Institution v. U.S. Dep't of Agric., 13-5281

• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)
• Parties: AMERICAN MEAT INSTITUTE, ET AL., APPELLANTS v. UNITED STATES DEPARTMENT OF AGRICULTURE, ET AL., APPELLEES
• Docket Number: No. 13-5281,13-5281
• Decision Date: 29 July 2014

AMERICAN MEAT INSTITUTE, ET AL., APPELLANTS
v.
UNITED STATES DEPARTMENT OF AGRICULTURE, ET AL., APPELLEES

No. 13-5281

United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 19, 2014
July 29, 2014

Appeal from the United States District Court for the District of Columbia
(No. 1:13-cv-01033)

Catherine E. Stetson argued the cause for appellants. With her on the briefs were Jonathan L. Abram, Judith E. Coleman., Mary Helen Wimberly, and Elizabeth B. Prelogar.

Peter D. Keisler, Jonathan F. Cohn, Erika L. Myers, Rachel L. Brand, Steven P. Lehotsky, and Quentin Riegel were on the brief for amici curiae The National Association of Manufacturers, et al. in support of appellants.

Jonathan Hacker and Anton Metlitsky were on the brief for amicus curiae Grocery Manufacturers Association in support of appellants.

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Daniel Tenny, Attorney, U.S. Department of Justice, argued the cause for appellees. With him on the briefs were Stuart F. Delery, Assistant Attorney General, Ronald C. Machen Jr., U.S. Attorney, and Mark B. Stern, Attorney.

Terence P. Stewart was on the brief for intervenors United States Cattlemen's Association, et al. in support of appellees.

Zachary B. Corrigan, Julie A. Murray, Scott L. Nelson, and Allison M. Zieve were on the brief for amici curiae Food and Water Watch, Inc., et al. in support of appellees.

Jonathan R. Lovvorn and Aaron D. Green were on the brief for amici curiae American Grassfed Association, et al. in support of appellees.

George A. Kimbrell was on the brief for amici curiae Center for Food Safety, et al. in support of appellees.

Mark E. Greenwold was on the brief for amici curiae Tobacco Control Legal Consortium, et al. in support of appellees.

Stephan E. Becker was on the brief for amicus curiae The United Mexican States in support of neither party.

Alan Kashdan was on the brief for amicus curiae Government of Canada in support of neither party.

Before: GARLAND, Chief Judge, HENDERSON, ROGERS, TATEL, BROWN, GRIFFITH, KAVANAUGH, SRINIVASAN, PILLARD, WILKINS, Circuit Judges, and WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge WILLIAMS.

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Opinion concurring in part filed by Circuit Judge ROGERS.

Opinion concurring in the judgment filed by Circuit Judge KAVANAUGH.

Dissenting opinion filed by Circuit Judge HENDERSON.

Dissenting opinion filed by Circuit Judge BROWN, which Circuit Judge HENDERSON joins.

WILLIAMS, Senior Circuit Judge: Reviewing a regulation of the Secretary of Agriculture that mandates disclosure of country-of-origin information about meat products, a panel of this court rejected the plaintiffs' statutory and First Amendment challenges. The panel found the plaintiffs unlikely to succeed on the merits and affirmed the district court's denial of a preliminary injunction. On the First Amendment claim, the panel read Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626, 651 (1985), to apply to disclosure mandates aimed at addressing problems other than deception (which the mandate at issue in Zauderer had been designed to remedy). Noting that prior opinions of the court might be read to bar such an application of Zauderer, the panel proposed that the case be reheard en banc. The full court shortly voted to do so. Order, American Meat Institute v. USDA, No. 13-5281 (D.C. Cir. Apr. 4, 2014) (vacating the judgment issued on Mar. 28, 2014, and ordering rehearing en banc). We now hold that Zauderer in fact does reach beyond problems of deception, sufficiently to encompass the disclosure mandates at issue here.

* * *

Congress has required country-of-origin labels on a variety of foods, including some meat products, 7 U.S.C.

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§§ 1638, 1638a, and tasked the Secretary of Agriculture with implementation, id. § 1638c. In the original statute, Congress did not define "country of origin," leaving that to the agency. Pub. L. No. 107-171, § 282, 116 Stat. 134, 533 (2002). After delaying the statute's implementation, see, e.g., Pub. L. No. 108-199, § 749, 118 Stat. 3, 37 (2004), Congress amended it in 2008 to define "country of origin," Pub. L. No. 110-234, § 11002, 122 Stat. 923, 1351-52 (2008). See also 153 Cong. Rec. 20,843 (2007) (statement of Rep. Peterson) (explaining the 2008 amendment as a compromise to allow the delayed country-of-origin mandate to go into effect). For meat cuts, at least, the amended statute defined country of origin based on where the animal has been born, raised, and slaughtered—the three major production steps. 7 U.S.C. § 1638a(a)(2).

The Secretary, whom we refer to interchangeably with his delegate the Agricultural Marketing Service ("AMS"), first promulgated rules in 2009. Mandatory Country of Origin Labeling, 74 Fed. Reg. 2658 (Jan. 15, 2009) ("2009 rule"). The rules did not demand explicit identification of the production step(s) occurring in each listed country, but called more simply for labeling with a phrase starting "Product of," followed by mention of one or more countries. 7 C.F.R. § 65.400 (2010). The 2009 rule also made allowance for a production practice known as "commingling." This made the labeling of meat cuts from animals of different origins processed together on a single production day relatively simple; the label could just name all the countries of origin for the commingled animals. Id. § 65.300(e)(2), (e)(4).

After the 2009 rule's adoption, Canada and Mexico filed a complaint with the Dispute Settlement Body of the World Trade Organization. In due course the WTO's Appellate Body found the rule to be in violation of the WTO Agreement on Technical Barriers to Trade. See Appellate Body Report, United States—Certain Country of Origin Labelling (COOL)

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Requirements, WT/DS384/AB/R (June 29, 2012). The gravamen of the WTO's decision appears to have been an objection to the relative imprecision of the information required by the 2009 rule. See id. ¶ 343. In a different section of its opinion, the Appellate Body seemed to agree with the United States that country-of-origin labeling in general can serve a legitimate objective in informing consumers. Id. ¶ 453. A WTO arbitrator gave the United States a deadline to bring its requirements into compliance with the ruling.

The Secretary responded with a rule requiring more precise information—revealing the location of each production step. Mandatory Country of Origin Labeling, 78 Fed. Reg. 31,367 (May 24, 2013) ("2013 rule"). For example, meat derived from an animal born in Canada and raised and slaughtered in the United States, which formerly could have been labeled "Product of the United States and Canada," would now have to be labeled "Born in Canada, Raised and Slaughtered in the United States." In a matter of great concern to plaintiffs because of its cost implications, the 2013 rule also eliminated the flexibility allowed in labeling commingled animals. Id. at 31,367/3.

The plaintiffs, a group of trade associations representing livestock producers, feedlot operators, and meat packers, whom we'll collectively call American Meat Institute ("AMI"), challenged the 2013 rule in district court as a violation of both the statute and the First Amendment. This led to the decisions summarized at the outset of this opinion.

AMI argues that the 2013 rule violates its First Amendment right to freedom of speech by requiring it to disclose country-of-origin information to retailers, who will ultimately provide the information to consumers. See 7 U.S.C. § 1638a(e). The question before us, framed in the

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order granting en banc review, is whether the test set forth in Zauderer, 471 U.S. at 651, applies to government interests beyond consumer deception. Instead, AMI says, we should apply the general test for commercial speech restrictions formulated in Central Hudson, 447 U.S. 557, 566 (1980). Given the scope of the court's order, we assume the correctness of the panel's rejection of plaintiffs' statutory claims.

* * *

The starting point common to both parties is that Zauderer applies to government mandates requiring disclosure of "purely factual and uncontroversial information" appropriate to prevent deception in the regulated party's commercial speech. The key question for us is whether the principles articulated in Zauderer apply more broadly to factual and uncontroversial disclosures required to serve other government interests. AMI also argues that even if Zauderer extends beyond correction of deception, the government has no interest in country-of-origin labeling substantial enough to sustain the challenged rules.

Zauderer itself does not give a clear answer. Some of its language suggests possible confinement to correcting deception. Having already described the disclosure mandated there as limited to "purely factual and uncontroversial information about the terms under which [the transaction was proposed]," the Court said, "we hold that an advertiser's rights are adequately protected as long as [such] disclosure requirements are reasonably related to the State's interest in preventing deception of consumers." 471 U.S. at 651. (It made no finding that the advertiser's message was "more likely to deceive the public than to inform it," which would constitutionally subject the message to an outright ban. See

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Central Hudson, 447 U.S. at 563.) The Court's own later...