Amicus Curiae Brief — BASF Corp. v. Peterson (No. 06-144)

AUG | 1 2006 Se

No. 06-144

InN THE

Supreme Court of the United States

BASF Corp.,

Petitioner, .

We

RONALD PETERSON, E7 AL.,

Respondents.

On Petition for Writ of Certiorari to the

Supreme Court of Minnesota

MOTION FOR LEAVE TO FILE BRIEF AMICUS CURIAE AND

BRIEFAMICUS CURIAE OF THE CHAMBER OF COMMERCE 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

sachs ae "alee - KIRKLAND & ELLIS LLP

gion, V.C. 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

August 2006

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

MOTION FOR LEAVE TO FILE AS 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.

Pétitioner has consented to the filing of this brief, but

respondents have withheld consent.

The Chamber is the world’s largest federation of

businesses and individuals, with more than three million

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

region. It regularly represents its members by filing amicus

briefs in cases 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 the company’s truthful speech to

be “unconscionable” under an admittedly “amorphous” state

consumer protection statute. See Pet. App. 74a.

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. 8,25. 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 encoviage

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

Page

INTEREST OF AMICUS CURIAE ....ccccccscssvcccoseesereressessoeseees l

ae CIE PIR TIEIES citiverretireitdsccenmincenanens ]

Fd) | Re eT ee ML EEE LIISA SITE Ie em 3

I. THE COURT’S GUIDANCE IS NEEDED ON

THE DEFINITION OF COMMERCIAL

Be ae tie scivncncenusncclesisdcuicassnsecdeusaeuiecimsonitdaioiadiiiies 3

A. The Court's Precedents Have Generated

Substantial Uncertainty Regarding the

Definition of “Commercial Speech.” .................. 3

B. The Lower Appellate Courts Are in Conflict

on the Definition of “Commercial Speech.” ....... 5

or 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.” ............ 9

I. The History of the “Commercial Speech”

Doctrine Demonstrates that It Addresses

Only the Advertising of Products and

Services, Not Corporate Speech

Es viciscitesictsieicinnisiehimimcsshckdstundadamegobctbiasan 9

y 5 BASF’s Speech Is Fully Protected.............. 12

If. THE COURT’S GUIDANCE IS NEEDED ON

. THE TREATMENT OF COMMERCIAL

ae TUT ieU el siesinicsinievinsieuhatiinteibeanieelammpaahdataceubesitlbaiebiidieiis 13

A. The Court Has Sent Conflicting Signals on

the Treatment of “Commercial Speech.” .......... 13

ii

B. The Court Should Take the Opportunity to

- Hold that the “Commercial Speech” Label

Alone Does Not Fix the Level of

Constitutional Protection............::ccseceeseeeeeeseeees 16

If. THE COURT’S REVIEW IS NEEDED TO

PREVENT IMMEDIATE AND NATIONWIDE

SUPPRESSION OF SPEECH ON IMPORTANT

PAPER: SUPER F ALE EEIRON ccccceverenscovsvenecssesesees 18

Se IIe ooh innncofaciiasivhieeciadaiencapeieaniinnipccevibideanaibahainibis 20

ill

TABLE OF AUTHORITIES

Page(s)

Cases

44 Liquormart, Inc. v. Rhode Island,

STF U8. St Fe) sintcmnanninn 3, 18, ES

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

Auth.,

S56 FES? 120 Ci. TI a ciciciniincncircenn 5

Bates v. State Bar of Arizona,

BEF 6 Be EE icsivhsnnrcctnmnmmianes 1]

Board of Trustees v. Fox,

Se es BL rckcttivtininconeinnl 4

Bolger v. Youngs Drug Products Corp.,

BGS UB, BCT FED sac ccncsvescreivnssvsetbierrevenies passim

Cardtoons, L.C. v. Major League Baseball Players’

Ass'n,

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

Central Hudson Gas & Elec. Corp. y. Public Serv.

Comm'n,

MEE Chita BT 5 PI iv ieestisicnessaniiinciuinmianataliaapeaions 3

City of Cincinnati v. Discovery Network, |

FE ee BU CO estssrcindnitininctsiceiicdaseamienen 4

Commodity Trend Serv., Inc. v. Commodity Futures

Trading Comm'n,

149 F.3d 679 (7th Cir. 1998)..............0000.. 5, 6,8

First Nat'l Bank v. Bellotti,

435 U.S. 765 (1978)

iV

Florida Bar v. Went For It, Inc.,

~ bh. | nee nano 1]

Friedman v. Rogers,

Re as A PI ccrey detichinohecosipansicaetabenianadesnieniets 11

Grayned vy. City of Rockford,

er FO heceiicsceinndevnieieenvvuideenanaeenten 18

Hoffman v. Capital Cities/ABC, Inc.,

ZID © F818 EOG (CO Cir. 2008). ncccecccccvscosseverevervens 6

Hustler Magazine, Inc. v. Falwell,

ar an IN TTT TEI scniccthdecesonintinsataemnnicinesaiddceiaa 15

[banez v. Florida Dept. of Business and Professional

Regulation, Bd. of Accountancy,

Re Sree, BE aE acsserneseiversecmstbesesenenitiobieasens 4

Lorillard Tobacco Co. v. Reilly,

SIF CIA FED COO EP ctvticcenstosvevonens scibbectiihabipidisbilie 13

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

Be ae Be CIEE Ge Be itrtsecinivivvintimnctinness 7

Metromedia, Inc. v. City of San Diego,

Se als Se COE Picsecotlbinidiieisinsgneuiindscinicasininbineens ll

New York Times v: Sullivan,

FG te Ce iitansieenitiiceiainen 12

Nike, Inc. v. Kasky,

Be aT Ie Ce Peritccntmionrinnttinievninien passim

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

Be PA 6 taieciscctetinpiceditannciipanniiasiainin 12

V

Porous Media Corp. v. Pall Corp.,

E73 F.3d VIGD Cote Co, 1DFI)....ncccccerseccvenesveosesons 7

Procter & Gamble Co. v. Amway,

242 F.3d 539 (Sth Cir.),

cert. denied, 534 U.S. 945 (2001).............4. 7,15

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

ee hale er cicenteirncoseniphincineicamsaaaaanades 16

Roe v. Anderson,

134 F.3d 1400 (9th Cir. 1998)..0..... cece eeceteeeeeee 6

Rubin v. Coors Brewing Co.,

Oe Oe Pe CD aiccenvoiiciatimeniciiniannnienipeiiaiaun 5,17

Saenz v. Roe,

oe TAR Rf 2... SRR Nenannoressnaahoemanot 6

Thomas v. Anchorage Equal Rights Comm'n,

165 F.3d 692 (Sth Cir. 1999)............ccccrcsorverseerers 6

Thomas v. Collins,

Be Es ee Cee ivdciaseksicetascidenieditaladsesssnanialiitieaal Ll

Thompson v. Western States Medical Center,

ae Sele HT Ce ilertieentenenanitminadeaeent 14

Thornhill v. Alabama,

ni gS Sf), RIB EnRenticeone 11,12

Time, Inc. v. Hill,

SE ey Pere ee iicichacinacieicbseateianichcuaaeiiiaadinaens 15

United States v. United Foods, Inc.,

FS Gh ile HH GFE hcctaniticakerebniccsinadisenisients a a0

vi

Valentine v. Chrestensen,

PUG Uae Fk Cle itiicincnsirniionnnciaacin 10

Virginia State Bd. of Pharmacy v. Virginia Citizens

Council, Inc.,

GES Vides FOE CE PTO stvictarcaeesontitctersidiniiomsaen 6

Other Authorities

Bums, Jean Wegman,

Confused Jurisprudence: False Advertising

Under the Lanham Act,

FP UL. REY. BC inniatsbatinicidiena 5

Kozinski, Alex & Banner, Stuart,

Who's Afraid of Commercial Speech?,

Re ee OR rd, Me ee 17

Post, Robert,

The Constitutional Status of Commercial

Speech,

SUC.LA. L. RRYV. GIR IE. cncticeapnbnn 5

Tribe, Laurence H.,

AMERICAN CONSTITUTIONAL LAW (2d ed.

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,” which menaces 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 form 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

ucspeimenamialy core — including undeniably true speech — to

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

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

entities made any monetary contribution to its preparation or submission.

2

the reduced level of. protection accorded to “commercial”

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

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 shouid 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. 46a-47a

(holding truthfulness is an affirmative defense to libel

charges but not to consumer fraud charges).2

These are precisely the kinds of issues that the Court

sought to resolve in Nike, Inc. v. Kasky, 539 U.S. 654 (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 resents a clean vehicle for the

Court to address them definit:vely.

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

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 /I the final

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

Peterson II is reprinted at Pet. App. 25a-53a.

3

treatment of commercial speech is chilling speech on

important public policy matters that should be encouraged,

not discouraged. Moreover, the increasingly nationwide and

international 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 About 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

4

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.

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

2

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

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 Bums,

Confused Jurisprudence: False Advertising Under the

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

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,

6

speaking through now-Chief Judge Flaum, expressed

concern about “the incredible breadth of the Central Hudson

test if taken to its literal extremes.” /d. at 684.

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., 255 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

7 -

sense tells us that this is not a simple advertisement.” /d. 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 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.),

cert. denied, 534 U.S. 945 (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.

8

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

on behalf of a company enjoys reduced constitutional

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

profit margins. See Peterson J, Pet. App. 87a (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. 6-9.

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

9

that speech may be deemed “commercial” solely because of ~

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

2002), cert. dismissed, 539 U.S. 654 (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.

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

10

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 made clear that “commercial

speech” was referring only to the narrow kind of product

advertisement addressed in Valentine:

[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: “I 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 nof “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.” /d. 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

1]

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 modern industrial society.” Thornhill v.

Alabama, 310 U.S. 88, 103 (1940); see also Thomas vy.

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 later devised for “commercial speech.”

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 qua

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

12

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 Util. 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

Amendment both fully protects and implicitly encourages.”

Id. (internal citations and quotations omitted).

2. BASF’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

national 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).

13

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.

Il. 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

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 IA, 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 Liquormart, 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

14

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

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

label to be 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

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,” but found that the issue had

not been raised in that case. /d. at 367-68. Most recently, in

Kasky, the Court declined on procedural grounds to

reconsider the “potentially conflicting principles” underlying

Central Hudson, though three Justices sought to revisit these

issues. Jd, 539 U.S. at 684 (Breyer and O’Connor, JJ.,

dissenting), see id. at 665 (Kennedy, J., dissenting).

15

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 issue’ 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.

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 II

conckided 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 IJ, Pet. App. 47a; see also id.

ai 46a-47a (“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

16

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. at 681-83 (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” because “waiting

extracts a heavy First Amendment price”).

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 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 terrain; a neutrality principle has long been

embedded in the Court’s First Amendment jurisprudence so

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.”

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

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

17

suit brought by the corporation). Cf Kasky, 539 U.S. at 68(

(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.” Discovery Network, 507 U.S. at 423. Indeed,

Justice Thomas doubts “whether it is even possible to draw a

coherent distinction between commercial and

noncommercial speech.” Lorillard, 533 U.S. at 575

(Thomas, J., concurring); see Rubin v. Coors Brewing Co.,

514 U.S. 476 (1995) (Stevens, J., concurring) (noting 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)

(“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.

The Court tried to address these free speech issues recently,

but ultimately left them unresolved. See Kasky, 539 U.S. at

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

Amendment questions because the speech at issue represents

18

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 afforded. Instead, the bedrock

neutrality principle dictates that however 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.

Il. THE COURT’S REVIEW IS NEEDED TO

PREVENT IMMEDIATE AND NATIONWIDE

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); see also Kasky, 539 U.S. at 667 (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 doctrines. 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

19

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

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;

20

athletic apparel companies trumpet financial

contributions to after-school programs; and

entertainment companies run advertisements

that encourage students to read.

Under... :lings below, these types of speech create

potential liability for an award of treble damages under state

consumer protection laws. Yet in each instance, a corporate

speaker addresses the American public (including its

customers) on matters involving its own business operations,

speaking truthfully on matters of public concern. Thus, if

the Court were to deny certiorari, then companies

nationwide (and even worldwide) could only speak on such

matters if they were willing to risk such expansive

application of state laws. The regime envisioned is utterly

inhospitable to free speech and to the Constitution. This

Court alone can and should make that dominant fact clear.

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

August 2006