The Ninth Circuit Court of Appeals has reversed a lower court's denial of a preliminary injunction stopping the warning-label portion of San Francisco's sugar-sweetened beverage (SSB) tax from taking effect. Am. Beverage Ass'n v. City & Cty. of San Francisco, No. 16-16072 (9th Cir., entered September 19, 2017). Additional information about the complaint and denial appears in Issues 573 and 605 of this Update, and details on the enforcement delay and associated amicus briefs appear in Issues 592, 607 and 613.
San Francisco's warning-label ordinance would require a warning about the health effects of SSBs—specifically, "Drinking beverages with added sugar(s) contributes to obesity, diabetes, and tooth decay"—to occupy 20 percent of the visible portions of fixed SSB advertising, including billboards, structures and vehicles. After several industry associations challenged the requirement, the district court held that the warning was not misleading, would not place an undue burden on the plaintiffs' commercial interests and was rationally related to a government interest.
The Ninth Circuit first considered whether the statement is factually accurate and uncontroversial. The warning label "conveys the message that sugar-sweetened beverages contribute to these health conditions regardless of the quantity consumed or other lifestyle choices," the court found. "This is contrary to statements by the [U.S. Food and Drug Administration] that added sugars are 'generally recognized as safe,'  and 'can be a part of a healthy dietary pattern when not consumed in excess amounts. … Because San Francisco’s warning does not state that overconsumption of sugar-sweetened beverages contributes to obesity, diabetes, and tooth decay, or that consumption of sugar-sweetened beverages may contribute to obesity, diabetes, and tooth decay, the accuracy of the warning is in reasonable dispute." The court further noted that the warning would be misleading because it is "required exclusively on advertisements for sugar-sweetened beverages, and not on advertisements for other products with equal or greater amounts of added sugars and calories. By focusing on a single product, the warning conveys the message that sugar-sweetened beverages are less healthy than other sources of added sugars and calories and are more likely to contribute to obesity, diabetes, and tooth decay than other foods."
The court then considered whether the compelled disclosure would be "unjustified or unduly burdensome" and whether it would chill protected speech. The plaintiffs argued that the label "effectively takes over their message" and would chill their speech "because it renders their speech on covered media so ineffective as to make it impractical to advertise on covered media." The court agreed, finding that the warning box "overwhelms" other visual elements in the plaintiffs' examples of ads complying with the ordinance. The warning label also "burdens the First Amendment right to be silent," the court held. "Moreover, even though advertisers would be free to engage in counter-speech, countering San Francisco’s misleading message would leave them little room to communicate their intended message. This would defeat the purpose of the advertisement, turning it into a vehicle for a debate about the health effects of sugar-sweetened beverages," the court held. Accordingly, the Ninth Circuit reversed the lower court's denial of a preliminary injunction and remanded the case for further proceedings.