Chapter Thirteen
Objectives
• To understand the evolution of advertising as
free expression under the First Amendment
• To explain commercial speech law.
• To explain noncommercial speech law.
• To explain advertising and access to the
media.
• To understand forms of advertising
regulation.
Advertising and the First
Amendment
• For years: Commercial speech
(advertising) had NO 1A protection!
• “Commercial speech doctrine” gives limited
protection to persuasive speech
– Court has waffled over
the years, and case law
is erratic and patchy
Early case law: bad news!
• Valentine v. Chrestensen (1942): Valentine
passed out handbills that advertised sub
rides on one side and had political protest
speech on other; held to violate NY
sanitation law
– Court upheld and said
1A does not apply to
“purely commercial
advertising”
– Commercial speech
doctrine chipped away
over decades, but accepted until 1970s
Early cases: bad news!
• Pittsburgh Press v. Pittsburgh
Commission on Human
Relations (1973): newspaper want
ads in sections: “Jobs— Male
Interest,” “Jobs—Female Interest”
– Held to violate anti-discrimination
ordinance; ordinance challenged
– Court upheld; likened sections to illegal advertising
Early cases: good news!
• Bigelow v. Virginia (1975): ad for NY abortion
clinic in VA newspaper where abortion illegal
– Conviction overturned: ad contained “factual info”
that was “newsworthy” and “of clear public
interest”—thus protected speech
– Supreme Court extends First
Amendment protection to
commercial speech for the first
time!
High-water mark
• Virginia State Board of Pharmacy v. Virginia
Citizens Consumer Council (1976): VA statute
said licensed pharmacists could not advertise
prescription drug prices—overturned
– 1A did apply; speech does not lose protection simply
because money is spent to purchase it
– Footnote: advertising may be more
“durable” than other speech and
unlikely “chilled” by proper regs
– Upshot: If ads not deceptive and
for legal products—protected!
THE major case
• Central Hudson Gas & Electric Corp v. Public
Service Commission (1980): Court invalidated
NY regulation prohibiting advertising that
promoted use of electricity
– Inserts in power bills touted nuclear energy; nuclear
opposition group wanted space to rebut claims and
were denied space
– Court expressly limited amount
of 1A protection based on “the
nature both of the expression
and of the gov’t interest served
by its regulation”
– Four-part test to determine if
commercial speech gets protection
Central Hudson’s four-part test
• 1) Ad must concern lawful activity and not
be misleading;
• 2) State must prove substantial state
interest to be served by regulation;
• 3) Regulation must advance interest; and
• 4) Regulation must be no more extensive
than necessary to advance interest
– “Fit” between regulation and interest
Advertising Regulations and the
Supreme Court
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Advertising by lawyers
Unsolicited mail advertising
Tobacco industry advertising
Alcohol industry advertising
Lawyers’ advertising
• Most states had bans on advertising by
attorneys
• Bates v. Arizona State Bar (1977): Legal
clinic advertised prices, far below “going
rate;” fined by AZ state bar
– Court ruled against bar: 1A right of consumers
to receive commercial info, but ads cannot be
misleading
– Ad bans overturned
Unsolicited mail advertising
• Bolger v. Youngs Drug Products Corp.
(1983): Post Office federal statute that
prohibited unsolicited mailings regarding
birth control products; Youngs wanted to
send “infomercial” flyers on condoms and
VD
– Court said such a ban denies
consumers access to important
information that public has
right to receive
Tobacco Advertising and the
weirdness of Posadas
• Posadas de Puerto Rico Assoc. v. Tourism Co. of
Puerto Rico (1986): hard to reconcile
– Supreme Court upheld a Puerto Rican
act that allowed casino gambling but
did not allow casino advertising locally.
– Posadas, which owned and operated a
casino and hotel on the island, protested
the act, and were fined several times
for violating the advertising law.
--Court applied CH, found law OK
The weirdness of Posadas
• Posadas de Puerto Rico Assoc. v. Tourism Co. of
Puerto Rico (1986): hard to reconcile
– Court said that advertising that is
considered “harmful” has less
First Amendment protection than
other advertising and is therefore
subject to greater regulation.
– The Supreme Court’s opinion
affirmed the Puerto Rican law but also
mentioned alcoholic beverages and
cigarettes as products whose
advertising could be further restricted
without violating the 1A.
Posada revisited?
• Greater New Orleans Broadcasting Association, Inc.
v. United States (1999): Court struck down a ban
against New Orleans broadcasters who wanted
to carry advertising for local casinos.
--Court applied CH: failed 3 and 4
because of “exemptions and
inconsistencies” in law—included
exemption for advertising casino
gambling run by Native American
tribes, allowing ads promising
“Vegas-style excitement” so long as gambling-specific
info not mentioned
Applying CH to tobacco ads
• Lorillard Tobacco Co. v. Reilly (2001): MA
had regulations forbidding tobacco ads
within 1,000 ft. of schools, parks,
playgrounds, and ads must be 5'+ off floor
– Court overturned cigarette
rules: regulations of
cigarette ads are federally
preempted
– Cigars and smokeless
tobacco NOT federally
preempted, but MA rules
violated 1A
Applying CH to alcohol ads
• Rubin v. Coors Brewing (1995): Court
unanimously struck down law barring advertising
of alcoholic content of beer—“strength wars”
– Court applied CH and said it failed
parts 3 and 4: “overall irrationality
of gov’t’s regulatory scheme”—
labels vs. ads—laws at odds
• 44 Liquormart v. Rhode Island (1996):
Court struck down RI laws banning
alcohol price ads except at point of
sale and publication/broadcast of
alcohol prices—CH 3 and 4 failed
– Some justices uncomfortable with CH
The upshot of post-CH cases
• Central Hudson becoming stricter and stricter
– Some justices still unhappy with test, but Court
refuses so far to abandon altogether
• And: Court failed to expressly overrule
Posadas, despite that Posadas upheld
restrictions on gambling ads indistinguishable
from those struck down in Greater New Orleans
Broadcasting!
• No exemptions for “vice” advertising: tobacco,
gambling, alcohol
Compelled advertising
• Glickman v. Wileman Bros. & Elliott
(1997): CA fruit tree growers
challenged CA program forcing
them to pay for generic advertising
for peaches, plums and nectarines
– Court said law OK: no prior restraint
(growers could put out other messages);
no forcing symbolic or actual speech; no
forcing to support political or
ideological views of any kind (no CH)
– Also, growers stand to benefit
economically from “forced” speech with
which they agree—ads intended to
stimulate interest in their products
Compelled advertising redux!
• U.S. v. United Foods (2001): Federal
program required all mushroom growers
to pay for generic advertising
– Court overturned; “compelled speech”
– Kennedy distinguished
from Glickman: CA
fruit growers part of
association with
regulatory marketing
scheme—not so with
mushroom growers
Corporate free speech
• First National Bank v. Bellotti (1978): MA
law forbade corporate advertising for or
against ballot measures except when
measure may “materially affect” business
– Court overturned: no 1A guarantee of special
right of access for corporations, but when
media agrees to accept
corporate ads, states
cannot prohibit merely
because speech comes
from corporation rather
than individual
Corporate speech test
• Consolidated Edison v. Public Service Comm. of
NY (1980): Supreme Court ruled that the
commission could not prohibit utilities
from sending inserts with their bills that dealt
with political or controversial matters
• Court set conditions that would justify
government regulation of noncommercial
speech.
Corporate speech test
• Consolidated Edison v. Public Service Comm. of
NY (1980): Court set out test for noncommercial corporate speech (vs. advertising
products); gov’t must meet only one:
– (1) restriction is “precisely drawn means of serving
compelling state interest”
– (2) restriction fulfills “significant government
interest” and merely regulates time, place and
manner
– (3) narrowly drawn restriction on speech under
specialized circumstances where disruption of gov’t
activities must be avoided (e.g., military base)
Nike v. Kasky…fizzle!
• Nike v. Kasky (2003): April 2002 California SC
ruling rejected claim that 1A immunized Nike
from being sued under state consumer
protection laws (for allegedly misrepresenting
facts in public relations campaign)
– Nike had defended benefits of
its Asian factories to host
countries and sought to
portray itself as responsible
corporation with adequate
labor standards in overseas
facilities
Nike’s major unanswered question
• When Nike issued press releases responding to
criticism of labor practices in their foreign
factories, was it noncommercial speech, entitled to
full 1A protection, or commercial speech, entitled
to limited protection?
– Court’s one-sentence ruling on
June 26, 2003: “The writ of
certiorari is dismissed as
improvidently granted,”
meaning Court erred by
granting appeal prematurely
– So we don’t know! Case now goes to trial on merits in
California, but Supreme Court still could choose to
review if Nike found guilty
Access to media
• Miami Herald v. Tornillo (1974): Miami Herald
attacked Pat Tornillo in print over his run for
state legislature; FL had right of reply law;
Herald refused, Tornillo sued
– FL Supreme Court upheld law;
US Supreme Court unanimously
reversed
– 1A simply does not permit
government to tell newspaper
publisher what to print or not print
– No guaranteed right of access to
print media! (Note differences to
electronic media!)
Federal Trade Commission (FTC)
• Created in 1914 by Federal Trade Commission
Act; responsible for managing ad issues; no
longer caveat emptor!
• Wheeler-Lea Amendments of 1938: FTC may ban
“unfair or deceptive acts or practices in
commerce”
– Will find practice deceptive if
misrepresentation, omission, or
other practice misleads consumers,
acting reasonably, to their detriment
• Magnuson-Moss Act of 1975: FTC may act against
fraudulent ads down to local level and can issue
enforceable “Trade Regulation Rules”
Tools of the FTC
• “Cease and desist” order: legally enforceable
order issued once FTC investigations reveal
unfair or deceptive practices
• Assurance of voluntary compliance: painless way
of resolving—company promises to stop
questionable practices in return for FTC
dropping investigation (when no harm done)
• Consent decree: most cases resolved this way;
FTC investigates and tells company that formal
proceedings will ensue unless company signs
decree (most do—it’s legally enforceable)
– No admission of guilt by company; just stop ads
“Unfairness Doctrine”
• FTC now looks beyond simply fraudulent
or false advertising to “fairness”
• Ads are unfair if:
– (1) causes or likely to cause substantial
consumer injury…
– (2) …which is not reasonably avoided by
consumers themselves, and…
– (3) …is not outweighed by countervailing
benefits
CA advertising law
• CA “Printer’s Ink” statute: modeled after 1911
Printer’s Ink magazine article that proposed
model statute
– Forbids many forms of false or misleading ads
– Cannot advertise product that is not available or
will not be sold for advertised price
– Must disclose multiple-unit price-cut requirements
– Comparative ads must be documented
Spam? Spam!
• Unsolicited commercial email
• At least 24 states have anti-spam laws
– CA: must have ADV: in subject line and give
some way to be removed from list
• Federal law being pushed;
multitude of state laws is
confusing
• All normal ad rules must
be followed online as well
Self-regulation
• National Advertising Review Council set up in
1971: created Nat’l Advertising Division (NAD),
Children’s Advertising Review Unit (CARU) and
Nat’l Advertising Review Board (NARB)
• NAD monitors nat’l ads to see if false,
misleading or deceptive and takes complaints
from competitors— if finds problem, asks
advertiser to take action to correct
– Can appeal to NARB, which often but not always
upholds NAD decisions
– Powerful organizations! Compliance with
NAD/NARB is nearly 100% and usually faster than
FTC actions
Lanham Act
• A person who generates “any false designation
of origin, false or misleading description of fact,
or false or misleading representation of fact
which…in commercial advertising or
promotion, misrepresents the nature,
characteristics, qualities, or geographical origin
of his or another person’s goods or services, or
commercial activities” is liable for civil
damages.
Lanham Act False Advertising
Test
• What message the ad conveys, either
explicitly or implicitly.
• Whether the message is false or
misleading.
• Whether that message is likely to injure
the plaintiff.
Conclusion: commercial and
corporate speech
• First Amendment protects commercial
speech—an expression promoting a
commercial transaction--but to a lesser
degree than it protects political expression.
• Under the four-part test, truthful
commercial speech may be restricted if the
government asserts a substantial interest
that will be advanced by regulation. That
regulation also must be narrowly tailored
to serve government objectives.
Conclusion: federal regulations
• The Federal Trade Commission has power
to keep the flow of commercial
information clean.
• FTC can halt deceptive ads through
consent decrees, cease-and-desist orders
and injunctions.
• Companies may seek injunctions under the
Lanham Act to halt false or misleading ads
and promotions by competitors
Conclusion: other regulations
• Advertisers themselves and the media
monitor advertisements to ensure that the
government and public will not find them
deceptive.
• Leading self-regulatory body is the
National Advertising Division of the
National Advertising Review Board.