Ninth Circuit Blocks Sweet Drink Warning Labels Pending Free Speech Lawsuit

The Ninth Circuit dealt a blow to the war on sugar last month, calling the warning labels a San Francisco ordinance would require on sweet drinks “deceptive” and blocking the mandate on free speech grounds. As we have discussed before, cities and counties across the nation have been launching an offensive against sugar for years. Favorite methods of attack include bans on large sugary drinks, taxes on sugar in drinks by volume, and now, warning labels.

While the USDA, FDA, and American Heart Association all have backed policies aimed at limiting sugar consumption, these policies have received mixed reviews from consumers and courts. A state judge knocked down the New York City ban on large sodas in 2013, calling it “arbitrary and capricious.” More recently, sugar taxes have been protested by unions in Philadelphia, sparked class-action litigation in Illinois, and were outright repealed in Cook County after only three months of implementation because residents began crossing state and county lines to avoid them.

In 2015, San Francisco passed an ordinance requiring advertisements for sugar-sweetened drinks to include warning labels. The labels stated, “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 requires the label to occupy 20% of an advertisement’s space and have a rectangular border. It requires warning labels on any advertisement or logo that identifies, promotes, or markets beverages containing one or more added sweeteners and more than 25 calories per 12 fluid ounces.

The warnings were set to go into effect July 2016. In July 2015, the American Beverage Association filed suit against the City and County of San Francisco. It argued that the warning label ordinance violated its First Amendment right to freedom of speech and moved for a preliminary injunction. The district court denied the motion and just last month, the court of appeals reversed, finding that the ABA was likely to prevail in its case and blocking the ordinance from going into effect until the litigation is resolved.

The court applied the Zauderer standard to evaluate the ABA’s free speech claim, a standard courts use to evaluate government-mandated commercial disclosures. Under Zauderer, an advertiser’s right to free speech is not violated if the required disclosure is “purely factual and uncontroversial” and is not “unjustified or unduly burdensome” so as to subdue protected speech.

The court deemed the assertion, “Drinking beverages with added sugar(s) contributes to obesity, diabetes, and tooth decay” to be “arguably inaccurate” since according to the FDA, added sugar is generally recognized as safe and can be part of a healthy diet. The court noted that the warning would be more accurate if it cautioned against overconsumption of sugary drinks or stated that sugar consumption may contribute to health problems. Further, the court took issue with the ordinance’s exclusive focus on sugary beverages and not on other products with equal or greater sugar content. By singling out sweet drinks, the labels give the deceptive impression that drinks are a more dangerous source of added sugar than other sources. Given the misleading focus on drinks and questionable accuracy of the warning, the court held that the warning labels are not “purely factual and uncontroversial,” and may violate the First Amendment.

Finally, the court found that the warning labels pose an undue burden on free speech because they cover 20% of an advertisement and are set off with a box, resulting in labels that “overwhelm other visual elements.” The court rejected the district court’s reasoning that advertisers are not unduly burdened because they can use the remaining 80% of their advertising space to engage in “counter-speech.” Instead, the court argued that the labels would force advertisers into making that counter-speech, burdening their right to be silent, and leave little room for their intended message.

Looking ahead, we will be watching how other municipalities will respond to this ruling. Proposed labels in the future may qualify warnings as suggested by this court. However, given the court’s objection to the ordinance’s focus on beverages instead of all sugary products, sweet drink warning labels may face an uphill battle in any court that agrees with the Ninth Circuit’s approach.