9th Circuit is sour on sugar-sweetened beverage disclosure

American Beverage Association v. City and County of San
Francisco, No. 16-16072 (9th Cir. Sept. 19, 2017)
Plaintiffs challenged a SF ordinance requiring warnings
about the health effects of certain sugar-sweetened beverages (SSBs) on certain
fixed advertising (e.g., billboards) in the city. The court of appeals reversed
the district court’s refusal to preliminarily enjoin the ordinance, on the
grounds that the required disclosure was controversial/misleading and unduly
burdensome.
The ordinance required ads to contain this warning: “WARNING:
Drinking beverages with added sugar(s) contributes to obesity, diabetes, and
tooth decay. This is a message from the City and County of San Francisco.”  Covered ads excluded, inter alia, ads in
periodicals, television, electronic media, SSB containers or packaging, menus,
shelf tags, vehicles, or logos that occupied an area less than thirty-six
square inches.  SSBs were defined to
include soda and other non-alcoholic beverages that contain one or more added
sweeteners and more than twenty-five calories per twelve fluid ounces of
beverage, but not milk, milk alternatives primarily consisting of plant-based
ingredients, 100% natural fruit juice, natural vegetable juice, infant formula,
medical food, supplements, and certain other products.  The warning had to occupy 20 percent of a
covered ad and be set off with a rectangular border. San Francisco’s purposes
included the desire to “inform the public of the presence of added sugars and
thus promote informed consumer choice that may result in reduced caloric intake
and improved diet and health, thereby reducing illnesses to which
[sugar-sweetened beverages] contribute and associated economic burdens.”
Zauderer applies
to mandatory disclosures, whether or not they are designed to remedy deception.
 A “purely factual and uncontroversial
disclosure that is not unduly burdensome will withstand First Amendment
scrutiny so long as it is reasonably related to a substantial government
interest.” The government has the burden of showing that a disclosure is purely
factual and uncontroversial, not unduly burdensome, and reasonably related to a
substantial government interest.  “[U]ncontroversial”
here “refers to the factual accuracy of the compelled disclosure, not to its
subjective impact on the audience,” and a “literally true but nonetheless
misleading and, in that sense, untrue” disclosure is not purely factual under Zauderer.
The majority concluded that “the factual accuracy of the
warning is, at a minimum, controversial.” he unqualified statement that
“[d]rinking beverages with added sugar(s) contributes to obesity, diabetes, and
tooth decay” “conveys the message that sugar-sweetened beverages contribute to
these health conditions regardless of the quantity consumed or other lifestyle
choices.” This message contradicted FDA statements that added sugars are
“generally recognized as safe,” and “can be a part of a healthy dietary pattern
when not consumed in excess amounts.” SF’s experts concluded that “there is a
clear scientific consensus” that sugar-sweetened beverages contribute to
obesity and diabetes through “excessive caloric intake” and “by adding extra
calories to the diet,” but didn’t directly challenge the conclusion of the plaintiffs’
expert that “when consumed as part of a diet that balances caloric intake with
energy output, consuming beverages with added sugar does not contribute to
obesity or diabetes.” Because SF’s warning wasn’t about overconsumption, and it
said “contributes” instead of “may contribute,” “the accuracy of the warning is
in reasonable dispute.”
Furhtermore, the warning was “misleading and, in that sense,
untrue.” By focusing on a single product and not on others with an equal or
greater amount of added sugars and calories, “the warning conveys the message
that sugar-sweetened beverages are less healthy than other sources of added
sugars and calories and are more likely to contribute to obesity, diabetes, and
tooth decay than other foods.”  Borrowing
an example from plaintiffs, the court reasoned that “If car dealers were
required to post a warning only on Toyota vehicles that said: ‘WARNING: Toyotas
contribute to roll-over crashes,’ the common-sense conclusion would be that
Toyotas are more likely to cause rollovers than other vehicles.”
[Note: not all courts will apply this interpretive standard,
which relies on the ordinary rules of implicature, to false advertising cases.
They should.  Second note: under false
advertising precedents, misleadingness is a matter of extrinsic evidence, not
simple reading.  If the government’s
burden is to show that the disclosure is nonmisleading, should it have to
provide expert or survey evidence of this? 
If the government does provide such evidence of nonmisleadingness, can
it rebut the court’s conclusions about the meaning of the disclosure?  I have my own conclusions about this, but
more overarchingly I believe that judicial reasoning about how consumers react
to information should be consistent across cases, adjusting appropriately for
who has the burden of proof.]
The current state of research on this issue indicated that
this message was deceptive. According to the FDA, “added sugars, including
sugar-sweetened beverages, are no more likely to cause weight gain in adults
than any other source of energy.” The American Dental Association likewise
cautioned against the “growing popularity of singling-out sugar-sweetened
beverages” because “ the evidence is not yet sufficient to single out any one
food or beverage product as a key driver of dental caries.” SF argued that an
underinclusive warning is okay because it was entitled “to attack problems
piecemeal.” But the problem was that the warning was potentially misleading,
not because it “does not get at all facets of the problem it is designed to
ameliorate.”
SF argued that people were more likely to over-consume
sugar-sweetened beverages than other foods. “But even if it were undisputed
that consumption of sugar-sweetened beverages gives rise to unique behavioral
risks, the warning does not communicate that information”—it didn’t mention
behavioral risks, “and thus clearly implies that there is something inherent
about sugar-sweetened beverages that contributes to these health risks in a way
that other sugar-sweetened products do not, regardless of consumer behavior.”  [This is an example of how “inherent” is
usually an unhelpful concept when people are involved.]   The
district court erred in finding that it would be unreasonable to interpret the
warning to mean that sugar-sweetened beverages are uniquely or inherently unhealthy.
Separately, the warning imposed an undue burden because it
required a black box, bold warning covering 20 percent of the ads, making it
impractical to advertise on covered media.  The court of appeals agreed that “the black
box warning overwhelms other visual elements in the advertisement,” thus
imposing an undue burden.  Although the
district court reasoned that a commercial speaker could use the remaining 80
percent of its advertising space to engage in counter-speech, that wasn’t
enough—the speaker was being forced “to tailor its speech to an opponent’s
agenda,” and to respond to a one-sided and misleading message when it would
“prefer to be silent” (which sounds like it’s going back to point one).  “[C]ountering San Francisco’s misleading
message would leave them little room to communicate their intended message.
This would defeat the purpose of the advertisement, turning it into a vehicle
for a debate about the health effects of sugar-sweetened beverages.”
 

sample ad submitted by plaintiffs
Plaintiffs submitted unrefuted declarations from major
companies manufacturing sugar-sweetened beverages stating that they’d remove
advertising from covered media if San Francisco’s ordinance went into effect. Effectively
ruling out advertising in a particular medium was evidence of undue burden
(consider the effect of this holding on FTC/FDA disclosure rules and Twitter
ads).   The district court erred in rejecting this
evidence because the declarations were “self-serving,” which alone isn’t enough
reason to disregard an affidavit.  The
district court also reasoned that tobacco and pharmaceutical companies
continued to advertise despite being compelled to provide similar warnings. But
SSBs don’t have “the same physiologically addictive qualities as tobacco, nor
are they prescribed by doctors to treat health conditions like pharmaceutical
products. There is no evidence in the record that advertisers have continued
advertising products analogous to sugar-sweetened beverages in the face of
compelled disclosures of the sort required here.”  
[While I understand why the payoff from addiction might be
enough to get tobacco companies to continue to advertise despite the warnings, I
don’t get the second distinction.  If
anything, the availability of an alternate means to get to the
consumer—advertising to doctors who prescribe drugs—makes it even clearer that
the benefits of advertising directly to consumers induce pharmacos to continue
to advertise despite onerous disclosure requirements, thus not chilling their
speech.  Is the distinction one of care
exercised by consumers in choosing?  The
profit margin on drugs/payoff per ad dollar, on which no factual findings have
been made?  That’s all I can come up with
at the moment.]
Though SF had a substantial government interest in the
health of its citizens, it failed to meet its burden for these reasons, though
the court commented in a footnote that SF might not even be able to establish
that providing misleading information through an unduly burdensome disclosure was
reasonably related to its substantial interest in the health of its citizens.
Indeed, San Francisco “has no legitimate reason to force retailers to affix
false information on their products.”

Judge Nelson
concurred in the judgment because of the warning’s size.  “[T]he City has not carried its burden in
demonstrating that the twenty percent requirement at issue here would not deter
certain entities from advertising in their medium of choice.” She wouldn’t have
ruled on the “tenuous” ground that the disclosure was misleading.

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