# Amicus Curiae Brief — Basf Corp. v. Peterson

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385017_1566%3A04

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2005
- **Citation:** 544 U.S. 1012

## Text

- 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

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385017_1566%3A04. Public record. Not legal advice.