Amicus Curiae Brief — Nike, Inc. v. Kasky

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NOV 7 5 200?

No. 02-575 \

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IN THE ss a

Supreme Court of the United States

NIKE, INC. et ai.,

Petitioners,

Vv.

MARC KASKY,

Respondent.

On Petition for a Writ of Certiorari

to the Supreme Court of California

MOTION OF EXXONMOBIL, BANK OF AMERICA,

MICROSOFT, MONSANTO, AND PFIZER FOR

LEAVE TO FILE BRIEF AMICI CURIAE AND BRIEF

IN SUPPORT OF PETITIONERS

E. Edward Bruce

David H. Remes

Counsel of Record

Covington & Burling

1201 Pennsylvania Avenue, N.W.

Washington, D.C. 20004-2401

(202) 662-6000

Attorneys for Amici Curiae

November 2002

MOTION FOR LEAVE TO FILE BRIEF

AS AMICI CURIAE

Pursuant to this Court’s Rule 37.2(b), ExxonMobil

Corporation, Bank of America, Microsoft Corporation,

Monsanto Company, and Pfizer Inc., respectfully request

leave of this Court to file this brief amici curiae in support

of petitioners. Petitioners have consented to the filing of

this brief; their letter of consent will be lodged with this

Court. Respondent has withheld consent, thus necessitating

this motion.’

ExxonMobil is the world’s largest integrated oil

company, engaged in oil and gas exploration, production,

supply, transportation, and marketing in some 200 countries

around the world.

Bank of America is one of the world’s leading

financial services companies, providing consumer and

commercial banking to one in four households in the United

States and serving clients in over 150 countries.

Microsoft is the worldwide leader in software,

services, and Internet technologies for personal and business

computing.

Monsanto is a leading global provider of agricultural

products and integrated solutions that seek to improve farm

productivity and food quality throughout the world.

, Pursuant to Rule 37.6, amici state that no counsel

representing a party in this case authored this motion or brief in

whole or in part and that no person or entity other than amici or

its counsel made a monetary contribution to the preparation or

submission of this motion or brief.

2

Pfizer, the world’s leading research-based health

care company, discovers, develops, manufactures, and

markets worldwide prescription medicines for both humans

and animals and many of the world’s best-known consumer

brands.

Each of the amici does business in California and,

accordingly, is subject to potential civil and criminal.

liabilities imposed under CAL. BUS. & PROF. CODE § 17200

et seq. and § 17500 et seq.

Like virtually every other large corporate enterprise

in the United States, amici regularly speak out on issues of

public concern and in so doing place before the public facts

about their products, services, or business operations. In

some instances, amici are responding to criticisms; in others,

they are initiating public discussion. But in each such

instance, their speech is an effort to engage public opinion,

not to solicit business.

If a corporation’s every press release, letter to an

editor, customer mailing, op-ed article and website posting

may, under the California statutes at issue here, be the basis

for civil and criminal actions, corporate speakers will find it

difficult to address issues of public concern implicating their

products, services, or business operations-—even to defend

themselves in the court of public opinion when attacked.

Amici's participation in this case will aid the Court in

two ways. First, amici will bring to the Court’s attention the

concern of a diverse group of large businesses that are

constantly in the public eye. Second, amici will explain

why it is imperative that the Court grant review now rather

than wait for the completion of proceedings on remand, as

well as why the Court should refine its commercial speech

doctrine in a fashion that will better serve core First

Amendment values. -

3

Based on the foregoing, amici hereby move to file

this brief amici curiae in support of petitioners in this case.

Dated: November 15, 2002

E. Edward Bruce

David H. Remes

Counsel of Record

Covington & Burling

1201 Pennsylvania Avenue, N.W.

Washington, D.C. 20004-2401

(202) 662-6000

Attorneys for Amici Curiae

ExxonMobil Corporation

Bank of America

Microsoft Corporation

Monsanto Company

Pfizer Inc.

TABLE OF CONTENTS

Page

ET CO CIEE cicriesrnninniiatitnnieinnitnitineniaibdaisamninnminiiebibaneagmaes l

SUMMARY OF ARGUMENT .......:.0.0ccecceccsecscccsscccsccccscosseseese l

i eaceraiessiieitiiisseasieiraiaeasintariertasinepinaaiatnatataaasiaiteaeatl 2

I. THE DECISION BELOW, IF NOT

REVERSED, WOULD HAVE DEVASTATING

IMPACTS ON CORPORATE SPEECH .....0............c00000+ 2

Il. IMMEDIATE REVIEW IS WARRANTED...................... 3

A. As Construed by the California Supreme

Court, the Statutes Chill Speech ....0................ccccccecceeeees 3

B. Review of the Court’s Decision Upholding

the Statutes Should Not Be Delayed............................+. 5

Ill. THE COURT SHOULD REFINE ITS

COMMERCIAL SPEECH DOCTRINE ................ccccccc00-0: 8

SATE TIITT sireutirniersepsinssnniiinsnienteamnminhaianiitaiataiiaaiiesiiiitiaiaiicabiai 16

TABLE OF AUTHORITIES

Page

CASES

44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484

TIE crcintssteninninseeniirentisenitnitasinembiennteatnintis 8,9, 10, 12,14

Bates v. State Bar, 433 U.S. 350 (1977) .........cccccccceeeseeeeeeees 10

Bd. of Trustees v. Fox, 492 U.S. 469 (1989) .........cccccceeseees 10

Bolger v. Youngs Drug Prods. Corp., 463 U.S. 60

TIT csassenneentnnininndiiesnenneneeunnpeneniie 8, 9, 12, 13,14

Central Hudson Gas & Elec. Corp. v. Pub. Serv. Comm'n,

gee 8, 10, 12, 13, 14

City of Cincinnati v. Discovery Network, Inc., 507 U.S.

ee stctnsinanteienenemnapraieindieimapinintnneinienen 9,10, 14

Cox Broad. Corp. v. Cohn, 420 U.S. 469 (1975) ..........cc0004 5

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

Florida Bar v. Went For It, Inc., 515 U.S. 618 (1995)........ 15

Fort Wayne Books, Inc. v. Indiana, 489 U.S. 46 (1989) ....... 6

Greater New Orleans Broad. Ass'n, Inc. v. United States,

gE Ie 8,9

Hewlett v. Squaw Valley Ski Corp., 63 Cal. Rptr. 2d 118

EE 4

In re Factor VIII or IX Concentrate Blood Prods.

Litig., 159 F.3d 1016 (7th Cir. 1998) ............ccccceeeeeeeees 4

In re R.A.V., 464 N.W.2d 507 (Minn. 1991) ..................0.....- 6

Keller v. State Bar, 767 P.2d 1020 (Cal. 1989)..................... 6

Keller v. State Bar, 496 U.S. 1 (1990) ............cccccccccceceeeeeeeeees 6

Leoni v. State Bar, 39 Cal. 3d 609 (1985) ............cccccceeeeeeeees 3

ll

Page

Lorillard Tobacco Co. v. Reilly, 533 U.S. 525

ee 8,9, 10, 12, 14

Miami Herald Publishing Co. v. Tornillo, 418 U.S.

en 6,7

NAACP v. Button, 371 U.S. 415 (1963) ........ccccccccceeeeeeneeneeee 5

Nebraska Press Assoc. v. Stuart, 423 U.S. 1319 (1975)....... 7

Nebraska Press Assoc. v. Stuart, 423 U.S. 1327 (1975)........ 7

Philadelphia Newspapers, Inc. v. Hepps, 475 U.S. 767

SETI hcnesncpsednanemnstentumnmnesatienesitinienennnmannsnmneess 6,7

Pittsburgh Press Co. v. Pittsburgh Comm'n on Human

Relations, 413 U.S. 376 (1973) .........ccccccceeeseeeeeeecenseees 10

R.A.V. v. City of St. Paul, S05 U.S. 377 (1992) ........cccccceeeeeee 6

Rosenbloom v. Metromedia, Inc., 403 U.S. 29 (1971).......... 3

Rubin v. Coors Brewing Co., 514 U.S. 476

FEIT contininnmepncenasaninisinninmsmmannimensneensnenets 8,9, 11,14

Smith v. California, 361 U.S. 147 (1959) ..0.......ccccceceeceeeeeneees 4

Speiser v. Randall, 357 U.S. 513 (1958) .........-.ccccccceeeeeeee 3,9

Thompson v. W. States Med. Ctr., 122 S. Ct. 1497

ee 8, 10, 14, 15

United States v. Playboy Entm't Group, Inc., 529 U.S.

re E 9

United States v. United Foods, Inc., 533 U.S. 405 (2001) .. 10

Va. State Bd. of Pharm. v. Va. Citizens Consumer

Council, 425 U.S. 748 (1976) ..ccccsccsssssssssveees 9, 10, 11, 13

Wainwright v. Stone, 414 U.S. 21 (1973) .ecccccccececccsveesseeeeeeee 5

Winters v. New York, 333 U.S. 507 (1948) .....cccccccccccssevsessoou 5

Zauderer v. Office of Disciplinary Counsel, 471 U.S.

626 (1985) ..ccccccccscsssssssssssssssssssessesssesssssseueseseessnueeesees 9,13

FEDERAL STATUTES

PEE A 5

STATE STATUTES

Cal. Bus. & Prof. Code § 17200 ef $€q ..........cccccccceeeseeeeeeeeees 2

Cal. Bus. & Prof. Code § 17500 et seq. .......... aijiniaiiaaameniaaa 2

oe Re 8 OD OD) OS ae 4

iv

BRIEF AMICI CURIAE

IN SUPPORT OF PETITIONERS

INTEREST OF AMICI

The interest of Amici Curiae is fully set forth in the

Motion that accompanies this brief.

SUMMARY OF ARGUMENT

Review should be granted because the California

statutes, as construed by the California Supreme Court in

this case, burden speech by corporate speakers that lies at

the heart of the First Amendment. The effect of these

statutes on First Amendment freedoms is both immediate

and grave, threatening all corporate speakers with civil and

criminal liability for engaging in protected speech.

The general chilling effect of the statutes exists now

and will continue to exist regardless of the proceedings on

remand. Only this Court can remedy the First Amendment

harms caused by these statutes, and they are harms the Court

should remedy now. The Court has granted review in

similar circumstances on many other occasions, and it

should do so here.

The California court’s decision, by adopting a

definition of “commercial speech” that goes far beyond

anything the Court’s commercial speech doctrine

contemplates, burdens core First Amendment speech. But

the California court’s decision also reflects aspects of the

doctrine that the Court should refine. The degree of First

Amendment protection for a corporation’s speech should not

depend on the category—‘“commercial” or “non-

commercial’—to which the speech is assigned. Here, as in

all other realms of expression, content and context should be

the touchstone of First Amendment analysis.

The fact that this Court has found it necessary to

address the proper application of its commercial speech

doctrine more than two-dozen times since 1976—more than

2

twenty times since it announced the Central Hudson test in

1980, and a dozen times in the last ten years

alone—demonstrates that this Court should bring greater

clarity to the doctrine. The obvious errors in the California

court’s decision on fundamental aspects of the doctrine

make this the appropriate case to do so.

ARGUMENT

L THE DECISION BELOW, IF NOT REVERSED,

WOULD HAVE DEVASTATING IMPACTS ON

CORPORATE SPEECH

A glance at a daily newspaper or a few minutes

watching network news reveals a broad array of issues of

intense public concern, where amici and other comparable

businesses lie at or near the heart of the story. For amici,

such issues range from global warming, the environmental

effects of their operations or products, and human rights

abroad to product safety, biotechnology, health-care costs,

equitable treatment of customers, and diversity in the

workplace. Every one of these issues of public corcern

relates directly or indirectly to the companies’ products,

services, or operations.

The decision below, if left uncorrected, would allow

plaintiffs’ lawyers to surf corporate websites, scan the daily

press, or watch television looking for op-ed articles, press

releases, speeches by management, letters to the editor, and

the like in an attempt to find some statement as to which

questions can at least be raised regarding accuracy. Suits

could then be filed by a single individual seeking to impose

massive liabilities on the corporate speaker in the hope of

being able to convince a California judge or jury that the

statement in fact was inaccurate or, even if accurate, might

be misleading. Without question, the decision below has

enormous consequences for free speech in the United States.

3

Il. IMMEDIATE REVIEW IS WARRANTED

Although the California Supreme Court has

remanded the case to determine whether Nike in fact

violated the statutes as the California court construed them,

this Court necd not, and should not, wait to review the

California Supreme Court’s holding that those statutes, as

thus construed, do not violate the First Amendment.

Immediate review is not only permitted but required to

remove the pall cast now by the statutes on speech by

corporate speakers that lies at the core of the First

Amendment.

A. As Construed by the California Supreme

Court, the Statutes Chill Speech

As construed by the California Supreme Court, even

a corporation’s truthful statements about issues of public

concern involving its products, services, or business

operations are actionable if the plaintiff alleges that the

statements are “either actually misleading or [have] a

capacity, likelihood or tendency to deceive or confuse the

public.” App. 7a (quoting Leoni v. State Bar, 39 Cal. 3d

609, 626 (1985)).

Merely by making such strict-liability allegations, a

public official or a private plaintiff can drag a corporation

into potentially costly, intrusive, and protracted litigation—a

prospect that this Court has repeatedly recognized chills the

exercise of First Amendment rights. See, e.g., Rosenbloom

v. Metromedia, Inc., 403 U.S. 29, 52-53 (1971) (plurality

opinion) (“It is not simply the possibility of a judgment for

damages that results in self-censorship. The very possibility

of having to engage in litigation, an expensive and

protracted process, is threat enough to cause discussion and

debate to ‘steer far wider of the unlawful zone’ thereby

keeping protected discussion from public cognizance.”

(quoting Speiser v. Randall, 357 U.S. 513, 526 (1958))).

And if the corporation’s statements, although believed to be

4

truthful when made, turn out to have been mistaken, or if its

statements, although truthful, are later deemed to have been

misleading or even potentially misleading, the corporation

faces substantial monetary and even criminal sanctions. The

Court has recognized the chilling effect of such strict-

liability rules on speech. See, e.g., Smith v. California, 361

U.S. 147, 150-52 (1959).

The statutes at issue not only chill corporate speakers

seeking to initiate discussion of matters of public concern

involving their products, services, or operations. They also

deter a corporation from responding to criticism, thereby

serving a corporation’s critics as a backup weapon to be

deployed whenever the corporation defends itself against its

critics’ claims. The attorney-fees provisions of California

law, CAL. CIv. PRoc. CODE § 1021.5, combined with the

ease with which plaintiffs’ lawyers can allege violations of

the broadly worded statutes, provide a corporation’s critics

with a financial incentive to use the statutes as just such a

weapon. See generally Hewlett v. Squaw Valley Ski Corp.,

63 Cal. Rptr. 2d 118, 146 (Cal. Ct. App. 1997) (awarding

attorneys’ fees under Civ. Proc. CODE §1021.5 in

plaintiffs’ successful unfair competition action). '

These statutes, as construed by the California court,

are what now confront petitioners and all corporate speakers

over which California’s courts could assert jurisdiction. The

California Supreme Court’s construction “fixes the meaning

’ Cf. In re Factor VIII or IX Concentrate Blood Prods.

Litig., 159 F.3d 1016, 1018 (7th Cir. 1998) (Posner, J.)

(describing “shenanigans” of certain contingent-fee attorneys in

“accus[ing] the lawyers for the class and for the

defendants—groundlessly, as far as we can tellh—of defamation,

bait-and-switch tactics, hoodwinking, infamy, dishonesty,

illegality, intimidation, extortion, hypocrisy, hysteria, and

Marxism”’).

5

of the statute,” Winters v. New York, 333 U.S. 507, 514

(1948), and “puts these words in the statute as definitely as

if it had been so amended by the legislature,” Wainwright v.

Stone, 414 U.S. 21, 23 (1973) (per curiam) (quoting

Winters, 333 U.S. at 514). The words of the California

Supreme Court “are the words of the statute.” NAACP v.

Button, 371 U.S. 415, 432 (1963).

B. Review of the Court’s Decision Upholding

the Statutes Should Not Be Delayed

This Court may exercise certiorari jurisdiction over

the “final” judgment of a state’s highest court. See 28

U.S.C. § 1257(a). The Court has “recurringly” granted

review in cases where “there [were] further proceedings in

the lower state courts to come.” Cox Broad. Corp. v. Cohn,

420 U.S. 469, 477 (1975). In this case, review of the issues

presented in the petition is warranted under Cox. See id. at

482-83.

First, the California Supreme Court fully considered

and squarely resolved the First Amendment issue that is the

subject of this petition. On remand, if Nike prevailed on

nonfederal grounds (no federal issues remaining), the state

court’s decision on the First Amendment issue would go

unreviewed by this Court, and the pall cast by its decision

over all corporate speakers would remain. See id. at 482-85.

Second, a victory for Nike in this Court on the federal issue

now would end the case, thereby preventing a waste of

resources by the parties and the courts. See id. Third, and

most crucially from amici’s_ standpoint, “refusal

immediately to review the state court decision might

seriously erode federal policy.” Jd. at 483.

This Court has repeatedly granted review in cases

like this one where a state court has sustained a state statute

against First Amendment challenge and ongoing state court

proceedings on remand are contemplated. “‘Adjudicating the

proper scope of First Amendment protections has often been

6

recognized by this Court as a ‘federal policy’ that merits

application of an exception to the general finality rule.”

Fort Wayne Books, Inc. v. Indiana, 489 U.S. 46, 55 (1989).

For example, in R.A.V. v. City of St. Paul, 505 U.S.

377 (1992), the Court granted certiorari and reversed the

Minnesota Supreme Court’s ruling that a bias-motivated

crime ordinance was permissible under the First

Amendment, even though the state court, upon upholding

the St. Paul ordinance, had remanded for trial under the

ordinance as interpreted. Jn re R.A.V., 464 N.W.2d 507, 511

(Minn. 1991). Similarly, in Keller v. State Bar, 496 U.S. 1

(1990), the Court granted certiorari and reversed the

California Supreme Court’s decision that the state bar’s use

of dues to finance certain ideological activities was

permissible under the First Amendment, id. at 4-7, 17, even

though the state supreme court had remanded the case to the

trial court for further proceedings. Keller v. State Bar, 767

P.2d 1020, 1033 (Cal. 1989).

In Fort Wayne Books, the Court held that, because

“petitioner could well prevail on nonfederal grounds at a

subsequent trial, and reversal of the ... [state court’s]

holding would bar further prosecution,” 489 U.S. at 55, and

because the case “involve[d] a First Amendment challenge,”

id. at 57, review was proper. In Miami Herald Publishing

Co. v. Tornillo, 418 U.S. 241 (1974), the Court reviewed,

and reversed, the Florida Supreme Court’s decision that the

state’s “right of reply” statute, granting political candidates a

right to equal newspaper space to reply to criticisms, was

permissible under the First Amendment. Jd. at 243-46. The

Court did so in a posture similar to that here: the state

supreme court had remanded to the trial court for further

proceedings on the plaintiff's claim against the newspaper.

Id. at 246. Finally, in Philadelphia Newspapers, Inc. v.

Hepps, 475 U.S. 767 (1986), this Court reviewed a state

court decision construing a state statute to require a

defamation plaintiff to show only fault, not falsity, and

7

sustaining the statute as so construed against First

Amendment challenge. /d. at 771. Although the state court

had remanded for a new trial under the statute as so

construed, this Court grar ed review. Jd. Just as the issue

here is the protected status of petitioners’ speech, the issue

in Hepps was whether defamatory statements not proven

false warranted First Amendment protection. Jd. at 776-77.

* * .

The chilling effect of the California Supreme Court’s

decision exists now and will continue to exist as long as it

remains unreviewed. For that reason, delaying review

“would constitute and aggravate a deprival of ... [First

Amendment] nghts, if any, that the [petitioners] possess and

may properly assert.” Nebraska Press Assoc. v. Stuart, 423

U.S. 1319, 1325 (1975) (opinion of Blackmun, J.) (in

chambers). And “each passing day may constitute a

separate and cognizable infringement of the First

Amendment.” Nebraska Press Assoc. v. Stuart, 423 U.S.

1327, 1329 (1975) (opinion of Blackmun, J.) (in chambers).

Where “uncertainty of the constitutional validity of

[a state statute] restricts the present exercise of First

Amendment rghts.... it would be intolerable to leave

unanswered ... an important question ... under the First

Amendment; an uneasy and unsettled constitutional posture

of [the challenged state statute] could only further harm the

operation of a free press.” Miami Herald, 418 U.S. at 247

n.6. Delay by this Court in granting review would all but

guarantee irreparable injury to petitioners, amici, and

countless other corporate speakers, all of whom, operating

under substantial uncertainty, will have to choose between

engaging in what they believe to be protected speech and

avoiding potential substantial liability under a state statutory

scheme of dubious constitutional validity.

8

For all of these reasons, immediate review of the

California Supreme Court's decision is warranted.

IL |§ THE COURT SHOULD REFINE ITS COMMERCIAL

SPEECH DOCTRINE

Under this Court’s commercial speech cases, “the

degree of protection afforded by the First Amendment

depends on whether the activity sought to be regulated

constitutes commercial or noncommercial speech.” Bolger

v. Youngs Drug Prods. Corp., 463 U.S. 60, 65 (1983).

Speech classified as “commercial” is subject to a less

demanding standard of review, allowing greater regulation,

than speech classified as “noncommercial.” Jd. at 64-65; see

also Central Hudson Gas & Elec. Corp. v. Pub. Serv.

Comm'n, 447 U.S. 557, 562-66 (1980).

This dichotomous approach has _ produced

inconsistent decisions by this Court. For example, the Court

has applied its less demanding standard of review to

commercial speech restrictions even where “the justification

for allowing more regulation of commercial speech” was

lacking. Rubin v. Coors Brewing Co., 514 U.S. 476, 491

(1995) (Stevens, J., concurring); see also, eg., 44

Liquormart, Inc. v. Rhode Island, 517 U.S. 484, 501-04

(1996) (opinion of Stevens, J., joined by Kennedy &

Ginsburg, JJ.); id. at 518 (Thomas, J., concurring); id. at 517

(Scalia, J., concurring).? On the other hand, the Court has

also invalidated commercial speech restrictions the purposes

of which were unrelated to any distinction justifying

differential regulation of commercial and noncommercial

’ See also Thompson v. W. States Med. Ctr., 122 §S. Ct.

1497, 1509 (2002) (Thomas, J., concurring); Lorillard Tobacco

Co. v. Reilly, 533 U.S. 525, 572 (2001) (Thomas, J., concurring);

Greater New Orleans Broad. Ass'n, Inc. v. United States, 527

U.S. 173, 197 (1999) (Thomas, J., concurring).

9

speech. See City of Cincinnati v. Discovery Network, Inc.,

507 U.S. 410, 424 (1993); Greater New Orleans Broad.

Ass'n, Inc. v. United States, 527 U.S. 173, 193-94 (1999).

More generally, commercial speech is anomalously

viewed as subordinate to and less deserving of First

Amendment protection than, for example, the fare offered

on the Playboy Channel. See United States v. Playboy

Entm't Group, Inc., 529 U.S. 803, 813 (2000) (applying

strict scrutiny). And the Court has not provided definitions

of “commercial” and “noncommercial speech,” even though

the category to which the speech is assigned determines its

level of protection. See Bolger, 463 U.S. at 66-68

(enumerating criteria for identifying “commercial speech”.

but emphasizing that none of them is either necessary or

sufficient); see also Lorillard Tobacco Co. v. Reilly, 533

U.S. 525, 575 (2001) (Thomas, J., concurring); 44

Liquormart, 517 U.S. at 521 (Thomas, J., concurring);

Coors, 514 U.S. at 493 (Stevens, J., concurring); Discovery

Network, 507 U.S. at 419-23; Zauderer v. Office of

Disciplinary Counsel, 471 U.S. 626, 637 (1985).°

This is not to say that this Court’s decisions lack

guideposts for determining what the Court has meant by its

references to “commercial speech”: it has meant speech

informing consumers about “who is producing and selling

what product, for what reason, and at what price,” 44

Liquormart, 517 U.S. at 496 (opinion of Stevens, J., joined

by Kennedy, Souter & Ginsburg, JJ.) (quoting Va. State Bd.

of Pharm. v. Va. Citizens Consumer Council, 425 U.S. 748,

765 (1976)); that is, “a communication that does no more

. Cf. Playboy Entm’t Group, 529 U.S. at 817 (“*{TJhe line

between speech unconditionally guaranteed and speech which

may legitimately be regulated, suppressed, or punished is finely

drawn.’ Speiser v. Randall, 357 U.S. 513, 525 (1958). “Error in

marking that line exacts an extraordinary cost.”’).

10

than propose a commercial transaction,” Thompson v. W.

States Med. Ctr., 122 S. Ct. 1497, 1503 (2002) (quoting

Edenfield v. Fane, 507 U.S. 761, 767 (1993)); see also

Lorillard, 533 U.S. at 554 (commercial speech is “speech

proposing a commercial transaction” (quoting Central

Hudson, 447 U.S. at 562)); United States v. United Foods,

Inc., 533 U.S. 405, 409 (2001) (“{[C]ommercial speech [is]

usually defined as speech that does no more than propose a

commercial transaction.”); Discovery Network, 507 U.S. at

423 (“{P]roposal of a commercial transaction [is] ‘the test’

for identifying commercial speech.” (quoting Bd. of Trustees

v. Fox, 492 U.S. 469, 473-74 (1989))). This is the type of

expression for which the commercial speech doctrine was

devised; it was this type of expression, proposing a sale—‘!

will sell you the X prescription drug at the Y price”—that

the Court had previously held to be unprotected, but then

determined should be protected. Va. State Bd. of Pharm.,

425 U.S. at 761; see also Bates v. State Bar, 433 U.S. 350,

364 (1977) (Commercial speech “inform{s] the public of the

availability, nature, and prices of products and services.”);

44 Liquormart, 517 U.S. at 496 (opinion of Stevens, J.,

joined by Kennedy, Souter & Ginsburg, JJ.) (“[A]dvertising

provides consumers with accurate information about the

availability of goods and services.”).

And the Court explained that it is the “commonsense

difference{ J” not between “commercial speech” and

“noncommercial speech,” but between this type of

commercial speech (speech that does “no more than propose

a commercial transaction”) and “other varieties” of speech,

that warrants “a different degree of protection.” Va. State

Bd. of Pharm., 425 U.S. at 771 n.24 (quoting Pittsburgh

Press Co. v. Pittsburgh Comm'n on Human Relations, 413

U.S. 376, 385 (1973)). It is this type of commercial

speech—speech about qualities of the advertiser’s “product

or service”—that the government may insist be truthful, id. ;

that it may require to “appear in such a form, or include such

11

additional information, warnings, and disclaimers, as are

necessary to prevent its being deceptive,” id; and as to

which the prohibition against prior restraints may be

inapplicable, id.* And it is the “commonsense distinction”

between this type of commercial speech and “other varieties

of speech” on which the Court has declared that the Central

Hudson test itself is “based.” Coors, 514 U.S. at 482

* “(T]he commercial advertiser generally knows the

product or service he seeks to sell and is in a position to

verify the accuracy of his factual representations before

he disseminates them. The advertiser’s access to the

truth about his product and his price substantially

eliminates any danger that government regulations of

false or misleading price or product advertising will chill

accurate and nondeceptive commercial expression.”

Coors, 514 U.S. at 495 (Stevens, J., concurring) (emphasis added)

(quoting Va. State Bd. of Pharm., 425 U.S. at 777-78 (Stewart, J.,

concurring)); see also id. at 495 n.4 (“Most of the time, if a seller

is representing a fact or making a prediction about his product,

the seller will know whether his statements are false or

misleading and he will be able to correct them.”) (emphasis

added). Justice Stevens stated that it is not simply a corporation’s

ability to verify particular speech that explains why the First

Amendment permits greater regulation of such speech; such

reasoning would support regulation of any factual statement by a

corporation on any matter within its direct knowledge. As Justice

Stevens stated, it is the combination of the corporation’s ability to

verify what it says about its products or services and “the

immediate harmful impact” of false commercial speech on

consumer transactions that “explain{s] why we tolerate more

governmental regulation of this speech than of most other

speech.” Jd. at 496; see also id. (the concern is that “consumers

may purchase products that are more dangerous than they believe

or do not work as advertised”). The California Supreme Court

mistakenly focused only on the verifiability of a corporation’s

speech and its resistance to chill.

12

(quoting Central Hudson, 447 U.S. at 562). In short, under

Central Hudson it is not all types of commercial speech that

receive lesser protection but only “some types” of

commercial speech (those proposing commercial

transactions) that the government may regulate “more freely

than other forms of protected speech.” 44 Liqguormart, 517

U.S. at 498 (opinion of Stevens, J., joined by Kennedy,

Souter & Ginsburg, JJ.).

The California Supreme Court departed from this

principle when it ruled that a corporation’s speech not about

its products and services as such, but about issues of public

concern involving its products, services, or operations could

be regulated as “commercial speech” simply because the

corporation indirectly aims, through its speech, to promote

its sales and profits. As Justice Thomas observed in a

similar connection, such a justification for regulation of

commercial speech is unduly broad because “[a]lmost

everything a business does has the purpose of promoting the

sale of its products,” with the result that such a justification

of a corporation’s speech would encompass virtually

anything that a corporation might say. Lorillard, 533 U.S.

at 585 (Thomas, J., concurring).

The California Supreme Court fell into its error

because, inferring from Bolger that “commercial speech”

could mean almost anything, it believed that its only

recourse was to consider whether the rationales that this

Court has offered to justify greater regulation of “speech

proposing a commercial transaction” justified similar

regulation of the speech at issue in this case. Those

rationales include a corporation’s ability to verify speech

about itself, and the supposed resistance of its speech to

being chilled because of the corporation’s economic

motivation to speak. The California court expanded the

definition of “commercial speech” subject to regulation as

far as it believed these rationales would allow.

13

The result of the California court’s extrapolation,

however, is a definition of regulatable “commercial speech”

that sweeps far beyond the type of transactional speech for

which the commercial speech doctrine was devised,

encompassing speech on matters of public concern that

proposes no commercial transaction. This Court has never

suggested that such speech may be subject to the same

degree of regulation as speech that does “no more than

propose a commercial transaction.” if that is to be the new

First Amendment rule (which plainly it should not be), it

should be this Court, rather than the California Supreme

Court, that so enlarges the doctrine. If it is not to be the

tule, this Court should disapprove it.°

Bolger is not to the contrary. Bolger merely

affirmed that “commercial speech” subject to regulation

under Central Hudson does not escape such regulation

simply because it “links a product to a current public

debate.” 463 U.S. at 68 (quoting Central Hudson, 447 U.S.

at 563). The Court thus held that the mailings at issue in

that case could be regulated under Central Hudson even

though they contained “discussions of important public

issues.” Jd. at 67-68. But the material in which these

$

If the First Amendment permits a corporation’s speech on

issues of public concern to be regulated as “commercial speech”

under Central Hudson—simply because the speech addresses

issues relating to the corporation’s products, services, or

operations—then the government could insist on pre-screening

materials containing such speech and require that such materials

“appear in such a form, or include such additional information,

warnings, and disclaimers, as are necessary to prevent its being

deceptive.” Va. State Bd. of Pharm., 425 U.S. at 771 n.24; see

also Zauderer, 471 U.S. 626 (upholding such a disclosure

requirement). This absurd, but alarming, result highlights the

fundamental error in the California Supreme Court’s decision.

14

discussions appeared were advertisements. See id. at 62.

Although the Court stated that the informational pamphlets

could not be characterized “merely as proposals to engage in

commercial transactions,” id. at 66, they were at least that

much, and the only question addressed by the Court was

whether their discussion of matters of public concern

transformed them into fully protected speech. By contrast,

the California Supreme Court has held that the First

Amendment permits regulation of speech discussing matters

of public concern that cannot fairly be characterized as

proposals to engage in commercial transactions in the first

place.

Several Members of the Court have expressed

misgivings about the Court’s commercial speech doctrine

and the Central Hudson test that embodies it. See Lorillard,

533 U.S. at 571-72 (Kennedy, J., joined by Scalia, J.,

concurring); 44 Liguormart, 517 U.S. at 522 (Thomas, J.,

concurring); Coors, 514 U.S. at 493 (Stevens, J.,

concurring) (referring to “the misguided approach adopted

in Central Hudson”). It is abundantly clear, after more than

two-dozen cases, that both the doctrine and the test have not

provided the needed guidance. Now is the time and this is

the case “to break new ground.” Thompson, 122 S. Ct. at

1504.

A categorical distinction between “commercial” and

“noncommercial” speech is neither possible nor desirable.

The two types of speech are not distinct: “the difference is a

matter of degree.” Discovery Network, 507 U.S. at 423.

Moreover, what Justice Stevens has called the “artificial[ }”

and “rigid” “commercial/noncommercial distinction,”

Coors, 514 U.S. at 494 (Stevens, J., concurring), simply is

not helpful in determining the appropriate level of protection

for particular speech that includes both commercial and

noncommercial elements. “The complex nature of

expression is one reason why even so-called commercial

speech has become an essential part of the public discourse

15

the First Amendment secures.” Florida Bar v. Went For It,

Inc., 515 U.S. 618, 636 (1995) (Kennedy, J., joued by

Stevens, Souter & Ginsburg, JJ., dissenting).

The Court should replace its Central Hudson test

with a more nuanced approach. Such an approach would

key the standard of First Amendment review not only to the

purpose of a regulation, as several Members of the Court

have urged, but, decisively here, also to the content and

context of the particular “commercial” speech involved. To

serve fully First Amendment values, the Court’s commercial

speech doctrine should prescribe a standard of review “that

reflects the need for distinctions among contexts, forms of

regulation, and forms of speech.” Thompson, 122 S. Ct. at

1515 (Breyer, J., joined by Rehnquist, C.J., and Stevens &

Ginsburg, JJ., dissenting).

And as Justice Brown noted in her dissent, even

“(without abandoning the categories of commercial and

noncommercial speech, the court could develop an approach

better suited to today’s world by recognizing that not .all

speech containing commercial elements should be equal in

the eyes of the First Amendment.” App. 6la (Brown, J.,

dissenting) (suggesting possible standards of review for

regulating corporate speech on issues of public concern).

Review should be granted not only to reverse the

California Supreme Court’s decision but to fashion a

commercial speech doctrine more in keeping with

fundamental First Amendment principles.

16

CONCLUSION

The petition should be granted.

Respectfully submitted,

E. Edward Bruce

David H. Remes

Counsel of Record

Covington & Burling

1201 Pennsylvania Avenue, N.W.

Washington, D.C. 20004-2401

(202) 662-6000

Attorneys for Amici Curiae

ExxonMobil Corporation

Bank of America

Microsoft Corporation

Monsanto Company

Pfizer Inc.

November 2002