Posted on July 9, 2019 (June 18, 2020) Corporate Abuse of Power Share: On July 2d, the U.S. Court of Appeals for the Ninth Circuit upheld mandatory consumer safety warnings for cell phones against a corporate First Amendment challenge by the cell phone industry’s lobbying group. For more details on the background of this case, see our blog post from 2015. The following blog post about the new decision was drafted by Brook Tylka, a summer legal intern at Free Speech For People. The Berkeley Ordinance This case arose after the City of Berkeley passed an ordinance requiring cell phone retailers to display or give customers a notice reading: The City of Berkeley requires that you be provided the following notice: To assure safety, the Federal Government requires that cell phones meet radio frequency (RF) exposure guidelines. If you carry or use your phone in a pants or shirt pocket or tucked into a bra when the phone is ON and connected to a wireless network, you may exceed the federal guidelines for exposure to RF radiation. This potential risk is greater for children. Refer to the instructions in your phone or user manual for information about how to use your phone safely. In response to this ordinance, CTIA – a trade association representing the wireless communications industry – sued. Cell Phone Companies and Jehovah’s Witnesses Although the government cannot force people to speak against their will (as established in a 1943 case and reaffirmed in a 1977 case involving Jehovah’s Witnesses), commercial disclosures for consumers are intended to be given what lawyers call “Zauderer review”—a very light review to ensure that the disclosure requirement is “reasonably related” to a legitimate government interest. But that principle is not always observed. That seems to be what happened in August 2015, when two judges of the D.C. Circuit struck down a disclosure rule that required publicly traded corporations to report whether their products contain “conflict minerals.” As those judges explained, the disclosure was too “controversial.” That decision was just another salvo in a broader corporate assault on public disclosure laws under the First Amendment. The Initial District Court Decision The judge here, however, got it right. He rejected industry’s argument that the Berkeley ordinance should be subjected to “strict scrutiny,” and instead ruled that the Berkeley ordinance should be reviewed under the Zauderer test. In fact, he noted, the ordinance wasn’t even really compelling speech by the cell phone retailers. Because of the required city logo and preface that the information was required by the city, the disclosure fell into a different legal category, called “government speech,” as if the city itself had handed out the flyers. Ultimately, the judge resoundingly rejected virtually all of the cell phone industry’s arguments, including the entire First Amendment claim. He did allow that the specific sentence about potential greater risk for children was probably preempted by a Congressional statute. The City of Berkeley subsequently amended the ordinance to remove the language regarding children’s safety. Further Challenges However, the cell phone industry again challenged the ordinance. In 2016, the district court denied the industry’s request to continue preventing the city from enacting the ordinance, noting that the previously objectionable sentence had been removed. The cell phone industry filed an appeal. Reviewing this appeal in 2017, the United States Court of Appeals for the Ninth Circuit used the Zauderer test to analyze if the ordinance compelled disclosure of information which was reasonably related to a substantial governmental interest and was purely factual. The court concluded that both of these conditions were met. Protecting the health and safety of consumers is clearly a substantial governmental interest and the information provided was factual. CTIA further argued that implementing the ordinance would impose an “undue burden” and cause economic harm to cell phone providers. The court rejected this argument. A cell phone retailer had the freedom to add additional disclosures if they were dissatisfied with the ones written. CTIA did not indicate that any retailer in Berkeley sought to do so. Therefore, the Court of Appeals affirmed the district court’s order denying CTIA’s request to prevent Berkeley from implanting the ordinance. National Institute of Family and Life Advocates v. Becerra In June 2018, the United State Supreme Court issued an opinion in National Institute of Family and Life Advocates v. Becerra. This case involved a challenge to the California Reproductive Freedom, Accountability, Comprehensive Care, and Transparency Act. The Act required licensed clinics primarily serving pregnant women to notify women that California provides free or low-cost health services, including abortion, and provide them with a phone number to call for these services. Unlicensed clinics were required to notify women that the state had not licensed them to provide medical services. The Court determined that the Act unduly burdened protected speech for unlicensed clinics. The Act stated that the facility must call attention to the notice by some method, such as a larger font or a contrasting color, thereby obscuring the facility’s own messaging. The notice requirement applied to all print and digital advertising materials by an unlicensed covered facility. In an illustration of the burden imposed by the Act, the Court noted that a billboard paid for by an unlicensed facility containing the short phrase “Choose Life” would also need to include a statement containing twenty-nine words in as many as thirteen different languages. Newest Decision from the Court of Appeals In light of this decision, the Supreme Court remanded the case back to the Ninth Circuit Court of Appeals. The Court of Appeals issued its opinion on July 2d and again affirmed the district court’s opinion that Berkeley’s required notice was permissible. In its analysis, the court noted that the decision in NIFLA stood for the proposition that the Zauderer standard only applied if the compelled disclosure involved “purely factual and uncontroversial” information and that the compelled speech must relate to the product or service provided by an entity. The court analyzed these new factors and concluded that the required disclosure was uncontroversial (it did not require cell phone providers to take a side in a political controversy, in contrast to the abortion-related disclosures) and directly related to the product. The court also reconsidered whether the Berkeley ordinance was unduly burdensome. It noted that, because the ordinance may be satisfied by a single 8.5 x 11” notice or a 5 x 8” handout, the requirement does not interfere with advertising or threaten to drown out cell phone retailers’ own messaging. What’s Next This decision represents a win in preventing corporations from using the First Amendment to evade consumer protection laws. However, the recent Supreme Court decision in NIFLA demonstrates lingering danger in this field. A corporation can argue that many types of information involve taking sides in a political controversy. For example, Exxon argued that an investigation about their climate change disclosures constituted an attempt to limit “the free exchange of viewpoints and ideas” regarding climate change. A corporation may endeavor to create or enhance a political controversy by funding think tanks and “Astroturf” groups. Corporations will likely use future litigation to test the boundaries of this standard and attempt to avoid informational disclosures. Read our Contaminating the Courts report on how corporations misuse the Constitution to challenge environmental, consumer protection, and other laws. Learn more about Free Speech For People’s legal advocacy fighting back against corporate constitutional personhood claims in the courts. Help pass the 28th Amendment to end corporate misuse of the Constitution. Photo by Adrianna Calvo courtesy of pexels.com.