Commercial Speech

2012-06-06 10:47:24

Commercial Speech is a subset of speech that is protected by the First Amendment. Its status as protected speech is of relatively recent vintage. It was only in 1976 that the Supreme Court announced that ‘‘Commercial Speech’’ was entitled to some, limited First Amendment protection in Virginia Pharmacy v. Virginia Citizens’Council. Prior to that casemost observers thought Commercial Speech clearly unprotected on the basis of the Court’s decision in 1942 in Valentine v. Chrestensen. There the Court had thought it self-evident that the First Amendment offered no ‘‘restraint [analogous to that imposed on political speech] on government as respects purely commercial advertising.’’ Almost a decade later, in 1951, the Court had again rebuffed the First Amendment argument of a door-todoor magazine salesman in Breard v. Alexandria.

So Virginia Pharmacy represented a new turn in the Court’s treatment of Commercial Speech. Nevertheless, Virginia Pharmacy did not clearly define what constituted ‘‘Commercial Speech.’’ One definition proposed in the case was that Commercial Speech was speech that ‘‘does no more than propose a commercial transaction.’’ However, this does not do much more to define the boundaries than the term ‘‘Commercial Speech itself.’’ And although the Court in Virginia Pharmacy used the terms ‘‘commercial advertising’’ and ‘‘Commercial Speech’’ interchangeably, it was not clear it meant to suggest that ‘‘Commercial Speech’’ and ‘‘commercial advertising’’ were synonymous, and thus that the boundaries of the new doctrine would be confined to advertising. Subsequent decisions of the Court have suggested that the two terms are not synonymous and that the category of Commercial Speech is broader than simply advertising. Nevertheless, as several commentators have noted, the definition of Commercial Speech remains unclear, and the ambiguities in the Court’s decisions in this area have laid the foundation for future struggles over the boundaries of protection for this type of speech.

The turn to protection for Commercial Speech, although somewhat abrupt from the perspective of the Court’s decisions, was nevertheless presaged in the academic literature. Despite the brevity of the Court’s dismissal of the notion of protection for Commercial Speech in Valentine v. Chrestensen in 1942, the social and economic conditions that would later generate arguments for the protection of Commercial Speech were well under way in the 1940s. Advertising and public relations were twentieth century outgrowths of the industrial revolution, and the accompanying technological developments that enhanced the speed of communications allowed for the mass production of an ever-larger proliferation of products—many of which were relatively indistinguishable from one another. The competition for custom led manufacturers to rely on increasingly large-scale advertising and promotional efforts—from package design, print ads and billboards, to radio and then television ads and sponsorship of particular shows. As the twentieth century progressed, the role advertising played in generating and maintaining sales seemed, to many observers, as crucial as the manufacturing process itself, despite always having somewhat mixed empirical support for the cause-and-effect relationship between advertising and sales. Lagging behind somewhat, but developing along similar lines, was the public relations business and the practice of promoting a product or service by issuing press releases and trying to get the media to report on it. By the late twentieth century this practice had become well established, threatening in some ways to swamp traditional advertising, because the advantage of the public relations approach is that if the media picks up information from a press release and reports on it, the item has greater credibility than an ad and at less cost since there is no charge for news coverage.

Parallel to these developments in the markets were other social developments—an increased focus on civil rights for women, blacks, and other historically disadvantaged groups, an increased degree of respectability for protest and dissent, perhaps growing out of the antiwar movement and protest against the war in Vietnam, loosening of restrictions on women’s reproductive choices to turn over more control to the individual and increased visibility for certain types of nonconformity and what might be viewed as a return to the relatively greater sexual permissiveness of the 1930s and 1940s. All these changes, and perhaps many others, involved an increased focus on the individual as rights holder. During this same period, roughly after the trajectory of the industrial revolution was a shift in the theory of the corporation away from the charter and the contractarian theories to an entity theory that proposed that a corporation was a ‘‘person’’ for purposes of the law. These various developments converged in the 1970s and played a part in the development of what became known as the Commercial Speech doctrine.

The first hint of new attitude on the part of the Court came in New York Times v. Sullivan in 1964. Although the case is often not thought of as a Commercial Speech case, it, like Chrestensen, involved an ad. But this time it was the civil rights struggle and defamation law that stood in the spotlight. Sullivan involved an ad paid for by various supporters of Dr. Martin Luther King who sought donations from the public to raise money for Dr. King’s defense. The ad described clashes between police and civil rights marchers and specific instances of violence that had been perpetrated by, or ignored by, law enforcement. Sullivan, a police commissioner, although unnamed in the text of the ad, felt sufficiently implicated in what he deemed were illegal police practices that he alleged he had been libeled because the ad contained some inaccuracies. The question presented was whether the First Amendment protected defendants’ from liability, for their statements and the publisher for running the ad, despite those inaccuracies.

The Court concluded that it did even though the vehicle for their statements was a paid advertisement and even though the publisher published the ad in exchange for money. The Court asserted that neither of these facts necessarily disqualified the speech from First Amendment protection. The Court distinguished Chrestensen as dealing with ‘‘purely commercial advertising.’’ In contrast, in the Sullivan case the Court found that the speech in question was the sort of key political speech that the First Amendment was intended to protect. Nevertheless, since a broader ruling might have swept away defamation law altogether, the Court held that absent evidence of malice speech about public figures on matters of public concern was fully protected.

A few years later, in 1973, this observation, that merely appearing in an ad does not make something ‘‘commercial,’’ was repeated in Pittsburgh Press v. Human Relations Commission. There the Court upheld a cease and desist order to a newspaper requiring it to stop the practice of listing the help wanted ads by gender, a practice that was arguably rendered illegal by Title VII. But it still did not announce a fully articulated theory of what constituted ‘‘Commercial Speech’’ and what level of protection such speech should receive. Only two years later another case came before the Court that again arguably involved Commercial Speech but that also implicated other protected rights. The case, Bigelow v. Virginia, involved the criminal prosecution of a newspaper publisher for printing ads announcing the availability of abortions in New York, under a statute criminalizing the sale or circulation of material encouraging abortions. Because the statute itself was clearly unconstitutional with respect to noncommercial expression, particularly in light of the Court’s decision in Roe v. Wade, it was unclear whether the fact that the expression took the form of an ad was of any significance. Arguably, it might have been had the Court been operating under the old Chrestensen schema. But Sullivan and Pittsburgh Press seemed to point in the other direction and, indeed, the Court felt constrained to add that it was not the case that if speech was related to commerce it was of no value to ‘‘the marketplace of ideas.’’

Finally, in 1976, the Court rendered a decision in a case that squarely presented a question that seemed to involve purely Commercial Speech without any of the overtones of civil rights issues intertwined in the previous cases. In Virginia Board of Pharmacy v. Virginia Citizens’ Consumer Council, a consumer group challenged the State’s prohibition on the advertising of drug prices. Virginia asserted that the ban on the advertising of price information was intended to promote professionalism by deterring a decline into a price war by pharmacists, a result that was liable to undercut the quality of their services. The Court did not find this argument convincing and concluded that there was no legitimate state interest in keeping consumers ignorant of truthful information. Any other conclusion, the Court held, would be unduly paternalistic where consumers’ interest in the information was keen and relevant to their decision-making process.

Despite the protection afforded Commercial Speech in this case, the Court held protected the publishing of price information on the grounds of the listeners’ right to receive the information rather than on any notion of the speakers right to speak. Moreover, the Court did not elevate the protection announced in this new doctrine to the level of the full protection afforded political speech. Commercial Speech would only be protected, the Court held, to the extent that it was truthful and not misleading or illegal and where the regulation in question was not supported by a legitimate public interest by legislation reasonably calculated to address that interest. Protection of the public’s right to receive information did not, the Court felt, prevent the government from seeing that the information stream ran ‘‘cleanly.’’

At last a doctrine had been announced. And a definition of sorts had even emerged. In Virginia Pharmacy the Court referred to speech that ‘‘does no more than propose a commercial transaction.’’ And at first, even to the Court to the extent that in later parts of the opinion it seemed to use the terms ‘‘Commercial Speech’’ and ‘‘commercial advertising’’ interchangeably, this definition seemed to mean ‘‘advertising’’— want ads, print ads, television ads, but apparently the term seemed sufficiently self-explanatory that no other definitional clarification was offered. However, the test for the assessment of governmental regulation was further refined in Central Hudson Gas & Electric Service v. Public Service Commission. In Central Hudson the Court announced the four-part test that, despite some criticisms, has survived up to the present day as the test for Commercial Speech.

According to the Court in Central Hudson, for Commercial Speech to be protected it must first be (1) truthful and involve a legal activity. If the speech in question meets that prong, it is entitled to intermediate scrutiny. So for governmental regulation of such speech to be acceptable it must (2) reflect a substantial governmental interest (3), and actually advance that substantial interest but do so (4) in a way that is no more extensive than necessary to advance the government’s legitimate interest. These last two portions of the test are often referred to as testing ‘‘the fit’’ between the interest to be protected or advanced and the implementing regulation.

While initially the Court seemed to address the ‘‘fit’’ question with a fair amount of deference to governmental judgments in cases such as Posadas de Puerto Rico Associates v. Tourism Co. of Puerto Rico and Board of Trustees v. Fox, in recent years the Court has become increasingly more inclined to strictly construe the test against the government and to strike down governmental restrictions where it finds the ‘‘fit’’ is not very tight. Examples of this trend are City of Cincinnati v. Discovery Network, Inc. and Edenfield v. Fane. Indeed, as Professor David Vladeck noted in a law review article in 2003, ‘‘The Court has not upheld a single restraint [against Commercial Speech] in the past decade.’’

What has occurred in the past decade is evergreater pressure to consider the definition of Commercial Speech and what is or is not included in its ambit. As noted previously, initially it seemed that ‘‘Commercial Speech’’ was coextensive with ‘‘commercial advertising.’’ But subsequent cases made clear that this could not be the case. In Bolger v. Youngs Drugs the Court confronted the attempt to prevent the distribution of informational pamphlets about condoms. The bulk of the text was informative only, but the brochure included product identification and thus presented a case of ‘‘mixed’’ speech. The Court concluded that the pamphlet could not be suppressed simply because it contained some elements that were commercial. In deciding whether speech was commercial, the Court proposed that a fact-intensive review of the context was required, and it found three elements of particular relevance: (1) the use of the advertising form, (2) a reference to a specific product, and (3) an underlying economic motive on the part of the speaker. The presence of all three characteristics was a strong indication that the speech in question was ‘‘commercial.’’ But even with all three factors present, as they were in Bolger, this did not preclude protection for the speech. Any regulation of such speech would still need to meet the requirements of the Central Hudson test.

Such discussions have only raised more questions rather than settling them. And as marketing forms have proliferated, the variety of ways in which commercial expression occurs, many of which seem far away from directly ‘‘propos[ing]’’ a commercial transaction, the doctrine seems to cover less and less. Does corporate image advertising, that is, advertising intended to address the corporation’s image, as, for example, in Wal-Mart’s ads addressing its labor practices or BP’s advertising regarding its environmental practices, count as ‘‘Commercial Speech’’ since they don’t explicitly propose a commercial transaction. Indeed, much traditional advertising does not propose a commercial transaction either, at least not directly. Do the marketing practices of pharmaceutical representatives to doctors on, for example, off-label uses of drugs, count as Commercial Speech, despite occurring outside of the media? What about speech by nonprofit corporations operated as research or public relations arms of for-profit corporations? Can their speech be designated as ‘‘commercial’’ because of the connection with a for-profit enterprise? Does format matter? If something appears in the form of a press release, does this necessarily mean it is not Commercial Speech? And if it is not commercial, does that mean it is fully protected? These and many other questions with very important ramifications for marketing practices, as well as social and governmental regulatory power, remain unanswered.

Moreover, the very first prong of the Central Hudson test, the requirement that the speech be truthful and not misleading and involve a legal activity has revealed more ambiguity over time than appeared at first blush. Of course the first prong is one that in other First Amendment contexts would be seen as problematic, since typically the argument in favor of protection of a multiplicity of opinions is that it is only through airing all sides of a debate that truth is best arrived at. Nevertheless, because Virginia Pharmacy and many of the subsequent cases involved concrete information that was verifiable, in that case prices, the problems raised by the first prong have not been deeply probed. Some of the other cases that fall into this category are Rubin v. Coors Brewing Co. (alcohol content on labels) and 44 Liquormart v. Rhode Island (price). When the ad deals less with concrete information and more with just product visuals or announcements, the Court has, to date, shown little willingness to engage in a more nuanced parsing of what constitutes ‘‘misleading,’’ such as where cigarette advertising makes smoking look glamorous or life enhancing. There is some argument that to the extent that smoking raises serious health risks such advertising is misleading.

However, far from indicating a greater willingness to regulate Commercial Speech in the absence of a specific claim, the weight of opinion seems to be inclining for greater protection for Commercial Speech. Indeed, some commentators have urged that the ambiguities in the Commercial Speech doctrine and the uncertainties of the boundaries be clarified by elevating Commercial Speech to the same status as political speech. In fact, the extent that promotion of consumption arguably also promotes a particular social and political agenda, an argument exists that Commercial Speech is political.

No case underscored the weight of this trend more clearly than the 2003 case of Nike v. Kasky. The Nike case involved a claim by a California activist, Kasky, that Nike’s public statements and public relations campaign aimed at defending its labor practices in response to criticism of those practices, contained numerous false statements that amounted to false advertising, unfair competition, and fraud and deceit. Kasky was suing under a provision of California law that allowed any citizen, acting as a ‘‘private attorney general,’’ to bring such claims on behalf of the citizens of the state. Nike responded to the complaint with a demurrer, claiming that all of its statements were completely protected by the First Amendment. Despite Kasky’s claim that these statements were motivated by the desire to promote sales and boost the company’s image and thus were ‘‘commercial’’ in nature, Nike maintained that its statements were offered in selfdefense and represented a contribution to the debate on globalization. Such statements were, it claimed, fully protected and thus the First Amendment represented a complete bar to Kaksy’s lawsuit.

The California trial and appellate courts agreed with Nike and dismissed the case with prejudice. A divided California Supreme Court disagreed and reversed, finding that at least some of the statements could constitute Commercial Speech and thus remanding the case back to the trial court for further proceedings. Nike petitioned the Supreme Court for review, and it was granted. Although both sides had several amici filing briefs in support of their position, Nike had the bulk of them, including one from the AFL-CIO, which, while explicitly disclaiming support for either party, nevertheless supported Nike’s claim that its speech was not commercial. News media coverage also was, by and large, supporting Nike.

In the end, the Court decided that review had been improvidently granted, because reversal of a motion to dismiss did not represent a sufficiently final judgment to confer jurisdiction on the Court. Still, the concurring and dissenting opinions written in connection with the dismissal suggested that a majority of the Court found Nike’s claim to protection compelling. This in turn suggests that a major overhaul of the Commercial Speech doctrine may occur if another case comes before the Court soon. And although the Nike can be seen as a harbinger of greater protection for Commercial Speech, a case presenting significantly different facts might shift the momentum, since it was clear from the briefs submitted in support of Kaksy by several states and by members of Congress, that significant expansion of the protection for Commercial Speech might imperil other governmental regulatory efforts that the Court may not have considered—for example, in the areas of corporate governance such as Sarbanes-Oxley, or with respect to the regulation of the sale of pharmaceuticals. At present, all definitional questions remain unanswered, and with the recent change in the makeup of the Court, the Court’s future direction may be relatively difficult to predict. Still, the Commercial Speech area promises to be one of the most interesting, active, and far-reaching areas of the Court’s Constitutional jurisprudence to come.


References and Further Reading

  • Baker, C. Edwin. Human Liberty and Freedom of Speech. Oxford University Press, 1989.
  • Chemerinsky, Erwin, and Catherine Fisk, What is Commercial Speech? The Issue not Decided in Nike v. Kasky, Case Wes. Res. L. Rev. 1143 (2004): 54.
  • Collins, Ronald K. L., and David M. Skover. The Death of Discourse. Westview Press, 1996.
  • Greenwood, Daniel J.H., Essential Speech: Why Corporate Speech is Not Free, Iowa L. Rev. 995 (1998): 83.
  • Horwitz, Morton J. The Transformation of American Law: 1870–1960. Oxford University Press, 1992.
  • Kosinski, Alex, and Stuart Banner, The Anti-History and the Pre-History of Commercial Speech, Tex. L. Rev. 627 (1990): 71.
  • Langvardt, Arlen W., and Eric L. Richards, The Death of Posadas and the Birth of Change in Commercial Speech Doctrine, Am. Bus. L. J. 483 (1997): 34.
  • Morrison, Alan B., How We Got the Commercial Speech Doctrine: An Originalist’s Recollections, Case Wes. Res. L. Rev. 1189 (2003): 54.
  • Neuborne, Burt, A Rationale for Protecting and Regulating Commercial Speech, Brook. L. Rev. 437 (1980): 46.
  • Redish, Martin H., The First Amendment in the Marketplace: Commercial Speech and the Value of Free Expression, Geo. Wash. L. Rev. 429 (1971): 39.
  • Schauer, Frederick F., Commercial Speech and the Architecture of the First Amendment, U. Cinn. L. Rev. 1181 (1988): 56.
  • Shiner, Roger A. Freedom of Commercial Expression. Oxford University Press, 2003.
  • Vladeck, David C., Lesson From a Story Untold: Nike v. Kasky Reconsidered, Case Wes. Res. L. Rev. 1049 (2003): 54.

Cases and Statutes Cited

  • 44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484 (1996)
  • Bigelow v. Virginia, 421 U.S. 809 (1975)
  • Board of Trustees v. Fox, 492 U.S. 469 (1989)
  • Bolger v. Youngs Drug Prods. Corp., 463 U.S. 60 (1983)
  • Breard v. Alexandria, 341 U.S. 622 (1951)
  • Central Hudson Gas & Electric Corp. v. Public Serv. Comm’n of New York, 447 U.S. 557 (1980)
  • Lorillard Tobacco Co. v. Reilly, 533 U.S. 525 (2001)
  • New York Times v. Sullivan, 376 U.S. 254 (1964)
  • Nike v. Kasky, 539 U.S. 654 (2003)
  • Posadas de Puerto Rico Assoc. v. Tourism Co. of Puerto Rico, 478 U.S. 328 (1986)
  • Rubin v. Coors Brewing Co., 514 U.S. 476 (1995)
  • Virginia State Bd. of Pharmacy v. Virginia Citizens Consumer Council, 425 U.S. 748 (1976)
  • Valentine v. Chrestensen, 316 U.S. 52 (1942)

See also First Amendment and PACs