Association of Nat. Advertisers, Inc. v. Lungren

• Decision Date: 18 November 1994
• Docket Number: No. 93-15644,93-15644
• Citation: 44 F.3d 726
• Parties: , 25 Envtl. L. Rep. 20,183, 22 Media L. Rep. 2513 ASSOCIATION OF NATIONAL ADVERTISERS, INC.; Grocery Manufacturers of America, Inc.; Soap and Detergent Association; National Food Processors Association; The Society of the Plastics Industry, Inc.; The American Paper and Forest Association; The American Advertising Federation; The American Association of Advertising Agencies; The California Chamber of Commerce; and The Chamber of Commerce of the United States, Plaintiffs-Appellants, Californians Against Waste and The Environmental Defense Fund, Intervenors-Appellees, v. Daniel E. LUNGREN, in his official capacity as Attorney General of the State of California, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 726

44 F.3d 726

63 USLW 2348, 25 Envtl. L. Rep. 20,183,

22 Media L. Rep. 2513

ASSOCIATION OF NATIONAL ADVERTISERS, INC.; Grocery Manufacturers of America, Inc.; Soap and Detergent Association; National Food Processors Association; The Society of the Plastics Industry, Inc.; The American Paper and Forest Association; The American Advertising Federation; The American Association of Advertising Agencies; The California Chamber of Commerce; and The Chamber of Commerce of the United States, Plaintiffs-Appellants Californians Against Waste and The Environmental Defense Fund, Intervenors-Appellees, v. Daniel E. LUNGREN, in his official capacity as Attorney General of the State of California, Defendant-Appellee.

No. 93-15644.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Sept. 13, 1994.

Decided Nov. 18, 1994.

Floyd Abrams, Cahill Gordon and Reindel, New York City, for plaintiffs-appellants.

Albert N. Shelden, Deputy Atty. Gen., San Diego, CA, for defendant-appellee.

Barbara J. Olshansky, Environmental Defense Fund, New York City (with whom Maria Savasta Kennedy, Rosen, Bien & Asaro, San Francisco, CA, on brief), for intervenors-appellees. ^*

Appeal from the United States District Court for the Northern District of California.

Before: CHOY, NOONAN, Circuit Judges and MARQUEZ, District Judge. ^**

Opinion by Judge CHOY; Dissent by Judge NOONAN.

CHOY, Circuit Judge:

Appellants, the Association of National Advertisers, Inc., et al. (Trade Associations), appeal the district court's grant of summary judgment upholding the constitutionality of California Business and Professions Code Sec. 17508.5. Having jurisdiction under 28 U.S.C. Sec. 1291, we affirm.

I. FACTUAL AND PROCEDURAL BACKGROUND

Section 17508.5 makes it unlawful for a manufacturer or distributor of consumer goods to represent that its products are "ozone friendly", "biodegradable", "photodegradable", "recyclable" or "recycled" unless their goods meet the statute's definitions of those terms. See Appendix. In 1990, the California Legislature enacted this statute in the wake of a report on environmental advertising issued by a ten-state task force of state attorneys general (the Task Force). This report summarized the findings of the Task Force from a public meeting it convened in March 1990 to address the potential for abuse raised by the increasing popularity of what the attorneys general characterized as "[g]reen marketing ... the marketing craze of the 1990's."

The Task Force found disparities in the usage of these terms by different firms and noted the assertions of environmental groups and business representatives that there was "growing confusion surrounding many environmental marketing claims" creating a "fertile ground for abusive business practices." Ass'n of Nat'l Advertisers, Inc. v. Lungren, 809 F.Supp. 747, 750 (N.D.Cal.1992). The Task Force further discerned a "wide degree of consensus among business and environmental groups" on the need for "development of national standards, guidelines or definitions to guide business in making environmental claims and to help consumers understand the claims made." Section 17508.5 is an attempt to implement these findings at the state level.

In February 1992, the Trade Associations responded to the passage of section 17508.5 by bringing suit in the Northern District of California against the attorney general of California, Appellee Daniel Lungren (Lungren or California). The Trade Associations sought a declaration that section 17508.5 impermissibly restricts both commercial and non-commercial speech and is unconstitutionally vague. They also pursued a permanent injunction against the statute's enforcement. Appellees, the Californians Against Waste and the Environmental Defense Fund (collectively referred to as "CAW"), intervened.

The district court held that the statute was adequately tailored to further substantial state interests in consumer and environmental protection and, accordingly, complied with the First Amendment. The Trade Associations appeal this ruling here on the basis that (1) the district court erred in concluding that section 17508.5 regulates only commercial speech; (2) the district court erroneously analyzed the statute under an intermediate standard of scrutiny inapplicable to non-commercial speech, or to commercial speech inextricably intertwined with more privileged expression; and (3) the district court misapplied intermediate scrutiny by ignoring far less restrictive alternatives to section 17508.5 and mistakenly finding that the statute directly advances a substantial governmental interest. ¹

II. DISCUSSION

A. Intermediate scrutiny governs section 17508.5.

The Trade Associations contend that the district court erred in holding that section 17508.5 regulates only commercial speech. They further assert that as a result the district court applied to the statute an unduly deferential standard of review, the intermediate scrutiny governing commercial speech. We disagree.

A district court's interpretation of a statute presents a question of law reviewed de novo. United States v. Freeman, 6 F.3d 586, 592 (9th Cir.1993).

We agree with the district court that "the messages regulated by section 17508.5 possess the three characteristics recognized by the Court as constitutive of commercial speech" in Bolger v. Youngs Drug Products Corp., 463 U.S. 60, 103 S.Ct. 2875, 77 L.Ed.2d 469 (1983). Lungren, 809 F.Supp. at 754. In Bolger, the Court struck down a federal statute prohibiting the mailing of unsolicited advertisements for contraceptives under the First Amendment. In doing so, the Court set out three characteristics which, in combination, supported its conclusion that the informational pamphlets at issue constituted commercial speech, including (i) their advertising format, (ii) their reference to a specific product, and (iii) the underlying economic motive of the speaker. Bolger, 463 U.S. at 67, 103 S.Ct. at 2880.

Here, the district court reasonably found all three of these factors present. Judge Patel observed:

First, by its explicit terms, the statute regulates representations concerning a specific consumer good which take the form of advertisements or product labels. Second, section 17508.5 specifically requires that the representation be made about a specific consumer good which a firm manufactures or distributes. Third, there is little doubt that by touting the environmental benefits of consumer products, plaintiffs' association members hope to capture a portion of the "green market".

Lungren, 809 F.Supp. at 754.

Accordingly, the district court correctly settled on the "more relaxed inquiry" applicable to restrictions on commercial speech. Id. at 751, citing Bd. of Trustees of State Univ. of N.Y. v. Fox, 492 U.S. 469, 477, 109 S.Ct. 3028, 3033, 106 L.Ed.2d 388 (1989). Under this intermediate scrutiny, the asserted governmental interest must be "substantial", rather than "compelling", and the regulation adopted must "directly advance" this interest, rather than be "precisely drawn". See Central Hudson Gas v. Pub. Serv. Comm'n of N.Y., 447 U.S. 557, 566, 100 S.Ct. 2343, 2351, 65 L.Ed.2d 341 (1980); Consolidated Edison Co. v. Public Service Comm'n of N.Y., 447 U.S. 530, 540, 100 S.Ct. 2326, 2334-35, 65 L.Ed.2d 319 (1980).

We are not persuaded that the district court "basically redrafted the statutory language" in order to avoid strict scrutiny. In the Trade Associations' view, section 17508.5 applies on its face to any " 'representation' about certain environmental characteristics of consumer goods made by any 'person' who manufactures or distributes those goods." In support of this interpretation, the Trade Associations first point to the statute's supposed title, "environmental representations relating to consumer goods." Insofar as this "title" was added by the editors of West's Publishing Co., it affords scant insight into the statute's intended ambit.

The Trade Associations also object that, in the absence of exemptions for statements "designed to inform and persuade the public", a manufacturer or distributor could conceivably fall afoul of section 17508.5 by using a non-conforming definition of one of the statutorily defined terms to make a political, editorial or otherwise non-commercial representation. This possibility, they contend, exposes them to the hazards of "content or viewpoint censorship," chills privileged speech and renders the statute unconstitutional.

However, the Trade Associations fail to raise any compelling actual or hypothetical examples of non-commercial representations that, in offending the statute, would compel a finding of its unconstitutionality or at least trigger strict scrutiny. As the district court observed:

[S]ince the statute only applies to representations that a specific consumer good possesses a particular environmental attribute, plaintiffs' examples are all unavailing. Educational advertisements which laud the benefits of tin cans in general are not representations concerning the environmental attributes of a particular consumer good, and therefore do not offend the statute. Similarly, informational advertisements that contain generalized expressions of an environmental attribute are not within the statute's ambit. Finally, a firm's statement that it supports recycling is certainly not a representation concerning a consumer good.

Lungren, 809 F.Supp. at 752.

We bear in mind that "[a] statute, of course, is to be construed, if such a construction is fairly possible, to avoid raising doubts of its constitutionality." St. Martin Evangelical Lutheran Church v. South Dakota, 451 U.S. 772, 780, 101 S.Ct. 2142, 2147, 68 L.Ed.2d 612 (1981). The district court's interpretation is more than "fairly possible". As the district court observed, the preamble specifies that only representations pertaining to the speaker's own products give rise to potential liability. In addition, the district court reasonably...