The Consumer “Right To Know” Versus the First Amendment

Panel II at the Abrams Institute’s conference
Moderator: Jonah Knobler, Partner, Patterson Belknap Webb
& Tyler: recent attempts to do things like require disclosure of child
labor in manufacturing process, and related consumer protection cases arguing
that failure to disclose was misleading. 
Kavanaugh, then-Judge: gov’t argued that there was a substantial
interest in providing info, but that would create endless potential burdens
since consumers might want to know political affiliation of business owners
etc. Consumer interest is not enough for a freewheeling power to mandate
compelled commercial disclosures.  So we
know what he thinks.
Panelists:
Rebecca Tushnet – Frank Stanton Professor of the First
Amendment, Harvard Law School
Amestoy/6th Circuit cases striking down competing
regulations of disclosure of rBGH, showing the current tensions in the
law.  Amestoy says that consumer interest
in a matter isn’t sufficient to compel disclosure and it’s just consumer
interest because the FDA says that rBGH has no effect on milk; the 6th
Circuit says that it’s not just consumer interest because research not accepted
by the FDA indicates there might be an effect on milk.
A few points, so that we can get to doubtless robust
discussion: Approaching strict scrutiny for regulations of nonfraudulent (as
Mr. Abrams put it) commercial speech while applying rational basis scrutiny for
regulations of false or misleading commercial speech puts incredible and I
think unworkable tension on the line between truthful and nonmisleading and false
or misleading speech, and we are beginning to see that tension manifest in
weird and conflicting decisions about disclosure, consistent with Professor
Post’s characterization of current doctrine as a hunting license.
Justice Stevens had it right in Central Hudson: where it’s a
regulation of the economic relations between the parties, disclosure regimes
should be subject to rational basis review as long as we don’t like Lochner. Of
course judges are increasingly friendly to a return of Lochner, but the real
justifications for that movement don’t distinguish compelled speech from
compelled payment of a minimum wage.
I also agree with Professor Post that MPG and emissions
labels for cars, nutrition labels, FDA regulation of drugs cannot be
distinguished in type from these other regulations, which is why even the cases
that strike disclosures down make the law more complex and hold out the
prospect of approving mandatory disclosures. This may eventually change but I
predict it will at least outlast Roe v. Wade—Central Hudson prong one (and
relatedly Zauderer) are hard to kill because they’re really the only way that
commercial deception stays actionable while false political speech is generally
protected.
But consider a few recent cases: Mississippi Bd. of
Engineers v. Tire Engineers: 5th Cir. case. New interpretation of
decades old precedent about the line between potentially misleading and
actually misleading speech.  The
background is that the Supreme Court said a bunch of things in lawyer
regulation cases about when you could ban speech versus when the regulator had
to mandate a disclosure instead—this line of cases treated disclosures as
speech protective and minimally invasive, and they haven’t been reconciled with
the anti-disclosure cases.  Anyway, those
cases say that the government can ban if the statement is false or actually
misleading, but the government has to use a disclosure—or at least start
there—if the statement is only potentially misleading.  This distinction doesn’t exist outside First
Amendment law. 
According to the Fifth Circuit panel in the Tire Engineers
case, surveys don’t show actual misleadingness, but an individual deceived
consumer might.  This is a terrible
distinction, wrong in both directions.  Given
the survey showing 55% net confusion
(an incredible number if you think about Lanham Act cases finding
misleadingness), the panel suggested, a disclosure might be justified, but it
could only be as minimal as necessary, which the panel thought meant it only
needed to be disclosed when a consumer was actually at the facility—a classic
bait and switch problem of sunk costs. 
The case also indicates a broader issue with trying to treat disclosure
as a separate issue from falsity: when a message is false or misleading, one
response is to try to ban it, but the other is to say “fix it.”  If there is a false message, then there
should also be a true message about the same thing.  And to say that you have to stick to the
truth is to compel speech, under the
current framework.
Another case worth noting: the Florida case barring
pediatricians from asking about whether there are guns in the house.  A panel said this survived strict scrutiny,
which I submit would be laughable if it weren’t a bellwether of where we are
going in judicial politics.  And with
abortion of course we’ve been there for decades: I agree with Professor
Bambauer is that the glaring contradiction in NIFLA is on the many burdensome
disclosures, neither factual nor uncontroversial, that the court has approved
for abortion providers.
NIFLA “health and safety warnings long considered
permissible.” We’ve already seen debate about that, and the quality of that
debate has been terrible.  One concurrence
in the American Beverage case thought that the specific health and safety
warnings at issue had to be of long standing, meaning that for example no
mandatory warnings about thalidomide would be constitutional because we didn’t
know about thalidomide at common law. Even Justice Scalia didn’t think that:
science can tell you things you didn’t know to which the common law principles
about harm can then be applied.  (Lucas
v. South Carolina Coastal Council, nuclear power plant that turns out to be on
an earthquake fault line can be shut down without constituting a taking.)  Similarly, the dispute in Am. Bev. about
whether the disclosure was “factual” b/c it only referenced “diabetes” without
distinguishing between type 1 and type 2 diabetes shows how easy it will be to argue
and hold that something isn’t factual.
Jonathan H. Adler – Johan Verheij Memorial Professor of Law
and Director, Center for Business Law and Regulation, Case Western Reserve
University School of Law
Zauderer should’ve been understood as a simple application
of Central Hudson, not a separate test. Result: mess, especially in terms of
explanation.  The rBGH cases from Sixth
and First Circuits are fully reconcilable: gov’t intervention in information in
the marketplace is something we should be skeptical of. Mandatory/conditional
disclosures (if you say A, you must also say B; A means X) require
justification, but should not be open season. 
Gov’t has to be explicit and express about what it’s doing and why,
which becomes a filter protecting against arbitrary gov’t action and against
rent-seeking, which was clearly what’s going on in the milk cases.  [And why this is about Lochner.]  Similarly with land regulation, floodgates
aren’t open [doubt Florida regulators would agree].  Fed gov’t will be able to defend the vast
majority of its disclosures.  The Court
hasn’t done a particularly good job of fleshing that out.  Nutritional labels: peanut allergy
disclosures are strongly justified—the gov’t has an interest in protecting the
uninformed consumer who can never know everything about a product from
suffering harm from that product. 
Probably satisfies both Central Hudson and strict scrutiny, provided
that it’s no more intrusive than necessary.
Securities disclosures can be justified too—an expert agency
can decide that consumers need to know that “you only pay fees if you win”
doesn’t include costs which will be owed regardless. [Quite notable that it was
the bar, not “experts” in the data collection/analysis sense, to which the SCt
deferred in Zauderer—preference for anecdotes over data.]  SEC disclosures on conflict minerals: telling
consumers to focus on this aspect of the product—he agrees the courts haven’t
been effective on fleshing out intuitive judgments they then rationalize.  Conflict mineral disclosure is meaningfully
different from other regulations on the books. 
GMO disclosure is materially different from ingredient labels.  [See Doug Kysar, Preferences for Processes:
this conclusion relies on paternalistic judgments about what consumers should care about, not what they do care
about.]
In sugar sweetened bev. case, the gov. can warn about these
things but it did more than necessary [unless you think that any of the
concurrences might add some votes if SF came back with a 10% warning]. 
Jacob Spencer –Gibson, Dunn & Crutcher LLP
CTIA is still ongoing (remanded in light of NIFLA, still
pending before 9th Circuit)—disclosure that cellphone retailers
would need to provide at point of sale. 
About RF exposure/exceeding FCC standards if you carry phone on and in
pocket/in bra.  Epistemology isn’t
litigated here: both parties appeal to what the FCC has determined about the
science, accepted it as an accurate account of science and of what FCC was
trying to do, and then disagreed about whether the message conveyed by
Berkeley’s ordinance was consistent with the FCC.  CTIA: if you read it as a normal consumer,
you would come away thinking there was a safety risk.  Uses “Safety” at beginning and end, and
“radiation” is scary.  FCC has said there
is no safety risk that’s scientifically provable from carrying cellphone.  Berkeley’s position: each sentence is true,
and this is factual and uncontroversial. 
SF did a sugar sweetened beverage disclosure that was struck
down as unduly burdensome. There was no definitive showing that SSBs uniquely contribute to obesity etc.  The parties didn’t have a fight about the
science, though.  Even without
controversy on facts, there’s a lot of disagreement. The trilogy of Zauderer,
Ibanez, and Milovetz were all about lawyer marketing, where the Court is very
confident about what it’s doing and what it knows about the facts.  Other cases, not so much.  [Which may say something about the judge as
data scientist regulating the FDA.]  They
were also all conditional disclosure cases: you say X, so you have to say
Y.  NIFLA is a noncommercial speech case,
and it’s weird to say stuff about Zauderer in that context—so none of these
cases deal with run of the mill compelled commercial speech.
Knobler: safety disclosures: lack of clarity over when
health and safety is a sufficiently important or substantial interest to
justify disclosure.  Vaccine/autism?  Adler thinks precautionary disclosure might
be allowable even if risks are hypothesized and not proven.  Tushnet thinks current epistemological
uncertainties about truth expressed in 1A cases should imply that courts can’t
rule on products liability cases, which is why the 1A cases are weird.
RT: [This is about scientific “proof” versus “proof.”]  It’s about probabalistic harm and whether regulators
can act on probabilities, which I think they can.  If past experience w/ a class of drugs has
indicated consumer misunderstanding (or safety problems), you should be able to
predict that with a new entrant.
Adler: factual/uncontroversial is not a good framing.  Substantial gov’t interest is where we should
be looking, and whether there are less burdensome ways of regulating.
Uncontroversial in particular is prone to so many interpretations, ultimately
incoherent and unhelpful.  We think that
agency transparency about decisionmaking has an effect on the quality of
decisionmaking. If you have a test that says the gov’t must explain why it’s
regulating, that helps constrain the gov’t. 
In Amestoy, the gov’t wasn’t willing to say it was protecting people’s
health, and it wasn’t willing to do that. 
In CFIA, the gov’t wasn’t willing to argue that it believed that there
was an actual safety risk against which it was protecting people.  Requiring the agency to put its reputation
behind things will discipline it some against rent-seeking.  [Except for abortion.]  The problem: how much scrutiny will we give
the gov’t’s claims.  Most cases have
tended to stay away from that question. Baltimore Gas, 1983 O’Connor opinion:
when the Q is one of science, we should be more deferential to admin agencies
than in any other context.  Judges know
this is not their comparative advantage. Allowing agencies to, as they must,
pick and choose b/t scientific research comes along w/having the agencies. But
1A context creates a tension that hasn’t been unpacked.  A candor rule relieves some of the
pressure. 
Cases that come out of the states: deference comes from
dealing w/expert agencies. But city council of SF may be different.  [so lying about federalism is part of the problem?]  A candor rule might be less effective with
legislatures than w/admin agencies. 
Courts have largely avoided this problem.
Knobler: most of these cases involve gov’t regulation, but
what about private lawsuits under state tort law seeking to impose these
disclosure requirements, and that’s even more problematic.
RT: I have a theory about this: argument made and ignored in
Nike v. Kasky because it’s inconsistent w/the 1A’s distrust of gov’t.  If we believe in (1) judicial competence to
find facts and (2) falsity/misleadingness, then these cases have to continue.  The California laws are not regulatory. They
use the same general language of falsity/misleadingness as core FTC §5 does.
Knobler: when there is a safety risk dispute, what kind of
evidence should be required to take it into the category
factual/uncontroversial?  In CTIA before
NIFLA, they said uncontroversial didn’t impose a separate requirement from
purely factual; has to be phrased as a fact. NIFLA involved true facts but the
Court still said it was controversial: on a subject that made people respond in
an emotional way.  [Like whether kids
should die of peanut allergies—and I’m not kidding about that.]
Spencer: Mistake to read Zauderer as distinct from Central
Hudson.  He would read “controversial”
very broadly. If it’s controversial: controversy in public; good faith
scientific disagreement—the consequence is that you should then apply Central
Hudson or heightened scrutiny to assess the gov’t’s reasoning. Level of gov’t
is important: federal regulator v. municipality; core competency of gov’t (SEC
lacks core competency on conflict minerals and whether disclosure would affect
violence in Africa); whether this is a standard warning (he’d look at whether
this is the sort of topic that looks like existing health and safety warnings).
Knobler: more exotic disclosure requirements: state
interests grounded in consumer’s right to know facts for their own sake or
facts of moral or ethical or aesthetic importance.  Can be phrased as economic harm (paid more
than I would) as well as moral/ethical harm. Adler has argued right to know is
not itself a consumer interest that justifies compelled speech, even if
consumers do in fact care more about identity of producer than the other
qualities of the product.  Where do you
draw the line between mere consumer curiosity and a legitimate state interest?
Adler: If ungrounded consumer right to know is justification
for compelling disclosure, without another gov’t interest, then there is no
protection against mandatory disclosure. The fact that gov’t, legisl. or admin,
has decided will always show that some nonzero number of consumers want to
know. There is an infinite amount of information consumers might want to know,
at least if prompted.  But these aren’t
commercial concerns, but concerns about values, how we see ourselves as
citizens of a polity.  This distinction
b/t citizens and consumers has been obliterated, if it ever was a line.  [Then I really don’t see why these concerns
should be distinguished from “commercial” concerns.]  Tilts the playing field to make decisions
more about question A than question B. That should worry us.  Instead, the gov’t should have to articulate
harms to people or property.  Squishier
when the gov’t has other interests it’s trying to carry out, like strengthening
a larger market, or AMI’s country of origin labeling.  These aren’t protecting consumers from harm
but groups trying to achieve through regulation what they can’t get through the
market: mandatory GMO labeling is about forcing producers to shame their own
products.  If Vermont really wants this
label on the milk, be willing to say up front that it thinks there’s a health
risk.
RT: Doug Kysar was right; the distinction reflects a
paternalistic view of what consumers ought to care about: the gov’t is already
making a value laden choice about which characteristics should matter and
Professor Adler’s point about the merger between commercial and political means
that telling people to stay in your lane and care only about calories is
already a political choice.  Another
takings case, Eastern Enterprises v. Apfel: it’s possible that a combination of
regulations would be so burdensome that you would go out of business.  That doesn’t make it ok for you to pick and
choose which you want to comply with to avoid a taking. [Or as Jack Balkin
says, the power to tax and the power to destroy can in fact be separated in
practice.]
GMO labeling: empirics on this seem less dangerous than
Prof. Adler make it sound. Consumers seem relatively welcoming.
Zauderer as application of Central Hudson: key difference is
whether the burden is on the gov’t to show that the disclosure achieves the
objective; since Zauderer our factual understanding of the world has changed
and that provides us with a choice.  Bambauer
and many others have noted that disclosures often don’t do what we want them to
(though it depends very much on the disclosure and on dynamic effects
especially effects on intermediaries). 
Judges like Kavanaugh think that a disclosure should inform and so
therefore it does, but that’s inconsistent with the evidentiary standards they
apply to everything else. Neither side has taken seriously enough the
objections to disclosure working: it would imply that many more speech bans
would be acceptable because there is no happy medium of disclosure while
preserving the truthful message, but many other regulations would fail unless
we accept a 10% increase in awareness through disclosure as sufficient to show
that the government has gone some way towards achieving its interest.
Adler: Kysar misses that consumers care about things but
producers can come forward and identify themselves to groups that care.  Econ literature is largely ignored in legal
literature: barring exceptional circumstances, where groups have strong
preferences about characteristics, there is disclosure by firms to match
preferences, and in a separating marketplace consumers tend to interpret
nondisclosure as confession.  USDA has
studied this for years.  It’s not that
consumers shouldn’t care or can’t care, but when they do, the marketplace takes
care of that.  If the requirement was
that the gov’t simply had to articulate why the consumer demand wasn’t being
met, that would eliminate the justification. Other areas of the law may make
companies somewhat reluctant to be aggressive in making direct comparative
claims [I don’t think this is true in the US]. If you want a GMO free product,
you can find it.  Mandatory disclosures
often differ from market disclosures; they get changed and less responsive to
what consumers are demanding, but rather to what lobbyists are demanding.
[RT: this would all be fine if preferences were fixed.]
Spencer: agrees w/ Adler. 
Right to know would be circular: always satisfied [unless we care
whether disclosure works].  We have a
separate set of standards for commercial speech b/c it deals only w/their
economic interests, though that has never really made sense, but if the
statement doesn’t deal w/consumers’ economic interests then it shouldn’t be
relevant.  That said, you never want to
be litigating whether the gov’t interest is substantial.
RT: if that were true, then you have to explain why it
should be constitutional to bar false explicit statements about ethical
practices because it’s not a commercial interest but instead is political.
Adler: that’s fraud.
RT: now we’re just debating price: what consumers understand
from the unadorned statement.

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