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Newsletter--Volume 2, Number 3

The Ninth Circuit’s First Amendment analysis in Wileman Bros. & Elliott, Inc., v. Espy, 58 F.3d 1367 (9th Cir. 1995), cert. granted, 116 S. Ct. 1875 (1996), is currently being reviewed by the U.S. Supreme Court. The case concerns the appeal filed by USDA Secretary Dan Glickman (“Glickman”), who is challenging the correctness of the Ninth Circuit’s decision to strike down the generic advertising program of the California peach, plum, and nectarine marketing orders. Oral argument will be heard in December or January, and the Supreme Court’s decision is due out by July.

Whether the Supreme Court reverses the Ninth Circuit’s decision that mandatory funding of a generic commodity promotion program violated the First Amendment, and how it decides that question, will largely determine the long-term fate of these programs, probably for at least the next 20 years. For those interested in, or affected by, federal and state commodity promotion programs, Wileman is obviously a “big deal.”

This article will review the arguments made in briefs filed with the Supreme Court in Wileman. First, we will discuss the arguments made on behalf of Glickman and those non-party (or amicus) briefs filed in support of Glickman. We will then examine the briefs filed by those whose constitutional challenge to the California tree fruit promotion program prevailed at the Ninth Circuit (“Respondents”), and those non-party (or amicus) briefs filed in support of Respondents.

In its decision, the Ninth Circuit, applying the so-called Central Hudson test, invalidated on First Amendment grounds the USDA’s generic advertising program for California nectarines, peaches, and plums. In so ruling, the Ninth Circuit held that “[t]he First Amendment right of freedom of speech includes a right not to be compelled to render financial support for others’ speech.” (Emphasis added.) While acknowledging that the program had increased sales, the Ninth Circuit ruled that “the question is not whether the generic advertising program has increased peach and nectarine sales -- it undoubtedly has.” Rather, the Court said, the Constitutional inquiry is a much more narrow and focused one: does the mandatory generic advertising program “sell the product more effectively” than the specific, targeted efforts of individual handlers that the Ninth Circuit assumed would take place in the absence of a mandatory program. The Ninth Circuit also ruled that the USDA must further show that the advertising program is “narrowly tailored to achieve the desired objective.” In applying this requirement in Wileman, the Ninth Circuit held that any program that fails to give credit against the generic advertising assessment for brand advertising was clearly not sufficiently narrow in its focus to pass the Ninth Circuit’s First Amendment test.

Briefs Seeking Reversal of Ninth Circuit’s Decision--Petitioner Glickman’s Brief

Glickman argues that the Ninth Circuit erred in analyzing these generic promotion programs as if they suppressed or banned a handlers’ own commercial speech. They do not. Indeed, the statute authorizing these programs provides that “[n]o order shall be issued ... prohibiting, regulating, or restricting the advertising or any commodity or product.” Thus, Glickman points out, we have a regulatory framework that uses assessments to fund collective activities having an expressive component. In similar circumstances, this Court has applied, not the Central Hudson test for restrictions on commercial speech but, rather, the Abood/Keller test that is applied to compelled funding of such speech. The latter test basically considers the relevance of the subsidized expressive activities to the government’s regulatory objectives. Because generic advertising is obviously relevant to the law’s objectives of stabilizing commodity markets, promoting the sale of the commodity, and increasing returns, the challenged programs satisfy the applicable test -- Abood/Keller.

Glickman also contends that even if the Central Hudson test is the correct test, the Ninth Circuit erred in ruling that these programs did not satisfy the test. Central Hudson teaches that a speech restriction is constitutional if it (1) directly advances, (2) a substantial government interest, and (3) the restriction is not more extensive than necessary to serve that interest. The Ninth Circuit erred by interpreting “directly advance” to require that generic promotion sell more product than the theoretical efforts of individual producers. Such an interpretation needlessly raises the constitutional bar for commercial speech restrictions. Finally, the Ninth Circuit also misinterpreted the “reasonable fit” requirement to mean that all such programs must offer credit for brand advertising. This approach fails to recognize that brand credit programs substantially undermine the key government objective of avoiding “free riders.”

National Association of State Departments of Agriculture’s Amicus Brief

NASDA argues that the speech produced by federal marketing orders is “government speech.” It is the government that is speaking. Therefore, NASDA concludes, the First Amendment does not apply. The First Amendment does not limit what the government itself can and cannot say. It only restrains government regulation of what private parties may or may not say. Here, the marketing orders were issued pursuant to a federal statute to achieve defined governmental objectives. They are administered under the supervision of the Secretary of Agriculture and by committees that are appointed by him and subject to removal by him at any time. The speaker in connection with these generic advertisements is, therefore, plainly the government. Moreover, the advertising messages funded by the mandatory assessments do not even give rise to the close association between the message and those that fund the message that might somehow transform otherwise permissible government speech into impermissible forced private speech.

Washington Apple Commission’s Amicus Brief

The Washington Apple Commission argues that the correct constitutional analysis for this case appears in Abood/Keller. Promotion programs, it asserts, are created in response to industry requests and operate under government supervision. The programs are designed to advance industry-wide interests rather than providing specific benefits to individual producers. Experience with voluntary promotion programs demonstrates that without a mandatory assessment, these promotion programs would wither on the vine. These programs benefit producers, consumers, and the relevant industry as a whole. Because the programs are relevant to important governmental objectives, they are constitutional. The Ninth Circuit’s decision is deficient because: (1) it provides no finality to legal determinations (because the comparative efficacy test could come out differently at different points in time, and because, at least arguably, the track record of a certain promotion program may not be attributed to its current promotion campaign if that campaign is materially different from the campaign upon which its record is based), (2) it may eliminate the opportunity to create new commodity promotion programs (because a new promotion program necessarily has no track record to utilize so that the comparative efficacy test could be meaningfully applied, and (3) it is based on a fundamental misunderstanding of the government’s interest in establishing these programs. That interest is in expanding the entire market for a particular commodity, it is not to increase each producer’s own share of the market.

Amicus Brief for Eleven States (California, New York, et. al.)

The eleven states argue that the Ninth Circuit erred in applying Central Hudson. The second and third prongs of the Central Hudson commercial speech test do not apply in this case, they claim, because commodity promotion programs do not impair the free flow of commercial information to consumers. The correct constitutional analysis is Abood/Keller, which protects one’s interest in economic free association. In Abood and Keller, this Court held that a union could force non-members to pay dues to support collective bargaining activities and a bar association could force members to pay dues to support relevant bar association activities. Here the intrusion on free association rights of the individual is even less than was tolerated in Abood and Keller. First, the speech involved here is pure commercial speech. Second, the commodity promotion programs have a very circumscribed range of activities in which they are authorized by law to engage. Finally, a stable and economically viable agricultural economy is a vital governmental interest that commodity promotion significantly bolsters. The agricultural economy is subject to numerous de-stabilizing forces that necessitate government intervention. These forces include variable supply, inelastic demand, seasonality, perishability, lagged production, limited mobility of resources, many small producers, and homogeneous products.

AFL-CIO’s Amicus Brief

The AFL-CIO argues that the Ninth Circuit erred in applying the strict standards of Central Hudson. The Ninth Circuit erroneously decided that the tests for determining the constitutionality of prohibitions on truthful commercial advertising apply equally to a regulatory scheme that promotes such advertising. This analysis, it claims, is flawed.

The AFL-CIO points out that the First Amendment protects commercial speech in the interest of furthering the free flow of information. This same value, which is infringed by a complete ban on truthful advertising, is actually advanced by requiring that fruit handlers financially support truthful generic advertising of the commodities they handle. Fruit handlers claims are like other claims the Court has considered by members of regulated groups urging that their compelled association with expressive activity pursuant to a statute is unconstitutional. The Court has in the past repeatedly rejected such claims, in cases such as Abood and Keller, when, as here, the positive group speech activity is contemplated by the regulatory scheme and there is a rational basis for concluding that this positive group speech activity serves the overall goals of the regulatory scheme. In addition, unless the challenged speech activity is political or ideological speech at the core of protected First Amendment values, the Court has taken a generous view in considering whether the challenged expenditures are rationally related to the overall legislative purpose.

The AFL-CIO argues that an asserted right not to be compelled to speak contracts the range of communication which it is the primary purpose of the First Amendment to protect. The claim that a corporate entity has a broad constitutional right to opt out of the affirmative portion of an overall regulatory program has never been accepted by the Supreme Court. Here the fruit handler is not closely and personally involved in communicating the message, can expressly disavow the message, and is free to communicate his or her own message on the same subject. Where all of this is true, the Court has recognized that the government’s regulatory program cannot be said to work a meaningful incursion on the objector’s intimate, personal rights of conscience.

Briefs Seeking Affirmance of Ninth Circuit’s Decision Majority (13 of 16) Respondents’ Brief

The majority respondents argue that Central Hudson’s three prong-test is the proper standard for scrutinizing the challenged advertising programs and that this compelled advertising scheme fails that test. They argue that the government’s interests in enhancing grower returns and avoiding “free riders” are not substantial interests. They further contend that compelled advertising does not directly advance that interest in a direct and material way. In fact, they claim, the governmental goals have not been accomplished at all since growers of tree fruit make less now than in 1971. The “Carmelita report,” relied on by the government to provide the effectiveness of its program, fails to demonstrate that the program’s generic advertising has increased the total market for peaches, plums, and nectarines. Compelled advertising does not avoid free riders because the constituency of the commodity committees extends beyond those who pay assessments. Third, the Secretary cannot show a “sufficient fit” between his stated goals and the abridgment of the handlers’ First Amendment rights.

In addition, these respondents argue that compelled advertising violates core First Amendment protections. Compelled advertising is presumptively invalid because it not only disseminates messages closely associated with respondents, but it burdens their speech and favors the committee’s speech based on content. This association between respondents and the compelled advertising messages forces response, endorsement, or silence by the respondents. Strict scrutiny must be applied where compelled advertising implicates respondents’ freedom of association, as it does here.

Finally, they argue, the driving forces that shaped the “germaneness” test are not at work here, so that test does not apply. Moreover, even if Keller/Abood is the proper test, advertising by the tree fruit committees fails the “germaneness” test because compelled advertising is not germane to the asserted governmental goals of orderly marketing, enhancing grower returns, or to increasing overall demand.

Minority (3 of 16) Respondents’ Brief

The minority respondents argue that absent the most compelling of reasons, the government may not appoint one citizen (or a group of citizens) to speak for others, or force unwilling persons to pay for or convey messages they do not freely choose to endorse. Government action that requires the utterance of a particular message favored by the government contravenes a person’s fundamental rights of free speech. The collective advertising programs at issue fail to satisfy all three parts of the Central Hudson test used by the Court to evaluate interference with commercial speech. There is no substantial interest, it is not directly advanced, and there is no reasonable fit between means and ends.

Moreover, they argue, perhaps because the Secretary recognizes that he cannot possibly satisfy the three Central Hudson requirements, he seeks to avoid the application of this test by urging this Court to apply Abood/Keller instead. Such a routine application of this low level of scrutiny would, in effect, legitimate all coercions of speech in a commercial context since it is hard to imagine any such requirement that would not be “germane” to some legitimate “regulatory objective.” The Secretary, they argue, offers no principled justification for “this astonishing enlargement of governmental power over the commercial marketplace of ideas.” The Secretary has offered no convincing reason why the government should be given any wider latitude to coerce than to forbid commercial speech. The Court routinely reviews compelled speech claims in the commercial context under the standards applicable to commercial speech restrictions.

Governmental compulsion of nonfactual advocacy for the purpose of manipulating consumer opinion is subject to strict scrutiny. The Court has relaxed constitutional scrutiny where the government has compelled disclosures of non-controversial, purely factual information for the protection of the public. Because the governmental regulation of advertising here is not limited to factual information, and cannot be justified by the need to prevent deception, the rationale for a relaxed standard does not exist. Accordingly, the government’s regulation of speech should be reviewed under a strict scrutiny standard. Moreover, strict scrutiny is appropriate because the compelled advertising programs alter the content of speech.

This case is the mirror image of 44 Liquormart, where the Court stuck down a law that barred commercial advertising in order to decrease consumption. This law compels commercial advertising in order to increase consumption. This law deserves the same fate, for the same reasons.

Pacific Legal Foundation’s Amicus Brief

The PLF argues that generic advertising programs should be strictly scrutinized. While “commercial speech” has traditionally been accorded less constitutional protection, in that the government is not regulating to prevent commercial harms, the traditional reasons for providing less protection for commercial speech do not apply. In addition, because the challenged marketing orders infringe on handler’s freedom of association, they are subject to strict scrutiny without regard to whether they involve commercial or non-commercial association rights. The advertising program is unconstitutional because it is not the least restrictive means of achieving an admittedly compelling state interest, that of maintaining a strong agricultural economy. Glickman has not and cannot show that government advertising is better equipped to achieve this goal than advertising by individual farmers. Because the assessments diminish the ability of farmers to advertise on their own, their free speech rights are infringed and the First Amendment rights of consumers are adversely affected by limiting the commercial messages and information available to them. In any event, the program can be accomplished through less restrictive means such as requiring credit for individual advertising or by making the program voluntary.

Washington Legal Foundation’s Amicus Brief

The WLF argues that Glickman was right to identify Abood as the proper legal test for compelled funding of private speech. WLF states, however, that Glickman mischaracterizes the Abood line of cases and the proper test to be derived from those cases. The Abood test “impose[s] an exacting measure of First Amendment scrutiny on any government effort to compel speech by individuals or business entities.” The Abood test requires that the governmental act satisfy three requirements: (1) The government must demonstrate that the compelled financial support serves some extremely important government interest, (2) the funded activity must be “germane” to the identified government interest, and (3) the compulsory funding scheme must be narrowly tailored, that is, it must not significantly add to the burdening of free speech that is inherent in the allowance of any amount of compulsory funding of expressive activity. These marketing orders fail both prongs one and three. The government has no vital policy interests in running generic advertising campaigns and the compelled advertising programs are not narrowly tailored since there are numerous examples of less restrictive alternatives. Such examples include: (1) taxpayer funded government advertisements, (2) grower and handler funded government advertisements, and (3) government encouragement of voluntary marketing cooperatives that would then fund such activities.1

WLF argues that Glickman has sought to eliminate from the Abood test any consideration of the “narrowly tailored” requirement. Thus formulated, the Solicitor’s test amounts to “little more than a rational basis review of compelled speech.” The Third Circuit in Frame, WLF points out, held that the Abood test employed a higher standard of scrutiny than that employed in cases like Central Hudson that involve only regulation, not compulsion, of commercial speech. In addition, the Court’s rationale for permitting a somewhat relaxed standard of review for cases involving regulation of commercial speech is inapplicable to a case concerning the compelled funding of commercial speech.

United Sheep Producers’ Amicus Brief

The USP argue that the promotion programs impose an extraordinary burden on First Amendment freedoms, far worse than government attempts to compel speech previously struck down by this Court. These collective promotion programs are not government speech. The only government role is ministerial approval, coercion, and enforcement. The content of the programs is designed, administered, and implemented by industry committees of competitors. These programs are not government speech because they are paid for by a small defined group and designed and implemented by the leadership of that group.

USP also argues that the government’s justification for this program is, at best, vague and illusory, and at worst, diabolical. Completely lacking is any showing by Glickman that a problem exists. There is no analysis of the economic status of the fruit growers before or during the program. In addition, the government must make an especially compelling case to justify compelling speech. This Court has never upheld a speech restriction or compulsion solely because of free riders without some compelling independent basis to restrict or require speech.

In addition, the government’s claim that compulsion is necessary to eliminate free riders is at best disingenuous. There are various “free riders” in many USDA compelled speech promotion programs. For example, dairies that process less than 500,000 pounds of milk in consumer size packages per month are made “free riders” on the milk processor program. These“free riders” are created for political, not economic, reasons. Thus, the existence of “free riders” cannot justify the mandatory nature of these programs. Finally, the program’s failure to allow credit for each handler’s own brand advertising requires that the program be struck down. Other less restrictive alternatives are use of tax revenues to fund these messages, and the provision of direct subsidies or tax credits to fruit farmers. Indeed, the most successful alternative to coerced advertising is facilitating the use of agricultural cooperatives. The success of agricultural cooperatives demonstrates that the benefits of the tree fruit program can be had without its unconstitutional and compulsory nature. The “speech tax” at issue in this case is unconstitutional.

American Advertising Federation’s Amicus Brief

The AAF brief, unlike the others we have discussed, consists almost entirely of a historical review of advertising practices and legal restrictions over the course of American history. The AAF contends that advertising was ubiquitous in the early American press. Although states regulated trades widely, the sole advertising restrictions were on unlawful products and services. The virtual absence of advertising restrictions is consistent with the Colonial conception of a “free press” that included advertising. The absence of restrictions on advertising is also consistent with the Framer’s political philosophy that equated liberty and property. State legislative practice at the time of passage of the Fourteenth Amendment is consistent with the view that truthful commercial messages regarding lawful products and services are entitled to full Constitutional protection. Lower protection for commercial speech is a 20th Century phenomenon that has its origins in disenchantment with economic liberties and confusion with economic due process. Assessed under the level of scrutiny accorded fully protected speech, this becomes an extremely easy case. The government obviously cannot compel a speaker to endorse or propound a particular view. Moreover, whether assessed under Central Hudson or Abood, the Secretary’s program is clearly unconstitutional.

Sun-Maid Growers of California’s Amicus Brief

Sun-Maid, the raisin marketing cooperative owned by 1,200 raisin growers, and the largest single marketer of raisins in the world, argues that the large number of briefs filed on both sides speaks to the importance of this case. Sun-Maid’s purpose in adding its voice to the many others, it says, is to discuss two issues which collectively demonstrate that this program cannot withstand Constitutional scrutiny under any test.

First, Sun-Maid argues, government-compelled advertising programs force all members of an industry to speak with a single voice, and to be identified with a single message. Such programs subvert the ability of independent growers, acting alone or through cooperatives, to associate and deliver their own messages. They also dilute a grower’s or cooperative’s ability to develop its own brand identity and consistent advertising messages. In Sun-Maid’s case, the “generic” advertising of “California raisins” has actually functioned to promote the products of Sun-Maid’s competitors, even though Sun-Maid was the single largest “funder” of such advertising.

Second, Sun-Maid argues, even if the government does have a permissible interest in requiring growers and sellers to buy more advertising than they would pay for of their own volition in order to avoid “free riders,” the burdens on free speech must be no more significant than necessary, and there are clearly less burdensome alternatives that have not been considered. For example, cooperatives like Sun-Maid provide a voluntary alternative through which growers may gain the advantages and economies of scale without being forced to support messages they oppose. At a bare minimum, to be constitutional, any compelled advertising program must be required to provide full credit for voluntary branded advertising, thereby allowing any “free rider” concerns to be addressed without unnecessary coercion. Such credits must be full, fairly administered, and available to all who engage in branded promotion.

Conclusion

We have discussed the key arguments made in briefs filed with the Supreme Court by parties and amici in Glickman v. Wileman. Necessarily, by choosing to highlight the major points made in these briefs, we have omitted the other arguments and points made. Of course, the ultimate judges (or should we say “justices”) of the merit in each of these arguments are sitting on the Supreme Court. By next July, we all will find out which arguments were found to be persuasive to those nine justices. The future of this significant aspect of this country’s agricultural economy hangs in the balance.

The authors are co-authors, along with John Roberts of Hogan & Hartson, of one of the briefs discussed herein -- the amicus brief filed on behalf of the National Association of State Departments of Agriculture.

1Ironically, the WLF in discussing various less restrictive alternatives seems to implicitly support the NASDA amicus argument in support of Glickman that the subject programs engage in “government speech” not subject to the First Amendment. The WLF says, “Respondents would have no cause for complaint if a generic advertising program for peaches, plums, and nectarines were funded out of tax revenues. That might even be true if the government imposed a tax on growers and handlers in order to raise sufficient revenue to pay for such a program.” WLF Amicus Brief at 26 (emphasis added). That, NASDA may argue, is essentially what the challenged program does.

Richard T. Rossier, Esq. and Wayne R. Watkinson, Esq.
McLeod, Watkinson & Miller
One Massachusetts Avenue, NW
Washington, DC 20001
Office: (202) 842-2345
FAX: (202) 408-7763

Newsletter Vol2-No3, Part 2