Proskauer on Advertising Law
Proskauer on Advertising Law

Snack Bar Class Action Powers On After USDA Action and FDA Inaction

Unlike a fine wine, a snack bar does not get better with age. Neither, apparently, does litigation. Last month, Judge William H. Pauley III in the Southern District of New York lifted a years-long stay in a lawsuit against KIND LLC concerning the allegedly false marketing of KIND snack products as “all-natural” and “non-GMO.” In re KIND LLC “Healthy and All Natural” Litigation, No. 15-MD-2645. As we blogged about previously, the “all-natural” claims were originally stayed in 2016 in light of ongoing FDA rulemaking regarding the use of “natural” labeling, and the “non-GMO” claims were subsequently stayed in early 2018 pending the USDA’s establishment of a national disclosure standard for bioengineered food. In December 2018, the USDA promulgated its “non-GMO” rules through the National Bioengineered Food Disclosure Standard, which became effective in February 2019. The FDA, however, is continuing its lengthy deliberative process. In considering this delay, Judge Pauley concluded that “[i]t is time for this multi-district litigation to move forward.”

Plaintiffs filed this lawsuit in 2015, alleging that KIND deceptively marketed certain products as “all-natural” and “non-GMO” even though they purportedly contain synthetic and genetically modified ingredients, in violation of New York and other state laws. In September 2016, Judge Pauley stayed the “all-natural” claims pursuant to the doctrine of primary jurisdiction, to wait for the FDA rulemaking process to run its course and provide guidance on the definition of the term “natural.” In March 2018, the Court also granted KIND’s motion to stay the “non-GMO” claims pending USDA action on a national disclosure standard for bioengineered food, which was expected to occur in July 2018. At the same time, the Court denied plaintiffs’ motion to lift the stay of the “all natural” claims. In doing so, Judge Pauley recognized the “glacial pace” of the FDA in defining the term “natural.” However, because there was a significant interest in litigating the “all natural” and “non-GMO” claims together, the Court continued to stay the “all natural” claims, but only through August 15, 2018—two weeks after the date on which the USDA was expected to promulgate the “non-GMO” standard. In doing so, the Court noted that the justification for lifting the stay on the “all natural” claims would be “substantially stronger” if the FDA failed to provide guidance by this date.

The USDA promulgated its “non-GMO” rules through the National Bioengineered Food Disclosure Standard on December 21, 2018. The Court therefore found in its February 2019 decision that there was no reason to continue the stay as to plaintiffs’ “non-GMO” claims. However, all parties were in agreement that the “non-GMO” claims should not proceed without the “all natural” claims, again putting at issue whether the stay of the “all natural” claims should be lifted as well, despite the continued absence of FDA guidance on the definition of the term “natural.” Judge Pauley noted that courts have split on the question of whether to lift similar stays of “natural” claims pending FDA rulemaking: some have declined to do so, others have lifted stays, and some have chosen not to stay these types of claims at all. But citing his prior determination that if the FDA provided no further guidance by August 2018, “the basis for lifting the stay w[ould] be substantially stronger, and that there was no reason to continue to stay the “non-GMO” claims, the Court concluded that the stay of the “all natural” claims should be lifted in this case. As a result, this lawsuit that began in 2015 will now proceed to discovery.

In the meantime, KIND petitioned the FDA last week to update its regulations on nutrient content labeling because, in KIND’s view, current regulations permit manufacturers to use nutrient content labeling in a way that misleads the public by concealing the use of added sugars and trans fats in products marketed as contributing to a healthy diet. Watch this space for further developments in-KIND.

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Want to talk advertising? We welcome your questions, ideas, and thoughts on our posts. Email or call us at lweinstein@proskauer.com /212-969-3240 or akaplan@proskauer.com /212-969-3671.  We are partners in Proskauer’s False Advertising & Trademark practice and editors of Proskauer on Advertising Law, which was recently named to the ABA Journal’s Web 100 for 2018.

FTC Statistics Confirm Risks to Advertisers of Refusing to Participate in NAD Proceedings

No advertiser likes challenges to its advertising, whether by private litigants, state or federal governmental agencies, or in voluntary self-regulatory NAD proceedings.  But for companies whose advertising is challenged at NAD, there are good reasons to participate and to abide, like it or not, by NAD’s recommendations or those of NARB, the appellate arm of advertising voluntary self-regulation.  The powerful reasons for compliance include the vastly reduced expense of NAD proceedings compared to litigation, NAD’s unquestioned expertise in advertising claim substantiation issues compared to that of the federal and state judiciary, and the long-term, the-shoe-will-one-day-be-on-the-other-foot benefit resulting from industry-wide adherence to a system of voluntary self-regulation of advertising.

Still, when a company’s very expensive advertising campaign is put at risk in a purely voluntary dispute resolution proceeding, it can be very tempting (albeit shortsighted) for the advertiser to decline to participate or, after participating, to decline to follow NAD’s (or NARB’s) recommendation if adverse to the advertiser.   Recognizing that (i) a declination to participate in an NAD challenge or to abide by NAD’s recommendation will result in NAD referring the matter to the appropriate federal regulatory body, typically the FTC, and (ii) FTC investigation and litigation can be hugely expensive and can result in severe financial and other penalties, most advertisers historically have avoided thumbing their noses at NAD.

Occasionally, advertisers have chosen the course of taking their proverbial ball and going home, gambling on the assumption that the FTC will be stretched too thin on its own consumer protection matters to devote its scarce resources to NAD referrals.  Today, however, an article published in Law 360 written by NAD Staff Attorney Alexander Goldman reveals the fallacy of the assumption that FTC is too busy to handle NAD matters.  Relying on FTC’s own statistics, Mr. Goldman reports that in 2017-18 (a period coinciding with the Trump presidency), the FTC took action in 15 of the 19 matters NAD referred to FTC.  Mr. Goldman noted that the percentage of NAD referrals that FTC acted upon during this two year period was virtually identical to that during the preceding two-year period of 2015-16, while President Obama was in office.

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Want to talk advertising? We welcome your questions, ideas, and thoughts on our posts. Email or call us at lweinstein@proskauer.com /212-969-3240 or akaplan@proskauer.com /212-969-3671.  We are partners in Proskauer’s False Advertising & Trademark practice and editors of Proskauer on Advertising Law, which was recently named to the ABA Journal’s Web 100 for 2018.

If Class Action Litigants Could Turn Back Time (The Text Would Have Said So)

Last week, the Supreme Court unanimously reversed a Ninth Circuit decision, resolving a circuit split in ruling that Federal Rule of Civil Procedure 23(f)’s 14-day deadline for a losing party to file a petition for permission to appeal an order granting or denying class certification is not subject to equitable tolling. Nutraceutical Corp. v. Lambert, 586 U.S. — (2019).

The putative class action lawsuit alleged California law false advertising claims arising from Nutraceutical’s sale and marketing of purported aphrodisiac supplements. The original district court judge assigned to the case certified the class and subsequently retired. Later, the judge to whom the case was reassigned granted Nutraceutical’s motion for decertification. From that point under 23(f), the plaintiff had 14 days to file a petition with the Court of Appeals for leave to appeal the decertification order.

Ten days into the 14-day countdown, plaintiff told the district court at a status conference that he would file a motion in the district court for reconsideration of the decertification order. No mention was made of the Rule 23(f) deadline. Plaintiff filed the reconsideration motion and, long after the 14-day deadline for a motion for leave to appeal, the district court denied reconsideration. Only then did plaintiff file his motion for leave to appeal with the Ninth Circuit.

Nutraceutical objected that the motion for leave to appeal was untimely under Rule 23(f), but the Ninth Circuit found the appeal timely, reversed the district court’s order of decertification and ordered that a class be certified. The Ninth Circuit’s rationale was that Rule 23(f)’s 14-day time limit is non-jurisdictional and therefore necessarily subject to equitable tolling, and that the 14-day deadline was deemed tolled when, before it had expired, plaintiff had objected to the decertification order and notified the district court of his intention to seek recertification via filing a reconsideration motion for reconsideration. In reaching this result, the Ninth Circuit recognized that its decision was in conflict with those of other circuits, which had held that Rule 23(f)’s 14-day deadline was immutable.

The Supreme Court granted Neutraceutical’s petition for certiorari and, in an opinion by Justice Sotomayor, unanimously reversed. The Supreme Court agreed with the Ninth Circuit that Rule 23(f) is non-jurisdictional because it is a procedural rule. Still, the Court clarified, the “mere fact that a time limit lacks jurisdictional force . . . does not render it malleable in every respect.” Instead, Justice Sotomayor explained, “[w]hether a rule precludes equitable tolling turns not on its jurisdictional character,” but “rather on whether the text of the rule leaves room for such flexibility.”

Reading Rule 23(f) with Federal Rules of Appellate Procedure 5(a)(2) and 26(b)(1), the Court found that the Rules “express a clear intent to compel rigorous enforcement of Rule 23(f)’s deadline, even where good cause for equitable tolling might otherwise exist.” Plaintiff’s motion was therefore untimely, regardless of any equitable considerations.

Nutraceutical Corp. provides an important lesson to litigants, whether plaintiffs or defendants, who find themselves on the losing end of a class action certification motion. Litigants have the right to seek leave to appeal the district court’s certification decision to the relevant circuit court. However, they forfeit that right if they fail to do so within 14 days of the entry of the order granting or denying class certification, as the appellate court cannot forgive on equitable tolling ground defendant’s failure to adhere to that deadline, even in good faith.

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Want to talk advertising? We welcome your questions, ideas, and thoughts on our posts. Email or call us at lweinstein@proskauer.com /212-969-3240 or akaplan@proskauer.com /212-969-3671.  We are partners in Proskauer’s False Advertising & Trademark practice and editors of Proskauer on Advertising Law, which was recently named to the ABA Journal’s Web 100 for 2018.

Nestlé’s Non-Disclosure of Child and Slave Labor Issues on Packaging Not Deceptive or Unfair, Massachusetts Federal Court Holds

Though child and slave labor is “widespread, reprehensible, and tragic,” a federal court in the District of Massachusetts found it was not deceptive for Nestlé to omit from product labels that those practices (allegedly) exist in its supply chain. In granting defendant Nestlé’s motion to dismiss, the court, after assuming that plaintiff’s allegations are true, found that reasonable consumers would not be misled when manufacturers omit such information at the point of sale. Tomasella v. Nestlé, No. 18-cv-10269 (2019).

In this putative class action – one of a trio of similar lawsuits against chocolate manufacturers – plaintiff, who purchased various Nestlé products, claimed the company’s omissions were deceptive and unfair, and violated Massachusetts consumer protection laws. Plaintiff claimed she would not have bought, or paid as much for, Nestlé’s products had she known that child and slave labor allegedly existed in its products’ supply chain.

First, the court examined whether Nestlé deceived customers by failing to disclose alleged child and slave labor practices in its supply chain on product packaging. Citing FTC administrative precedent, the court characterized Nestlé’s omission as a “pure omission,” involving a subject as to which the seller has said nothing, in a circumstance that does not give any meaning to that silence. Specifically, the court noted that plaintiff did not allege Nestlé made any false statements about child or slave labor on its packaging, “or that Nestlé’s omissions turned an affirmative representation into a misleading half-truth.” By selling chocolate, Nestlé is implying “the product is fit for human consumption.” This implication, the court reasoned, “does not on its own give rise to any misleading impression about how Nestlé or its suppliers treat their workers.” The court therefore found it was not reasonable for a consumer to “affirmatively form any preconception about” Nestlé’s supply chain, “let alone make a purchase decision based on any such preconception.” Because the labeling would not mislead consumers “acting reasonably under the circumstances, to act differently,” plaintiff failed to state a claim for deceptive conduct. The court also held Nestlé’s failure to disclose alleged child and slave labor practices in its supply chain did not constitute unfair trade practices under Massachusetts law, and Plaintiff did not point to any authority that defined such nondisclosure as unfair.

The Tomasella decision echoes a line of other federal cases in which putative class actions were filed alleging similar labor practices in the supply chains of other retailers and manufacturers. These cases, including several brought under California’s consumer protection laws, also found there was no affirmative duty to disclose these types of supply chain labor practices. See, e.g., Sud v. Costco, 15-cv-03783 (N.D. Cal. 2017) and Wirth v. Mars, 15-cv-1470 (C.D. Cal. 2016).

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Want to talk advertising? We welcome your questions, ideas, and thoughts on our posts. Email or call us at lweinstein@proskauer.com /212-969-3240 or akaplan@proskauer.com /212-969-3671.  We are partners in Proskauer’s False Advertising & Trademark practice and editors of Proskauer on Advertising Law, which was recently named to the ABA Journal’s Web 100 for 2018.

SDNY Judge Not Sweet on Dannon’s Bid for a Preliminary Injunction

In a battle of leading yogurt beverage makers, Chief Judge Colleen McMahon of the U.S. District Court for the Southern District of New York recently denied Dannon’s application for a preliminary injunction in its false advertising suit against Chobani. The result of Judge McMahon’s decision is that Chobani can continue to sell its yogurt drinks with labeling that claims its drinks contain 33% less sugar than Dannon’s yogurt drinks. Danone, US v. Chobani, No. 18-cv-11702 (S.D.N.Y. Jan. 23, 2019). Although Judge McMahon found that Dannon is likely to succeed on its claims that Chobani’s labeling is misleading under the Lanham Act and N.Y. General Business Law § 349, she concluded that Dannon was not entitled to a preliminary injunction because it had not shown it would be irreparably harmed absent an immediate injunction.

Dannon makes the nation’s leading-selling drinkable yogurt for kids: “Danimals Smoothies.” Danimals are available in eight flavors and sold in 3.1 fluid ounce bottles. All flavors currently contain 9 grams of sugar per serving. Chobani’s competing drinkable yogurt, called “Gimmies,” comes in three flavors and is sold in 4 fluid ounce bottles. Two Gimmies flavors – “Cookies & Cream Crush” and “Bizzy Buzzy Strawberry” – contain 9 grams of sugar per bottle, while the “Chillin’ Mint Chocolate” flavor contains 7 grams.

Chobani’s labels claim that Gimmies contains “33% less sugar than the leading kids’ drinkable yogurt,” which Chobani conceded refers to Dannon’s Danimals. On the front and top of the Gimmies packaging, this claim is unqualified. On the back, the claim appears in much smaller typeface with an asterisk saying: “Chobani Gimmie Milkshakes: avg. 8 g sugar; leading kids’ drinkable yogurt: avg. 12 g sugar, per 4 fl oz serving.”

Chobani asserted that, according to its calculations, the average of the sugar content of the three Gimmie flavors rounds down to 8 grams per 4 fluid ounces. Since Danimals come in a smaller serving size than Gimmies, Chobani then calculated how much sugar a Danimals would contain if it came in a 4 fluid ounce package and found that it would contain nearly 12 grams. Because 12 grams is 33% more than 8 grams, Chobani concluded that Gimmies contained 33% less sugar than Danimals per fluid ounce.

The court found that the Gimmie labeling, while not literally false, would likely be found misleading because it required consumers to perform multiple calculations and search for “fine-print” disclaimers in order to understand the labeling properly. Drawing on the Second Circuit’s recent decision in Mantikas v. Kellogg, which we blogged about here, Judge McMahon noted that a reasonable consumer “should not be expected to look beyond misleading representations on the front of the box to discover the truth regarding the advertisement on the side of the box.”

Nonetheless, Judge McMahon found Dannon’s preliminary injunction motion wanting. She found that Dannon had not shown irreparable harm from the misleading labeling, as Dannon’s total market share for yogurt products grew to its second-highest level ever following Gimmies’ introduction, and that subsequent decreased sales of kids’ drinkable yogurt were not shown to be attributable to Gimmies’ misleading labeling. The court also rejected Dannon’s arguments that Chobani’s marketing harmed Dannon’s reputation as a purveyor of healthy snacks because Danimals do in fact have more sugar per ounce than Gimmies.

The court also weighed the impact such an injunction would have on Chobani, finding that it would cause substantial harm. Chobani presented evidence showing that a preliminary injunction would be “financially ruinous,” as it would essentially amount to a forced recall that would cost the company millions of dollars in wasted product, lost sales, and logistical expenses, as well as jeopardizing relationships with retailers and consumers.

Finally, the court noted that a preliminary injunction was not necessary to advance the public’s interest in truthful advertising, as Chobani had already begun revising its packaging to address Dannon’s complaints and the products with the current labeling will either be sold or expire in a few weeks.

The opinion points to the likely significance of the Second Circuit’s Kellogg decision, underscoring the inadequacy of fine-print disclosures to remedy what the court determined was likely to be implicitly false advertising. However, it also illustrates the importance of establishing likely irreparable harm that false advertising plaintiffs face when seeking the extraordinary remedy of a preliminary injunction.

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Want to talk advertising? We welcome your questions, ideas, and thoughts on our posts. Email or call us at lweinstein@proskauer.com /212-969-3240 or akaplan@proskauer.com /212-969-3671.  We are partners in Proskauer’s False Advertising & Trademark practice and editors of Proskauer on Advertising Law, which was recently named to the ABA Journal’s Web 100 for 2018.

State of Nature: District Courts Diverge in Treatment of “Natural” False Advertising Claims

Two recent contrasting decisions in class action false advertising cases alleging misleading uses of the term “natural” for food products underscore the difficulty in predicting the likelihood of achieving an early stage dismissal in these cases.

Late last year, Judge Richard Seeborg in the Northern District of California denied Williams-Sonoma’s motion to dismiss an alleged class action false involving labels describing products as containing “Active Ingredients Derived from Natural Sources.” Kutza v. Williams-Sonoma, 2018 WL 5886611. Just a few weeks later, Judge Allyne Ross of the Eastern District of New York dismissed a putative class action alleging that the brand name “Florida’s Natural” for orange juice misleadingly suggests that the juice contains no herbicide or other chemicals. Axon v. Citrus World, 2018 WL6448646. Last month, the Axon court denied plaintiff’s motion to amend the complaint, causing plaintiff to appeal to the Second Circuit.

The facts of the cases do not readily explain why the Kutza and Axon decisions came out differently.  In the former case, plaintiff claimed Williams-Sonoma breached express and implied warranties to him and to a nationwide class by deceptively advertising that its products are “natural” through product labels that state “Active Ingredients Derived from Natural Sources.” Plaintiff alleged that product ingredients, ranging from phenoxyethanol and dimethicone to citric acid and sodium chloride, are “hazardous” and/or synthetic, and that he would not have purchased the products had he known the nature of these ingredients.

In addition to the product labels, plaintiff also alleged that Williams-Sonoma’s website contains misleading statements that further imply the products are “natural.” One such statement is that “[t]here are no dangerous chemicals like ammonia or chlorine to worry about, and no lauramide DEA or parabens either – only natural oils, essences and cleansing elements.”

Williams-Sonoma argued that none of these statements would mislead reasonable consumers. Indeed, as the court noted, the principal statement at issue – “Active Ingredients Derived From Natural Sources” – concededly is literally true. Nonetheless, Judge Seeborg allowed the false advertising claims to proceed, notwithstanding his recognition of the retailer’s “strong arguments that it can present to the fact-finder, or perhaps on summary judgment.” The opinion did not clearly explain, however, how the label’s literally true, qualified statement might mislead a reasonable consumer that every ingredient in the product was natural.

By contrast, in Axon, the court granted the defendant’s motion to dismiss on the ground that the complaint failed plausibly to explain how a reasonable consumer would be misled by the “Florida’s Natural” brand name into believing that the fruit in the product was not treated with any herbicide or other chemicals. The court relied on In re General Mills, 2017 WL 2983877 (D. Minn. July 12, 2017) – another lawsuit alleging false advertising based on trace amounts of glyphosate in “natural” products – which held that “[i]t would be nearly impossible to produce a processed food with no trace of any synthetic molecule.” As a result, the court found it “implausible that a reasonable consumer would believe that a product labeled ‘Florida’s Natural’ could not contain a trace amount of glyphosate.” It distinguished the instant case – in which a synthetic compound remained in the products due to its use in the growing process – from those in which products labeled “natural” contained synthetic ingredients that had been specifically added. It also distinguished use of the term “natural” in a brand name from instances in which it was applied as a descriptor of the product.

Together, Kutza and Axon are noteworthy for highlighting the degree to which the dismissal of suits challenging “natural” claims on product labels (and for that matter, many other advertising statements challenged in class action false advertising cases) depends on a district court’s inclination (or lack thereof) to “kick the can down the road” to a later phase of the case. This results in significant uncertainty for defense counsel and their clients as to their ability to obtain early stage dismissal even of obviously weak and conclusory allegations of false advertising. The dichotomy in the case law will be one to watch in the future.

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Want to talk advertising? We welcome your questions, ideas, and thoughts on our posts. Email or call us at lweinstein@proskauer.com /212-969-3240 or akaplan@proskauer.com /212-969-3671.  We are partners in Proskauer’s False Advertising & Trademark practice and editors of Proskauer on Advertising Law, which was recently named to the ABA Journal’s Web 100 for 2018.

San Francisco City Ordinance Takes a Hard Hit in Ninth Circuit Soft Drink Lawsuit

Can an en banc decision of a federal appellate court be controversial even when every single active judge of that court agrees with the outcome? The answer is emphatically yes, as confirmed by the Ninth Circuit’s January 31, 2019 en banc decision in American Beverage Ass’n et al. v. City & County of San Francisco, 16-16072 (2019), which preliminarily enjoined on First Amendment grounds a San Francisco ordinance mandating health warnings on certain soft drink and other beverage advertising. A link to the en banc decision is here.

In 2015, the City of San Francisco enacted an ordinance requiring certain sugar-sweetened beverage advertisements to include a health and safety warning stating: “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 ordinance prescribed instructions as to the format, content, placement and size of the warning, including that it occupy at least 20% of the total space of the advertisement. The ordinance applied principally to billboard, mass transit, arena, wall and other public place advertising, but not to television, print or online advertising, or product labeling. And, the ordinance applied to soft drinks and certain other non-alcoholic beverages with one or more added caloric sweeteners containing more than 25 calories per 12 ounces of beverage, but it did not apply to milk, milk alternatives or natural fruit juices.

The American Beverage Association and other beverage industry associations sued in San Francisco federal district court to enjoin the ordinance on First Amendment grounds. The district court denied the preliminary injunction motion on the ground that plaintiffs had not established a likelihood of success on the merits. In 2017, a Ninth Circuit panel reversed. Last year, the full Ninth Circuit granted en banc rehearing and late last week, the en banc court affirmed the panel decision, with all active judges agreeing that the San Francisco ordinance must be preliminarily enjoined as likely violating the First Amendment. How the judges got to that outcome is where the controversy lies.

The parties agreed that the San Francisco ordinance constituted compelled commercial speech, and the en banc court was confronted with determining the level of scrutiny applicable to plaintiffs’ First Amendment challenge. Judge Graber’s opinion for the en banc Court concluded that the appropriate scrutiny was established by the Supreme Court’s decision in Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (1985), and a 2017 Ninth Circuit decision called CTIA. According to Judge Graber, these decisions together established that the ordinance would be proper only if the City could show that it is reasonably related to a substantial governmental interest, which defendant could establish by demonstrating that the compelled speech is (1) purely factual, (2) noncontroversial and (3) not unjustified or unduly burdensome.

Judge Graber’s opinion found that San Francisco failed to establish that the ordinance was not unduly burdensome, and that the ordinance therefore likely violated the First Amendment. The City argued that the ordinance’s size requirements for the health warning – 20% of the total size of the advertisement — “adhere to best practices for health and safety warnings.” However, the study cited by the City’s own expert showed that a 10%-of-total-size requirement was equally effective at communicating the health warning without obscuring the advertiser’s intended message, and the City offered no evidence contradicting plaintiffs’ position that the size of the required warning would “drown out [the] Plaintiffs’ message.” On balance, therefore, Judge Graber’s opinion for the Court held that the ordinance likely was constitutionally infirm due to the unnecessary burden it placed on soft drink and other beverage companies.

The opinion for the Court caught flak in two concurring opinions. Judge Ikuta’s concurrence in the result concluded that under a more recent Supreme Court decision, National Institute of Family Life Advocates v. Becerra, 138 S. Ct. 2361 (2018), the Zauderer “reasonable relationship” test did not apply to the San Francisco ordinance, and that instead, the ordinance must be subjected to the tougher “heightened scrutiny” test. In addition, Chief Judge Thomas and Judge Christen, although also concurring in the result, criticized Judge Graber’s opinion for a different reason – they would not have reached Zauderer’s “undue burden” prong, and instead would have found that the ordinance’s compelled message failed Zauderer’s “purely factual” and “non-controversial” prongs, in that the accuracy of the compelled message was hotly disputed by the parties and not consistent with the FDA’s position regarding sugar in beverages.

In sum, there is little likelihood San Francisco will prevail if it insists on defending the ordinance on remand. However, the appropriate test for adjudicating the constitutionality of a municipality’s compelled commercial speech regulations remains as foggy as many San Francisco mornings. Still, in light of the Ninth Circuit’s en banc decision, and regardless of the level of scrutiny applied, cities and states looking to enact health- and safety-based compelled commercial speech ordinances and statutes are likely to continue to face strong judicial headwinds.

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Want to talk advertising? We welcome your questions, ideas, and thoughts on our posts. Email or call us at lweinstein@proskauer.com /212-969-3240 or akaplan@proskauer.com /212-969-3671.  We are partners in Proskauer’s False Advertising & Trademark practice and editors of Proskauer on Advertising Law, which was recently named to the ABA Journal’s Web 100 for 2018.

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