Commercial speech

“The Constitution. . . affords a lesser protection to commercial speech than to other constitutionally guaranteed expression.” Commercial speech is “speech that proposes a commercial transaction.” That books and films are published and sold for profit does not make them commercial speech; i.e., it does not “prevent them from being a form of expression whose liberty is safeguarded [to the maximum extent] by the First Amendment.”

Commercial speech, however, may be banned if it is false or misleading, or if it advertises an illegal product or service. Even if fits in none of these categories, the government may regulate it more than it may regulate fully protected speech.

The Supreme Court has prescribed the four-prong Central Hudson test to determine whether a governmental regulation of commercial speech is constitutional. This test asks initially (1) whether the commercial speech at issue is protected by the First Amendment (that is, whether it concerns a lawful activity and is not misleading) and (2) whether the asserted governmental interest in restricting it is substantial. “If both inquiries yield positive answers,” then to be constitutional the restriction must (3) “directly advance[ ] the governmental interest asserted,” and (4) be “not more extensive than is necessary to serve that interest.”

The Supreme Court has held that, in applying the third prong of the Central Hudson test, the courts should consider whether the regulation, in its general application, directly advances the governmental interest asserted. If it does, then it need not advance the governmental interest as applied to the particular person or entity challenging it. Its application to the particular person or entity challenging it is relevant in applying the fourth Central Hudson factor, although this factor too is to be viewed in terms of “the relation it bears to the overall problem the government seeks to correct.” The fourth prong is not to be interpreted “strictly” to require the legislature to use the “least restrictive means” available to accomplish its purpose. Instead, the Court has held, legislation regulating commercial speech satisfies the fourth prong if there is a reasonable “fit” between the legislature’s ends and the means chosen to accomplish those ends.

The Supreme Court has applied the Central Hudson test in all the commercial speech cases it has decided since Central Hudson, and this article discusses the ten most recent court decisions in chronological order. In nine of these cases, the Court struck down the challenged speech restriction; it has not upheld a commercial speech restriction since 1993.

In its most recent commercial speech case, Thompson v. Western States Medical Center, the Court noted that “several Members of the Court have expressed doubts about the Central Hudson analysis and whether it should apply in particular cases.” These justices believe that the test does not provide adequate protection to commercial speech, but the Court has found it unnecessary to consider whether to abandon the test, because it has been striking down the statutes in question anyway.

In Cincinnati v. Discovery Network, Inc., the Court struck down a Cincinnati regulation that banned newsracks on public property if they distributed commercial publications, but not if they distributed news publications. As for the first two prongs of the Central Hudson test, the Court found that the commercial publications at issue were not unlawful or misleading, and that the asserted governmental interest in safety and esthetics was substantial. As for the third and fourth prongs, although banning commercial newsracks presumably advances the asserted governmental interests, the distinction between commercial and noncommercial speech “bears no relationship whatsoever to the particular interests that the city has asserted.” The city, therefore, did not establish “the ‘fit’ between its goals and its chosen means that is required by our opinion in Fox.”

In Edenfield v. Fane, the Court struck down a Florida ban on solicitation by certified public accountants, even though the Court had previously, in Ohralik v. Ohio State Bar Association, upheld a ban on solicitation by attorneys. The Court found that the government had substantial interests in the ban, including the prevention of fraud, the protection of privacy, and the need to maintain CPA independence and to guard against conflicts of interest. However, the Court found no evidence that the ban directly advanced these interests, and noted, among other things, that, “[u]nlike a lawyer, a CPA is not ‘a professional trained in the art of persuasion,’” and “[t]he typical client of a CPA is far less susceptible to manipulation than the young accident victim in Ohralik.”

The Court added, more generally, that the government’s burden in justifying a restriction on commercial speech “is not satisfied by mere speculation or conjecture; rather, a governmental body seeking to sustain a restriction on commercial speech must demonstrate that the harms it recites are real and that its restriction will in fact alleviate them to a material degree.”

In United States v. Edge Broadcasting Co., the Court upheld “federal statutes that prohibit the broadcast of lottery advertising by a broadcaster licensed to a State that does not allow lotteries, while allowing such broadcasting by a broadcaster licensed to a State that sponsors a lottery. . . .” The governmental interest in the statutes was to balance the interests of states that prohibit lotteries and states that operate lotteries. The broadcaster that challenged the statutes was licensed in North Carolina, which does not allow lotteries, but broadcasted from only three miles from the Virginia border, which does allow lotteries.

The broadcaster claimed that prohibiting it from broadcasting advertisements for the Virginia lottery did not advance the governmental interest or represent a “reasonable fit” because North Carolina radio listeners in its area were already inundated with advertisements from Virginia stations advertising the Virginia lottery and because most of the broadcaster’s listeners were in Virginia. The Supreme Court upheld the statutes because, even if they did not advance the governmental interest or represent a reasonable fit as applied to the particular broadcaster, they did as applied to the overall problem the government sought to address.

In Ibanez v. Florida Board of Accountancy, the Court held that the Florida Board of Accountancy could not reprimand an accountant for truthfully referring to her credentials as a Certified Public Accountant and a Certified Financial Planner in her advertising and other communication with the public, such as her business cards and stationery. The Court wrote that it “cannot imagine how consumers can be misled by her truthful representation” that she was a CPA.”

In Rubin v. Coors Brewing Co., the Court struck down a federal statute, 27 U.S.C. §205(e), that prohibits beer labels from displaying alcohol content unless state law requires such disclosure.The Court found sufficiently substantial to satisfy the second prong of the Central Hudson test the government’s interest in curbing “strength wars” by beer brewers who might seek to compete for customers on the basis of alcohol content.

However, it concluded that the ban “cannot directly and materially advance” this “interest because of the overall irrationality of the Government’s regulatory scheme.” This irrationality is evidenced by the fact that the ban does not apply to beer advertisements, and by the fact that the statute requires the disclosure of alcohol content on the labels of wines and spirits.

In Florida Bar v. Went For It, Inc., the Court upheld a rule of the Florida Bar that prohibited personal injury lawyers from sending targeted direct-mail solicitations to victims and their relatives for 30 days following an accident or disaster. The Bar argued “that it has a substantial interest in protecting the privacy and tranquility of personal injury victims and their loved ones against intrusive, unsolicited contact by lawyers,” and the Court found that “[t]he anecdotal record mustered by the Bar” to demonstrate that its rule would advance this interest in a direct and material way was “noteworthy for its breadth and detail”; it was not “mere speculation and conjecture.” Therefore, the rule passed what the Court called the second prong of the Central Hudson test. As for the final prong, the Court found the Bar’s rule to be “reasonably well tailored to its stated objective. . . .” In a subsequent case, the Court wrote that, in ''Florida Bar v. Went For It, Inc.,]] it had “upheld a 30-day prohibition against a certain form of legal solicitation largely because it left so many channels of communication open to Florida lawyers.”

In 44 Liquormart, Inc. v. Rhode Island, the Court, struck down a state statute that prohibited disclosure of retail prices in advertisements for alcoholic beverages.66 In the process, it increased the protection that the Central Hudson test guarantees to commercial speech by making clear that a total prohibition on “the dissemination of truthful, nonmisleading commercial messages for reasons unrelated to the preservation of a fair bargaining process” will be subject to a stricter review by the courts than a regulation designed “to protect consumers from misleading, deceptive, or aggressive sales practices.”

The Court added: “The First Amendment directs us to be especially skeptical of regulations that seek to keep people in the dark for what the government perceives to be their own good.” It concluded “that the price advertising ban cannot survive the more stringent constitutional review that Central Hudson itself concluded was appropriate for the complete suppression of truthful, nonmisleading commercial speech.” the Court applied the Central Hudson test to strike down, as applied to advertisements of private casino gambling that are broadcast by radio or television stations located in Louisiana, where such gambling is legal, the same federal statute it had upheld in United States v. Edge Broadcasting Co., as applied to broadcast advertising of Virginia’s lottery by a radio station located in North Carolina, where no such lottery was authorized.

The Court emphasized the interrelatedness of the four parts of the Central Hudson test; e.g., though the government has a substantial interest in reducing the social costs of gambling, the fact that the Congress has simultaneously encouraged gambling, because of its economic benefits, makes it more difficult for the government to demonstrate that its restriction on commercial speech materially advances its asserted interest and constitutes a reasonable “fit.” In this case, “[t]he operation of [18 U.S.C.] §1304 and its attendant regulatory regime is so pierced by exemptions and inconsistencies that the Government cannot hope to exonerate it. . . . [T]he regulation distinguishes among the indistinct, permitting a variety of speech that poses the same risks the Government purports to fear, while banning messages unlikely to cause any harm at all.”

In Lorillard Tobacco Co. v. Reilly, the Supreme Court applied the Central Hudson test to strike down most of the Massachusetts Attorney General’s regulations governing the advertising and sale of cigarettes, smokeless tobacco, and cigars. The Court first found the “outdoor and point-of-sale advertising regulations targeting cigarettes” to be preempted by the Federal Cigarette Labeling and Advertising Act, 15 U.S.C. §§1331-41. By its terms, however, this statute’s preemption provision applies only to cigarettes, so the Court considered the smokeless tobacco and cigar petitioners’ First Amendment challenges to the outdoor and point-of-sale advertising regulations. Further, the cigarette petitioners did not raise a preemption challenge to Massachusetts’ sales practices regulations (regulations, described below, other than outdoor and point-of-sale advertising regulations), so the Court considered the cigarette as well as the smokeless tobacco and cigar petitioners’ claim that these regulations violate the First Amendment.

The Court struck down the outdoor advertising regulations under the fourth prong of the Central Hudson test, finding that the prohibition of any advertising within 1,000 feet of schools or playgrounds “prohibit[ed] advertising in a substantial portion of the major metropolitan areas of Massachusetts,” and that such a burden on speech did not constitute a reasonable fit between the means and ends of the regulatory scheme. “Similarly, a ban on all signs of any size seems ill suited to target the problem of highly visible billboards, as opposed to smaller signs.”

The Court found “that the point-of-sale advertising regulations fail both the third and fourth steps of the Central Hudson analysis.” The prohibition on advertising “placed lower than five feet from the floor of any retail establishment which is located within a one thousand foot radius of” any school or playground did not advance the goal of preventing minors from using tobacco products because “[n]ot all children are less than 5 feet tall, and those who are certainly have the ability to look up and take in their surroundings.”

The Court, however, upheld the sales practices regulations that “bar the use of self-service displays and require that tobacco products be placed out of the reach of all consumers in a location accessible only to salespersons.” These regulations, though they “regulate conduct that may have a communicative component,” do so “for reasons unrelated to the communications of ideas.” The Court therefore applied the O’Brien test for incidental restrictions of speech and concluded “that the State has demonstrated a substantial interest in preventing access to tobacco products by minors and has adopted an appropriately narrow means of advancing that interest.”

In Thompson v. Western States Medical Center, the Court struck down section 503A of the Food, Drug, and Cosmetic Act, 21 U.S.C. § 353a, which “exempts ‘compounded drugs’ from the Food and Drug Administration’s standard drug approval requirements as long as the providers of those drugs abide by several restrictions, including that they refrain from advertising or promoting particular compounded drugs.” “Drug compounding,” the Court explained, “is a process by which a pharmacist or doctor combines, mixes, or alters ingredients to create a medication tailored to the needs of an individual patient.” The Court found that the speech restriction in this case served “important” governmental interests, but that, “[e]ven assuming” that it directly advances these interests, it failed the fourth prong of the Central Hudson test.

In considering the fourth prong, the Court wrote that “the Government has failed to demonstrate that the speech restrictions are ‘not more extensive than is necessary to serve’” the governmental interests, as “[s]everal non-speech-related means [of serving those interests] might be possible here.” “If the First Amendment means anything,” the Court added, “it means that regulating speech must be a last &mdash; not first &mdash; resort. Yet here it seems to have been the first strategy the Government thought to try.” The Court noted that it had “rejected the notion that the Government has an interest in preventing the dissemination of truthful commercial information in order to prevent members of the public from making bad decisions with the information.”

In saying that the speech restrictions were “not more extensive than is necessary to serve” the governmental interests, the Court was quoting from the fourth prong of the Central Hudson test, but nowhere in Thompson did it note that it had previously modified the fourth prong to require merely a reasonable “fit” between the legislature’s ends and means, and not use of the least restrictive means to serve the governmental interests. Rather, it wrote: “In previous cases addressing this final prong of the Central Hudson test, we have made clear that if the Government could achieve its interests in a manner that does not restrict speech, or that restricts less speech, the Government must do so.” Yet the Court did not state that it intended to overrule its reasonable “fit” construction of the fourth prong.