Opinion ID: 176237
Heading Depth: 4
Heading Rank: 1

Heading: Proper standard for evaluating disclosure requirements

Text: As an initial matter, the Processors argue that the district court failed to employ the appropriate standard of review for evaluating disclosure requirements. The court relied on Zauderer v. Office of Disciplinary Counsel of the Supreme Court of Ohio, 471 U.S. 626, 105 S.Ct. 2265, 85 L.Ed.2d 652 (1985), where the Supreme Court articulated a more lenient standard than the Central Hudson test to use when disclosure requirements, as opposed to outright prohibitions on speech, are at issue. In Zauderer, the Supreme Court explained that, because disclosure requirements trench much more narrowly on an advertiser's interests than do flat prohibitions on speech, warnings or disclaimers might be appropriately required in order to dissipate the possibility of consumer confusion or deception. Id. at 651, 105 S.Ct. 2265 (alterations, citation, and ellipsis omitted). It therefore held that disclosure requirements do not violate an advertiser's First Amendment rights where the requirements are reasonably related to the State's interest in preventing deception of consumers. Id. Such requirements, however, cannot be unjustified or unduly burdensome. Id. The Supreme Court recently clarified the standard of review to apply to disclosure requirements in Milavetz, Gallop & Milavetz, P.A. v. United States, ___ U.S. ___, 130 S.Ct. 1324, 176 L.Ed.2d 79 (2010). That case involved challenges to recent revisions of the Bankruptcy Code, including provisions that require certain professionals providing debt-relief assistance to disclose in their advertisements that their help was related to bankruptcy relief and to identify themselves as debt-relief agencies. Id. at 1330. The Court observed that the relevant provisions targeted marketing claims that were inherently deceptive because they promised debt relief without any reference to the possibility of filing for bankruptcy, which has inherent costs. Id. at 1340. Given this, and the fact that the regulation required a disclosure rather than imposing a prohibition on speech, the Court upheld the constitutionality of the provisions under Zauderer. Id. Milavetz thus established that Zauderer applies where a disclosure requirement targets speech that is inherently misleading. We conclude that Zauderer also controls our analysis where, as here, the speech at issue is potentially misleading. Several reasons support this conclusion. First, in Milavetz, the Court did not explicitly limit its application of Zauderer to inherently misleading speech, instead stating that a relaxed standard of review applies to disclosure requirements regulating  misleading commercial speech. Id. at 1339 (emphasis in original). But see id. (Thomas, J., concurring) ([A] disclosure requirement passes constitutional muster only to the extent that it is aimed at advertisements that, by their nature, [are inherently likely to deceive or have in fact been deceptive].). In addition, as the Court recognized in Milavetz, the impetus behind the formation of the Zauderer standard was the fact that First Amendment protection for commercial speech is justified in large part by the information's value to consumers. Id. The speech rights of advertisers, in contrast, are of less value; specifically, their constitutionally protected interest in not providing the required factual information is `minimal.' Id. (citing Zauderer, 471 U.S. at 651, 105 S.Ct. 2265). This justification for the Zauderer standard thus fits regulations that require a disclosure, regardless of whether the speech being targeted is inherently or potentially misleading. Because the Ohio Rule regulates production claims by requiring them to be accompanied by a disclosure, Zauderer controls our review. Our sister circuits have similarly recognized this rationale for employing the Zauderer standard. The Court of Appeals for the Second Circuit, for example, has held that there are material differences between purely factual and uncontroversial disclosure requirements and outright prohibitions on speech. Nat'l Elec. Mfrs. Ass'n v. Sorrell, 272 F.3d 104, 113 (2d Cir.2001) (citing Zauderer ) (brackets and internal quotation marks omitted). Such differential treatment is due to the fact that the mandated disclosure of accurate, factual, commercial information does not offend the core First Amendment values of promoting efficient exchange of information or protecting individual liberty interests. Id. at 114; see also United States v. Wenger, 427 F.3d 840, 849 (10th Cir.2005) (observing that advertisers'constitutionally protected interest in not providing any particular factual information in [their] advertising is minimal (quoting Zauderer )). In arguing to the contrary, the Processors rely on two decisions from the Eleventh Circuit Court of Appeals in which that court applied the Central Hudson factors to disclosure requirements. One of these is Borgner v. Brooks, 284 F.3d 1204, 1210-13 (11th Cir.2002), which applied the Central Hudson test to a statute requiring dentists to include disclaimers when advertising a specialty practice not recognized by the Florida Board of Dentistry and/or membership in an organization affiliated with such a specialty. The other is Mason v. Florida Bar, 208 F.3d 952, 954-55 (11th Cir.2000), where the court analyzed a Florida Bar disclosure requirement for self laudatory statements under the Central Hudson framework. But in neither case did the Eleventh Circuit explain its decision to employ the Central Hudson test instead of Zauderer. Moreover, the Borgner decision acknowledged that [c]ourts have been more tolerant of regulations mandating disclosure requirements than they have been of regulations that impose a total ban on commercial speech. Borgner, 284 F.3d at 1214. We therefore find these two cases unpersuasive in determining the proper standard of review. In sum, we conclude that the Rule's disclosure requirement is reasonably related to the State's interest in preventing consumers from being deceived by production claims. Like composition claims, production claims such as this milk is from cows not supplemented with rbST are potentially misleading because they imply that conventional milk is inferior or unsafe in some way. But neither the FDA nor any study has conclusively shown that to be the case. Furthermore, unlike its regulation of composition claims, the Rule does not prohibit the use of production claims. It instead requires only the disclosure of accompanying information. We therefore conclude that the less-burdensome analytical framework from Zauderer should apply.