Be careful not to skim over potential First Amendment challenges to commercial speech regulations in labeling cases. By ‘whey’ of example, the Eleventh Circuit recently found that the actions of the Florida Commissioner of Agriculture and the Chief of the Florida Bureau of Dairy Industry violated Ocheesee Creamery LLC’s First Amendment rights related to the labeling of its products. Ocheesee Creamery LLC v. Putnam, 851 F.3d 1228 (11th Cir. 2017).
Ocheesee Creamery is a dairy company that produces milk and other dairy products. One such product is an all-natural, additive-free 100% skim milk, which Ocheesee Creamery labels as “skim milk” on the product packaging.
Florida law restricts the sale of milk and other milk products not classified as “Grade A” products. A “Grade A” designation requires that any vitamin A that is lost or removed from a product during the skimming process be replaced. Because Ocheesee’s product did not qualify for this Grade A designation, the state of Florida notified Ocheesee that its all-natural skim milk did not meet the definition of milk and, thus, Ocheesee could only sell this product if it was labeled as “imitation skim milk.” Ocheesee refused since the only ingredient in its product was, in fact, skim milk. Ocheesee also refused to add vitamin A back into its all-natural product. Ocheesee Creamery filed a lawsuit challenging this restriction in the Northern District of Florida, which found in favor of the State.
On appeal, the Eleventh Circuit applied the Supreme Court’s test for evaluating restrictions on commercial speech, which was set forth in Central Hudson Gas & Electric Corp. v. Public Service Commission, 447 U.S. 557 (1980). Under Central Hudson, a court considering a restriction on commercial speech must first determine whether the speech is protected under the First Amendment. The First Amendment protects commercial speech unless it 1) concerns unlawful activity or 2) is false or inherently misleading. The Eleventh Circuit found that neither of these exceptions applied to Ocheesee in this case.
First, the Eleventh Circuit held that Ocheesee’s use of the term “skim milk” on its product label was not unlawful because the state’s position was that under Florida law Ocheesee could call its product “skim milk” as long as the label also indicated that the product was “imitation” milk. Second, the Eleventh Circuit held that Ocheesee’s use of the term “skim milk” was not inherently misleading—or even, according to the Court, potentially misleading—because it was a statement of objective fact. As a result, the Court concluded, Ocheesee’s commercial speech on its all-natural skim milk label was constitutionally protected.
The Court then proceeded to apply Central Hudson’s three-pronged intermediate scrutiny test. Under this test, the Court must determine: 1) “whether the asserted governmental interest is substantial”; 2) “whether the regulation directly advances the governmental interest asserted”; and 3) “whether it is not more extensive than is necessary to serve that interest.”
The Eleventh Circuit focused its analysis on the third prong of the test, finding that Florida’s restriction “is clearly more extensive than necessary to achieve its goals.” The Eleventh Circuit noted that there had been extensive negotiations between Ocheesee and the State concerning the language used on Ocheesee’s all-natural skim milk label, and pointed out that “numerous less burdensome alternatives existed and were discussed by the State and the Creamery during negotiations that would have involved additional disclosure without banning the term ‘skim milk.’” Consequently, the Court concluded that the restriction was more extensive than necessary to achieve the goals of preventing deception and ensuring adequate nutritional standards. The Court thus concluded that Florida’s restriction of Ocheesee’s commercial speech violated the First Amendment and vacated the district court’s grant of summary judgment in favor of the State.
The Eleventh Circuit’s decision offers some reassurance to companies that the First Amendment provides some protection for objectively truthful descriptions of their products, even in the face of restrictions imposed by various state labeling laws, although this protection continues to be balanced against the state interests served by these laws.