Amicus Curiae Brief — Nike, Inc. v. Kasky

&)

No. 02-575

In the

Supreme Court of the United States

+

NIKE, INC., et al.,

Petitioners,

Vv.

MARC KASKY,

Respondent.

+

On Petition for a Writ of Certiorari to the

Supreme Court of California

o

MOTION TO FILE BRIEF AMICUS CURIAE

AND BRIEF AMICUS CURIAE OF PACIFIC

LEGAL FOUNDATION, CALIFORNIA

MANUFACTURERS AND TECHNOLOGY

ASSOCIATION, AND CALIFORNIA CHAMBER

OF COMMERCE IN SUPPORT OF PETITIONERS

—

DEBORAH J. LA FETRA

Counsel of Record

Pacific Legal Foundation

10360 Old Placerville Road,

Suite 100

Sacramento, California 95827

Telephone: (916) 362-2833

Facsimile: (916) 362-2932

Counsel for Amici Curiae

Pacific Legal Foundation, et al.

| a eR LT I EE I EET

i>

MOTION FOR LEAVE TO

FILE BRIEF AMICUS CURIAE

Pursuant to this Court’s Rule 37.2(b), Pacific Legal Foun-

dation, California Manufacturers and Technology Association,

and California Chamber of Commerce respectfully request

leave of the Court to file this brief amicus curiae in support of

Petitioners.' Counsel for Nike consents to the filing of this

brief; however, counsel for Kasky withheld consent.

INTEREST OF AMICI CURIAE

Pacific Legal Foundation (PLF) was founded 29 years ago

and is widely recognized as the largest and most experienced

nonprofit legal foundation of its kind. PLF litigates matters

affecting the public interest at all levels of state and federal

courts and represents the views of thousands of supporters

nationwide. PLF is an advocate for limited government,

individual rights, and free enterprise. PLF established a Free

Enterprise Project in which it submits amicus briefs in cases

impacting America’s economic vitality. For example, PLF filed

amicus briefs in Chevron, U.S.A., Inc. v. Echazabal, 122 S. Ct.

2045 (2002), Adams vy. Florida Power Corp., 122 S. Ct. 643

(2001), and Pharmaceutical Research and Manufacturers of

America v. Concannon, Supreme Ct. Docket No. 01-188. PLF

also filed an amicus brief in this case in the court below.

The California Manufacturers and Technology Association

(CMTA) (formerly the California Manufacturers Association)

works to improve and preserve a strong business climate for

California’s 30,000 manufacturers, processors, and technology

based companies. Since 1919, CMTA has worked with state

government to develop balanced laws, regulations, and policies

that stimulate economic growth and create new jobs while

safeguarding the state’s environmental resources. CMTA

' Pursuant to Rule 37.6, Amici Curiae affirm that no counsel for any

party authored this brief in whole or in part and that no person or entity

made a monetary contribution specifically for the preparation or

submission of this brief.

2

represents businesses from the entire manufacturing

community—a segment of California’s economy that

contributes more than $250 billion annually and employs more

than 2 million Californians.

The California Chamber of Commerce is a voluntary,

nonprofit, California-wide business association with more than

15,000 members, both individual and corporate, who represent

virtually every economic interest in the state. Ninety percent of

the Chamber’s members are small- or medium-sized businesses

which it represents before the Legislature, local governing

bodies, and the courts on a broad range of issues affecting

business. The Chamber is involved with legislative, regulatory,

and judicial issues involving corporate free speech and the

business community.

Amici will augment Petitioners’ arguments by illustrating

the wide range of situations that will be affected by the

California Supreme Court’s decision in this case. Justice

Brown’s dissenting opinion below implored this Court to

review this case and to reconsider the current commercial

speech doctrine, which no longer provides adequate guidance

in a time when commercial and noncommercial speech are

blurred beyond the ability of courts to separate them. Amici

believe that this case presents an adequate record as well as

fully developed legal arguments that make this case appropriate

for review by this Court.

3

For all the foregoing reasons, the motion of Pacific Legal

Foundation, California Manufacturers and Technology

Association, and California Chamber of Commerce to file a

brief amicus curiae should be granted.

DATED: November, 2002.

Respectfully submitted,

DEBORAH J. LA FETRA

Counsel of Record

Pacific Legal Foundation

10360 Old Placerville Road,

Suite 100

Sacramento, California 95827

Telephone: (916) 362-2833

Facsimile: (916) 362-2932

Counsel for Amici Curiae

Pacific Legal Foundation, et al.

i

~ QUESTIONS PRESENTED

1. When a corporation participates in a public

debate—writing letters to newspaper editors and to educators

and publishing communications addressed to the general public

on issues of great political, social, and economic

importance—may it be subjected to liability for factual

inaccuracies on the theory that its statements are “commercial

speech” because they might affect consumers’ opinions about

the business as a good corporate citizen and thereby affect their

purchasing decisions?

2. Even assuming the California Supreme Court properly

characterized such statements as “commercial speech,” does the

First Amendment, as applied to the states through the

Fourteenth Amendment, permit subjecting speakers to the legal

regime approved by that court in the decision below?

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED 2... cccccccccccccccccees i

Be PEED ccc ccccccccccccccccces ill

SUMMARY OF ARGUMENT ...............--00008: |

GEE hbeeeuccendeenssdksedesecdscedenseees 2

I. NIKE’S PETITION SHOULD BE

GRANTED SO THIS COURT CAN

ADDRESS A MATTER OF CRITICAL

PUBLIC CONCERN: THE LEVEL OF

SCRUTINY APPLIED TO SPEECH

UTTERED BY BUSINESS INTERESTS ......... 2

Il. THE CURRENT COMMERCIAL SPEECH

DOCTRINE ANALYSIS IS INADEQUATE

APPLIED TO MARKETERS’ INNOVATIVE

PRESENTATIONS OF CORPORATE SPEECH ... 7

A. Marketing and Advertising Are

No Longer Necessarily Identifiable or

Separable from Noncommercial Speech ....... 9

B. Speech Intended to Bolster a

Corporate Image Should Be Fully

Protected Under the First Amendment ....... 16

ED dcundencceccésccoaccasuscedsnunens 20

TABLE OF AUTHORITIES

Page

Cases

44 Liquormart, Inc. v. Rhode Island,

Ber ED Skcuecodecocescutcesenccences 3

Bates v. State Bar, 433 U.S. 350 (1977) ............... ]

Board of Trustees of the State Univ.

v. Fox, 492 U.S. 469 (1989) ........ cece cee eee 1-2

Bolger v. Youngs Drug Product Corp.,

SPEED San debecancecceséandeeses 8, 10

Central Hudson Gas & Elec. Corp. v. Public

Serv. Comm'n, 447 U.S. 557 (1980) ........... 1-3, 7-9

Citizens United for Free Speech Il v. Long

Beach Township Board of Commissioners,

602 F. Supp. 1223 (D.NJ. 1992) ......cccccccccces 8

City of Cincinnati v. Discovery

Network, Inc., 507 U.S. 410 (1993) ............056. 3

Cohen v. California, 403 U.S. 15 (1971) ............... 4

Commodity Trend Serv., Inc. v. Commodity Futures

Trading Comm'n, 149 F.3d 679 (7th Cir. 1998) ....... 3

Dillon v. Legg, 441 P.2d 912 (Cal. 1968) .............. 7

Edenfield v. Fane, 507 U.S. 761 (1993) .............. 10

First National Bank v. Bellotti, 435 U.S. 765 (1978) ..... 4

Ford Motor Co. v. Texas Dept. of Transp.,

eee 16

Foster-Gardner, Inc. v. National Union |

Fire Ins. Co., 959 P.2d 265 (Cal. 1998) ............. 7

Granite Mgmt. Corp. v. Aetna Cas. & Sur. Co.,

37 Fed. Appx. 262, 2002 U.S. App.

LEXIS 10836 (9th Cir. June 4, 2002) ............... 7

iV

TABLE OF AUTHORITIES—Continued

Page

Greater New Orleans Broad. Ass'n v.

United States, 527 U.S. 173 (1999)... 2... 2. eee ee eee 3

Hornell Brewing Co. v. Brady,

819 F. Supp. 1227 (E.D.N.Y. 1993) ............005: 8

Lorillard Tobacco Co. v. Reilly, 533 U.S. 525 (2001)..... 3

McGregor Co. v. Heritage, 631 P.2d 1355 (Or. 1981) .... 6

MD II Entertainment, Inc. v. City of Dallas,

ee A CE ncn cncnccccesoscecccess 8

Molien v. Kaiser Foundation Hospitals,

od ) TTT 7

Montgomery v. Montgomery,

60 S.W.3d 524 (Ky. 2001) .............0 eee 12-13

New York Times v. Sullivan, 376 U.S. 254 (1964) ........ 4

Nordyke v. Santa Clara County,

Lf po se 8 ree 3

Ohralik v. Ohio State Bar Association,

SE TEED SAS eveccuneceeseseecevecese: l

Oxycal Lab., Inc. v. Jeffers,

909 F. Supp. 719 (S.D. Cal. 1995) ............0005. 3

Planned Parenthood Fed'n of America,

Inc. v. Bucci, 1997 U.S. Dist. LEXIS 3338

(S.D.N.Y. Mar. 24, 1997), aff'd, 1998 U.S.

App. LEXIS 22179 (2d Cir. Feb. 9, 1998),

cert. denied, 525 U.S. 834 (1998) ................. 16

Posadas de Puerto Rico Assocs. v.

Tourism Co., 478 U.S. 328 (1986) ............0055. |

Quinn v. Aetna Life & Casualty Co., 482 F. Supp. 22

(E.D.N.Y. 1979), aff'd, 616 F.2d 38 (2d Cir. 1980) ... 19

——

Vv

TABLE OF AUTHORITIES—Continued

Page

Quinn v. Aetna Life & Casualty Co.,

96 Misc. 2d 545, 409 N.Y.S.2d 473 (1978) ...... 18-19

R.A.V. v. City of St. Paul, 505 U.S. 377 (1992) .......... 8

Rubin v. Coors Brewing Co., 514 U.S. 476 (1995) ...... 10

Rutledge v. Liability Ins. Indus..,

487 F. Supp. $ (W.D. La. 1979) ...... ccc ececeess 19

U.S. Healthcare, Inc. v. Blue Cross of Greater

Philadelphia, 898 F.2d 914 (3d Cir.),

cert. denied, 498 U.S. 816 (1990) ..............045. 9

Valentine v. Chrestensen, 316 U.S. 52 (1942) ........... ]

Valley Broadcasting Co. v. United States,

107 F.3d 1328 (Sth Cir. 1997)... ... cece cece eee: 8

Vidal Sassoon, Inc. v. Bristol-Myers Co..,

Se a BED ec ccedccccdnsceceses 20

Village of Schaumburg v. Citizens for a

Better Environment, 444 U.S. 620 (1980)............ ]

Virginia State Bd. of Pharmacy v. Virginia Citizens

Consumer Council, Inc., 425 U.S. 748 (1976) ...... 1,7

W.C. Richards Co. v. Hartford Accident &

Indem. Co., 724 N.E.2d 63 (Ill. 1999)... ............. 7

Ward v. Rock Against Racism, 491 U.S. 781 (1989) ..... 12

Zauderer v. Office of Disciplinary Counsel of

Supreme Court of Ohio, 471 U.S. 626 (1985)....... 8-9

Miscellaneous

Abrams, Floyd, A Growing Marketplace of

Ideas, Legal Times, July 26, 1993, atS28 ......... 2-3

Ad Follies, Advertising Age, Dec. 24, 1990, at24 ...... 10

vi

TABLE OF AUTHORITIES—Continued

Page

Binole, Gina, After Buying MacBlo, Weyerhaeuser

Won 't Commit on Clear-Cutting, Portland Bus. J.

(June 28, 1999) (http://forests.org/archive/

canada-/weywonts.htm) (visited Oct. 24, 2002) ...... 17

Deutsch, Askan, Sports Broadcasting and Virtual

Advertising: Defining the Limits of Copyright

Law and the Law of Unfair Competition,

11 Marq. Sports L. Rev. 41 (2000) ..............-. 13

Edsall, Thomas B., Drug Industry Financing

Fuels Pro-GOP TV Spots, Washington Post,

i ce ees 19

Elliott, Stuart, Real or Virtual? You Call It, '

New York Times, Oct. 1, 1999, atCl .............. 13

Emord, Jonathan W., Contrived Distinctions:

The Doctrine of Commercial Speech in

First Amendment Jurisprudence, Cato

Policy Analysis No. 161 (1991) ............00005- 18

Epstein, Robert, Public-Interest Group

Tilts at Commercial Windmills,

i rr i ee ce eceetesneees 1]

Farber, Daniel, Commercial Speech

and First Amendment Theory,

Fee De Ee Ce DUTT 6 bo hbkecdevcesececs 18

Goldberg, Michelle, Confessions of an

Undercover Drink Fink, Salon (Dec. 9, 1997)

(http://www.salon.com/media-/1997/12/

09media.html) (visited Sept. 28, 2002) ............. 14

Grodin, Joseph R., Are Rules Really Better

Than Standards, 45 Hastings L.J. 569 (1994) ......... 6

Vii

TABLE OF AUTHORITIES—Continued

Page

Harrelson, Michael, The Fat Man Sings:

Meet the 300-Pound Guerrilla of Undercover

Marketing, Nightclub & Bar Magazine

(Feb. 2002) (http://www.nightclub.com/

magazine-/February02/cover.html)

SE SL LEED Scdcnbecodeedceceseosess 14

Hartman, Cathy L. & Beck-Dudley, Caryn L.,

Marketing Strategies and the Search for

Virtue: A Case Analysis of The Body Shop,

International, 20 J. of Bus. Ethics 249-63 (1999)... 17-18

Kershen, Drew L., Professional Legal

Organizations on the Internet: Websites

and Ethics, 4 Drake J. Agric. L. 141 (1999) ......... 16

Khermouch, Gerry & Green, Jeff, Buzz Marketing,

Business Week, July 30, 2001, at54............... 14

Kozinski, Alex, & Banner, Stuart,

Who's Afraid of Commercial Speech,

Fee Pi ee a ET CU ad decdecccctcecsess 4,8, 12

Lin, C.C. Laura, Note: Corporate Image

Advertising and the First Amendment,

GS Be Gees Gee ES PRUE 0 wc ccccccecvescscccs 16

Lively, Donald E., The Supreme Court and

Commercial Speech: New Words with

an Old Message, 72 Minn. L. Rev. 289 (1987)........ 8

Loving, Paul E., The Justice of

Certainty, 73 Or. L. Rev. 743 (1994) ............... 6

Madow, Michael, Private Ownership of

Public Image: Popular Culture and

Publicity Rights, 81 Cal. L. Rev. 125 (1993) ........ 11

Vili

TABLE OF AUTHORITIES—Continued

Page

Nord, Thomas, Stealth marketing—is it the

next big thing or just a big fat flop?,

The Courier-Journal (Louisville, KY)

(August 3, 2001) (http://www.courier-

journal.com/features/columns/popculture/

fe20010803pop.html) (visited Sept. 24, 2002)....... 14

Peterson, Melody, Heartfelt Advice, Hefty

Fees: Side Effects of Celebrity Drug

Pitches Debated, New Y ork Times,

FE, Fes se AE © KG ho 6d wee se ceccdcneaens 11-12

Post, Robert, The Constitutional Status of

Commercial Speech, 48 UCLA L. Rev. 1 (2000) ...... 8

Rees, Victona L., AJDSphobia: Forcing Courts

to Face New Areas of Compensation for Fear

of a Deadly Disease, 39 Vill. L. Rev. 241 (1994)...... 7

Rothenberg, Randall, Now, Novels Are Turning

Promotional, N.Y. Times, Jan. 13, 1989, atDS ...... 1]

Shiffrin, Steven, The First Amendment and

Economic Regulation: Away From a

General Theory of the First Amendment,

Fee a er I CUE ok cece cS cccececévens 3

Smolla, Rodney A., /nformation, Imagery,

and the First Amendment: A Case for

Expansive Protection of Commercial

Speech, 71 Tex. L. Rev. 777 (1993) ............. 9-10

Snyder, Steven L., Note: Movies and

Product Placement: Is Hollywood

Turning Films into Commercial Speech?

ote ee FL Brrr 10-11

ix

TABLE OF AUTHORITIES—Continued

Page

Stafford, Leon/Cox News Service, Use of ‘stealth’

marketing raises questions of ethics

(Aug. 29, 2002) (http://www.coxnews.com/

newsservice-/stories/2002/0829-STEALTH-

ADS-COX.html) (visited Sept. 24, 2002) ........... 1]

Subcomm. on Administrative Practice and Procedure

of the Senate Comm. on the Judiciary, Sourcebook

on Corporate Image and Corporate Advocacy

Advertising, 95th Cong., 2d Sess. 1149(1978) ...... 16

Tincher, Rex, Stealth Marketing in Usenet

News Groups (http://216.239.53.100/

search?q=cache:pra0aYbfAtwC:www.

dnaco.net/~tinc/stealth.htm+stealth+

marketing+usenet&hl=en&ie=UTF-8)

ed eee hte dbeseccknew ius 15

Vranica, Suzanne, Advertising: That Guy

Showing off His Hot New Phone May

Be a Shill, Wall St. J., July 31, 2002, atBl ...... 13-14

Website for Evenflo products,

http://www.evenflo.com/ yb/index.phtm!

ee re |

Website for Gerber products,

http://www.gerber.com/ main.asp

Ce ED ao ka 0 a owns espns teens 15

sn"

1

SUMMARY OF ARGUMENT

In the past 60 years, this Court’s approach to speech

uttered by business interests ranged from zero protection

(Valentine v. Chrestensen, 316 U.S. 52 (1942)), to very high

protection (Virginia State Bd. of Pharmacy v. Virginia Citizens

Consumer Council, Inc., 425 U.S. 748 (1976)), to a four-part

test (Central Hudson Gas & Elec. Corp. v. Public Serv.

Comm 'n, 447 U.S. 557, 564 (1980)), which has itself undergone

revision (Board of Trustees of the State Univ. v. Fox, 492 U.S.

469, 480 (1989) (upholding a regulation outlawing Tupperware

parties on a university campus)). The analyses have differed

depending on the speaker (Bates v. State Bar, 433 U.S. 350, 384

(1977), and Ohralik v. Ohio State Bar Association, 436 U.S.

447, 456 (1978) (lesser protection accorded to attorney

solicitations)) and the social worth of the activity promoted

(Compare Posadas de Puerto Rico Assocs. v. Tourism Co., 478

U.S. 328, 342, 348 (1986) (upholding restnctions on

advertisements for legal gambling facilities), with Village of

Schaumburg v. Citizens for a Better Environment, 444 U.S.

620, 632 (1980) (restrictions on solicitations for chanty struck

down)). The divergent lines of commercial speech

jurisprudence have produced a well of confusion, the most

extreme example of which is the California Supreme Court

decision below.

Looking to the future, corporate speech takes many

different forms and addresses issues far beyond offering to sell

widgets at low, low prices. And even when the speech is fairly

straightforward in its attempt to bolster a bottom line, it is so

frequently intermingled with otherwise protected speech that

courts simply cannot determine where the speech falls in the

tangled web of cases compnsing the “commercial speech

doctrine.” Only this Court can cut through the clutter. This

case presents a perfect opportunity to do so.

For these reasons, the Petition for a Wnt of Certioran to

the California Supreme Court should be granted.

2

ARGUMENT

I

NIKE’S PETITION SHOULD BE GRANTED

SO THIS COURT CAN ADDRESS A MATTER

OF CRITICAL PUBLIC CONCERN:

THE LEVEL OF SCRUTINY APPLIED TO

SPEECH UTTERED BY BUSINESS INTERESTS

The variety and pervasiveness of commercial and mixed

commercial/noncommercial speech present in the market today

cannot be analyzed adequately under the modern commercial

speech doctrine. The decision below relies on this Court’s

cases, but in so doing, unmoors the precedents from the

underlying source—the First Amendment. To prevent

consumers from hearing misleading corporate speech, the

California Supreme Court sought to prevent consumers from

hearing misleading speech by holding that a// corporate speech

deserves only minimal constitutional protection. In Centra/

Hudson Gas & Electric Corp. v. Public Service Commission,

447 U.S. at 566, this Court formulated a four-part test against

which restrictions on commercial speech would be weighed:

For commercial speech to come within [the First

Amendment], [1] it at least must concern lawful

activity and not be misleading. Next, we ask [2]

whether the asserted governmental interest is

substantial. If both inquiries yield positive answers,

we must determine [3] whether the regulation

directly advances the governmental interest asserted,

and [4] whether it is not more extensive than is

necessary to serve that interest.

This Court later expanded Central Hudson’s inherent

flexibility. See, e.g., Board of Trustees of the State Univ. v.

Fox, 492 U.S. at 480 (requiring a “reasonable fit” rather than

the least restnctive means to comply with the fourth prong).

Unfortunately, this flexibility has “left both sides of the debate

with their own well of precedent from which to draw,” Abrams,

3

Floyd, A Growing Marketplace of Ideas, Legal Times, July 26,

1993, at S28. See also Shiffrin, Steven, The First Amendment

and Economic Regulation: Away From a General Theory of

the First Amendment, 78 Nw. VU. L. Rev. 1212, 1222 (1983)

(“commercial speech” was “an empty vessel into which content

is poured”).

Even this Court has been unable to apply the Central

Hudson analysis in any predictable way. See, eg., 44

Liquormart, Inc. v. Rhode Island, 517 U.S. 484, 527 (1996)

(Thomas, J., concurring) (courts have had difficulty in applying

the Central Hudson balancing test “with any uniformity’’); (City

of Cincinnati v. Discovery Network, Inc., 507 U.S. 410, 419

(1993) (“This very case illustrates the difficulty of drawing

bright-lines that will clearly cabin commercial speech in

a distinct category. ... The absence of a categorical definition

.. . [is] also a characteristic of our opinions considering the

constitutionality of regulations of commercial speech.”). Many

lower courts have expressly noted their struggle to apply

Central Hudson. See e.g., Nordyke v. Santa Clara County, 110

F.3d 707, 712 (9th Cir. 1997) (striking down a fairground lease

term prohibiting gun shows, appellate court described this

Court’s commercial speech cases, concluding that “Central

Hudson is not easy to apply”); Commodity Trend Serv., Inc. v.

Commodity Futures Trading Comm'n, 149 F.3d 679, 684 (7th

Cir. 1998) (recognizing “the difficulty of drawing bnght-lines”

(quoting Discovery Network, 507 U.S. at 419)); Oxveal-Lab.,

Inc. v. Jeffers, 909 F. Supp. 719, 724 (S.D. Cal. 1995)

(recognizing “that, often, these definitions will not be helpful

and that a broader and more nuanced inquiry will be required’”’).

Moreover, this Court has noted the entreaties of “certain judges,

scholars, and amici curiae” to repudiate Central Hudson and

“implement[] a more straightforward and stringent test for

assessing the validity of governmental restnctions on

commercial speech.” Greater New Orleans Broad. Ass'n v.

United States, 527 U.S. 173, 184(1999): Lorillard Tobacco Co

v. Reilly, 533 U.S. 525, 554 (2001).

4

The commercial speech doctrine has become nearly

impossible to apply because “commercial speech” is often

extremely difficult, if not impossible, to identify. See Kozinski,

Alex, & Banner, Stuart, Who's Afraid of Commercial Speech,

76 Va. L. Rev. 627, 631 (1990) (Kozinski & Banner). This

Court has long recognized that speech can serve dual functions.

[Mjuch linguistic expression serves a dual

communicative function: it conveys not only ideas

capable of relatively precise, detached explication,

but otherwise inexpressible emotions as well. In

fact, words are often chosen as much for their

emotive as their cognitive force. We cannot sanction

the view that the Constitution, while solicitous of the

cognitive content of individual speech, has little or

no regard for that emotive function which,

practically speaking, may often be the more

important element of the overall message sought to

be communicated.

Cohen v. California, 403 U.S. 15, 26 (1971). The duality of

commercial and noncommercial speech becomes critically

important when overlaid with the Court’s treatment of false or

misleading speech. Traditionally, in the realm of

noncommercial speech, the government is restrained from

acting as the arbiter of truth and falsity and the state may not

punish its citizens for disseminating false noncommercial

information. New York Times v. Sullivan, 376 U.S. 254, 271-72

(1964) (“Authoritative interpretations of the First Amendment

guarantees have consistently refused to recognize an exception

for any test of truth. ... [E]}rroneous statement is inevitable in

free debate, and . . . it must be protected if the freedoms of

expression are to have the ‘breathing space’ that they ‘need . .

. to survive.’ ”); see also First National Bank v. Bellotti,

435 U.S. 765, 777, 783 (1978) (corporations enjoy the same

degree of constitutional protection as individuals for direct

comments on public issues; thus, corporate sponsored editorials

which address the merits of a pending legislation should not be

subject to government regulation of falsity).

5

The court below, in a groundbreaking decision, held that

“when a court must decide whether particular speech may be

subjected to laws aimed at preventing false advertising or other

forms of commercial deception, categorizing a particular

statement as commercial or noncommercial speech requires

consideration of three elements: the speaker, the intended

audience, and the content of the message.” Petitioners’

Appendix (Pet. App.) 17a-18a. The court tries to downplay the

nature of its holding, claiming that it merely means “that when

a business enterprise, to promote and defend its sales and

profits, makes factual representations about its own products or

its own operations, it must speak truthfully.” Pet. App. 2a.

There is, of course, nothing to prevent other courts from

considering this reasoning persuasive enough to depart from the

consumer fraud context to which the court tries to limit it.

Dissenting, Justice Janice Brown took issue with the

current commercial speech doctrine that is dependent on speech

being categorized as either commercial or noncommercial, with

little quarter given to speech that contains elements of both.

Pet. App. 40a (Brown, J., dissenting). | Contemporary

marketing, she argues, involves speech far more intermingled

than segregated: “With the growth of commercialism, the

politicization of commercial interests, and the increasing

sophistication of commercial advertising over the past century,

the gap between commercial and noncommercial speech is

rapidly shrinking.” Pet. App. 41a. She further laments, “I

believe the commercial speech doctrine, in its current form,

fails to account for the realities of the modern world—a world

in which personal, political, and commercial arenas no longer

have sharply defined boundaries.” Pet. App. 42a.

The commercial speech doctrine as currently applied by

this Court and lower courts can lead to highly unpredictable

results, such as the decision below. Pulling a little of this and

a little of that from a variety of this Court’s opinions, a majority

of the California Supreme Court developed a new doctrine

unlike any this Court—or any other court—ever articulated.

Pet. App. 17a (describing the new “limited purpose” definition

6

of commercial speech). When the state of the law reaches this

point, affected parties have no means by which to adapt their

actions or their speech to prevent themselves from running

afoul of the law. This uncertainty chills protected speech as

those fearing liability shy away from expression that might be

construed as “commercial.”

The confusion engendered by the opinion below weighs

heavily in favor of this Court’s review. Stability, certainty, and

predictability are valued because they promote confidence in

the rule of law and make the resolution of disputes a less costly

enterprise. Grodin, Joseph R., Are Rules Really Better Than

Standards, 45 Hastings L.J. 569, 570 (1994). Certainty

achieves fairness to those who rely upon the law, efficiency in

following precedent, and continuity and equality in treating

similar cases equally. McGregor Co. v. Heritage, 631 P.2d

1355, 1366 (Or. 1981) (Peterson, J., concurring). Certainty

promotes business innovation and development by letting firms

know what they can and cannot do. Further, by eliminating

speculation as to what the law is and avoiding a need for

interpretation, clarification, or explanation, certainty promotes

efficiency for businesses and individuals. Loving, Paul E., The

Justice of Certainty, 73 Or. L. Rev. 743, 764 (1994).

The decision of the California Supreme Court cannot be

reconciled with the First Amendment. It can only serve as

authority for other courts to ratchet downward the protection

due not only to commercial speech, but to any speech that has

even the slightest element of commercial gain for the speaker.

Petitioners are correct that the decision below is so outlandish

that no other court in the country can match it for sheer

creativity. See Petition for Wnt of Certiorari (Pet. Cert.) at 24.

But the California Supreme Court is not a backwater tribunal

lacking in influence. Not only does the decision impact any

business whose speech comes within its borders (which is to

say, any national company at the very least), but the decision

provides fodder for lawsuits in other states. California

7

jurisprudence has a deserved reputation for being ahead of the

curve.’ This Court should not let the matter percolate further.

THE CURRENT COMMERCIAL

SPEECH DOCTRINE ANALYSIS IS

INADEQUATE APPLIED TO MARKETERS’

INNOVATIVE PRESENTATIONS

OF CORPORATE SPEECH

A profit motive, in and of itself, does not render speech

unprotected. Virginia Pharmacy, 425 U.S. at 761-62. Instead,

this Court held in Virginia Pharmacy that the speech is reduced

to less-favored status only when it does “no more than propose

a commercial transaction.” /d. at 771 n.24. The Court has thus

far relied on “common sense” to differentiate between

commercial and noncommercial speech. /d The two

“common sense” distinctions are (1) that commercial speech is

more verifiable than other types of speech and (2) that

commercial speech is more durable than other types of speech.

Id., see also Central Hudson, 447 U.S. at 564, n.6. Both

distinctions have been criticized by judges and scholars. See,

* For example, in Foster-Gardner, Inc. v. National Union Fire Ins. Co.,

959 P.2d 265 (Cal. 1998), the California Supreme Court adopted the

minority view that insurers do not have a duty to defend administrative

agency proceedings. This ruling was then followed by the Ninth Circuit

Court of Appeals (Granite Mgmt. Corp. v. Aetna Cas. & Sur. Co., 37

Fed. Appx. 262, 2002 U.S. App. LEXIS 10836 (9th Cir. June -}, 2002)),

and the State of Illinois (W.C. Richards Co. v. Hartford Accident &

Indem. Co., 724 N.E.2d 63 (Ill. 1999)). See also, Rees, Victona L.,

AlDSphobia: Forcing Courts to Face New Areas of Compensation for

Fear of a Deadly Disease, 39 Vill. L. Rev. 241, 249 n.41 (1994), noting

that the trend towards recovery for emotional distress without

accompanying physical injury began with the California Supreme

Court’s decision in Dillon v. Legg, 441 P.2d 912 (Cal. 1968). A

subsequent case, Molien v. Kaiser Foundation Hospitals, 616 P.2d 813

(Cal. 1980), established the California Supreme Court as a trendsetter in

this area of recovery.

e.g., Kozinski & Banner, supra, at 635-38; Lively, Donald E.,

The Supreme Court and Commercial Speech: New Words with

an Old Message, 72 Minn. L. Rev. 289, 296-97 (1987); Post,

Robert, The Constitutional Status of Commercial Speech, 48

UCLA L. Rev. 1, 31-32 (2000). Given that these distinctions

no longer appear a solid foundation for diminished

constitutional protection, and given the innovative new methods

of advertising and marketing in contemporary society, reliance

on a “common sense” approach can lead only to confusion.

In R.A.V. v. City of St. Paul, 505 U.S. 377, 385 (1992),

this Court held that even speech that normally receives less

First Amendment protection may not be regulated such that the

state discnminates on the basis of content or viewpoint.

Several lower courts have either applied or considered applying

R.A.V. to content-based commercial speech restnctions. See,

e.g., Vallev Broadcasting Co. v. United States, 107 F.3d 1328,

1331 (9th Cir. 1997) (citing MD I] Entertainment, Inc. v. City

of Dallas, 28 F.3d 492, 495 (Sth Cir. 1994) (acknowledging

potential application of R.A.V. to content-based commercial

speech regulation)); Hornell Brewing Co. v. Brady, 819 F.

Supp. 1227, 1232-33 (E.D.N.Y. 1993) (applying both 2.4.

and Central Hudson to speech regulation without deciding

which is required); and Citizens United for Free Speech Il v

Long Beach Township Board of Commissioners, 802 F. Supp.

1223, 1232(D.N.J. 1992)(“Itis clear from the Supreme Court's

decision in R.A. Vv. /), that commercial speech must be protected

by the usual strictures against content-based restnctions.”’).

Nonetheless, in Bolger v. Youngs Drug Product Corp.,

463 U.S. 60, 68 (1983) (quoting Central Hudson, 447 U.S. at

$63 n.5), this Court held that “advertising which ‘links a

product to a current public debate’ 1s not thereby entitled to the

constitutional protection afforded noncommercial speech”

because “[ajdvertisers should not be permitted to immunize

false or misleading product information from government

regulation simply by including references to public issues.”

The Court reiterated this holding in Zauderer v. Office of

Disciplinary Counsel of Supreme Court of Ohio, 471 U.S. 626

ee

9

(1985), in which a state supreme court sanctioned a lawyer for

running deceptive newspaper advertisements for his services in

bringing personal injury actions related to use of Dalkon Shield

contraceptives. Because some of the advertisements contained

statements regarding the legal nights of persons injured by the

Dalkon Shield, this Court recognized that such statements “in

another context, would be fully protected speech.” /d. at 637

n.7. Nonetheless, this Court concluded that the advertisements

were still commercial speech subject to lesser protection under

Central Hudson. “{A}dvertising which ‘links a product to a

current public debate’ is not thereby entitled to the

constitutional protection afforded noncommercial speech.” /d.

(quoting Central Hudson, 447 U.S. at 563 n.5). Based on these

cases, the Third Circuit Court of Appeals found that

advertisements by nval health care insurance companies that

included information about health care insurance and

delivery—matters indisputably at the center of public

debate—do not escape the commercial speech category. U.S.

Healthcare, Inc. v. Blue Cross of Greater Philadelphia, 898

F.2d 914, 937 (3d Cir.), cert. denied, 498 U.S. 816 (1990). In

each of these cases, the court suppressed noncommercial speech

related to important public debates for the sole reason that it

was coupled with commercial speech. The patronizing

assumption that people cannot discount speech made by

someone with an interest in a particular outcome has now led to

a California decision in which the corporate side of a public

debate is stifled in its entirety. Pet. App. 3la (Chin, J.,

dissenting) (arguing that Nike's speech is depnved of First

Amendment protection only because the company “competes

not only in the marketplace of ideas, but also in the marketplace

of manufactured goods”’).

A. Marketing and Advernising Are No

Longer Necessarily Identifiable or

Separable from Noncommercial Speech

As a corollary to the government's ability to regulate

commercial transactions, the government also assumes the

ability to regulate commercial speech. See Smolla, Rodney A.,

10

Information, Imagery, and the First Amendment: A Case for

Expansive Protection of Commercial Speech, 71 Tex. L. Rev.

777, 780 (1993). The Court has already conceded that

“commercial speech” is not easily defined. See, e.g., Rubin v.

Coors Brewing Co., 514 U.S. 476, 493 (1995) (Stevens, J.,

concurring) (“[ T]he borders of the commercial speech category

are not nearly as clear as the Court has assumed.”’); Edenfield v.

Fane, 507 U.S. 761, 765 (1993) (“[A]}mbiguities may exist at

the margins of the category of commercial speech.”); and

Bolger, 463 U.S. at 81 (Stevens, J., concurring) (“[T]he

impression that ‘commercial speech’ is a fairly definite category

of communication . . . may not be wholly warranted.”) These

“ambiguities” however, threaten to overcome the rest of the

category.

The speech in this case involved press releases, letters to

the editor, letters to university athletic directors, and the like

descnbing Nike’s overseas labor practices. Pet. App. 21a. Far

from the prototypical commercial speech of offering to sell X

product for Y price, the speech at issue in this case was

intended to rehabilitate a corporate image as well as provide

information to the public on a matter of broad concern.

Extending the lesser protection of the commercial speech

doctrine to this type of speech threatens a wide variety of public

relations communications. These include:

“Product placement,” an arrangement whereby a movie

studio incorporates certain commercial products into its film in

exchange for cash or free use of the product. Snyder, Steven L.,

Note: Movies and Product Placement: Is Hollywood Turning

Films into Commercial Speech? 1992 U. Ill. L. Rev. 301

(1992). For example, in 1990, Disney reportedly charged

advertisers $20,000 to show the product without comment,

$40,000 to show the product and have an actor mention the

product’s name, and $60,000 for an actor to be shown using the

product. /d. at 305 (citing Ad Follies, Advertising Age,

Dec. 24, 1990, at 24).

1]

Product placement began in feature films and television,

but other media have followed suit. For example, author Beth

Ann Herman featured a Maserati in her novel Power City. The

protagonist drives a Maserati whose ““V-6 engine had two

turbochargers, 185 horsepower and got up to 60 in under 7

seconds.” Jd. at 308 (citing Rothenberg, Randall, Now, Novels

Are Turning Promotional, N.Y. Times, Jan. 13, 1989, at D5).

In exchange, a Beverly Hills Maserati dealership threw a

$15,000 party for Herman that attracted nationwide television

coverage. /d. Even record albums are not exempt. Barbara

Mandrell’s album, No Nonsense, was made with the financial

support of the No Nonsense panty hese manufacturer. /d. at

308 n.67 (citing Epstein, Robert, Publi -/nterest Group Tilts at

Commercial Windmills, L.A. Times, June 6, 1991, at F7).

Testimonials became part of main-stream marketing in

the 1920s, when Pond’s cold cream paid “Great Ladies”

(including Mrs. Reginald Vanderbilt and Queen Mane of

Rumania) to sing the praises of the moisturizer in exchange for

contributions to charity. Madow, Michael, Private Ownership

of Public Image: Popular Culture and Publicity Rights, 81 Cal.

L. Rev. 125, 164-65 (1993). Lately, however, it may not be

apparent that those giving testimony are paid to tout the

product. For example, actress Kathleen Turner appeared on

CNN in August, 2002, to discuss her struggles with rheumatoid

arthritis. She failed to mention that the makers of Enbrel, a

drug that battles the condition, paid her to appear. Stafford,

Leon/Cox News Service, Use of ‘stealth’ marketing raises

questions of ethics (Aug. 29, 2002) (http://www.coxnews.

com/newsservice-/stories/2002/0829-STEALTH-ADS-COX.

html) (visited Sept. 24, 2002). Similarly, Lauren Bacall

appeared on “NBC Today,” telling the story of a friend who had

gone blind due to macular degeneration and then discussed a

new drug that could prevent blindness from that cause.

Novartis, the maker of the drug, paid for Ms. Bacall’s

appearance on the show, a fact revealed to the audience by

neither Ms. Bacall nor NBC. Peterson, Melody, Heartfelt

12

Advice, Hefty Fees: Side Effects of Celebrity Drug Pitches

Debated, New York Times, Aug. 11, 2002, § 3, at 1.

Music videos also blur the line between commercial and

noncommercial speech. See Kozinski & Banner, supra, at 641.

Music itself, of course, is entitled to full First Amendment

protection. Ward v. Rock Against Racism, 491 U.S. 781, 790

(1989). A primary function of a music video is to promote the

artist and the song, in hopes of persuading consumers to buy the

album on which the song appears. Yet whether the video is

treated as lesser-protected commercial speech is not obvious

under the Court’s current jumsprudence. The only court thus far

to consider this issue held in Montgomery v. Montgomery, 60

S.W.3d 524, 529 (Ky. 2001), that:

While music videos are not produced pnmarily for

the sale of the video but, rather, the underlying song,

this does not stnp them of their First Amendment

protection. Music videos are in essence mini-movies

that often require the same level of artistic and

creative input from the performers, actors, and

directors as is required in the making of motion

pictures. Moreover, music videos are aired on

television not as advertisements but as the main

attraction, the airing of which, consequently, is

supported by commercial advertisements. Simply

put, the commercial nature of music videos does not

deprive them of constitutional protection.

(Footnote omitted.) This holding provoked a dissent that seems

equally plausible:

A music video stands to an album the same way that

a movie “trailer” or “teaser” stands in relation to a

movie; it represents an attempt to entice a customer

to purchase the right to hear or see the larger work.

Indeed, music videos are “doubly” commercial

speech. MTV, VH1, the Nashville Network, and

other music-video cable channels select and show

the videos that they believe will generate the highest

13

advertising revenue. The video channels’

unwillingness to broadcast controversial matenals—

materials likely to spook boycott-wary advertisers—

provide additional evidence of the essentially

commercial nature of the undertaking.

Id. at 533 (Keller, J., dissenting). The disagreement between

the majority and dissent in Montgomery is significant only

because the categorization of the video impacts the level of

protection to which it is entitled under the First Amendment.

“Virtual advertising” is a form of digital technology that

allows advertisers to insert computer-generated brand names,

logos, or animated images into previously recorded television

programs or movies. Deutsch, Askan, Sports Broadcasting and

Virtual Advertising: Defining the Limits of Copyright Law and

the Law of Unfair Competition, 11 Marq. Sports L. Rev. 41, 42

(2000). It uses computers to place still or video images into

live video broadcasts in real time so that they look as if they are

part of the original scene. For example, several Major League

Baseball teams have made use of virtual advertisements

along the wall behind home plate. /d. (citing Elliott, Stuart,

Real or Virtual? You Call It, New York Times, Oct. 1, 1999,

at Cl). Virtual advertising blurs the line between television

programming aid commercials. /d. at 44.

“Stealth” or “guerilla” marketing is anew way of using

undercover actors to promote a product without the public

being aware that the actors are paid by the product’s

manufacturer. For example, the United States arm of Sony

Ericsson Mobile Communications Ltd. hired men and women

to pose as tourists at tourist attractions in New York City, then

ask passers by to take their picture with Sony’s new

phone/digital camera. Sony also hired attractive women to sit

at opposite ends of a bar in a nightclub and play a computer

game on their phones while engaging other patrons in

conversation about their cool new toy. Under no circumstances

are the actors supposed to tell the passers by or club patrons that

they are employed by Sony. Vranica, Suzanne, Advertising

14

That Guy Showing off His Hot New Phone May Be a Shill, Wall

St. J., July 31, 2002, at B1. Moreover, the actors do not make

any type of sales pitch, they simply demonstrate the product and

make flattering comments about it. /d. Similarly, the public

relations firm representing a new flavored-water brand

dispatched young women fitting the target demographic to

trendy Manhattan bars and clubs to be seen drinking the

specific brand and making favorable comments about it to

unsuspecting bar patrons. Harrelson, Michael, The Fat Man

Sings: Meet the 300-Pound Guerrilla of Undercover Marketing,

Nightclub & Bar Magazine (Feb. 2002) (http://www.

nightclub.com/magazine-/February02/cover.html) (visited

Sept. 24, 2002) (profiling Jonathan Ressler, CEO of Big Fat,

Inc., a public relations firm that is at the vanguard of

undercover marketing techniques). See also Goldberg,

Michelle, Confessions of an Undercover Drink Fink,

Salon (Dec. 9, 1997) (http://www.salon.com/media-/1997/

12/09media.html) (visited Sept. 28, 2002) (first-hand account

of methods used to sell cognac martinis without expressly

offering to conduct a commercial transaction).

This type of marketing is not restricted to high-tech

gadgets and liquor. Record companies may plant attractive

young women in record shops, paid to notice the album in a

customer’s hand and helpfully suggest other artists the customer

may like. Nord, Thomas, Stealth marketing—is it the next big

thing or just a big fat flop?, The Courier-Journal (Louisville,

KY) (August 3, 2001) (http://www.courier-journal.com/

features/columns/popculture/fe20010803pop.html) (visited

Sept. 24, 2002). Scooter companies pay college students to

hang outside coffee shops, striking up conversations with

customers and casually mentioning their new nies.

Khermouch, Gerry & Green, Jeff, Buzz Marketing, Business

Week, July 30, 2001, at 54. Children are given copies of hot

new portable video games, urging them to bring it to class and

show all their frends. /d. at 55.

Providing helpful advice (while selling a little something

on the side) is also a time-honored method of marketing that is

a

15

evolving into a particularly powerful tool on the Internet. Using

this method, an entrepreneur seeks out chat groups on the

Internet that discuss issues related to what he has to sell. For

example, someone who wants to sell bookkeeping software will

find (e.g., through Yahoogroups) groups of people who talk

about finances. He will “lurk” long enough to get a feel for the

group’s discussions, and then start contributing. He will spend

the bulk of his time joining in the discussion and some

percentage correctly answering questions related to his product.

Each of his posts will link to his own webpage where he offers

software for sale. After becoming a trusted member of the

group, he will find occasional opportunities to suggest a

“meeting” via private E-mail to discuss how the software can

meet a particular person’s special needs. Tuincher, Rex,

Stealth Marketing in Usenet News Groups

(http://216.239.53.100/search?q=cache:pra0aYbfAtwC:

www .dnaco.net/~tinc/stealth.htm+stealth+marketing~usenet

&hl=en&ie=UTF-8) (visited Oct. 24, 2002).

Another common incarnation of this technique 1s found on

websites geared toward parents, mothers in particular. Baby

food manufacturers have websites chock full of helpful

information as to when baby should achieve developmental

milestones, adv:ce on how to encourage baby to eat new foods,

health advice for the expectant and breastfeeding mother, and

so on. Some even have a doctor on staff to answer E-mail

inquiries. Of course, the websites also provide information for

purchasing products, but one may peruse the sites at length

without ever making a purchase. See, e.g., Website for Gerber

products, http://www.gerber.com/main.asp (visited Oct. 29,

2002) (home page points readers to information about

nutritional development, new products, and “expert advice,

anytime, day or night”); and Website for Evenflo products,

http://www.evenflo.com/yb/index.phtml (visited Oct. 29, 2002)

(pregnancy tips, introducing solids, better bottlefeeding and

factors to consider when purchasing a breast pump).

16

Websites as commercial speech have not yet generated

much case law,’ but, especially as regards lawyer advertising,

they have generated some law review articles concerned about

whether law firms’ websites are subject to state rules regarding

solicitation. See, e.g., Kershen, Drew L., Professional Legal

Organizations on the Internet: Websites and Ethics, 4 Drake J.

Agnic. L. 141, 145 (1999). (Even if a website is primarily

informational, if the content suggests a solicitation for a

commercial relationship, the website is commercial speech

subject to state regulation.”).

B. Speech Intended to Bolster a

Corporate Image Should Be Fully

Protected Under the First Amendment

Corporate image advertising “describes the corporation

itself, its activities or its views, but does not explicitly describe

any products or services sold by the corporation.” Subcomm.

on Administrative Practice and Procedure of the Senate Comm.

on the Judiciary, Sourcebook on Corporate Image and

Corporate Advocacy Advertising, 95th Cong., 2d Sess. 1149,

1156 (1978), quoted in Lin, C.C. Laura, Note: Corporate

Image Advertising and the First Amendment, 61 S. Cal. L. Rev.

459, 461 (1988). There are, generally, two types of image

advertising. The first is advertising that treats the company

itself as a product to be sold. For example, lumber giant

* See e.g., Ford Motor Co. v. Texas Dept. of Transp., 264 F.3d 493, 505

(Sth Cir. 2001) (court rejected Ford’s challenge to a Texas law

prohibiting the sale of used vehicles via a website as violating its First

Amendment nght to speech); Planned Parenthood Fed'n of America,

Inc. v. Bucci, 1997 U.S. Dist. LEXIS 3338, *6-*12 (S.D.N.Y. Mar. 24,

1997), aff'd, 1998 U.S. App. LEXIS 22179 (2d Cir. Feb. 9, 1998), cert.

denied, 525 U.S. 834 (1998) (defendant, doing business as Catholic

Radio, registered a website at “plannedparenthood.com.” dedicated to

the pro-life position; court held that this use of plaintiff's mark was

commercial speech because it impacted the plaintiff's ability to offer its

own services over the Internet and because the very use of the Internet

is “in commerce” because it requires long-distance, interstate phone lines

to connect).

te sea

17

Weverhaueser has been reviled by environmentalists for clear-

cutting certain forest areas. See, e.g., Binole, Gina, After

Buying MacBlo, Weverhaeuser Won't Commit on

Clear-Cutting, Portland Bus. J. (June 28, 1999) (http:/ forests.

org archive canada-/weywonts.htm) (visited Oct. 24, 2002).

Promoting its image as a responsible steward of the earth,

Weyerhauser publicized its partnership with CARE, a well-

known international relief and development organization.

Together, they will teach “sustainable forestry practices and

environmental stewardship to improve living conditions of

people in developing countnes for current and future

generations.” See http: www.weyerhaeuser.com citizenship-

philanthropy partnershipwithcare.asp (visited Oct. 24, 2002).

This type of image advertising also includes companies

that project an ethos of social responsibility and a political

philosophy that consumers presumably can share and support

through the purchase of the companies’ products. For example,

The Body Shop sells cosmetics and one might reasonably

presume that its communications with the public are intended

to sell soap and moisturizers. The company’s owner contends

that the central mission of business is to improve the world by

not only caring for its work force and customers, but also for its

communities aud the environment. She believes that business

should be a force for social good first, and consider bottom line

profits second. Hartman, Cathy L. & Beck-Dudley, Caryn L.,

Marketing Strategies and the Search for Virtue: A Case

Analysis of The Body Shop, International, 20 J. of Bus. Ethics

249-63 (1999). Thus, The Body Shop’s mission statement

specifies that social, environmental, and political

values are the fundamental bases of exchange with

its constituents. Specifically, the company’s first

commitment is to “social and environmental

change,” and, second, to the “financial and human

needs” of its stakeholders. Further, its product

pledge involves “the protection of the environment,

human and civil mghts” within the cosmetics

industry.

18

ld. Whether it is Weyerhaeuser’s forest management or the

Body Shop’s focus on “natural” skin care reflecting broader

environmental concerns, these businesses are speaking on

relevant issues that do not come close to asking consumers to

buy their products.

The second type of image advertising takes positions on

public issues. As such, it is even further removed from actual

commercial transactions than advertising to promote the

company itself as a product. For example, when inexpensive

Japanese compact cars began to flood the market, American

automakers responded by urging consumers to “buy American.”

When the president of an American automobile company takes

out an advertisement in a newspaper or buys air time on a

network to urge people to “buy American,” he may argue that

by purchasing foreign automobiles Americans are putting other

Americans out of work and that buying his company’s cars is a

patriotic act. The speech is profit motivated; it even proposes

a commercial transaction and directly concerns the economic

interests of the speaker. However, it also touches on matters of

pressing political concern—consumer choice, protectionism,

and free trade. Emord, Jonathan W., Contrived Distinctions:

The Doctrine of Commercial Speech in First Amendment

Jurisprudence, Cato Policy Analysis No. 161 (1991).

“Information about the quality and pnce of some products may

relate to important political issues. For example, a belief that

American cars are over priced influences views on foreign car

import restrictions, on inflationary price increases for domestic

cars, and on the effects of oligopoly ... .” /d. (quoting Farber,

Daniel, Commercial Speech and First Amendment Theory, 74

Nw. U. L. Rev. 372, 382 (1979)).

In Quinn v. Aetna Life & Casualty Co., 96 Misc. 2d 545,

409 N.Y.S.2d 473 (1978), a state court tral judge ruled that an

insurance company’s advertisements blaming high insurance

premiums on large tort damage awards were commercial speech

and, thus, could be enjoined if found to be false or misleading.

Plaintiffs involved in on-going personal injury actions sought

to enjoin Aetna from continuing publication of statements in

ee le te ene. ees + oe

— oo ae

19

certain magazines that criticized the tort system and what Aetna

perceived to be excessive damages awarded in many personal

injury cases on the grounds that the advertisements contained

misleading statements violating New York law. /d. at 549, 409

N.Y.S.2d at 475. Aetna responded that its publications

advocating tort law reform were political expression and fully

protected by the First Amendment. /d. The state judge ruled

that the statements were commercial speech that could be

enjoined if false or misleading. See id. at 553-54, 409 N.Y.S.2d

at 478. The court made its ruling despite Aetna’s purpose to

influence potential jurors to give lower damage awards, rather

than targeting its statement at consumers who might purchase

insurance products. /d. at 554,409 N.Y.S.2d at 478. When the

case was removed to federal district court, Quinn v. Aetna Life

& Casualty Co., 482 F. Supp. 22, 29 (E.D.N.Y. 1979), aff'd,

616 F.2d 38 (2d Cir. 1980) (per curiam), the district court judge

concluded that the advertisements were not commercial speech,

id., and the Second Circuit affirmed. Quinn, 616 F.2d at 40.

The federal district judge concluded that the state court judge

had “engaged in a fundamental misconception by calling the

advertisements here in question ‘commercial speech.’” Quinn,

482 F. Supp. at 29; see also Rutledge v. Liability Ins. Indus.,

487 F. Supp. 5, 8-9 (W.D. La. 1979).

The pharmaceutical industry has also sponsored political

advertisements—“issue ads”—that praise certain candidates’

stands on prescription drug legislation. The advertisements are

prepared and placed by a nonpartisan group called United

Seniors Association, but that group is funded largely by

unrestricted educational grants from the Pharmaceutical

Research and Manufacturers of America (PhRMA). Edsall,

Thomas B., Drug Industry Financing Fuels Pro-GOP TV

Spots, Washington Post, Oct. 23, 2002, at All. The drug

companies that are members of PhRMA undoubtedly would

benefit economically if the positions they are advertising are

enacted into law. Under the California Supreme Court's

analysis, this core political speech could be transformed into

commercial speech entitled to lesser protection.

20

This Court’s current commercial speech jurisprudence

simply is not up to the task of analyzing corporations’

innovative ways of informing the public of their positions on

issues ranging from the companies themselves to raging public

debates. The California Supreme Court’s decision

demonstrates how far afield a court can go while relying on this

Court’s precedents.

+

CONCLUSION

“One of the most delicate tasks a court faces is the

application of the legislative mandate of a prior generation to

novel circumstances created by a culture grown more complex.”

Vidal Sassoon, Inc. v. Bristol-Myers Co., 661 F.2d 272, 273 (2d

Cir. 1981). The current doctrinal framework is ill suited to

handle the wide range of commercial and mixed

commercial noncommercial speech present in the market today.

The decision below represents a distillation of this Court’s

commercial jurisprudence reductio ad absurdem: in its efforts

to prevent consumers from “hearing misleading corporate

speech, the California Supreme Court has essentially outlawed

all corporate speech. The petition for a writ of certiorari to the

California Supreme Court should be granted.

DATED: November, 2002.

Respectfully submitted,

DEBORAH J. La FETRA

Counsel of Record

Pacific Legal Foundation

10360 Old Placerville Road,

Suite 100

Sacramento, Califorma 95827

Telephone: (916) 362-2833

Facsimile: (916) 362-2932

Counsel for Amici Curiae

Pacific Legal Foundation, et al

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