MAY 1998 VOLUME 19 NUMBER 3


CORPORATE TRASH TALK

 
First Amendment Follies
Expanding Corporate Speech Rights
 


by Robert Weissman

The First Amendment -- it is not just for people anymore.

In recent years, corporations in the United States are increasingly invoking the First Amendment to the U.S. Constitution to defend controversial speech. U.S. courts afford corporations most of the same protections for political speech as are provided to individuals. The courts are also providing ever-increasing levels of protection for commercial speech, gradually approaching the peak protection guaranteed for political debate.

As the U.S. Congress debates tobacco control legislation, some of the consequences of extending free speech guarantees to corporations are becoming apparent.

Leading First Amendment scholars -- albeit many with historic ties to the tobacco industry -- are persuasively (though not conclusively) arguing that the Bill of Rights prevents Congress from banning various types of advertising, including those that are thought to contribute to rising teen smoking rates.

In a nutshell, Northwestern University Law School Professor Martin Redish told a congressional committee, "There can be no constitutionally acceptable justification for the suppression or widespread disruption of the truthful advertising of a lawful product."

ESTABLISHING THE RIGHT

In 1886, the U.S. Supreme Court declared that it did "not wish to hear argument" on whether corporations were "persons" protected by the Fourteenth Amendment's due process guarantees originally intended to safeguard the rights of emancipated slaves. It simply asserted that corporations should be treated the same as people, at least for Fourteenth Amendment purposes.

But it was not until the 1970s that the Supreme Court began extending First Amendment speech rights to corporations.

In 1976, the Supreme Court first held that the First Amendment protected commercial speech by corporations. The Court ruled in Virginia State Board of Pharmacy that a Virginia regulation banning advertising of pharmaceutical prices was unconstitutional. The Virginia Citizens Consumer Council argued that consumers had a right to pricing information, and the Supreme Court agreed.

In 1978, the Court held that corporations had political speech rights as well. In First National Bank, the court upheld the right of Massachusetts corporations to make campaign contributions to defeat a political referendum that would have enacted a progressive income tax.

Massive campaign spending by corporations is now the norm in any statewide referendum or initiative potentially impinging on corporate power, whether it concerns insurance regulation, workers compensation, campaign finance reform or toxics.

The Supreme Court extended this line of cases in 1986, in Pacific Gas & Electric, when it ruled that corporations have "negative" speech rights not to be associated with the speech of others or to be forced to speak.

In the Pacific Gas & Electric case, a California consumer group had successfully lobbied for a regulation that utilities in the state be required to include inserts in their billing envelopes asking utility users to join a non-profit, democratically run utility consumer advocacy group. (There would have been no cost to the utility; the consumer group would have paid printing costs and, because the insert would use extra space in the billing envelope, there would have been no additional postage costs.) The Supreme Court ruled that this arrangement might unconstitutionally compel the utility to respond or tailor its statements in response to the consumer group's information.

"For corporations as well as for individuals, the choice to speak includes within it the choice of what not to say," the Court held.

Other courts have since extended corporations' political and negative speech rights. In 1996, a U.S. appellate court struck down a Vermont law that would have required milk that was produced by cows treated with BGH (bovine growth hormone also known as bovine somatotropin (BST)) to be labeled with a blue dot [see "Corporate Rights, and Wrongs," Multinational Monitor, October 1996]. Grocery stores would have been required to carry signs noting that the blue dot signified that the milk came from BGH-treated cows and stating that the Food and Drug Administration has concluded there is no health difference between BGH-treated and non-BGH-treated milk. The appellate court ruled that this program would infringe on corporations' "negative" speech rights, and held it to be unconstitutional.

BROUGHT TO YOU BY ...

Meanwhile, the commercial speech line of cases has also evolved significantly from the 1970s.

In 1980, in a case known as Central Hudson Gas & Electric, the Supreme Court established a four-part test for determining whether limitations on commercial speech are constitutional.

First, Justice Lewis Powell wrote in his majority opinion, to receive constitutional protection, commercial speech must concern lawful activity and not be misleading.

If the communication passes the first test, a court must then determine if the government interest advanced by the regulation is substantial.

If a substantial government interest is at stake, a court must ask whether the commercial speech regulation directly advances the government interest.

Finally, the court must determine whether the regulation of speech is no more extensive than necessary to serve the government interest.

The fourth prong of this test is the harshest. It sounds like a "least restrictive alternative" test, meaning commercial speech regulations will only be upheld if there is no alternative available that might accomplish the same ends but would burden speech less.

However, the Supreme Court has explicitly stated that this is not its approach for commercial speech cases. In 1995, in Florida Bar v. Went-For-It, Inc., the Court stated, "The 'least restrictive means' test has no role in the commercial speech context."

Two years earlier, the Supreme Court held that "the requirement of narrow tailoring is met if the regulation promotes a substantial government interest that would be achieved less effectively absent the regulation, provided that it did not burden substantially more speech than necessary to further the government's legitimate interests."

Nonetheless, in 1996, the Court seemed to veer in the direction of the least-restrictive-alternative test. In 44 Liquormart, the Supreme Court struck down a Rhode Island ban on liquor price advertising. The ostensible purpose of the advertising ban was to limit price competition that would induce higher alcohol consumption. The Court held that the ban was unconstitutional, concluding that there was not a reasonable fit between the ad prohibition and the goal of cutting alcohol consumption.

"It is perfectly obvious that alternative forms of regulation that would not involve any restriction on speech would be more likely to achieve the State's goal of promoting temperance," wrote Justice John Paul Stevens.

"Higher prices can be maintained either by direct regulation or by increased taxation. Per capita purchases could be limited as is the case with prescription drugs. Even educational campaigns focused on the problems of excessive, or even moderate, drinking might prove to be more effective."

At least seven of the nine justices in 44 Liquormart agreed with this analysis.

This invocation of a wide array of alternative measures -- without any evidence that Rhode Island legislators had ever considered them or any acknowledgement that the alternatives might be politically or financially infeasible -- illustrates the intensity of the least-restrictive alternative analysis. If this analysis emerges as the norm in commercial speech regulation cases, it will be very difficult for government agencies to limit commercial speech outside of the deceptive advertising area.

Some commentators argue that 44 Liquormart did not represent a shift in the commercial speech doctrine. Rhode Island's ad ban was struck down, they argue, because the state presented virtually no evidence to support its claim that the ad ban would deter drinking. Where the government can show a reasonable fit between a commercial speech regulation and achievement of a legitimate policy goal, they believe, the courts will uphold the regulation.

TOBACCO "SPEECH"

It is against the backdrop of the Supreme Court's commercial speech jurisprudence that the constitutionality of various tobacco marketing regulations is being debated.

Most of the various tobacco bills being considered in the U.S. Congress include strong advertising and marketing restrictions. Among the proposed regulations: prohibiting tobacco billboard advertisements, restricting tobacco print ads to black-and-white text-only format in publications with high youth readership and banning the use of human images and cartoons in tobacco promotions.

Proponents justify all of these measures as designed to limit certain kinds of advertisements that appeal to children. Opponents argue the measures fail to pass the Central Hudson test, and can only be constitutionally adopted with an industry waiver of the tobacco companies' rights.

Here is how the argument breaks down:

  • Does the speech contain lawful activity? David Vladeck, director of Public Citizen's Litigation Group, argued to the Senate Commerce Committee in March that the answer to this question is "no," at least for the somewhat narrower regulations promulgated by the Food and Drug Administration in 1995. The First Amendment does not protect commercial speech that proposes an illegal transaction, and selling tobacco to kids is illegal. "Because a reviewing court would understand that these [commercial advertising] restraints are aimed at forbidding an illegal transaction, they would be upheld," Vladeck testified.

    Opponents of the regulations counter that the desire to protect children cannot justify regulation of commercial speech that does not narrowly target children.

    "As the Supreme Court said just last June, the interest in protecting children from harmful materials 'does not not justify an unnecessarily broad suppression of speech directed to adults,'" First Amendment attorney and sometime tobacco industry representative Floyd Abrams told the Senate Judiciary Committee.

  • Is a substantial interest advanced by the regulation? Even opponents grant that reducing youth smoking is a substantial government interest.

  • Does the regulation directly advance the government's interest? Proponents of the regulation do well on this score as well. The FDA, in its rulemaking leading up to promulgation of the 1995 rule, compiled an extensive record showing the connection between advertising and youth smoking. The famous study showing six year-olds were as able to recognize Joe Camel as Mickey Mouse, and a raft of others, support the notion that limiting advertising will help diminish youth smoking.

  • Are the regulations no more extensive than necessary? Proponents like Richard Daynard, a professor of law at Northeastern University, emphasize that the regulations are narrowly tailored. "Tobacco advertising legislation will not be a total ban and the tobacco industry will still have many alternative channels to communicate with its adult customers," Daynard told the Senate Judiciary Committee in February. "Adults will still receive information on price, quality, comparative product features and any other information to help them make an informed decision on tobacco products."

Daynard and others also emphasize the reasonableness of the proposed tobacco marketing rules by highlighting the failed three decade-long attempt by health authorities to curb youth smoking.

Opponents of the regulation respond with their strongest arguments. Citing 44 Liquormart, they argue the government must pursue less restrictive alternatives to speech regulations before imposing marketing restrictions.

"If Congress determines that the education and access provisions of the tobacco settlement are insufficient, then it should consider additional measures, such as a minimum age for possession and use of tobacco products," Abrams testified in February.

"But whatever means are selected," he said, "the Constitution requires Congress to employ education (more speech) and access restrictions before it enacts a wholesale prohibition on free speech."

Opponents also contend that the regulations are far too broad. "The prohibition on colors and images in virtually all tobacco advertising eliminates those elements of communication that most effectively and efficiently draw attention to an advertisement, impart information and distinguish one brand from another," David Versfelt, general counsel to the American Association of Advertising Agencies, told the Senate Judiciary Committee in February.

There is no way to establish with certainty how a court would rule on these various disputes. It is clear, however, that the arguments for marketing regulations become weaker the more removed they become from the purpose of protecting children. Thus while a federal court has upheld a Baltimore ordinance banning tobacco billboards in residential areas, an ad ban in adult magazines would face a stronger constitutional challenge.

CREEPING RIGHTS

As the Supreme Court stiffens its application of the Central Hudson test, the differential treatment of political and commercial speech is beginning to narrow. The Court appears increasingly willing to grant safeguards to commercial speech that are similar to the strong protections for political speech.

In an opinion joined by two other justices, Justice Stevens wrote in 44 Liquormart that the governmental interest in protecting consumers from misleading, deceptive or aggressive sales practices, or requiring the disclosure of beneficial consumer information, justified greater deference to government regulation of commercial speech. (Indeed, recall that in the Central Hudson test, deceptive commercial speech is not afforded any First Amendment protection.) "When a State entirely prohibits the dissemination of truthful, nonmisleading commercial messages for reasons unrelated to the preservation of a fair bargaining process," Stevens wrote, "there is far less reason to depart from the rigorous review that the First Amendment generally demands."

"The First Amendment directs us to be especially skeptical of regulations that seek to keep people in the dark for what the government perceives to be their own good," Stevens argued. "That teaching applies equally to state attempts to deprive consumers of accurate information about their chosen products."

Justice Thomas openly argued in his opinion in 44 Liquormart for the abandonment of the Central Hudson test, and the application of the same standards to political and commercial speech.

"I do not see a philosophical or historical basis for asserting that 'commercial' speech is of 'lower value' than 'noncommercial' speech," Thomas asserted.

Justice O'Connor, in an opinion joined by three other justices, refused to consider the merits of abandoning the Central Hudson test, saying that such a reconsideration of Central Hudson should be postponed until another day. But she suggested a willingness to review the issue with an open mind.

This trend in commercial speech jurisprudence accounts for the necessity of tobacco advertising restriction proponents justifying ad bans as preventing children from smoking. Even proponents tend to concede that it would be extremely difficult under current doctrine for the government to constitutionally regulate cigarette advertising as a public health policy to deter adult use of a deadly product, as long as that deadly product -- tobacco -- is legal for sale and consumption.

"No substantial interest could be asserted by the government in support of depriving adults of access to advertisements for tobacco which may lawfully be sold to them," Floyd Abrams told the Senate Judiciary Committee.

If the trend continues unchecked, it is possible that it will evolve in ways that will limit the ability of the government to require warning labels on products or to ban deceptive advertising.

If it is "paternalistic" and unconstitutional to deny consumers truthful information, the argument would run, perhaps it is also "paternalistic" to censor deceptive information. Just as the government does not distinguish between legitimate and illegitimate arguments in the political realm, the contention would be, perhaps it should make no such distinctions in regulating commercial speech.

It is by no means certain that First Amendment jurisprudence will evolve in this fashion. But is eminently possible, and corporate free-speech rights are already interfering in notable ways with democratic processes and outcomes. Whether the trend to expanding corporate speech rights will grow incrementally and with little or no attention from the public or policymakers, or whether it will spark a backlash -- resulting perhaps from campaign funding scandals or a court decision striking down tobacco advertising restrictions -- remains to be seen.