Amicus Curiae Brief — Basf Corp. v. Peterson

- MOTION FILED

SEP 2 4 2004

No. 04-81

IN THE

Supreme Court of the United States

BASF Corp.

Petitioner,

Vv.

RONALD PETERSON, ET AL.,

Respondents.

On Petition for a Writ of Certiorari

to the Supreme Court of Minnesota

MOTION FOR LEAVE TO FILE BRIEF AMICUS CURIAE

AND BRIEF AMICUS CURIAE OF THE CHAMBER OF COM-

MERCE OF THE UNITED STATES OF AMERICA

IN SUPPORT OF PETITIONER

ROBIN S. CONRAD KENNETH W. STARR

NATIONAL CHAMBER Counsel of Record

LITIGATION CENTER, INC. RICHARD A. CORDRAY

1615 H Street, N.W. KIRKLAND & ELLIS

Washington, D.C. 20062 655 Fifteenth Street, N.W.

(202) 463-5337 Washington, D.C. 20005

(202) 879-5000

Counsel for Amicus Curiae Chamber of Commerce

of the United States of America

September 2004

WILSON-EPES PRINTING Co., INC. — (202) 789-0096 -— WASHINGTON, D.C. 20001

MOTION FOR LEAVE TO FILE

BRIEF AMICUS CURIAE

The Chamber of Commerce of the United States of

America (“Chamber”) respectfully requests leave to file the

attached brief amicus curiae pursuant to Court Rule 37.2.

Petitioner has consented to the filing of this brief, but

_ respondents have withheld consent.

The Chamber is the world’s largest federation of

business organizations and individuals. It represents an

underlying membership of more than three million

businesses of every size, in every business sector, and from

every geographic region of the country. One of its primary

missions is to represent the interests of its members by filing

amicus briefs in cases involving issues of national concern to

American business.

The Chamber and its members have a strong interest in

this case because the Minnesota courts significantly curtailed

freedom of speech by holding that a corporate defendant can

be held liable for “consumer fraud,” notwithstanding the

truthfulness of its “commercial speech.” This holding is so

extreme that it turns every corporate utterance into a

potential predicate for treble damages, insofar as a jury

might find ihe company’s truthful speech to be

“unconscionable” under an admittedly “amorphous” state

consumer protection statute. See Pet. App. 20a.

A substantial amount of speech is at jeopardy. If BASF’s

speech in this case (including a truthful and non-misleading

submission to a reputable trade publication and truthful

information submitted to a government agency) can be used

to support liability under state consumer protection laws,

then a great deal of accurate corporate speech will be fair

game for “consumer fraud” actions when alleged to be “for

the wrong purpose.” Pet. 7. For example:

fast-food companies often encourage children

to exercise and stay in school;

energy companies support conservation and

efforts to develop alternative fuel sources;

alcoholic beverage manufacturers encourage

consumers to drink responsibly;

athletic apparel companies trumpet financial

contributions to after-school programs; and

television stations run advertisements that

encourage students to read.

Conduct that was once lauded as “good corporate

citizenship” could be considered prima facie “fraudulent,”

on the theory that consumers would not heed the corporate

speaker’s message if they understood that the speech was

_ motivated (at least partially) by profit.

This case represents a particularly egregious example of

state consumer protection litigation run amok. Applying a

New Jersey statute to BASF’s nationwide conduct, the

Minnesota courts have punished truthful, non-misleading

speech on the basis that it furthered (in the jury’s view) an

unfair commercial practice. Because speech by corporations

is increasingly disseminated nationwide and even worldwide,

the decision below would threaten speech around the globe.

In light of the Chamber’s strong interest in defending its

members against this assault on their freedom of speech, the

Chamber seeks leave to file this brief as amicus curiae.

Respectfully submitted,

ROBIN S. CONRAD KENNETH W. STARR

NATIONAL CHAMBER Counsel of Record

LITIGATION CENTER, INC. RICHARD A. CORDRAY

1615 H Street, N.W. KIRKLAND & ELLIS

Washington, D.C. 20062 655 Fifteenth Street, N.W.

(202) 463-5337 Washington, D.C. 20005

(202) 879-5000

Counsel for Amicus Curiae Chamber of Commerce

of the United States of America

i

TABLE OF CONTENTS

INTEREST OF AMICUS CURIAE........ccccccccsssssessessesseees

SUMMARY OF ARGUMENT ..........cccessseseeseeseseeneens

I. THE COURT’S GUIDANCE IS NEEDED ON

THE DEFINITION OF COMMERCIAL

TT dalsdiasinitdhenbnditusedonntatninlinisneneisanesiiseisadianuntnsenden

A. The Court’s Precedents Have Generated

Substantial Uncertainty Regarding the

Definition of “Commercial Speech”’..................

B. The Lower Appellate Courts Are in Conflict

on the Definition of “Commercial Speech””.......

C. The Court Should Address the Speech Issues

and Hold that, At a Minimum, Only Spee:

About the Attributes of Goods or Services

for Sale Can Be Considered “Commercial”’.......

1. The History of the “Commercial Speech”

Doctrine Demonstrates that It Addresses

Only the Advertising of Products and

Services, Not Corporate Speech Generally...

2. BASF’s Speech Is Fully Protected................

II. THE COURT’S GUIDANCE IS NEEDED ON

THE TREATMENT OF COMMERCIAL

SET tiirikdihesinsssiiamiiiiiaidiishsnicienticecauahinieaicescnunnsbaneccesonse

A. The Court Has Sent Conflicting Signals on

the Treatment of “Commercial Speech”’............

B. The Court Should Take the Opportunity to

Hold that the “Commercial Speech” Label

Alone Does Not Fix the Level of

Constitutional Protection ........................ccceeeeeeee

il

Ill. THE COURT’S REVIEW IS NEEDED TO

PREVENT IMMEDIATE AND NATIONWIDE

SUPPRESSION OF SPEECH ON IMPORTANT

PUBLIC POLICY MATTERS. .........cccccccrccsescerssersssessee

CONC EIIIING ss isciistsceiisinseilidaes sede hein titipdatiatl

iil

TABLE OF AUTHORITIES

Page(s)

Cases

44 Liquormart, Inc. v. Rhode Island,

BEF CRS Ie COD seisbikeniabiiiatitgstindnctiaiiesibassan 4,11, 13

Bad Frog Brewery, Inc., v. New York State Liquor Auth.,

SOF OG Or es SI iiiticccstitcsctresesonnseesavisaristisniemases 5

Bates v. State Bar of Arizona,

Se ee EE Fe istinsitenitaicthenskinanitssiiiniihincdiimesiante 11

Board of Trustees v. Fox,

a aD isiitesiiritnss ianidsnnniensestivintaasbendsinciatiiciiania 4

Bolger v. Youngs Drug Products Corp.,

ae ED CO Rinccidenscsshsccctohensatharesshsndsnnoenstonns 3,7, 11

Cardtoons, L.C. v. Major League Baseball Players’ Ass'n,

95 F.3d 959 (10th Cir. 1996)............0ccccsccsccssrsssssesserees 7,8

Central Hudson Gas & Elec. Corp. v. Public Serv. Comm’n,

OF Ais EF CD iictintiinchabinnnsdblattiaedinrnasmnansepiisiite 3, 13

City of Cincinnati v. Discovery Network,

PF GA ETD sshninnestcthorsinntiatesnasibesishianstannin’ 4, 13, 16

Commodity Trend Serv., Inc. v. Commodity Futures Trading

Comm'n, |

149 F.3d 679 (7th Cir. 1998).............scsccsscsssssssssececeeees 5,8

First Nat’l Bank v. Bellotti,

a FU ER hsiciidiitctisiicacinsiniecidinsaniabncisabiininictsountili 12

Florida Bar v. Went For It, Inc.,

515 U.S. 618 (1995)... eee istasesvovensenonecscncasrenrseriers 11

iV

Friedman v. Rogers,

SED UD. 5 (RGF E p ccnetssnntnscovsstesnisinncatciiiaibbitejettiadialiisatinitit ll

Grayned v. City of Rockford,

GOS UB, BBG Ci ri ccisttinciintininnnisthintiienidaiaaaen 18

Hoffman vy. Capital Cities/ABC, Inc.,

yr EP Lt | | NE ee 6, 8

Hustler Magazine, Inc. v. Falwell,

GOS US. 46 CR ccecismncisinavmninicimenaaaie 15

Ibanez v. Florida Dept. of Business and Professional

Regulation, Bd. of Accountancy,

SES UB. TSB CEPR cerccescctvssesscsinavnincbiaincnaaatadnauanias 4

Lorillard Tobacco Co. v. Reilly,

S33 ULB. FES COPE Peccecsscconanstacterotstetnsebsaontieatins 13, 14, 16

Mattel, Inc. v. MCA Records, Inc.,

296 F.36 SPS COG Car. Bee veicccctacionctnsensishntntieitacsasctala 6

Metromedia, Inc. v. City of San Diego,

SS UB. GEO CIB a Peceincesczsnscsictabhaseinscteinstaatoestedcian 11

National Life Ins. Co. v. Phillips Publ’g, Inc.,

Pie Yorgi} | RARE 17

New York Times v. Suilivan,

FIO UB. SIO (iP ctmasstsvrestemevinteneetentioniaeana 12

Nike, Inc. v. Kasky,

539 U.S. 654,

vik Gow. . [| EA en RD passim

Pacific Gas & Elec. Co. v. Public Utils. Comm'n,

STS UB. F COBB cxrercinscntticinsinticsiginentiandianana 11, 12

|

Peterson v. BASF Corp.,

618 N.W.2d 821 (Minn. App. 2001) .............ccccccceeeeeeeees Mt

Peterson v. BASF Corp.,

657 N.W.2d 853 (Minn. App. 2003)..............cccccce0e 2, 15

Porous Media Corp. v. Pall Corp.,

eB Fe DRE erence ae 7

Procter & Gamble Co. v. Amway,

pg eR L , ee 7,14

R.A.V. v. St. Paul,

— 8 fT RES S a ai mle ee 16

Roe v. Anderson,

Be ee ee icc ccencecseuninnethicemsisnientesnenens 6

Rubin v. Coors Brewing Co.,

EET Nee SO ee 4,17

Saenz v. Roe,

RE Se Re ET Oe 6

Thomas v. Anchorage Equal Rights Comm'n,

eg Sn 6, 8

Thomas v. Collins,

a a A Nie SAO IR AE 10

Thompson v. Western States Medical Center,

SEER SIRI Rk a 14

Thornhill v. Alabama,

I hail 10, 12

Time, Inc. v. Hill,

Fe CUS Piiitaestnsncenstnttinnnenisicninesétantanbsissceatetans 15

vi

United States v. United Foods, Inc.,

Sa oes CE EN ikiincibdiiphinsieihia diniligaeanstetateiaahaiiicmibtin 3,13

Valentine v. Chrestensen,

BO EB Fae Cee ctalitancitchitattaibinitinciniinehsatiieistihailiabaiiaaii y

Virginia State Bd. of Pharmacy v. Virginia Citizens Council,

Inc.,

es See te Occincensicneneciiciiideihieattteindniseaiiteiguidl 6,9, 10, 12

Other Authorities

Alex Kozinski & Stuart Banner,

Who's Afraid of Commercial Speech?,

a Bas re icchttancitasintiasencemeinistnanancinsaii 17

Jean Wegman Burns,

Confused Jurisprudence: False Advertising Under the

Lanham Act,

Fs tc is cncihsstatickakascsctnschnssttindhedinlstecess 5

Laurence H. Tribe,

AMERICAN CONSTITUTIONAL LAW

a NI alecl-ciaicdheciesisdteethhisesipeshatanistarentienitencantadidtiinenpinacshinilinay 5

Robert Post,

The Constitutional Status of Commercial Speech,

ete tais Ba: RM, TE GINO vo cetanicekatesecensenenbasiiiapnantogoesse 5

INTEREST OF AMICUS CURIAE

The interest of the amicus curiae is described in the

foregoing Motion for Leave to File. !

SUMMARY OF ARGUMENT

For years, the Court has sent conflicting signals on the

proper definition of “commercial speech.” The resulting

jurisprudential uncertainty has led the lower courts to take

widely diverging approaches in determining when corporate

speech is subject to reduced protection under the First

Amendment. In this case, the decision below deepens that

conflict by treating a breathtakingly broad class of speech as

“commercial,” thereby deeply menacing our system of free

expression. According to Minnesota’s courts, commercial

speech includes all statements of fact: (i) made by persons

engaged in commerce (including all businesses and their

public relations firms); (ii) made to an audience including

actual or potential purchasers of their products (including

readers of a trade journal); and (iii) addressing any matter in

which the speaker has some forrn of commercial interest

(including truthful discussion of the illegal, off-label use of

pesticides).

Whatever the correct test may be, this surely is not it.

From its inception, the “commercial speech” doctrine was

designed “to broaden the First Amendment’s reach by

granting limited constitutional protection to product

advertisements previously held unprotected. But now, the

Minnesota courts have treated speech as “commercial” to

restrict freedom of speech by subjecting speech at the First

Amendment’s core — including undeniably true speech — to

the reduced level of protection accorded to “commercial”

speech. This makes no sense; at a barebones minimum, such

1. Pursuant to S. Ct. R. 37.6, the undersigned counsel for the amicus

curiae states that they alone authored this brief, and no other persons or

entities made any monetary contribution to its preparation or submission.

2

speech must address the attributes of the company’s products

or services, as opposed to general discussion on topics of

public concern in trade journals or reports to government

agencies. Otherwise, speech that lies at the core of the First

Amendment will be relegated to its periphery.

The Court should also grant certiorari to confirm that

even if this kind of speech is to be classed as “commercial

speech,” that label, without more, is not dispositive of the

applicable level of constitutional protection. The Court has

sent conflicting signals on that issue, and this case presents

an excellent vehicle for the Court to address the increasing

uncertainty by holding that the “commercial speech” label is

not a license for using truthful speech as the foundation for a

“consumer fraud” action. See Peterson II, Pet. App. 49a-50a

(holding truthfulness is an affirmative defense to libel

charges but not to consumer fraud charges).?

These are precisely the kinds of issues that the Court

sought to resolve in Nike, Inc. v. Kasky, 539 U.S. 654, 123 S.

Ct. 2554 (2003), before it ultimately dismissed the case as

improvidently granted. See id. The issues remain just as

urgent in the wake of that result, and this case presents a

clean vehicle for the Court to address them definitively.

The Court’s guidance on these crucial questions is urgent

for the entire business community. As matters stand, the

lower courts’ uncertainty regarding the definition and

treatment of commercial speech is chilling speech on

important public policy matters that should be encouraged,

not discouraged. The Kasky case itself illustrates pressing

problems that require the Court’s immediate intervention.

Moreover, the increasingly nationwide and international

2. The Minnesota Supreme Court refused to review the Court of

Appeals’ holding that the First Amendment was inapplicable to BASF’s

speech, making the intermediate appellate court’s decision in Peterson //

the final state court ruling on the issue. The Court of Appeals’ decision

in Peterson II is reprinted at Pet. App. 28a-S6a.

3

scope of corporate speech and consumer class actions means

that many corporate speakers are effectively bound by the

stultifying laws of the least-protective jurisdiction. The

Court’s clarifying guidance is needed now.

ARGUMENT

I. THE COURT’S GUIDANCE IS NEEDED ON THE

DEFINITION OF COMMERCIAL SPEECH.

This case presents an excellent opportunity to address the

confusion and division generated by this Court’s past

pronouncements on the definition of “commercial speech.”

A. The Court’s Precedents Have Generated

Substantial Uncertainty Regarding the Definition

of “Commercial Speech.”

The Court has announced at least three different tests for

determining whether speech is “commercial.” The Court has

“usually defined” commercial speech as “speech that does no

more than propose a commercial transaction.” United States

v. United Foods, Inc., 533 U.S. 405, 409 (2001) (emphasis

added). At times, however, the Court has announced a more

expansive test: that “expression related solely to the

economic interests of the speaker and its audience” is

commercial. Central Hudson Gas. & Elec. Corp. v. Public

Serv. Comm’n, 447 U.S. 557, 561 (1980). The Court

employed yet a third test in Bolger v. Youngs Drug Products

Corp., 463 U.S. 60 (1983), by considering three factors:

whether the communication was an advertisement; whether it

referred to a specific product or service; and whether the

speaker had an economic motivation for the speech. See id.

at 66-68. The Bolger Court added to the indeterminacy of

these precedents by indicating that speech is not necessarily

commercial even if all three factors are met, and conversely

that speech can be commercial even if all three factors are

not met. See id. at 66-67 & n.14.

4

This Court has acknowledged the inconsistency and

indeterminacy of these and other precedents:

[W]e have stated that speech proposing a

commercial transaction is entitled to lesser

protection than other constitutionally

guaranteed expression. We have also

suggested that such lesser protection was

appropriate for a somewhat larger category of

commercial speech — “that is, expression

related solely to the economic interests of the

speaker and its audience.” We did not,

however, use that definition in either Bolger

or in [Board of Trustees v. Fox, 492 U.S. 469

(1989)]} .... In Fox, we described the

category even more_ narrowly, by

characterizing the proposal of a commercial

transaction as “the test for identifying

commercial speech.” |

City of Cincinnati v. Discovery Network, 507 U.S. 410, 422-

23 (1993) (emphasis original; citations omitted). The Court

chose not to resolve this inconsistency, however, because the

parties agreed that the speech at issue in that case was

commercial. See id. at 416.

The ambiguity left in the wake of Discovery Network has

been exacerbated by subsequent commercial speech cases.

For example, the Court accepted as “commercial speech”

statements on an attorney’s letterhead and business cards

identifying the attorney as a certified public accountant and

certified financial planner, see /banez v. Florida Dept. of

Business and Professional Regulation, Bd. of Accountancy,

512 U.S. 136, 142 (1994), a statement of alcohol content on

the label of a beer bottle, see Rubin v. Coors Brewing Co.,

514 U.S. 476, 481-482 (1995), and truthful statements about

the retail prices of liquor, see 44 Liquormart, Inc. v. Rhode

Island, 517 U.S. 484 (1996). None of these statements fits

5

comfortably within the definition of “commercial speech”

established in United Foods, Central Hudson, or Bolger.

Lower courts and commentators have expressed

frustration with this continuing uncertainty, which the Court

tried but failed to resolve in Kasky. The Second Circuit, for

example, has lamented the “doctrinal uncertainties left in the

wake of Supreme Court decisions from which the modern

commercial speech doctrine has evolved.” Bad Frog

Brewery, Inc., v. New York State Liquor Auth., 134 F.3d 87,

94 (2d Cir. 1998). Commentators agree that this Court’s

“attempts to define ‘commercial speech’” are “more ad hoc

than the source of any real guidance.” Jean Wegman Burns,

Confused Jurisprudence: False Advertising Under the

Lanham Act, 79 B.U. L. Rev. 807, 831-32 (1999); see also

Laurence H. Tribe, AMERICAN CONSTITUTIONAL LAW 896

(2d ed. 1988); Robert Post, The Constitutional Status of

Commercial Speech, 48 U.C.L.A. L. Rev. 1, 5 (2000) (noting

the “boundaries” of commercial speech are “quite blurred”’).

B. The Lower Appellate Courts Are in Conflict on

the Definition of “Commercial Speech.”

The indeterminacy of the Court’s precedents has

inevitably led to a conflict among various federal courts of

appeals and state courts of last resort. The Seventh Circuit

has concluded that while “[i]t is not for us to proclaim the

official demise of the Central Hudson test” for commercial

speech, “we will not rush to endow that standard with a

greater scope than the traditional definition” of “speech

which does no more than propose a _ commercial

transaction.” Commodity Trend Serv., Inc. v. Commodity

Futures Trading Comm'n, 149 F.3d 679, 684-85 (7th Cir.

1998) (emphasis added). In doing so, the Seventh Circuit,

speaking through now-Chief Judge Flaum, expressed

concern about “the incredible breadth of the Central Hudson

test if taken to its literal extremes.” Jd. at 684.

6

The Ninth Circuit has imposed an especially stringent

variant of the Virginia Pharmacy test. After determining

that this Court’s Discovery Network decision “cast serious

doubt upon [Bolger],” the Ninth Circuit concluded that it

should limit commercial speech to traditional advertising.

Thomas v. Anchorage Equal Rights Comm'n, 165 F.3d 692,

710 (9th Cir. 1999). As the court explained its approach,

“{t]his simply is not a case of ‘I will sell you X at the Y

price.’ Under Discovery Network, that observation alone

suffices to classify the expression as non-commercial.” Jd.

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

Council, Inc., 425 U.S. 758, 762 (1976). Although the Ninth

Circuit later granted en banc review in Thomas, the 11-

member en banc court dismissed the case on ripeness

grounds without reaching or commenting on the commercial

speech issue. See Thomas v. Anchorage Equal Rights

Comm'n, 220 F.3d 1134 (9th Cir. 2000) (en banc). Thus,

Judge O’Scannlain’s panel opinion on that issue remains

“persuasive authority” in the Ninth Circuit. See Roe v.

Anderson, 134 F.3d 1400, 1402 (9th Cir. 1998), aff'd sub

nom. Saenz v. Roe, 526 U.S. 489 (1999).

Perhaps for that reason, at least two subsequent panels of

the Ninth Circuit have held speech to be noncommercial

under similarly restrictive tests. In Hoffman v. Capital

Cities/ABC, Inc., 225 F.3d 1180 (9th Cir. 2001), the court

held that the speech at issue was not commercial because it

did not appear “in a traditional advertisement printed merely

for the purpose of selling a particular product.” Id. at 1185

(emphasis added). The court further explained that “[t]here

are commonsense differences between speech that does no

more than propose a commercial transaction and other

varieties, and common sense tells us that this is not a simple

advertisement.” Jd. at 1185-86 (internal quote and citation

omitted). See also Mattel, Inc. v. MCA Records, Inc., 296

F.3d 894, 906 (9th Cir. 2002) (“If speech is not ‘purely

commercial’ — that is, if it does more than propose a

j

- 7

commercial transaction — then it is entitled to full First

Amendment protection.”).

The Tenth Circuit has also held that “commercial speech

is best understood as speech that merely advertises a product

or service for business purposes.” Cardtoons, L.C. v. Major

League Baseball Players’ Ass'n, 95 F.3d 959, 970 (10th Cir.

1996). Because the speech at issue in Cardtoons did not

“merely advertise[] a product or service,” the Tenth Circuit

held that it was not “commercial speech.” Jd.

In contrast to these circuits that have followed variants of

the Virginia Pharmacy test, other circuits have followed an

expansive version of the Bolger test. See, e.g., Procter &

Gamble Co. v. Amway, 242 F.3d 539 (Sth Cir. 2001); Porous

Media Corp. v. Pall Corp., 173 F.3d 1109 (8th Cir. 1999).

In Procter & Gamble, one company made statements about a

competitor’s business operations — specifically, about

whether the competitor donated its profits to the Church of

Satan - and suggested that consumers boycott the

competitor’s products for that reason. Under Bolger, the

Fifth Circuit concluded that this was “commercial speech” if

the speaker “acted substantially out of economic

motivation.” 242 F.3d at 552-53 (emphasis in original). The

court of appeals reasoned that the second Bolger factor was

satisfied by references to the competitor’s products, and

“{t}he first factor - whether the speech is an advertisement —

seems to collapse into the third factor,” which is the

speaker’s motivation. Jd. The Fifth Circuit thereby held that

even boycott-related speech, as opposed to traditional

product advertising, can be considered commercial speech.

In contrast to the variants of the Virginia Pharmacy test

applied by the Seventh, Ninth, and Tenth Circuits, and in

contrast to the expansive Bolger test fashioned by the Fifth

Circuit, the Minnesota courts added to the general confusion

by ignoring the need for multi-part tests altogether.

According to the courts below, every speech-act made by or

8

on behalf of a company enjoys reduced constitutional

protection, at least to the extent that it fails to disclose its

profit margins. See Peterson I, Pet. App. 62a (plaintiff may

claim damages for “consumer fraud” even based on truthful

speech if he “lost the opportunity to refuse to buy [the

defendant’s products] because [he was ignorant] of the large

profit [the defendant] would make” on the transaction).

The resulting instability is especially manifest in this

case, because the speech that BASF sought to exclude under

the First Amendment is not “commercial” under the tests

applied by other courts. Clearly BASF’s magazine article

did not merely “propose a commercial transaction.”

Commodity Trend Serv., 149 F.3d at 684-85. Indeed, it said

nothing resembling “‘I will sell you X at the Y price.’”

Thomas, 165 F.3d at 710. Nor did it constitute “a traditional

advertisement.” Hoffman, 225 F.3d at 1185. It certainly did

not “merely advertis[e] a product or service.” Cardtoons, 95

F.3d at 970. Instead, BASF’s public relations firm made

general and truthful statements about illegal off-label

pesticide use, without mentioning BASF or its products, and

without offering any prices or terms of sale. See Pet. 6-7.

By holding such speech to be commercial, the Minnesota

courts ruled in conflict with the federal circuits that follow

variants of the Virginia Pharmacy test. Their decision

reaches even farther than the Fifth Circuit’s application of

the Bolger test, inasmuch as BASF’s article made no

mention of its products. Indeed, the lower court’s decision

in this case reaches even farther than the California Supreme

Court’s troublesome decision in Kasky, which held that

speech may be deemed “commercial” solely because of the

speaker’s economic motivations. See 45 P.3d 243 (Cal.

2002), cert. dismissed, 123 S. Ct. 2554 (2003). This

jurisprudential misunderstanding has persisted long enough;

the Court should take this opportunity to forestall further

confusion about the proper scope of constitutional protection

for speech on such matters of public concern.

9

C. The Court Should Address the Speech Issues and

Hold that, At a Minimum, Only Speech About the

Attributes of Goods or Services for Sale Can Be

Considered “Commercial.”

This case presents an especially valuable vehicle for

addressing the lower courts’ confusion about the definition

of “commercial speech.” While line-drawing in this area

may be difficult in some respects, this case turns on an

obvious line: only speech advertising the attributes of

products or services for sale can be considered “commercial”

speech. In contrast, speech that addresses business

operations in general, or other matters of public policy or

public concern, should be accorded the full First Amendment

protections enjoyed by all other participants in those debates.

1. The History of the “Commercial Speech”

Doctrine Demonstrates that It Addresses Only

the Advertising of Products and Services, Not

Corporate Speech Generally.

This line is strongly supported by the history of the

“commercial speech” doctrine, which shows that the doctrine

was intended to grant limited protection to product

advertising, not to /imit the protections already applied to

other types of corporate speech. The Court developed the

modern “commercial speech” doctrine in the 1970s in

response to its earlier holding that “the Constitution imposes

no .. . restraint on government as respects purely

commercial advertising.” Valentine v. Chrestensen, 316

U.S. 52, 54 (1942) (emphasis added). Specifically, the Court

gave birth to the doctrine by overruling Valentine and

holding that “commercial speech, like other varieties, is

protected.” Virginia Pharmacy, 425 U.S. at 760-61.

In doing so, the Court could not have been clearer that by

“commercial speech,” it was referring only to the narrow

kind of product advertisemen. addressed in Valentine:

10

[T]he question whether there is a First

Amendment exception for “commercial

speech” is squarely before us. Our

pharmacist does not wish to editorialize on

any subject, cultural, philosophical, or

political. He does not wish to report any

particularly newsworthy fact, or to make

generalized observations even about

commercial matters. The “idea” he wishes to

communicate is simply this: “T will sell you

the X prescription drug at the Y price.” Our

question, then, is whether this communication

is wholly outside the protection of the First

Amendment.

Id. at 760-61 (emphasis added). From its genesis, therefore,

the “commercial speech” doctrine was designed to address

speech that does not “editorialize on any subject,” “report

any particularly newsworthy fact,” or “make generalized

observations . . . about commercial matters.” Jd. Instead, it

was designed to give limited protection to speech that does

“no more than propose a commercial transaction.” Jd. at

761, 762 (internal quotation omitted).

Significantly, the speech at issue here — on public policy

matters involving corporations — was fully protected long

before the Court extended any protection to “commercial”

speech. As early as 1940, the Court held that self-interested

speech “concerning the conditions in industry and the causes

of labor disputes” is protected by the First Amendment,

because it is “indispensable to the effective and intelligent

use of the processes of popular government to shape the

destiny of moder industrial society.” Thornhill v. Alabama,

310 U.S. 88, 103 (1940); see also Thomas v. Collins, 323

U.S. 516 (1945). Thus, speech about business operations

generally — as opposed to product advertising — has always

received full First Amendment protection, not the limited

protection subsequently devised for “commercial speech.”

1]

The Court has never departed from this understanding.

To the contrary, the Court has repeatedly recognized that the

advertisement of products or services — as opposed to

business operations generally — is the sine quo non of

“commercial speech.” Thus, the Court explained in the early

years of the “commercial speech” doctrine that such speech

“serves to inform the public of the availability, nature, and

prices of products and services,” Bates v. State Bar of

Arizona, 433 U.S. 350, 364 (1977), because it “relates to a

particular product or service.” Friedman v. Rogers, 440 U.S.

1, 10 (1979); see also Metromedia, Inc. v. City of San Diego,

453 U.S. 490, 507 (1981) (referring to “commercial speech”

as “commercial price and product advertising”). More

recently, the Court confirmed: “The entire commercial

speech doctrine . . . represents an accommodation between

the right to speak and hear expression about goods and

services and the right of government to regulate the sales of

such goods and services.”. 44 Liquormart, Inc. v. Rhode

Island, 517 U.S. 484, 499 (1996) (plurality opinion)

(quotation omitted) (emphasis added and omitted).

In keeping with this long-established understanding of

the “commercial speech” doctrine, this Court (unlike the

Minnesota state courts) has “always been careful to

distinguish commercial speech from speech at the First

Amendment’s core.” Florida Bar v. Went For It, Inc., 515

U.S. 618, 623 (1995). For example, the Court has held that

while a manufacturer’s speech about the attributes of a

specific product is “commercial” regardless of whether it is

linked to a public debate, see Bolger, 463 U.S. at 67-68, an

energy company’s speech to its customers about energy

conservation is not “commercial.” Pacific Gas & Elec. Co.

v. Public Utils. Comm'n, 475 U.S. 1, 8-9 (1986) (plurality

opinion). Such speech “extends well beyond speech that

proposes a business transaction and includes the kind of

discussion of matters of public concern that the First

12

Amendment both fully protects and implicitly encourages.”

Id. (internal citations and quotations omitted).

2. BA“F’s Speech Is Fully Protected.

Far from advertising its products’ attributes, BASF’s

magazine article in Sugarbeet Grower presented truthful

discussion about regulatory matters of great importance to its

audience — the illegal, off-label use of pesticides on “minor”

crops — as did the reports it submitted to government

authorities. This is speech at the core of the First

Amendment, not the type of “commercial speech” that was

excluded altogether from First Amendment protection prior

to Virginia Pharmacy. See, e.g., Thornhill, 310 U.S. at 103.

Indeed, corporations are generally accorded the same free

speech rights as other speakers precisely because the First

Amendment is designed to protect the public’s access to

information, and “[t]he inherent worth of . . . speech in terms

of its capacity for informing the public does not depend upon

the identity of its source.” First Nat'l Bank v. Bellotti, 435

U.S. 765, 777 (1978). Suppressing speech merely because

the speaker is a corporation runs contrary to our “profound

rational commitment to the principle that debate on public

issues should be uninhibited, robust and wide-open.” New

York Times v. Sullivan, 376 U.S. 254, 270 (1964).

This should be an easy case. Instead of making

statements connected with the sale of Poast Plus, the article

addressed the changing regulatory environment for off-label

pesticide use as part of a general debate on matters of public

concern. Similarly, the reports simply brought unlawful

conduct to the agency’s attention. Accordingly, BASF’s

speech falls well outside the “commercial speech” category.

If. THE COURT’S GUIDANCE IS NEEDED ON THE

TREATMENT OF COMMERCIAL SPEECH.

Even if the Court considered BASF’s speech to be

“commercial,” that should not be the end of the matter. The

13

Court has sent conflicting signals on whether the

“commercial speech” label alone dictates the applicable level

of constitutional protection, or whether further analysis is

required. The Court should take this opportunity to confirm

that this label does not invariably trump all other strands of

First Amendment jurisprudence, especially the fundamental

prohibition against discrimination among speakers.

A. The Court Has Sent Conflicting Signals on the

Treatment of “Commercial Speech.”

In Section LA, above, the Chamber addressed the

conflicting signals that the Court has sent on the definition of

“commercial speech.” The Court has also “followed an

uncertain course” in determining what level of protection to

accord speech that has been determined to be “commercial.”

Lorillard Tobacco Co. v. Reilly, 533 U.S. 525, 574 (2001)

(Thomas, J., concurring). In some cases, the Court has held

that the “mere fact” that speech is commercial “does not in

and of itself dictate the constitutional analysis that should

apply to decisions to suppress” it. 44 Liguormart, 517 U.S.

at 501; see also, e.g., Discovery Network, 507 U.S. at 424

(emphasizing that courts must be careful not to “place too

much importance on the distinction between commercial and

noncommercial speech”). But in other cases (and especially

in older cases), the Court has held the “commercial speech”

label dispositive of the level of protection accorded the

speech. See, e.g., Central Hudson, 447 U.S. at 561-66.

The Court’s most recent precedents have only added to

the uncertainty. In United Foods, this Court noted that

precedents which “accord less protection to commercial

speech than to other expression” have “been subject to some

criticism.” 533 U.S. at 409-10 (citing opinions of Stevens

and Thomas, JJ.). But the Court concluded that it “need not

enter into the controversy” because the restriction at issue in

that case could not be upheld under any standard. /d. at 410.

In Lorillard, the Court recognized that a majority of the

14

Justices have criticized Central Hudson, but again concluded

that the traditional test sufficed for purposes of that case.

See 533 U.S. at 554-55; see also id. at 571 (Kennedy, J.,

joined by Scalia, J., concurring) (emphasizing that in view of

the “obvious overbreadth” of the restriction at issue, the

Court was not required in that case “to consider whether

Central Hudson should be retained in light of the substantial

objections that can be made to it”); id. at 575 (Thomas, J.,

concurring) (“there is no philosophical or historical basis for

asserting that commercial speech is of lower value than

noncommercial speech”) (internal quotation omitted).

Similarly, in Thompson v. Western States Medical

Center, 535 U.S. 357 (2002), the Court again noted that

“several Members of the Court have expressed doubts about

the Central Hudson analysis.” /d. at 367-68. But the Court

again declined “to break new ground,” in part because

“(njeither party . . . challenged the appropriateness of

applying the Central Hudson framework” in that case. /d. at

367. And most recently, in Nike, Inc. v. Kasky, the Court

declined on procedural grounds to reconsider the “potentially

conflicting principles” underlying Central Hudson,

notwithstanding three Justices’ efforts to revisit these issues.

Id., 123 S. Ct. at 2565 (Breyer and O’Connor, JJ.,

dissenting); see also id. at 2559 (Kennedy, J., dissenting).

This state of affairs has led to unfortunate results. In

Procter & Gamble, the Fifth Circuit held that a corporation’s

speech about a competitor’s religious affiliation could be

deemed false “commercial speech” entitled to no First

Amendment protection, even though this speech “touched on

the type of issues that are at the heart of First Amendment

protections, namely: religious issues and issues of how

corporations act and influence society.” 242 F.2d at 550.

Judge Smith, the author of the court’s opinion, went out of

his way to emphasize that he questioned this result. See id.

at 557-59. But he determined that his hands were tied by this

Court’s controlling precedents. See id. at 557-58.

15

Judge Smith’s efforts to grapple with the contours of this

Court’s jurisprudence are admirable in contrast with the

cursory — and astoundingly fallacious — approach adopted by

the Minnesota courts below. Instead of considering the

complexities of these precedents, the court in Peterson I]

concluded that the First Amendment provides absolutely no

protection for a company’s speech in a “consumer fraud”

case, even on an issue of acknowledged public concern. The

reasoning for this conclusion was no more than tautological

definition: the First Amendment does not apply, the court

said, simply because “this is a consumer fraud action, not a

defamation action.” Peterson II, Pet. App. 50a; see also id.

at 49a-50a (“Here, there is no claim that the reports that

BASF seeks to protect were defamatory . . . . This consumer

fraud action, however, does not raise a libel claim.”). To

support this incredibly skimpy analysis, the court cited only

its prior decision in a patent case. This Court, by contrast,

rejected this very approach of “censorship by classification”

in cases such as Hustler Magazine, Inc. v. Falwell, 485 U.S.

46 (1988) (applying constitutional “actual malice” standard

to tort action for emotional distress), and Time, Inc. v. Hill,

385 U.S. 374 (1967) (same in tort action for invasion of

privacy). The urgent need for the Court’s guidance on the

free speech issues presented here — that are now being raised

in consumer protection actions brought as class actions on

behalf of many individual plaintiffs — could not be more

apparent. See, e.g., Kasky, 539 U.S. 654, 123 S. Ct. at 2568

(Breyer, J., dissenting) (“refusal immediately to review the

state-court decision before us will ‘seriously erode’ the

federal constitutional policy in favor of free speech” and

“may well ‘chill’ the exercise of free speech rights’”’).

B. The Court Should Take the Opportunity to Hold

that the “Commercial Speech” Label Alone Does

Not Fix the Level of Constitutional Protection.

This case provides an important opportunity to address

the proper treatment of commercial speech. Although no

16

comprehensive reassessment of Central Hudson is required

to decide this case, the Court would foster the fundamental

values underlying freedom of speech by confirming that each

speaker on matters of public concern is to be treated equally

under the law, regardless of whether the speaker is deemed

to be engaging in “commercial” speech. This is familiar

jurisprudential terrain; a neutrality principle has long been

embedded in the Court’s First Amendment jurisprudence.

See, e.g., R.A.V. v. St. Paul, 505 U.S. 377, 392 (1992). Thus,

it is now a commonplace that the government may not

discriminate among speakers by “licens[ing] one side of a

debate to fight freestyle, while requiring the other to follow

Marquis of Queensberry rules.” Jd.

Yet that is precisely the result ordained by the Minnesota

courts here, when they concluded that the First Amendment

has no place in a “consumer fraud” action. Therefore, the

Court should take this opportunity to hold that even if a

corporation’s speech on a public policy matter is deemed to

be “commercial speech,” it cannot be punished without the

same showing of fault (be it negligence or actual malice) that

is required in an action brought against any other participant

in the public debate (such as a defamation suit brought by the

corporation). Cf. Kasky, 539 U.S. 654, 123 S. Ct. at 2567

(Breyer, J., dissenting) (such laws create “concern that the

commercial speaker engaging in public debate suffers a

handicap that noncommercial opponents do not’).

. A contrary conclusion would leave First Amendment

freedoms hanging by too slender a thread. In this case, the

Sugarbeet Grower article was plainly not “commercial”

because it did not address the attributes of goods or services

that BASF offered for sale. But typically, the determination

whether speech is “commercial” turns on “a matter of

degree,” as the Court has noted. Discovery Network, 507

U.S. at 423. Indeed, Justice Thomas has expressed “doubt

whether it is even possible to draw a coherent distinction

between commercial and noncommercial speech.” Lorillard,

17

533 U.S. at 575 (Thomas, J., concurring); see also Rubin vy.

Coors Brewing Co., 514 U.S. 476, 494 (1995) (Stevens, J.,

concurring) (commenting on the “artificiality of a rigid

commercial/non-commercial distinction”); Alex Kozinski &

Stuart Banner, Who’s Afraid of Commercial Speech?, 76 Va.

L. Rev. 627, 628 (1990) (“the commercial/noncommercial

distinction makes no sense’’).

Under the holding in Peterson II, however, a distinction

that often rests on a minor difference in degree is

transformed into a major difference in kind. If BASF’s

speech is not commercial, then it is entitled to full First

Amendment protection. But if it is commercial, then it is

entitled to no protection, at least when it is challenged in a

“consumer fraud” action. Especially given the tenuousness

of the distinction between commercial and noncommercial

speech, and the enormity of the stakes in “consumer fraud”

cases, this sharp disparity in treatment makes little sense. As

one court has pointedly noted, “using the mere identification

of commercial speech as the analytic tool [would] operate

with a meat cleaver instead of a scalpel, and would amputate

much of the core of protected speech from the body of the

First Amendment.” National Life Ins. Co. v. Phillips Publ’g,

Inc., 793 F. Supp. 627, 646 (D. Md..1992). The Court tried

to address these free speech issues last term, but ultimately

left them unresolved. See Kasky, 539 U.S. 654, 123 S. Ct. at

2558 (Stevens, J., concurring) (“This case presents novel

First Amendment questions because the speech at issue

represents a blending of commercial speech, noncommercial

speech and debate on an issue of public importance.”’).

Of course, the simplest way to resolve this case would be

to hold that BASF’s speech was not “commercial.” But if

this Court were to hold that the speech at issue was

commercial, then it should also hold that the status of this

speech as “commercial” speech is not dispositive of the level

of constitutional protection that should be afforded. Instead,

the bedrock neutrality principle dictates that however

18

BASF’s speech is labeled, it must be treated the same as all

other speech that occurs in the course of the same public

policy debate. See, e.g., id. at 2559 (Stevens, J., concurring)

(“The interest in protecting such participants from the

chilling effect of the prospect of expensive litigation is

therefore also a matter of great importance.”’).

Il. THE COURT’S REVIEW IS NEEDED TO

PREVENT IMMEDIATE AND NATIGNWIDE

SUPPRESSION OF SPEECH ON IMPORTANT

PUBLIC POLICY MATTERS.

The Court’s plenary review in this case is needed to

prevent immediate harm. The confusion spawned by the

_Court’s “commercial speech” precedents makes it extremely

difficult for corporate counsel to determine which statements

are fully protected and which are not. Such uncertainty can

only “inhibit the exercise of [First Amendment] freedoms”

by “lead[ing] citizens to steer far wider of the unlawful zone

... than if the boundaries were clearly marked.” Grayned v.

City of Rockford, 408 U.S. 104, 109 (1972) (quotation

omitted). The inconclusive result last Term in Kasky merely

underscores the immediacy of these problems. See, e.g.,

Kasky, 539 U.S. 654, 123 S. Ct. at 2560 (Breyer, J.,

dissenting) (‘delay itself may inhibit the exercise of

constitutionally protected rights of free speech without

making the issue significantly easier to decide later on”).

_ The decision below heightens the need to clarify the

proper boundaries of the Court’s free speech docirines. The

increasingly nationwide nature of corporate speech means

that the law of the least-protective jurisdiction effectively

governs statements made by corporations everywhere. If one

jurisdiction can punish this kind of speech in a consumer

class action, then as a practical matter, speakers nationwide

will be prevented from disseminating such speech at all.

The upshot of the ruling below is that most corporate

speech can be classified as “commercial” speech, including

19

all statements of fact: (i) made by persons engaged in

commerce (including all businesses); (ii) made to an

audience that includes actual or potential purchasers or users

of their products; and (iii) addressed to any matter in which

the speaker has a commercial interest (including a trade

journal article or government report), even if that speech is

focused on a public policy matter of obvious public concern.

As a result, companies now face the unhappy choice of

either remaining quiet on important public policy debates

concerning their own operations, or facing liability for any

statements made in the context of heated and fast-moving

debate, simply because they have a commercial interest in

the issues being debated. The risks of being sued and found

liable are far from trivial, since many state consumer

protection laws have relaxed the constraints on traditional

fraud actions — such as proof of scienter and reliance.

This regime cannot be squared with bedrock principles of

free speech. The decision below forces responsible

corporate citizens to curtail their involvement in public

debate, lest they risk a consumer fraud lawsuit premised on

“impure” corporate motivations. For example:

fast-food companies often encourage children

to exercise and stay in school;

energy companies support conservation and

efforts to develop alternative fuel sources;

alcoholic beverage manufacturers encourage

consumers to drink responsibly;

athletic apparel companies trumpet financial

contributions to after-school programs; and

entertainment companies run advertisements

that encourage students to read.

Under the rulings below, these types of speech create

potential liability and are punishable by an award of treble

20

damages. Yet in each instance, a corporate speaker

addresses the American public (including its customers) on

matters involving the effects of its own business operations,

which are also matters of public concern. And in each

instance, a plaintiff might sue under state consumer

protection laws) based on even truthful statements made by

the company in public policy debates. Thus, if the Court

were to deny certiorari, then companies nationwide (and

even worldwide) could only speak on matters of great public

concern if they were willing to risk a civil judgment against

them based on such expansive application of state consumer

fraud laws. The regime envisioned is utterly inhospitable to

free speech in disregard of the Constitution. See, e.g., Kasky,

539 U.S. 654, 123 S. Ct. at 2568 (Breyer, J., dissenting)

(“refusal immediately to review the state-court decision

before us will ‘seriously erode’ the federal constitutional

policy in favor of free speech” and “may well ‘chill’ the

exercise of free speech rights”). This Court alone can and

should make that dominant fact clear to all concerned.

CONCLUSION

~ For the foregoing reasons, the Court should grant the

petition for a writ of certiorari.

Respectfully submitted,

ROBIN S. CONRAD KENNETH W. STARR

NATIONAL CHAMBER Counsel of Record

LITIGATION CENTER, INC. RICHARD A. CORDRAY

1615 H Street, N.W. KIRKLAND & ELLIS

Washington, D.C. 20062 655 Fifteenth Street, N.W.

(202) 463-5337 Washington, D.C. 20005

} (202) 879-5000

Counsel for Amicus Curiae Chamber of Commerce

of the United States of America

September 2004