U.S. Court of Appeals Reaches Decision in National Association of Manufacturers v. U.S. Securities and Exchange Commission

Today, a panel of the U.S. Court of Appeals for the D.C. Circuit issued an opinion holding that publicly-traded corporations have a First Amendment right to hide whether their products contain conflict minerals from the war-torn Democratic Republic of the Congo. (See here for background on the case and our amicus brief.)

In today’s opinion, two of the panel’s three judges took a broad Supreme Court precedent disfavoring business First Amendment challenges to disclosure rules—which the full D.C. Circuit had ringingly endorsed just last summer—and held that it only applies to advertising. (The two majority judges also criticized the full D.C. Circuit’s decision, claiming it “stretched” Supreme Court precedent.) They also said that even if the conflict minerals rule was covered by that broader precedent, they weren’t convinced that it would actually be effective in mitigating the war in the Congo—i.e., rejecting the very judgment that Congress made when it passed the Dodd-Frank Act requiring conflict mineral disclosure.

Judge Srinivasan dissented from the majority opinion, pointing out that publicly-traded corporations are pervasively regulated by disclosure laws. But this was the majority’s disturbing response:

To support the conflict minerals disclosure rule, the dissent argues that the rule is valid because the United States is thick with laws forcing “[i]ssuers of securities” to “make all sorts of disclosures about their products.” Charles Dickens had a few words about this form of argumentation: “‘Whatever is is right’; an aphorism that would be as final as it is lazy, did it not include the troublesome consequence, that nothing that ever was, was wrong.”

In other words, this isn’t just about the conflict minerals rule: these judges are coming for the entire set of transparency laws that help make our stock markets the most trusted in the world. And perhaps they won’t stop there; according to these judges, nearly every disclosure or sunshine law in modern society is now subject to corporate First Amendment challenge. (We’ve seen this before: the D.C. Circuit has also in recent years struck down laws involving warning labels on cigarette packages and employee break-room “know your rights” posters on the basis of corporations’ First Amendment rights.)

Free Speech For People and our amicus partner Global Witness Limited will review the decision and determine next steps.

Download the NAM v. SEC Opinion [PDF]

Image via Global Witness

2 Responses to U.S. Court of Appeals Reaches Decision in National Association of Manufacturers v. U.S. Securities and Exchange Commission

  1. Pingback: A Very Disturbing U.S. Court of Appeals Decision About Corporate Disclosure Rules | ValueEdge Advisors

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