Did you hear the news?  The Supreme Court has ruled that lies have First Amendment protection. 

I’m not just talking about little white lies, or half-truths, or artful omissions – I’m talking about great big whoppers, like claiming at a public meeting that you were awarded the Congressional Medal of Honor when you were never even in the military.

I’m not lying, folks – if you don’t believe me, just take a gander at United States v. Alvarez.  (If you’re a member of the FTC’s Bureau of Consumer Protection staff, you’ll want to take a very close look at it.)

That decision has received very little attention because it was issued the same day as the “Obamacare” opinion, which exerted a black hole-like gravitational effect on the attention of the press and the public.

United States v. Alvarez involved a challenge to the Stolen Valor Act, a 2005 federal law that makes it a crime to falsely represent that one has been awarded a medal, decoration, or badge for service in the armed forces. 

Click here to view the picture The Medal of Honor

Xavier Alvarez, a member of a water district board in Claremont, California, was prosecuted under the Stolen Valor Act for telling the attendees of a board meeting that he was a retired Marine who had been wounded in action and had received the Congressional Medal of Honor in 1987.  Alvarez (who also once claimed to have played hockey for the Detroit Red Wings -- which apparently violates no federal law) had never even served in the military, much less won the Medal of Honor. 

Justice Kennedy's plurality opinion – he was joined by the Chief Justice and Justices Ginsburg and Sotomayor – acknowledged that Alvarez’s claim was absolutely false. “There is no room to argue about interpretation or shades of meaning,” he said.  But that fact alone didn’t necessarily disqualify the claim from being protected by the First Amendment.

Content-based restrictions on speech are generally presumed to be invalid, although there are exceptions to that rule for certain categories of speech – e.g., defamation, fraud, and obscenity.

According to Justice Kennedy, “[a]bsent from those few categories where the law allows content-based regulation of speech is any general exception to the First Amendment for false statements.” 

While there have been a number of cases upholding laws that declared false statements to be illegal, Kennedy said that those cases all involved some “legally cognizable harm associated with the false statement.”  In other words, it wasn't the lying itself that justified those laws -- it was the harm caused by the lying.

And while Kennedy recognized that the government had a legitimate interest in protecting the integrity of the Medal of Honor, he concluded that the means chosen to achieve that interest – the Stolen Valor Act – was not “actually necessary,” and so did not satisfy the “exacting scrutiny” that is applied to content-based restrictions on protected speech.  (Justice Breyer’s concurring opinion, which was joined by Justice Kagan, applied “intermediate scrutiny” rather than “strict scrutiny” to the Stolen Valor Act, but concluded that the statute failed to meet that test as well.)

This is where things start to get v-e-d-d-y interesting if you’re an advertising lawyer. “The facts of this case indicate that the dynamics of free speech, of counterspeech, of refutation can overcome the lie,” Kennedy opined.  “The remedy for speech that is false is speech that is true.”   (The concurring justices agreed with the plurality on this point, noting that “more accurate information will normally counteract the lie.”)

Justice Kennedy went on to say, "Only a weak society needs government protection or intervention before it pursues its resolve to preserve the truth.  Truth needs neither handcuffs or a badge for its vindication."  [Emphasis added.]

According to the plurality, when the government seeks to regulate protected speech, “the restriction must be the ‘least restrictive means among available, effective alternatives’.” That was not the case in Alvarez.  For example, a government-created database listing Medal of Honor winners would protect the integrity of the military awards system by ensuring “truth will out” without limiting protected speech.

While the government argued that such a database would be impracticable, the plurality opinion noted that at least one privately-maintained database already existed, which called into serious question the government’s claim that the statue was really necessary.  (The concurring justices also liked the idea of a database in place of a government-imposed restriction on speech.)

Click here to view the picture The Supreme Court

Justice Kennedy’s opinion should be sending cold shivers down the collective spines of the Federal Trade Commission and its staff. 

Is he saying that the First Amendment would be better served if the FTC surrendered its handcuffs and badge, and instead devoted its energies to informing and educating consumers rather than "protecting" them, or simply trusted the marketplace of ideas to work its magic? 

There’s another aspect of the Alvarez decision that should concern the FTC.  As noted above, Justice Kennedy emphasized that the laws that prohibit false statements without running afoul of the First Amendment have one thing in common: they apply to false statements that are associated with a “legally cognizable harm.”  Justice Breyer made the same point when he noted that valid laws that make false statements illegal usually require “proof of specific harm to identifiable victims” or only prohibit lies that “are particularly likely to produce harm.”

Both Kennedy and Breyer point to laws condemning fraud as examples of valid restrictions on false statements.  But many of the advertisers whose claims have been challenged by the FTC have not come close to committing fraud, which usually requires proof of material misrepresentation, the victims’ reliance on that misrepresentation, and actual injury. 

The FTC would be aghast if it were expected to prove materiality, reliance, or actual injury – much less all three.  Its "Policy Statement on Deception" states that the Commission “considers certain categories of information presumptively material.”  If a misrepresentation is material, injury will usually be presumed as well.

We’ve all heard the old saying that when you presume too much, you make a “pres” out of “u” and “me.”  (Hmmm . . . that doesn’t sound quite right, does it?)  But there’s a whole lotta presumin’ going on at the FTC – perhaps too much for the Supreme Court’s taste.

The FTC will no doubt find comfort in this statement from Justice Kennedy’s opinion: “Where false claims are made to effect a fraud or secure moneys or other valuable considerations . . . it is well established that the Government may restrict speech without affronting the First Amendment.” 

Note the Justice’s use of “false” – there’s no mention of restrictions on merely “unsubstantiated” claims.  Of course, the FTC says that objective claims necessarily carry an implication that they are supported by valid evidence, which is a nice back-door way of transforming an unsubstantiated claim into a false one.  (That approach doesn’t work in Lanham Act cases, of course.  You usually need to prove falsity.)

Over the years, the FTC has gradually raised the bar for what constitutes adequate substantiation.  For example, the agency’s new-fangled “three tiers” substantiation policy allows certain health-related claims only if they are supported by at least two adequate and well-controlled human clinical studies conducted independently by different researchers, and prohibits disease claims (very broadly defined) altogether if they have not been approved by the FDA.

It’s one thing to require two clinical studies instead of one – it may take considerable time and money to carry out that second study, but it is at least possible to meet the standard set forth by the FTC. 

It’s another thing altogether to ban claims that have not been approved by the FDA.  Can an absolute ban on such claims possibly constitute “the least restrictive means among available, effective alternatives”?  After all, a two-study standard is less restrictive, and can’t be attacked as an ineffective alternative – after all, the FTC itself says that’s good enough for many health-related claims.  Why not for disease claims as well?

Remember what Justice Kennedy said:  “The remedy for speech that is false is speech that is true.”  And we’re not even talking about false speech here – we’re talking about speech that very well may be true . . . it just hasn’t been proven true to the satisfaction of the FDA.

Alvarez raises some very interesting questions.  I’ve just scratched the surface of that decision’s implications, but enough is enough.  This is a blog, after all – not a law review.