9th Circuit Reviews 2017 Decision on Sugar Warning Labels

Written by Ashley Maiolatesi, Spring 2019 Food Law and Policy Clinical student.

Over the past decade, the soda industry has faced waves of opposition from the public health sphere. For example, cities around the country have passed soda taxes, California and Connecticut proposed statewide soda taxes this year, and New York previously considered warning labels on cans and bottles. San Francisco attempted to add to this list of sugar-reduction policies in 2015 by enacting an ordinance requiring warning labels on certain advertisements for sugar sweetened beverages and soda. The ordinance has since been reviewed twice in court, with the most recent review sending positive signals to the public health sector.

At the beginning of the year, all members of the Ninth Circuit Court of Appeals sitting en banc reconsidered a prior three-judge ruling of the Ninth Circuit from 2017 regarding a San Francisco ordinance (American Beverage Association v. City and County of San Francisco, 871 F.3d 884 (9th Cir. 2017). The first-of-its-kind ordinance was passed in 2015 in an attempt to inform consumer purchasing habits and would have required certain advertisements, including billboards, promoting sugar-sweetened beverages to display a warning label over at least 20% of the advertisement area, stating: “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.” Industry trade groups, including the American Beverage Association, California State Outdoor Advertising Association, and California Retail Association filed suit shortly after the ordinance was enacted, alleging that the warning label infringed on their right to free speech.

In a decision published on January 31, 2019, the full Ninth Circuit affirmed the prior decision of the three-judge panel and placed a preliminary injunction on the San Francisco ordinance. Both the full court and the three-judge panel used a test from Supreme Court case Zauderer v. Office of Disciplinary Counsel of the Supreme Court of Ohio, 471 U.S. 626 (1985), to determine whether the warning label required by the ordinance infringed on the industry trade groups’ free speech. In Zauderer, the Supreme Court used three considerations to determine whether advertising restrictions on free speech were “unjustified and unduly burdensome.” To do this, the Supreme Court considered whether the mandated warning label was 1) purely factual and uncontroversial,  2) reasonably related to a governmental interest (which some courts have interpreted as the government’s interest in preventing consumer deception), and 3) not unduly burdensome.

In considering the San Francisco ordinance, the initial three-judge panel in American Beverage Association v. City and County of San Francisco found that the advertisement required by San Francisco could be considered controversial and that the government interest did not justify the large requirement. In assessing whether the required warning label was “purely factual and uncontroversial,” the three-judge panel called into question the scientific data linking sugar sweetened beverage consumption to health risks. Although there is a wealth of scientific studies suggesting a link between soda and negative health outcomes, there are several scientific publications that came back inconclusive. In the end, the three-judge panel concluded that the San Francisco ordinance violated the First Amendment’s right to free speech by requiring an “unjustified and unduly burdensome” disclosure that was not “factual and uncontroversial,” and issued an injunction, stopping the ordinance from going into effect.

The most recent decision by the full Ninth Circuit came to the same ultimate decision to halt the ordinance, but in a way that is much friendlier to future public health efforts. While the three-judge circuit questioned the factual accuracy of the warning, the full Court decided the case based solely on whether the label required by the ordinance was unduly burdensome. After considering the size and format of the required disclosure, the Court determined that the ordinance’s requirement was overly burdensome for the government objective. The Court determined that the requirement of a prescriptive warning covering 20% of the advertisement was excessive to achieve the purpose of adequately informing the public of the health risks associated with the consumption of sugar sweetened beverages, as a smaller warning label could achieve the same effect. The Court noted, “We do not hold that a warning occupying 10 percent of product labels or advertisements necessarily is valid, nor do we hold that a warning occupying more than 10 percent of product labels or advertisements is necessarily invalid,” signaling that an ordinance with a smaller labeling requirement may pass constitutional muster.

The Court’s determination that the 20% of total advertisement area requirement is unduly burdensome was enough to hold the ordinance unconstitutional under the First Amendment. Therefore, the Court did not reach a determination on whether the content of the warning was “factual and uncontroversial.” Because the ordinance was unconstitutional on a different basis, the Court never examined the scientific nexus between sugar sweetened beverages and health risks, and the scientific data linking the two was not called into question as it had been by the initial three-judge panel. The recent holding by the full Ninth Circuit is far more favorable than its initial decision because it is based only on the size and format of the required warning, something easily amended, while leaving the scientific data linking adverse health impacts and sugar sweetened beverages intact.

Still, San Francisco refuses to back down and local officials say they will look into whether a different wording or design could pass constitutional muster. Following the Ninth Circuit’s decision in this case, it’s possible that we’ll see more cities create ordinances requiring disclosures or warning labels, though hopefully future warnings will be a bit more unobtrusive than those San Francisco initially had in mind.