# Amicus Curiae Brief — Nike, Inc. v. Kasky

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0611%3A30

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2003
- **Citation:** 539 U.S. 654

## 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 _

i
QUESTIONS PRESENTED

1. When a corporation participates in a public debate—
writing letters to newspaper editors and to educators and
publishing communications addressed to the general public on
issues of great political, social, and economic importance—
may it be subjected to liability for factual inaccuracies on the
theory that its statements are “commercial speech” because they
might affect consumers’ opinions about the business as a good
corporate citizen and thereby affect their purchasing decisions?

2. 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

a

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

iV
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

Vv

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

vi

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

|
:
|

ix

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

x

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

XI

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

Xi

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

——

l

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.

2

represents businesses from the entire manufacturing
community—a segment of California’s economy that
contributes more than $250 billion annually and employs more
than 2 million Californians.

The California Chamber of Commerce is a voluntary,
nonprofit, California-wide business association with more than
15,000 members, both individual and corporate, who represent
virtually every economic interest in the state. Ninety percent of
the Chamber’s members are small- or medium-sized businesses
which it represents before the Legislature, local governing
bodies, and the courts on a broad range of issues affecting
business. The Chamber is involved with legislative, regulatory,
and judicial issues involving corporate free speech and the
business community.

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.

3

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

4

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
I

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

5

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...)

6

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.

J

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

8

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

9

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

10

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

1]

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.

12

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

13

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

14

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).

on

15

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

16

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.

17

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

18

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).

19

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.

20

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

21
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/

22

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

23

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...)

24

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.

25

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...)

26

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).

27

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).

28

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

29

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 |

© See also Rutledge v. Liability Ins. Indus., 487 F. Supp. 5 (W.D.
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.

30

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

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0611%3A30. Public record. Not legal advice.