Amicus Curiae Brief — Nike, Inc. v. Kasky

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Text

No. 02-575 ©

In the es

Supreme Court of the United States

—+

NIKE, INC., ef al.,

Petitioners,

Vv.

MARC KASKY,

Respondent.

On Writ of Certiorari to the California Supreme Court

BRIEF AMICUS CURIAE OF PACIFIC LEGAL

FOUNDATION, CALIFORNIA MANUFACTURERS

AND TECHNOLOGY ASSOCIATION, CALIFORNIA CHAMBER

OF COMMERCE, AND NEW ENGLAND LEGAL

FOUNDATION 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,

California Manufacturers

and Technology Association,

California Chamber of

Commerce, and New England

Legal Foundation _

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. Evenassuming 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

SUPE NIEED 5 os ccc cece cccccncccscccsceees i

EE ED sok cece cccccnsccccecececses ili

INTEREST OF AMICI CURIAE ...........cccccccccsecs l

SPUUUET GPW PUUUUPRIIUEIIEUE 5 ccc ccc cccccccescccccces 3

EEE EE SO 4

I. THE CURRENT COMMERCIAL SPEECH

DOCTRINE LEADS TO UNPREDICTABLE,

AND TROUBLING, RESULTS .................... 4

Il. CORPORATE SPEECH PLAYS AN

IMPORTANT ROLE IN A FREE SOCIETY

AND SHOULD THEREFORE ENJOY FULL

FIRST AMENDMENT PROTECTION .............. 8

Il. CENTRAL HUDSON CANNOT ADEQUATELY

PROTECT THE INTERMINGLED SPEECH

PREVALENT IN MODERN, INNOVATIVE

GURNEE PUEDE oc cece scrcccccccscccccecs 14

A. Marketing and Advertising Are No

Longer Necessarily Identifiable or

Separable from Noncommercial Speech ......... 16

B. Speech Intended to Bolster a Corporate

Image Should Be Fully Protected Under

the First Amendment ............sccccccccees 25

eee ee ECU de nb ceyescesscvececececes 29

iil

TABLE OF AUTHORITIES

Page

Cases

44 Liquormart, Inc. v. Rhode Island,

FEF We GO CIID cccccccccccccccccccccccces 3,6

Bates v. State Bar, 433 U.S. 350 (1977) «2.6... ee ee eee 3

Board of Trustees of the State Univ. of

New York v. Fox, 492 U.S. 469 (1989) ............ 3,5

Bolger v. Youngs Drug Product Corp.,

GED UE GOI ccccccccccccccccccccccccs 15,17

Bose Corp. v. Consumers Union of

United States, Inc., 466 U.S. 485 (1984) ........... 13

Central Hudson Gas & Elec. Corp. v.

Public Serv. Comm'n, 447 U.S. 557 (1980) ..... passim

Chevron U.S.A., Inc. v. Echazabal,

TOO TA, FOC ccccccccccccccccqcccccccccces l

Citizens United for Free Speech Il v. Long

Beach Township Board of Commissioners,

802 F. Supp. 1223 (D.N.J. 1992) 2... 6... cc ee ee eee 16

City of Cincinnati v. Discovery Network, Inc.,

Fae Cs FREI cccccccccccccccccccccccess 5-6

Cohen v. California, 403 U.S. 15 (1971) ...........46.- 7

Committee On Children’s Television, Inc. v.

General Foods Corp., 35 Cal.3d 197 (1983) ........ 13

Commodity Trend Serv., Inc. v. Commodity Futures

Trading Comm'n, 149 F.3d 679 (7th Cir. 1998) ....... 6

Crosby v. National Foreign Trade Council,

FOO Us SOD GID cc cccccccccccccccccccccccses 2

EEOC v. Waffle House, Inc., 534 U.S. 279 (2002) ....... 2

TABLE OF AUTHORITIES—Continued

Erznoznik v. City of Jacksonville, 422 U.S. 205 (1975) ... 9

First National Bank of Boston v. Bellotti,

Sar as HED ducbanbaccucckswiadeuccwecdne 7

Ford Motor Co. v. Tex. Dep't of Transportation,

BOO F356 GO GOCE. BOGE) co ccccccccccccccccces 23

Greater New Orleans Broad. Ass'n v.

United States, 527 U.S. 173 (1999) ............0 0 eee 6

Hornell Brewing Co., Inc. v. Brady,

819 F. Supp. 1227 (E.D.N.Y. 1993) ............... 16

Lebron v. Washington Metro. Area Transit Auth.,

Fa ee Oe ie GERI ccc cccccccccesetvesss 8

Licata & Co., Inc. v. Goldberg,

812 F. Supp. 403 (S.D.N.Y. 1993) ..............4.. 8

Lorillard Tobacco Co. v. Reilly, 533 U.S. 525 (2001)..... 6

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

a HO oc cccccccccicteecpecos 16

Montgomery v. Montgomery,

60 S.W.3d 524 (Ky. 2001) .............0c00e. 19-20

Morales v. Trans World Airlines, Inc.,

Se ED cu naukecdcusususataukenaeies 7

Name.Space, Inc. v. Network Solutions, Inc.,

Bee Ce FEO CBG BOOED oc ccccccvcscccevcccess 24

New York Times v. Sullivan, 376 U.S. 254 (1964) ........ 7

Nordyke v. Santa Clara County,

SO Sade COW GE SOE cece ccécteceocnccces 6

Northern Sec. Co. v. United States,

Ses GET Sntcodundeasbansasduuaueese 29

TABLE OF AUTHORITIES—Continued

Page

Ohralik v. Ohio State Bar Association,

GO See SED Kh ccnccccesecscascccccecesces 3

Pacific Gas & Electric Co. v. Public Utilities

Commission, 475 U.S. 1 (1986) ..........6.65. 11-12

Palazzolo v. Rhode Island, 533 U.S. 606 (2001) ......... 2

Pittsburgh Press Co. v. Pittsburgh Comm'n

on Human Relations, 413 U.S. 376 (1973) .......... 14

Planned Parenthood Fed’n of America, Inc. v.

Bucci, No. 97 Civ. 0629 (KMW), 1997 U.S. WL

133313 (S.D.N.Y. Mar. 24, 1997), aff'd, 152 F.3d

920 (2d Cir.), cert. denied, 525 U.S. 834 (1998) ..... 24

Police Dep't of Chicago v. Mosley,

Gs SEED cdcccenccesccccocesessecous 7,9

Posadas de Puerto Rico Assocs. v. Tourism Co.,

SI DEED cccenccces cessecsecevceccesse 3

Procter & Gamble Co. v. Chesebrough-Pond's Inc.,

588 F. Supp. 1082 (S.D.N.Y.), aff'd, 747 F.2d

il: le & FREPPPPTTTT TTT TTT TT TTT 8

Quinn v. Aetna Life & Casualty Co.,

482 F. Supp. 22 (E.D.N.Y. 1979),

aff'd, 616 F.2d 38 (2d Cir. 1980) .............. 28-29

Quinn v. Aetna Life & Casualty Co.,

96 Misc. 2d 545, 409 N.Y.S.2d 473 (1978) ...... 27-29

R.A.V. v. City of St. Paul, 505 U.S. 377 (1992) ........-. 16

Rubin v. Coors Brewing Co., 514 U.S. 476 (1995) ... 16-17

Rudisill v. Flynn, 619 F.2d 692 (7th Cir.1980) .......... 8

TABLE OF AUTHORITIES—Continued

Page

Rutledge v. Liability Ins. Indus.,

487 F. Supp. 5 (W.D. La. 1979) .........eceeeees 29

Suzuki Motor Corp. v. Consumers Union of United

States, Inc., 292 F.3d 1192 (9th Cir. 2002) .......... 14

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

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

cert. denied, 498 U.S. 816 (1990) ................. 15

United States v. Bell, No. 1:CV-01-2159,

2003 WL 102610 (M.D. Pa. Jan. 10,2003) ......... 24

United States v. O’Brien, 391 U.S. 367 (1968) ......... 30

Valentine v. Chrestensen, 316 U.S. 52 (1942) ........... 3

Valley Broadcasting Co. v. United States,

Se See CE as SEED oc nccccececcceseccece 16

Village of Schaumburg v. Citizens for a Better

Environment, 444 U.S. 620 (1980) ................. 3

Virginia State Bd. of Pharmacy v.

Virginia Citizens Consumer

Council, Inc., 425 U.S. 748 (1976) ........... 3, 14,17

Ward v. Rock Against Racism, 491 U.S. 781 (1989) ..... 19

Zauderer v. Office of Disciplinary Counsel of

Supreme Court of Ohio, 471 U.S. 626 (1985)........ 15

Statutes

Cal. Bus. & Prof. Code § 17200 ...............0005s 13

United States Supreme Court Rules

3} t PEPPTTTTTTTTT TTI TTT TTT TTT iT l

DEED asncceseccdenceseceesecéeuesenesescesouss l

Vii

TABLE OF AUTHORITIES—Continued

Page

Miscellaneous

Abrams, Floyd, A Growing Marketplace of Ideas,

Legal Times, July 26, 1993, at S28 ................. 5

Ad Follies, Advertising Age, Dec. 24, 1990, at24 ...... 17

Beech Nut products, http://www.beechnut.com/

feeding/index.htm (visited Feb. 12, 2003) .......... 23

BeVier, Lillian R., Competitor Suits for False

Advertising under Section 43(a) of the Lanham

Act: A Puzzle in the Law of Deception,

See es Pn ckeseceecdbcedenseducsecne 10

Bhagwat, Ashutosh, Hard Cases and the

(D)Evolution of Constitutional Doctrine,

Pe SE Es ocecceccencesscessss 29

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) ............. 25

Brown, Ed, Hold the Olives: Martini Marketing,

Eg on cc ceenceueused ses 22

CBSNEWS.com, Stars Profit from Covert Drug |

Pitches, Aug. 29, 2002 (http://www.cbsnews.com/

stories/2002/08/29/entertainment/main520196.shtml)

Sn CMD cscccntccousncesecesssess 19

CNN, Environmental campaigners take aim at oil

companies (May 30, 2002) (http://www.cnn.com/

2002/WORLD/europe/05/30/oil.environment.

groups.glb/index.html) (visited Jan. 29, 2003) ..... .. 10

Craswell, Richard, /nterpreting Deceptive Advertising,

SP es Os Cs Ge CUED cc ccccnccccccessceeens 10

Vili

TABLE OF AUTHORITIES—Continued

Page

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) ................ 21

Edsall, Thomas B., Drug Industry Financing

Fuels Pro-GOP TV Spots, Washington

Pe th a MEE on ccdcaeckbesueedsceses 29

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

& 8 8 Ul} rer 21

Emord, Jonathan W., Contrived Distinctions:

The Doctrine of Commercial Speech in First

Amendment Jurisprudence, Cato Policy Analysis

ey PEE ceddsbickednesewssinedesaneenses 27

Epstein, Robert, Public-Interest Group Tilts at

Commercial Windmills, L.A. Times, June 6, 1991,

Farber, Daniel, Commercial Speech and First

Amendment Theory, 74 Nw. U. L. Rev. 372 (1979) ... 27

Faulk, Richard O., A Chill Wind Blows: California's

Supreme Court Muzzles Corporate Speech,

15 Andrews AIDS Litig. Rep. 10(2002) ........... 12

Fierman, Jaclyn, The Big Muddle in Green

Marketing, Fortune, June 3, 1991, at91 ............. 9

Gartner, Michael G., Advertising and

the First Amendment (1989) ..........000000e00es 11

Gerber products, http://www.gerber.com/main.asp

I I i a eS oa i ed os 23

TABLE OF AUTHORITIES—Continued

Page

Goldberg, Michelle, Confessions of an Undercover

Drink Fink, Salon (Dec. 9, 1997)

(http://www.salon.com/media/1997/12/09

media.html) (visited Sept. 28, 2002) ...........+45. 22

Gollin, Andrew S., Comment Jmproving the Odds of

the Central Hudson Balancing Test: Restricting

Commercial Speech as a Last Resort,

81 Marg. L. Rev. 873 (1998)... 6... cece eee ee eee 1]

Gurevitch & Blumler, Political Communication

Systems and Democratic Values, Democracy

and the Mass Media (1990) ............++eeeee0- 8-9

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) .......cccsesevevvvees 21-22

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

Marketing Strategies and the Search for Virtue:

A Case Analysis of The Body Shop, International,

20 J. Bus. Ethics 249 (1999) .. 0... cc cece cece eee 26

Hearings Before the Subcomm. on Oversight

and Investigations of the House Comm.

on Energy and Commerce, 102d Cong.,

bet Seas. 3 (Sept. 12, 1991) 0. cccecccccccccces 25-26

Helberg, Daniel, Note and Comment Butt Out: An

Analysis of the FDA's Proposed Restrictions on

Cigarette Advertising under the Commercial-Speech

Doctrine, 29 Loy. L.A. L. Rev. 1219 (1996)......... 18

rABLE OF AUTHORITIES—C ontinued

Page

Hoch, David & Franz, Robert, Eco-porn Versus

the Constitution: Commercial Speech and the

Regulation of Environmental Advertising,

Be ee a a OE 0 Gea wo ved awek cen KO's 9-10

Howard, Alan, The Constitutionality of Deceptive

Speech Regulations: Replacing the Commercial

Speech Doctrine with a Tort-based Relational

Framework, 41 Case Western Res. L. Rev.

1093 (1991)

- - awewtrtnertnpAewy. esr, @tanuweteyvy Ft 2a eVe Be ee ee AP A eS

http://www.weyerhaeuser.com/citizenship- philanthropy

partnershipwithcare.asp (visited Oct. 24, 2002) ...... 25

Kavalauskas, Juanita S. & Kahane, Charles J.,

Nat’l Highway Traffic Safety Admin. Report

No. DOT HS 809 208, Evaluation of the

American Automobile Labeling Act (2001).......... 27

Kershen, Drew L., Professional Legal Organizations

on the Internet: Websites and Ethics,

De ts SU En OE CRED ik wawaeésesaneaness 24

Khermouch, Gerry & Green, Jeff, Buzz Marketing,

Sk, Sees Dk I OD kek ddd ae s¥enssa0s Oe

Kozinski, Alex & Banner, Stuart, Who's

Afraid of Commercial Speech,

76 Va. L. Rev. 627 (1990) ......%........ 6, 14, 19, 30

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

Advertising and the First Amendment,

fF fe Fe OF Ce PPP TT TUTE TT TTT 25

Lively, Donald E., The Supreme Court and

Commercial Speech. New Words with an

Old Message, 72 Minn. L. Rev. 289 (1987) ......... 14

TABLE OF AUTHORITIES—C ontinued

Page

Lyons, Daniel, Play it Again, TiVo, Forbes

(Jan. 28, 2003) (http://www.forbes.com/2003/

01/28/cz_dl_ 0128tivo.html) (visited Feb. 5, 2003) .... 18

Madow, Michael, Private Ownership of Public

Image: Popular Culture and Publicity

Rights, $1 Cal. L. Rev. 123 (IDPS) .... cnn cecsceses 19

Nord, Thomas, Stealth marketing—is it the next

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

Journal (Louisville, KY) (Aug. 3, 2001)

(http://www.courier-journal.com/features/

columns/popculture/fe20010803pop.html

CP: vc ccd nkvnsceinssadsonens ON

Parloff, Roger, /s Fat the Next Tobacco?: For

Big Food, the Supersi.ing of America is

Becoming a Big Headache, Fortune

(Jan. 21, 2003) (http://www. fortune.com/

fortune/articles/0,15114,409670-2,00. html)

I I oe a eo oe eee ee 13

Peterson, Melody, Drug Companies Turn to

Celebrities for Advertising, N.Y. Times,

Aug. 14, 2002 (http://www. bayarea.com/mld/

cctimes/3857601.htm) (visited Feb. 12, 2003) ....... 19

Post, Robert, The Constitutional Status of Commercial

Speech, 48 UCLA L. Rev. 1 (2000) ............ 14-15

Procter & Gamble, New Media Age,

| ee OM BEET ETT TT TTT TTT TE TTT 18

Rapid Response Program, http://www.restaurant.org/

pressroonrrrlist.cfm (visited Feb. 8, 2003) ....... 12-13

Xil

TABLE OF AUTHORITIES—Continued

Page

Redish, Martin H., First Amendment Theory

and the Demise of the Commercial Speech

Distinction: The Case of the Smoking

Controversy, 24 N. Ky. L. Rev. 553 (1997) .... 9, 11, 14

Rothenberg, Randall, Now, Novels Are Turning

Promotional, N.Y. Times, Jan. 13, 1989, atD5 ... 17-18

Roush, Chris, Red Necks, White Socks, and Blue-Chip

Sponsors, Bus. Wk., Aug. 15, 1994, at 74 .......... 18

Shelledy, David, Autonomy, Debate, and Corporate

Speech, 18 Hastings Const. L.Q. 541 (1991) ......... 8

Shiffrin, Steven, The First Amendment and Economic

Regulation: Away From a General Theory of the

First Amendment, 78 Nw. U. L. Rev. 1212 (1983) ..... 5

Smolla, Rodney A., /nformation, Imagery, and the First

Amendment: A Case for Expansive Protection of

Commercial Speech, 71 Tex. L. Rev. 777 (1993) ..... 16

Snyder, Steven L., Note: Movies and Product

Placement: Is Hollywood Turning

Films into Commercial Speech?,

4 8 FR RF reer Tere 17-18

Strasburg, Jenny, Ban on Israeli goods has shoppers

in uproar: Some demand Rainbow co-op end

boycott, S.F. Chron., Dec. 5, 2002, at B-1 .......... 10

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) ...... 25

TABLE OF AUTHORITIES—Continued

Page

Sweet, Jesse H., Attorney Advertising on the

Information Superhighway: A Crash Course

in Ethics, 24 J. Legal Prof. 201 (2000) ............. 24

Tincher, Rex, Stealth Marketing in Usenet News

Groups (http://www.tincher.to/ stealth.htm)

I re er en 23

Vranica, Suzanne, Advertising: That Guy Showing

off His Hot New Phone May Be a Shill,

ee ee i, I 6 4 6c Coewestdccdéeviwdcs 21

WU DOTTIE ov occ ccc cccccceccescseces 10

Yudof, M., When Government Speaks (1983) ........... 9

——

INTEREST OF AMICI CURIAE

Pacific Legal Foundation, California Manufacturers and

Technology Association, California Chamber of Commerce,

and New England Legal Foundation respectfully file this brief

amicus curiae in support of Petitioners.'

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. For example, PLF filed

amicus briefs in Chevron U.S.A., Inc. v. Echazabal, 536 U.S. 73

(2002), Nevada Department of Human Resources v. Hibbs,

Supreme Ct. Docket No. 01-1368, 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 and supporting the petition

for a writ of certiorari.

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 this Court’s Rule 37.3(a), all parties have consented to

the filing of this brief. Letters evidencing such consent have been

filed with the Clerk of the Court.

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.

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.

New England Legal Foundation (NELF) is a nonprofit

public interest law firm, incorporated in Massachusetts in 1977.

Its membership consists of large and small corporations from all

parts of New England and the United States, law firms, and

individuals who believe in NELF’s mission of promoting

balanced economic growth for New England, protecting the free

enterprise system, and defending economic rights. NELF

regularly appears before this Court in cases raising issues of

general economic significance to the national business

community. See, e.g, EEOC v. Waffle House, Inc., 534 U.S.

279 (2002); Palazzolo v. Rhode Island, 533 U.S. 606 (2001);

and Crosby v. National Foreign Trade Council, 530 U.S. 363

(2000).

Amici will augment Nike’s arguments by illustrating the

wide range of situations that will be affected by the California

Supreme Court's decision in this case. Amici also urge the

Court to abandon 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.

SUMMARY OF ARGUMENT

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

uttered by business interests has 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. of New York v.

Fox, 492 U.S. 469, 480 (1989) (upholding a regulation

outlawing Tupperware parties on a university campus); 44

Liquormart, Inc. v. Rhode Island, 517 U.S. 484, 504 (1996)

(when a regulation constitutes a blanket prohibition against

truthful, nonmisleading speech about a lawful product and the

ban serves an interest unrelated to consumer protection, it will

be subject to a heightened form of First Amendment scrutiny

akin to strict scrutiny.)). There have been conflicting analyses

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) (restrictions on advertisements for

legal gambling facilities do not violate the first amendment)

with Village of Schaumburg v. Citizens for a Better

Environment, 444 U.S. 620, 632 (1980) (restrictions on

solicitations for charity 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. Even when the speech is fairly

straightforward in its attempt to bolster the 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 comprising the “commercial speech

doctrine.” The decision of the California Supreme Court cannot

be reconciled with the First Amendment. It can serve only 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.

The decision below should be reversed.

ARGUMENT

THE CURRENT COMMERCIAL

SPEECH DOCTRINE LEADS TO

UNPREDICTABLE, AND TROUBLING, RESULTS

The commercial speech doctrine as currently applied by

this Court and lower courts can lead to highly unpredictable

results, with the majority opinion below identified as Exhibit A.

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. Petitioners’ Appendix (Pet. App.) at

17a (describing the new “limited purpose” definition of

commercial speech). The court below 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.” Pet. App. at 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. at 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.

The decision below is the result of this Court’s oft-

changing, but mostly derisive, approach to corporate speech. In

Central Hudson Gas & Electric Corp. v. Public Service

Commission of New York, 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. of

New York v. Fox, 492 U.S. at 480 (requiring a “reasonable fit”

rather than the least restrictive 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,”

Floyd Abrams, A Growing Marketplace of Ideas, Legal Times,

July 26, 1993, at S28. See also Steven Shiffrin, The First

Amendment and Economic Regulation: Away From a General

Theory of the First Amendment, 78 Nw. U. L. Rev. 1212, 1222

(1983) (“commercial speech” was “an empty vessel into which

content is poured”).?

? Justice Blackmun thought that Central Hudson's “chickens have

come home to roost” when Cincinnati banned commercial

newsstands for the sole reason that commercial speech was deemed

less valuable than other speech. City of Cincinnati v. Discovery

(continued...)

This Court has been unable to apply the Central Hudson

analysis in any predictable way. See, e.g., 44 Liquormart, 517

U.S. at 527 (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. at 419-20 (“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 Cou. ty, 110

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

term prohibiting gun shows, appellate court described this

Court’s commercial speech cases, concluding that “the Central

Hudson test is not easy to apply”); see also Commodity Trend

Serv., Inc. v. Commodity Futures Trading Comm'n, 149 F.3d

679, 684 (7th Cir. 1998) (quoting Discovery Network, 507 U.S.

at 419). 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 restrictions 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).

| The commercial speech doctrine has become nearly

impossible to apply because “commercial speech” is often

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

Kozincki & Stuart Banner, Who's Afraid of Commercial

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

2 (...continued)

Network, Inc., 507 U.S. 410, 436 (1993) (Blackmun, J., concurring).

This sentiment applies with equal validity to the California Supreme

Court’s decision below.

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. See, e.g., Police Dep't

of Chicago v. Mosley, 408 U.S. 92, 95 (1972) (“{T]he First

Amendment means that government has no power to restrict

expression because of its message, its ideas, its subject matter

or its content.”). Moreover, the state may not punish its citizens

for disseminating false noncommercial information. New York

Times v. Sullivan, 376 U.S. 254, 271-72 (1964) (“erroneous

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 of Boston v. Bellotti, 435 U.S. 765, 777,

783 (1978) (corporations enjoy same degree of constitutional

protection as individuals for direct comments on public issues;

thus, corporate sponsored editorials should not be subject to

government regulation of falsity); Morales v. Trans World

Airlines, Inc., 504 U.S. 374, 389-90 (1992) (noting the

difficulty in regulating only “false” advertising); Procter &

Gamble Co. v. Chesebrough-Pond’s Inc., 588 F. Supp. 1082,

1094 (S.D.N.Y.), aff'd, 747 F.2d 114 (2d Cir. 1984) (“courts are

not always able to determine whether an advertising claim is

true or false”); Licata & Co., Inc. v. Goldberg, 812 F. Supp.

403, 408 (S.D.N.Y. 1993) (“Robust debate between competitors

... [is] encouraged as part of the hurly-burly inherent in a free

market system, and indeed an open society.”). Cf Lebron v.

Washington Metro. Area Transit Auth., 749 F.2d 893, 898-99

(D.C. Cir.1984) (suggesting that First Amendment prohibits

governmental assessment of the deceptiveness of political

speech); Rudisill v. Flynn, 619 F.2d 692, 694 (7th Cir.1980)

(footnote omitted) (“We do not regard intentional

misstatements of fact made during an election campaign as

‘election frauds’ in the ordinary sense. The merits of a ballot

issue are matters reserved for public and private discussion and

debate between opponents and proponents.”). Courts’

difficulties in ascertaining the truth or falsity (much less-

misleading nature) of corporate speech leads to highly

unpredictable results. The decision of the court below, which

would subject all corporate speech to this analysis, is

unworkable as a constitutional doctrine.

CORPORATE SPEECH PLAYS AN

IMPORTANT ROLE IN A FREE SOCIETY

AND SHOULD THEREFORE ENJOY FULL

FIRST AMENDMENT PROTECTION

_ Corporate speech enriches public debate by counteracting

the dominance of the few media megacorporations, and of

government officials who can command free access to the press

and other means of disseminating information simply by virtue

of their position. David Shelledy, Autonomy, Debate, and

Corporate Speech, 18 Hastings Const. L.Q. 541, 571-72 (1991)

(citing Gurevitch & Blumler, Political Communication Systems

and Democratic Values, in Democracy and the Mass Media

277-78 (1990); M. Yudof, When>Government Speaks 6-9

(1983)). Given that most individual citizens either cannot or

choose not to compete in public debates dominated by the press

and the government, adding a component of corporate speech

provides “a more diverse discourse than a debate dominated by

two, so long as the third does not merely echo the others.” /d.

at 571-72 (citing M Yudof, supra, at 90-110, 161-64).

Government may not shut off one side of a public debate

because of disagreement with the position sought to be

expressed. See, e.g., Erznoznik v. City of Jacksonville, 422 U.S.

205 (1975); Mosley, 408 U.S. 92. Relegating commercial

speech to second-class status accomplishes the same thing,

allowing the government to skew the democratic process to

achieve a preordained result and reflecting a mistrust of

citizens’ ability to make personal choices based on free and

open debate. Martin H. Redish, First Amendment Theory and

the Demise of the Commercial Speech Distinction: the Case of

the Smoking Controversy, 24 N. Ky. L. Rev. 553, 579-80

(1997).

Worse, by permitting restrictions on commercial speech,

the Court assumes that consumers are unable to separate the

wheat from the chaff. There are two problems with this

approach. First, consumers frequently demonstrate their ability

to view corporate speech with an awareness of the self-

interested source of the information. For example, a marketing

trend arose in the 1980s and 1990s in which many companies

sought to profit from appearing to be ecologically sensitive by

“frantically relabeling, repackaging, and repositioning

products.” David Hoch & Robert Franz, Eco-porn Versus the

Constitution: Commercial Speech and the Regulation of

Environmental Advertising, 58 Alb. L. Rev. 441, 442 (1994)

(citing Jaclyn Fierman, The Big Muddle in Green Marketing,

Fortune, June 3, 1991, at 91). In 1990, a survey noted that 26%

of all new household items “boasted that they were

ozone-friendly, recyclable, biodegradable, compostable, or

some other shade of green.” Jd Despite these claims, an

environmental research organization found that “nearly 47% of

consumers dismiss environmental claims as ‘mere

gimmickry.’” Jd. Given the time and space limitations of the

various media outlets, advertising copy is necessarily

incomplete. Most advertisements contain more than one

message with different meanings to different people. See

Richard Craswell, Interpreting Deceptive Advertising, 65 B.U.

L. Rev. 657, 672-76 (1985). “Consumers are wary whenever

they discern that the self-interest of the advertiser would be

served by their own uncritical belief in what the advertiser

asserts.” Lillian R. BeVier, Competitor Suits for False

Advertising under Section 43(a) of the Lanham Act: a Puzzle

in the Law of Deception, 78 Va. L. Rev. 1, 8 (1992).

People are not only quite capable of looking out for their

own interests, but are also capable of organizing counter-speech

to corporate communications. Frequently, this takes the form

of boycotts. See, e.g., CNN, Environmental campaigners take

aim at oil companies (May 30, 2002) (http://www.cnn.com/

2002/WORLD/europe/05/30/oil.environment.groups.glb/

index.html) (visited Jan. 29. 2003) (Greenpeace, Friends of

the Earth, and World Wildlife Fund urge boycott of oil

companies, specifically identifying their action as a response

to corporate political contributions); Jenny Strasburg, Ban

on Israeli goods has shoppers in uproar: Some demand

Rainbow co-op end boycott, S.F. Chron., Dec. 5, 2002, at B-1

(grocery store’s boycott of Israeli products led to counter-

boycott by local Jewish community). Boycotting is such a

popular response to corporate speech that an organization called

“Boycott Watch” keeps track of all the major boycott actions.

See www.boycottwatch.org.

Second, denying full protection to commercial speech for

this reason ignores the fact that people need to listen to speech

from noncommercial sources with an equal amount of

skepticism; even core political speech can be rife with

falsehoods and misleading statements. In fact, the blurry,

shifting line between political and commercial speech defies

capture and definition. While commercial speech “may not

affect how people are governed as directly as political speech

does, [] it indirectly influences people’s attitudes and values

about how they should be governed.” Andrew S. Gollin,

Comment Improving the Odds of the Central Hudson Balancing

Test: Restricting Commercial Speech as a Last Resort, 81

Marg. L. Rev. 873, 915-16 (1998) (citing Michael G. Gartner,

Advertising and the First Amendment 9 (1989)). Furthermore,

the free flow of commercial speech allows advertisers and

consumers to economize their time and effort in deciding how

to allocate their resources. Jd.

The operation of commercial enterprises and the

quality of their products and services give rise to

inescapable social and political implications. The

very fact that those who seek to reduce free speech

protection for “commercial speech” are today so

anxious to exclude from that less protected category

expression about such products and services other

than advertising tends to confirm the inherently

ideological message of all commercial speech.

Redish, 24 N. Ky. L. Rev. at 578.

Reducing the First Amendment protection of corporate

speech threatens to chill protected speech especially. when a

business has to respond to adverse publicity. Newsmagazines

such as 60 Minutes or public interest organizations have the

luxury of spending as much time and money as they wish on

investigative reporting before airing adverse publicity. By

contrast, an effective corporate response must be made almost

immediately to avert or minimize harm or simply to avoid being

defined by its detractors. This Court has previously exhibited

concern for corporations placed in the position of having to

respond to the speech of others. In Pacific Gas & Electric Co.

v. Public Utilities Commission, 475 U.S. 1 (1986), the issue was

whether a state regulatory commission could require a utility

company to permit an activist group to use its billing envelopes

to distribute an insert expressing views with which the utility

vehemently disagreed. The plurality found that the utility

would “feel compelled to respond,” id. at 16, and characterized

the Commission’s order as one that actually forced a response.

Id. at 15 n.11. The court. below failed to consider this

complication when it concluded that the facts underlying Nike’s

campaign were “more easily verifiable by the disseminator” and

“less likely to be chilled by proper regulation.” Pet. App. at

20a. “A strict standard of ‘absolute truthfulness’ means a

besieged corporate speaker with little time to investigate

allegations responds at its own risk, creating a ‘Hobson’s

choice’ where responding or not responding carries different but

equally serious consequences.” Richard O. Faulk, A Chill Wind

Blows: California’s Supreme Court Muzzles Corporate

Speech, 15 Andrews AIDS Litig. Rep. 10 (2002). As Justice

Chin noted in dissent below:

While Nike’s critics have taken full advantage of

their right to “‘uninhibited, robust, and wide-open’”

debate, the same cannot be said of Nike, the object

of their ire. When Nike tries to defend itself from

these attacks, the majority denies it the same First

Amendment protection Nike’s critics enjoy... .

Pet. App. at 31a (Chin, J., dissenting) (citations omitted).

Companies—and even entire industries—routinely are

called upon for rapid response to attacks upon their business

practices. For example, the past few years have seen self-

proclaimed health advocates excoriate certain restaurant chains

for “supersizing” meal portions and thus “causing” obesity in

their patrons. With accusations multiplying, the National

Restaurant Association created a “Rapid Response Program”

specifically designed to “rebut denigrating and

negative portrayals of the restaurant industry wherever they

occur in the media.” See Rapid Response Program,

http://www.restaurant.org/pressroom/rrlist.cfm (visited Feb. 8,

2003) (posting letters sent to the editors of SmartMoney

Magazine, the Washington Post, the Pittsburgh Post-Gazette,

USA Today, and others). Fortune magazine recently noted that

McDonalds launched a public relations campaign to counteract

the adverse publicity surrounding the filing of such a lawsuit.

The article cautions, however, that in California, such defensive

claims that food products can be a part of a nutritious diet may

lead to liability under the unfair competition law at issue in this

case. Roger Parloff, Js Fat the Next Tobacco?: For Big Food,

the Supersizing of America is Becoming a Big Headache,

Fortune (Jan. 21, 2003) (http://www.fortune.com/fortune/

articles/0,15114,409670-2,00.html) (visited Feb. 10,2003). See

also Committee On Children’s Television, Inc. v. General

Foods Corp., 35 Cal. 3d 197 (1983) (permitting consumer

group’s lawsuit against supermarkets, cereal manufacturer, and

advertising agency to go forward under Cal. Bus. & Prof. Code

§ 17200, where lawsuit alleged that advertising for Super Sugar

Crisp, Cocoa Crispies, and similar cereals misled parents and

children into thinking these “candy breakfasts” provided a

nutritional start to the day).

The Court is not unfamiliar with the types of debates

spawned by commercial enterprises. In Bose Corp. v.

Consumers Union of United States, Inc., 466 U.S. 485 (1984),

this Court held that an article in Consumer Reports making

unflattering comments about stereo speakers was entitled to full

First Amendment protection. As a matter of constitutional law,

it makes no sense to hold that the assertions in Consumer

Reports Magazine are so much more objectively verifiable and

valuable to society than Bose’s press releases in response to

those same magazine articles.’ Yet, under the commercial

speech doctrine—especially as applied by the California

Supreme Court—the former receive full First Amendment

protection while the latter do not. See Redish, 24 N. Ky. L.

Rev. at 568-69.

Ill

CENTRAL HUDSON CANNOT

ADEQUATELY PROTECT THE

INTERMINGLED SPEECH PREVALENT IN

MODERN, INNOVATIVE 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

acommercial transaction.’” /d. at 771 n.24 (quoting Pittsburgh

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

U.S. 376, 385 (1973)). 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. /d., see also Central

Hudson, 447 U.S. at 564 n.6. Both distinctions have been

criticized by judges and scholars. See, e.g., Kozinski & Banner,

76 Va. L. Rev. at 635-38; Donald E. Lively, The Supreme Court

and Commercial Speech: New Words with an Old Message, 72

Minn. L. Rev. 289, 296-97 (1987); Robert Post, The

Constitutional Status of Commercial Speech, 48 UCLA L. Rev.

> Consumer Reports is not immune to charges that it engages in

biased reporting. See Suzuki Motor Corp. v. Consumers Union of

United States, Inc., 292 F.3d 1192, 1203 (9th Cir. 2002) (finding that

the publisher of Consumer Reports had a financial motive to falsify

test results related to the propensity of a Suzuki Samurai to rollover

on sharp turns).

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 Bolger v. Youngs Drug Product Corp., 463 U.S. 60, 68

(1983) (quoting Central Hudson, 447 U.S. at 563 n.5), this

Court held that “advertising which ‘links a product to a current

public debate’ is not thereby entitled to the constitutional

protection afforded noncommercial speech” because

“[a]dvertisers 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 (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 rights of persons injured by the

Dalkon Shield, the Supreme Court recognized that such

statements “in another context, would be fully protected

speech.” /d. at 637n.7. Based on these cases, the Third Circuit

Court of Appeals found that advertisements by rival health care

insurance companies that included information about health

care insurance and delivery—amatters 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. at 3la

(Chin, J., dissenting) (arguing that Nike’s speech is deprived of

First Amendment protection only because the company

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

marketplace of manufactured goods”).

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

suggests a different approach. In that case, this Court held that

even speech that normally receives less First Amendment

protection may not be regulated in such a way that the state

discriminates on the basis of content or viewpoint. A number

of lower courts have either applied or considered applying

R.A.V. to content-based commercial speech restrictions. See

Valley Broadcasting Co. v. United States, 107 F.3d 1328, 1331

n.3 (9th Cir. 1997) (citing MD II 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., Inc. v. Brady, 819 F.

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

and Central Hudson to speech regulation without deciding

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

Beach Township Board of Commissioners, 802 F. Supp. 1223,

1232 (D.N.J. 1992) (“It is clear from the Supreme Court’s

recent decision in R.A.V. /], that commercial speech must be

protected by the usual strictures against content-based

distinctions.”).

A. Marketing and Advertising 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 Rodney A. Smolla,

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.”); 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

describing Nike’s overseas labor practices. Pet. App. at 21a.

Far from the prototypical commercial speech of offering to sell

X product for Y price (see Virginia Pharmacy, 425 U.S. at

761), 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 communication.

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. Steven L. Snyder,

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). 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.” /d. at 308 n.65 (citing Randall

Rothenberg, Now, Novels Are Turning Promotional, N.Y.

Times, Jan. 13, 1989, at DS). 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-hose manufacturer. /d. at 308 n.67 (citing

Robert Epstein, Public-Interest Group Tilts at Commercial

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

Sponsorships, by which a company underwrites the

production of a television show, concert, or sporting event. The

early days of television were marked by shows like Texaco Star

Theater. “Soap operas” were so called because they were

sponsored originally by Proctor & Gamble. Procter & Gamble,

New. Media Age, Apr. 11, 2002, at 28. Animal lovers will

remember “Mutual of Omaha’s Wild Kingdom.” R.J. Reynolds

has sponsored the Winston Cup series since 1970. Chris

Roush, Red Necks, White Socks, and Blue-Chip Sponsors, Bus.

Wk., Aug. 15, 1994, at 74, cited in Daniel Helberg, Note and

Comment Butt Out: an Analysis of the FDA's Proposed

Restrictions on Cigarette Advertising under the

Commercial-Speech Doctrine, 29 Loy. L.A. L. Rev. 1219, 1222

n.23 (1996)).

Testimonials became part of main-stream marketing in

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

(including Mrs. Reginald Vanderbilt, Queen Marie of Rumania,

and the Duchess de Richelieu) to sing the praises of the

* In the age of TiVo, in which viewers can use computer technology

to download broadcasts minus the commercials, advertisers

have used product placement and other ways to interject favorable

mentions of their products into the programs themselves. See

Daniel Lyons, Play it Again, TiVo, Forbes (Jan. 28, 2003)

(http://www.forbes.com/ 2003/01/28/cz_dl_0128tivo.html) (visited

Feb. 5, 2003).

moisturizer in exchange for contributions to charity. Michael

Madow, Private Ownership of Public Image: Popular Culture

and Publicity Rights, 81 Cal. L. Rev. 125, 164-65 (1993).

Lately, however, it is not necessarily 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. CBSNEWS.com, Stars Profit from Covert Drug

Pitches, Aug. 29, 2002 (http://www.cbsnews.com/stories/

2002/08/29/entertainment/main520196.shtml) (visited Feb. 12,

2003). 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. Melody Peterson,

Drug Companies Turn to Celebrities for Advertising, N.Y.

Times, Aug. 14, 2002 (http://www.bayarea.com/mld/cctimes/

3857601 .htm) (visited Feb. 12, 2003).°

Music videos also blur the line between commercial and

noncommercial speech. See Kozinski & Banner, 76 Va. L. Rev.

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 jurisprudence.

The Kentucky Supreme Court, apparently the only court to

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

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

* In response to public outcry, CNN now requires full disclosure of

commercial endorsements for any guest who appears on the network.

While music videos are not produced primarily for

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

this does not strip 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.

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, VHI1, the Nashville Network, and

other music-video cable channels select and show

the videos that they believe will generate the highest

advertising revenue. The video channels’

unwillingness to broadcast controversial materials—

materials likely to spook boycott-wary advertisers—

provide additional evidence of the essentially

commercial nature of the undertaking.

Id. at 534 (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 digi‘ al technology that

allows advertisers to insert computer-generated brand names,

logos, or animated images into previously recorded television

programs or movies. Askan Deutsch, 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 Stuart Elliott, Real or

Virtual? You Call It, N.Y. Times, Oct. 1, 1999, atC1). Virtual

advertising blurs the line between television programming and

commercials. /d. at 44.

“Stealth” or “guerilla” marketing is a new 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.

Suzanne Vranica, Advertising: That Guy Showing off His Hot

New Phone May Be a Shill, Wall St. J. (July 31, 2002).

Moreover, the actors do not make any type of sales pitch, they

simply demonstrate the product and make flattering comments

about it. Jd. 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. Michael

Harrelson, 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 Ed

Brown, Hold the Olives: Martini Marketing, Fortune, Mar. 2,

1998, at 37 (describing how Hennessey recruited hip young

barhoppers to drink “Hennessey martinis” and other cognac

drinks undercover at trendy bars during a five year campaign to

reach 21-32 year old drinkers); Michelle Goldberg, Confessions

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

(http://www.salon.com/media/1997/12/09media.htm!) (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. Thomas Nord, Stealth marketing—is it the next big

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

KY) (Aug. 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 rides. Gerry Khermouch & Jeff

Green, Buzz Marketing, Bus. Wk., 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 friends. /d. at

55.

Providing helpful advice (while selling a little something

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

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 foi 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. Rex Tincher, Stealth

Marketing in Usenet News Groups (http://www.tincher.to/

stealth.htm) (visited Feb. 12, 2003).

Another common incarnation of this technique is 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, advice 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”); website for Beech Nut products,

_ http://www.beechnut.com/feeding/index.htm (visited Feb. 12,

2003) (tips on immunizations, allergies, babysitters, and

suggested menus for babies of different ages).

Websites as commercial speech have not yet generated

much caselaw,” but, especially as regards lawyer advertising,

* One example is Ford Motor Co. v. Tex. Dep't of Transportation,

264 F.3d 493, 505 (Sth Cir. 2001), in which Ford challenged a Texas

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

(continued...)

they have generated some law review articles concerned about

whether law firms’ websites are subject to state rules regarding

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

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

Agric. L. 141, 145 (1999) (“Even if a website or publication is

primarily informational, if the content or context indicates the

solicitation for a commercial relationship, the website or

publication is commercial speech subject to state regulation.”);

Jesse H. Sweet, Attorney Advertising on the Information

Superhighway: A Crash Course in Ethics, 24 J. Legal Prof.

201, 210 (2000).’

® (...continued)

First Amendment right to speech. The Fifth Circuit held that the

advertising and information on Ford’s website constitutes

commercial speech and, applying Central Hudson, upheld the

regulation. See also United States v. Bell, No. 1:CV-01-2159, 2003

WL 102610 (M.D. Pa. Jan. 10, 2003) (operator of website which

promoted tax avoidance was engaged in commercial speech),

Name.Space, Inc. v. Network Solutions, Inc., 202 F.3d 573, 586 (2d

Cir. 2000) (domain names may or may not be commercial speech

depending on variety of factors).

” In Planned Parenthood Fed'n of America, Inc. v. Bucci, No. 97

Civ. 0629 (KMW), 1997 U.S. WL 133313 (S.D.N.Y. Mar. 24, 1997),

aff d, 152 F.3d 920 (2d Cir.), cert. denied, 525 U.S. 834 (1998), the

defendant, doing business as Catholic Radio, registered a website at

“plannedparenthood.com.” However, the website was actually

dedicated to the pro-life position and opposed abortion. /d. at *5-*6.

The defendant argued that his use of plaintiffs mark was

noncommercial speech. Jd. at *9. The court disagreed for two

reasons: First, although the use of “plannedparenthood.com” was

arguably noncommercial in of itself, it impacted the plaintiff s ability

to offer its own services over the Internet. Second, the very use of

the Internet is “in commerce” because it requires interstate phone

lines to connect. Jd. at *11-*12.

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 inC.C. Laura Lin, 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

Weyerhaueser has been reviled by environmentalists for clear-

cutting certain forest areas. See, e.g., Gina Binole, Affer 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). Promoting its

image as a responsible steward of the earth, Weyerhauser has

publicized its partnership with CARE, one of the world’s

largest international relief and development organizations.

Together, they will teach “sustainable forest management and

environmental stewardship to improve the lives of people in

developing countries for current and future generations.” See

http://www. weyerhaeuser.com/citizenship-/philanthropy/

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

* Similarly, in testimony to Congress, former FDA Commissioner

David Kessler noted that tobacco companies engaged in image

building through “promotional events labeled as scientific and

technical seminars, special journal supplements and video news

releases.” Hearings Before the Subcomm. on Oversight and

Investigations of the House Comm. on Energy and Commerce, 102d

(continued...)

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 seils 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 and the environment. She believes that business

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

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

Marketing Strategies and the Search for Virtue: A Case

Analysis of The Body Shop, International, 20 J. Bus. Ethics 249

(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 rights” within the cosmetics

industry.

Id. 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

* (...continued)

Cong., Ist Sess. 3 (Sept. 12, 1991) (statement of David A. Kessler,

M.D., Commissioner of Food and Drugs).

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 proposes a commercial transaction. It directly

concerns the economic interests of the speaker, and it is a

commercial announcement. However, it also touches on

matters of pressing political concern—consumer choice,

protectionism, and free trade. Jonathan W. Emord, Contrived

Distinctions: The Doctrine of Commercial Speech in First

Amendment Jurisprudence, Cato Policy Analysis No. 161

(1991). “Information about the quality and price 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 Daniel Farber, 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 trial judge ruled that an

*® To assist consumers in complying with this exhortation, Congress

passed the American Automobile Labeling Act, which requires

passenger vehicles manufactured after October 1, 1994, to have

labels specifying their percentage value of U.S./Canadian parts

content, the country of assembly, and countries of origin of the

engine and transmission. Juanita S. Kavalauskas & Charles J.

Kahane, Nat’! Highway Traffic Safety Admin. Report No. DOT HS

809 208, Evaluation of the American Automobile Labeling Act

(2001).

insurance company’s advertisements blaming high insurance

premiums on large tort damage awards was 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

certain magazines that criticized the tort system and what Aetna

perceived to be excessive damages awarded in many personal

injury cases. Jd. at 548-49, 409 N.Y.S.2d at 474-75. The

plaintiffs argued 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 fundamental disagreement was

whether the mixed commercial/political speech should be

deemed one or the other. This is a question like, “is The Wizard

of Oz a black and white film or in color?” Sometimes there is

no getting around the fact that it is both. See Alan Howard, The

Constitutionality of Deceptive Speech Regulations: Replacing

the Commercial Speech Doctrine with a Tort-based Relational

Framework, 41 Case Western Res. L. Rev. 1093, 1143 (1991).

The state judge ruled that the statements were commercial

speech that could be enjoined if false or misleading. See Quinn,

96 Misc. 2d at 553-54, 409 N.Y.S.2d at 478. The court made

its ruling despite the fact that Aetna’s purpose was to influence

potential jurors to give lower damage awards, rather than

targeting its statement at consumers who might purchase

insurance products. Jd. 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 i1 a fundamental misconception by calling the

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

482 F. Supp. at 29."°

The pharmaceutical industry has also sponsored poiitical

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. Thomas B. Edsall,

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.

CONCLUSION

While hard cases may make bad law, see Northern Sec.

Co. v. United States, 193 U.S. 197, 400-01 (1904) (Holmes, J.,

dissenting), sometimes “it is bad law that is creating the hard

cases.” Ashutosh Bhagwat, Hard Cases and the (D)Evolution

of Constitutional Doctrine, 30 Conn. L. Rev. 961, 984 (1998).

Central Hudson falls into this category. The issue before the

California Supreme Court in this case should not have been

“hard.” But until this Court simplifies First Amendment |

La. 1979), also involving insurance company advertising statements,

the court similarly held that the advertisements were not commercial

speech because “[t]he ads [made] no attempt to sell insurance or to

recommend any particular type of insurance coverage ....” /d. at 8.

Finding the speech to be fully protected noncommercial speech, the

district court concluded that issuing an injunction in the case would

be tantamount to imposing a prior restraint on publication in

violation of the First Amendment. /d. at 8-9.

jurisprudence by protecting corporate engagement in public

debate, lower courts will continue to struggle and the citizenry

will be deprived of all sides of important controversies.

The Court should treat all speech as deserving the same

protection under the First Amendment. The government then

could regulate commercial speech and mixed speech just as it

would political speech: regulation is constitutional where it

furthers an important governmental interest, the governmental

interest is unrelated to the suppression of free expression, and

the restriction on expression is no greater than necessary. See,

e.g., United States v. O’Brien, 391 U.S. 367, 377 (1968).

Consumer fraud statutes could still exist, albeit in -much

narrower form than California’s unfair competition law. There

is no question that preventing consumer fraud furthers a

substantial governmental interest. The critical point is that

while the seller is free to make true, false, or misleading claims,

he will be liable if buyers rely on those claims to make

purchases. See Kozinski & Banner, 76 Va. L. Rev. at 651.

When there is no reliance, and no harm, then private

counterspeech will serve to remedy falsehoods placed before

the public.

The judgment of the California Supreme Court should be

reversed.

DATED: February, 2003.

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

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.