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From Health Law Daily, September 20, 2017

Advertisers score win against San Francisco’s sugar-sweetened beverage ordinance

By Rebecca Mayo, J.D.

The American Beverage Association, California Retailers Association, and the California State Outdoor Advertising Association (the Associations) won their appeal for a preliminary injunction seeking to enjoin the implementation of a San Francisco ordinance requiring a warning on certain advertisements for sugar-sweetened beverages. The Ninth Circuit found that San Francisco’s ordinance was unduly burdensome and the language contained in the warning was controversial and misleading (American Beverage Association v. City and County of San Francisco, September 19, 2017, Ikuta, S.).

Background. San Francisco enacted an ordinance that required a warning statement on advertisements for sugar-sweetened beverages (SSB Ad) on billboards, structures, or vehicles, among other things. The warning was required to occupy 20 percent of the advertisement, be offset with a rectangular border, and was required to say "WARNING: Drinking beverages with added sugar(s) contributes to obesity, diabetes, and tooth decay. This is a message from the City and County of San Francisco." The Associations filed suit against the City and County of San Francisco claiming that the ordinance violated their First Amendment right to freedom of speech.

Disclosure requirement. The Ninth Circuit found that the content of the warning was controversial. The Associations argued that the ordinance chills their protected speech because it rendered their speech on covered media so ineffective as to make it impractical to advertise on covered media. The Associations argued that a black box with a bold warning that covers 20 percent of their advertisements effectively takes over their message. The court agreed that the black box warning overwhelmed other visual elements of the advertisements in such a way that was unduly burdensome. The court recognized that although advertisers could use the remaining 80 percent of its advertising space to engage in counter-speech, it would then leave little room to communicate the intended message and defeat the purpose of the advertisement.

According to the court, the statement conveyed the message that sugar-sweetened beverages contribute to obesity, diabetes, and tooth decay regardless of the quantity consumed or other lifestyle choices. Further, placing the warning on advertisements for sugar-sweetened beverages and not other products with added sugars conveyed the message that there was something inherent about sugar-sweetened beverages that contributes to these health risks in a way that other sugar-sweetened products do not, regardless of consumer behavior. The court noted that this statement was contrary to statements from both the FDA and the American Dental Association, both of which have cautioned against singling out sugar-sweetened beverages as a cause or leading contributor to many health conditions. Rather than being purely factual and uncontroversial, the warning required the Associations to convey San Francisco’s disputed policy view.

Previous courts have held that regulations that impose a disclosure requirement rather than an affirmative limitation on speech are governed by a lesser standard. Disclosure requirements that are purely factual, uncontroversial, and not unduly burdensome will withstand First Amendment scrutiny so long as it is reasonably related to a substantial government interest. A disclosure requirement cannot be so burdensome that it essentially operates as a restriction on constitutionally protected speech, or acts to chill protected commercial speech.

The court concluded that the Associations showed a likelihood of success on the merits of their First Amendment claim and the district court’s decision was reversed and remanded.

The case is No. 16-16072.

Attorneys: Michael E. Bern (Latham & Watkins LLP) for American Beverage Association. Joshua D. Dick (Gibson, Dunn & Crutcher LLP) for California State Outdoor Advertising Association. Jeremy Michael Goldman, City Attorney's Office, for City and County of San Francisco.

Companies: American Beverage Association; California State Outdoor Advertising Association; City and County of San Francisco

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