer, intermediate scrutiny doesn’t
apply to mandatory disclosures applied to commercial speech. Instead, “disclosure requirements [must be]
reasonably related to the State’s interest in preventing deception of
consumers,” or “promote informed consumer decision-making” in order to address
a potential cause of harm. So did Zauderer
apply?
First, the compelled speech was commercial in nature. It
might not propose a commercial transaction on its own (how much does any one
statement on the average package “propose” a commercial transaction?), and it
might even discourage some people from engaging in commercial transactions with
the seller, but it related to the economic interests of buyer and seller.
“Product labeling requirements are traditionally regarded as commercial speech
even if they effectively discourage the product’s consumption.”
The court then asked whether this was a factual or
“controversial” disclosure. Plaintiffs argued that “[i]t would be difficult to
point to a current consumer issue more controversial than genetic engineering,”
and that Act 120’s definition of GE was erroneous, conflicted with other GE
definitions used by the State, and conflicted with the FDA’s definition of GE. “Plaintiffs
point to no authority for the proposition that speech is misleading when it
fails to reflect a party’s preferred definition of a statutorily-defined term.” Though the disclosure requirement was enacted
in the midst of controversy over the safety and benefits of GE foods, that’s
not enough. Rather, the information that
is compelled to be disclosed must itself be controversial. “[I]t is the nature
of the regulation of compelled speech that controls, not the nature of the
legislative debate that gave rise to its enactment.” Other courts have required that compelled
disclosures must be “opinion-based” before they can be said to convey a
“controversial” governmental message. “A factual disclosure does not reflect an
opinion merely because it compels a speaker to convey information contrary to
its interests.” Facts can be unpleasant
or provoke emotions, but that doesn’t make facts into opinions. Plus, if plaintiffs believe the disclosure
conveys a negative message, they can correct that message with their own
disclosures, including a statement that the FDA does not consider GE food to be
materially different from non-GE food.
The only remaining requirement came from the First Circuit’s
Amestoy decision invalidating a
disclosure requirement based only on satisfying consumer curiosity. However, Amestoy is basically limited to its
facts, where the state conceded that its only interest was in satisfying
curiosity. Vermont did not so concede this time. The findings and purpose extended beyond
curiosity and documented the scientific debate about the safety of GE
ingredients, their environmental impacts, and the state’s interest in accommodating
religious beliefs about GE, “as well as its interest in providing factual
information for purposes of informed consumer decision-making.” Though some of these interests “arguably
border on the appeasement of consumer curiosity,” commercial disclosure
requirements that enhance consumer decision-making further First Amendment interests by promoting the flow of truthful
information.
However, the court declined to conclude definitively that
intermediate scrutiny didn’t apply; the motion to dismiss the intermediate
scrutiny challenge was denied without prejudice. (I don’t really understand this. If the level
of scrutiny applied is a question of law, not a question of plausibility, why
can’t the question of law be resolved now?)
But there was no likely success on the merits.
We’re left now with Zauderer’s
reasonable relationship test. Unsurprisingly, Act 120 passed. Because “First
Amendment protection for commercial speech is justified in large part by the
information’s value to consumers,” the “constitutionally protected interest in
not providing the required factual information is ‘minimal.’” Zauderer
applies not just to disclosures intended to prevent deception but also to
disclosures intended to better inform consumers. It wasn’t clear whether Zauderer requires a “substantial” government interest—the case
itself rejected an argument that Ohio had to demonstrate its “disclosure
requirement serves some substantial governmental interest” because this
argument “overlooks material differences between disclosure requirements and
outright prohibitions on speech.” Recent Second Circuit commercial disclosure
cases did identify “substantial” interests, but did not explicitly require
them. Anyway, as the D.C. Circuit observed, “the pedestrian nature of those
interests affirmed as substantial calls into question whether any governmental
interest—except those already found trivial by the Court—could fail to be
substantial.” Assuming that a substantial interest was required, the purposes
discussed above qualified; at this stage, the court viewed the legislature’s
findings with deference. “The safety of food products, the protection of the
environment, and the accommodation of religious beliefs and practices are all
quintessential governmental interests, as is the State’s desire ‘to promote
informed consumer decision-making.’” Its
alleged political motivation was irrelevant; that’s the case with most
legislation.
Plaintiffs argued that, nonetheless, “the harms recited in
Act 120 are not real” because they “consist of speculation and conjecture about
speculation and conjecture” based only on “risks,” or “mere potentiality.” But
there were studies supporting both “sides” of the GE debate, so plaintiffs
couldn’t plausibly allege that Vermont’s evidence wasn’t “real”—only that it wasn’t
persuasive.
Finally, plaintiffs argued that there wasn’t a proper fit
between the disclosure and the state’s interest, because a disclosure that a
product “may” contain GE ingredients didn’t further the legislature’s
purpose. But the disclosure satisfied
the reasonable relationship standard. A
state’s interest in “encouraging ... changes in consumer behavior” through
compelled disclosure is “rationally related” to a disclosure requirement even
if it’s not the best means of furthering that goal. Nor is there a requirement
that a disclosure law be comprehensive. The Vermont General Assembly was
therefore entitled to “take one step at a time.”
Because the factual record was undeveloped, though, the
court denied Vermont’s motion to dismiss this claim without prejudice. Still, there was no likely success on the
merits.
Now to the “natural” restriction. None of plaintiffs’ members identified any
specific products that contained GE ingredients but were nonetheless labeled
“natural.” This didn’t deprive them of
standing, but it did affect entitlement to injunctive relief.
First, Vermont failed to show that the use of “natural” was
“inherently or actually” misleading. A
state can’t completely ban statements that aren’t actually or inherently
misleading, and the state has the burden of justifying its speech restriction.
Because the law didn’t define “natural,” the state faced an “uphill battle” in
showing actual/inherent misleadingness in the absence of a statutory or
regulatory definition as a metric. Nor did the state show there was a single,
accepted definition of the term, only that various definitions “share[d]
commonalities.”
Vermont argued that, no matter how “natural” is defined, it
couldn’t apply to GE foods because GE techniques were definitionally manmade,
artificial, and not existing in nature. Both the World Health Organization and
one of the members of plaintiff GMA, Monsanto, “define genetically modified
organisms as those that have been altered from their ‘natural’ state.” But there are lots of purposeful interferences
with plant production, from greenhouses and fertilizers to watering and weeding
plants. “[A]ltering seeds and plants
from their “natural” state has occurred for centuries through techniques such
as selective breeding, hybridization, cross pollination, and grafting.” “Natural” was thus a standardless term “that
virtually no food manufacturer could satisfy.”
The court also considered the General Assembly’s finding
that “natural” was actually/inherently misleading as applied to GE foods with
its further finding that the term “poses a risk of confusing or deceiving
consumers,” because “[s]peech that is inherently misleading poses more than a
risk of confusion or deception, and it is for this reason it receives no First
Amendment protection.” I think the court
is collapsing various kinds of probabilities—not everyone will be fooled even
by the most blatant of falsehoods, or the most subtle. As the court notes below, fooling a
substantial percentage of relevant consumers is enough to justify regulation,
and we can conclusively presume that inherently misleading/false speech will do
so. The reason false/inherently
misleading/actually misleading speech receives no constitutional protection is
that its benefits are substantially outweighed by its harms, which is a
normative as well as an empirical judgment.
Plus, the law’s numerous exemptions undermined Vermont’s
position on inherent misleadingness. Why
would “natural” terms be inherently deceptive as applied to some foods and not
others? The state’s evidence of actual
misleadingness came from a 2010 survey conducted by The Hartman Group, purportedly
showing that 61% of consumers “believed” that “natural” suggests or implies
“the absence of genetically engineered food.” The Hartman report concluded that “natural”
was increasingly meaningful to consumers desiring fresh, real foods, but that
arguably conflicted with its further finding that “natural as a marketing term
remains vague and unappealing to consumers.”
Anyway, “[a] survey asking whether certain consumers think
GE is a ‘fundamentally unnatural’ process, is not the equivalent of actual and
unsolicited citizen problems or complaints regarding GE manufacturers’ use of ‘natural’
terminology.” [How would the citizens know to complain in the absence of GE
disclosures? Also, as stated, this conclusion is inconsistent with the court’s
later invocation of the Lanham Act standard, since surveys are regularly
accepted in Lanham Act cases. Perhaps
the court means that this kind of survey—asking for whether something is
misleading—is not probative, whereas a different kind of survey, asking
consumers what they took away from the “natural” label, would be probative.] At most, Vermont had “some evidence that some consumers
may find the use of ‘natural’ terminology in conjunction with GE food
misleading depending on how ‘natural’ is defined.” That wasn’t enough to
support an outright ban on commercial speech.
Because the speech was only potentially misleading, Act
120’s “natural” regulation had to survive Central
Hudson. It didn’t. Where speech isn’t false or misleading (note how
“potentially” misleading speech is treated here as not false or misleading; that didn’t have to be the case), the
government’s interest must be substantial, the restriction must directly and
materially advance the governmental interest, and the restriction must be no
more extensive than necessary to serve that interest.
The court returned to falsity: “Whether Act 120 restricts
false and misleading speech in anything other than a random and arbitrary
manner turns on how ‘natural’ is defined.” If “natural” means occurring or
existing “in nature,” then virtually no food products qualify, and GE
manufacturers weren’t the only commercial speakers who should be restricted
from its use. Likewise, if “natural” means “nothing artificial” or “less
processed,” then products with preservatives, stabilizers, artificial colorings,
or flavorings should also be covered. Vermont didn’t identify a substantial
state interest that is served by restricting the use of undefined terms by
some, but not all, similarly-situated commercial speakers.
Even potential misleadingness didn’t show a substantial
state interest. (Note the tension with
the Zauderer section, where the court
pointed out that almost any interest is substantial if not trivial.) The Second
Circuit has questioned whether there can ever be a substantial state interest
in banning “potentially misleading” commercial speech: “If the protections
afforded commercial speech are to retain their force, we cannot allow rote
invocation of the words potentially misleading to supplant the State’s burden.
Moreover, it is unclear what harm potentially misleading advertising creates,
and the state bears the burden of proving that the harms it recites are real
and that its restrictions will in fact alleviate them to a material degree.” But that’s not about the substantiality of
the interest, it’s about the other elements of Central Hudson, though I guess that’s just quibbling.
Unsurprisingly, Vermont failed to show that the “natural”
restriction “directly and materially advances” that state interest and was “no
more extensive than necessary to serve that interest.” Without a definition of
“natural,” the law swept either too broadly or too narrowly. The addition of
“any words of similar import” “essentially leaves GE manufacturers guessing
regarding which advertising terms are prohibited.” Plus, the exemptions showed
that Vermont would tolerate continued use of “natural” for some GE foods and
beverages, without explaining why that use is ok. Finally, Vermont’s consumer
protection statutes could address misleading use of “natural,” and the GE
disclosure requirement could let consumers make up their own minds about
whether a GE food product is “natural.”
“[R]estrictions on commercial speech to prevent consumer
deception should be limited to those instances when actual deception is likely,
or when a reasonable consumer would be deceived.” Speculation or conjecture aren’t enough to
satisfy the state’s burden. Here, whether the promised benefits materialized
depended almost entirely on how “natural” was defined. Thus, plaintiffs showed likely success on the
merits of their claim against the “natural” restrictions.
Further, they showed likely success on the facial invalidity
of Act 120’s restriction of the use of “any words of similar import.” The law didn’t define that phrase, and the
AG’s rule made the phrase surplusage by just repeating already-regulated words;
that approach wasn’t supported by Vermont law.
Though the law required that “any words of similar import” have “a
tendency to mislead a consumer,” that wasn’t enough because the law didn’t
include a limitation to reasonable
consumers, or to instances where the ad as a whole was misleading. This contrasted with Vermont law generally,
which used an objective reasonable consumer standard. (Why that can’t be
implied is unclear.) The Lanham Act
cases on which Vermont relied were distinguishable, because they required proof
of “extrinsic evidence [of consumer deception or confusion] to support a
finding of an implicitly false message.” (Citing Tiffany (NJ) Inc. v. eBay
Inc., 600 F.3d 93 (2d Cir. 2010).) Thus,
the void for vagueness challenge was likely to succeed, though the phrase was
severable.
Preliminary injunction: the Second Circuit doesn’t presume
irreparable harm in cases involving allegations of the abridgement of First
Amendment rights unless “the challenged government action directly limited
speech.” Where the effect on speech is only potential the plaintiff must show a
causal link between the injunction and its alleged injury. Plaintiffs’ arguments about irreparable harm
were primarily directed to the burdens imposed by the GE disclosure
requirements, which challenges were unlikely to succeed. They identified few burdens of complying with
the “natural” and “any words of similar import” bans—other than unspecific
allegations, they provided no evidence of any member’s actual use of the
“natural” terminology or “any words of similar import” in conjunction with a GE
product. They thus couldn’t show irreparable harm. Nor had they been threatened
with any enforcement action.
Likewise, plaintiffs didn’t identify any of their members
who currently produce non-exempt GE products that are governed by either the
FMIA or the PPIA. Given the AG’s rule’s exemption from Act 120 for any
“[p]ackaged, processed food containing meat or poultry” subject to the FMIA and
PPIA, “an enforcement action against these GE manufacturers appears unlikely.”
Without irreparable harm, there could be no preliminary
injunction.
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