Ruling that meat producers must disclose where animals are born, raised and slaughtered, the U.S. Court of Appeals for the D.C. Circuit, sitting en banc last week, laid out a new standard for commercial speech, one that gives the government more leeway to force companies to disclose information about their products.
Writing for the majority, Senior Judge Stephen Williams found that First Amendment concerns were offset by the government’s “substantial interest” in country-of-origin food labeling. Reasoning that information about where meat comes from is purely factual and noncontroversial, the majority ruled that the U.S. Department of Agriculture’s labeling requirement is permissible.
“The value of this particular product information to consumers,” Williams wrote, is “a matter of common sense.”
The full court majority said it was overruling its earlier holdings on the issue, including a pending case involving so-called conflict minerals, and prompted a fierce dissent from Judge Janice Rogers Brown, joined by Judge Karen Henderson. Brown wrote that the majority “hacks the First Amendment down to fit in the government’s hip pocket. I will not join in the carnage.”
First Amendment experts said the ruling breaks new ground. “The majority opinion rewrites commercial-speech doctrine to permit disclosure requirements even where there is no risk of consumer confusion or deception,” said Robert Corn Revere, a First Amendment partner at Davis Wright Tremaine. “The decision will sow confusion in this area of the law, and I expect the Supreme Court will want to review it.”
The American Meat Institute and other trade groups challenged the 2013 country-of-origin rule, arguing that it did not directly advance a government interest, exceeded the statutory mandate and was arbitrary and capricious. Represented by Hogan Lovells, the groups complained the labeling requirement was onerous because it makes no allowances for “commingling” meat cuts from animals of different origins that were processed together. Some of the highest-profile cases before the court in recent years have involved compelled commercial speech — R.J. Reynolds Co.’s challenge to a Food and Drug Administration rule mandating graphic warnings on cigarette packages, for example, or the National Labor Relations Board’s poster rule requiring employers to display a notice informing workers of their rights. In both instances, the D.C. Circuit ruled the government went too far and struck down the regulations as unconstitutional.
In its July 30 decision in American Meat Institute v. U.S. Department of Agriculture, the full court specifically overruled the applicable portions of those prior opinions, saying, “To the extent that other cases in this circuit may be read as holding to the contrary … we now overrule them.” Included on the list of overruled cases is one still pending before the D.C. Circuit as a petition for rehearing: National Association of Manufacturers v. SEC — better known as the conflict-minerals case.
In April, a three-judge panel voided a portion of a rule by the U.S. Securities and Exchange Commission requiring 6,000 publicly traded companies to determine whether their products contain gold, tin, tantalum or tungsten from the Democratic Republic of the Congo or its neighbors. Proceeds from mineral sales have helped fund a campaign of violence by Congolese warlords.
The panel said forcing a company to declare whether its products are “conflict free” is akin to telling “consumers that its products are ethically tainted,” and found the requirement violated the First Amendment.
Public Citizen attorney Julie Murray, who represents intervenor Amnesty International in the conflict-minerals case, said the meat-labeling decision bodes well for her case. The majority recognized that “consumers often have an interest in knowing about the origin of companies’ products,” she said. “The government can constitutionally compel companies to provide that type of information to the public, even where the compelled disclosures are not targeted at preventing consumer deception.”
Murray said Amnesty was still reviewing the decision to determine if additional briefing will be necessary. McKenna Long & Aldridge securities partner Nancy Grunberg, who has followed the case closely, agreed the decision was “good news for the SEC” and Amnesty International. She predicted the court “will find the required disclosure passes muster” under its new reading of the U.S. Supreme Court’s 1985 decision Zauderer v. Office of Disciplinary Counsel. The high court held that disclosure could be compelled to prevent consumers from being deceived, a standard that the D.C. Circuit has now expanded to “reach beyond the problems of deception,” as Stephens wrote for the majority.
Sidley Austin partner Peter Keisler, who represents the National Association of Manufacturers in the conflict-minerals case and as an amicus in the meat case, declined comment.
In a concurring opinion, Judge Brett Kavanaugh outlined what may be the key distinction between the two cases: the nature of the disclosure.
The mandated disclosures for meat labels “cannot be considered ‘controversial’ given the factually straightforward, even-handed and readily understood nature of the information,” he wrote. This is “unlike the mandated disclosures at issue” for conflict minerals, he continued, citing a passage in that opinion describing the disclosure requirement as forcing a company “to confess blood on its hands.” To justify a compelled disclosure, he said, “the government must show that the disclosure is … uncontroversial.”