The First Amendment and Disclosure Regulations: Compelled Speech or Corporate Opportunism?

• Published date: 01 September 2014
• Date: 01 September 2014
• DOI: http://doi.org/10.1111/ablj.12034
• Author: Lucien J. Dhooge

The First Amendment and

Disclosure Regulations: Compelled

Speech or Corporate Opportunism?

Lucien J. Dhooge*

[T]he First Amendment does not look fondly on attempts by the government

to affirmatively require speech.1

Once the patron saint of protesters and the disenfranchised, the First Amend-

ment has become the darling of economic libertarians and corporate lawyers

who have recognized its power to immunize private enterprise from legal

restraint.2

INTRODUCTION

Government regulation of business in the United States is ubi-

quitous and inescapable. Although regulation may take many

different approaches, one common form is based upon disclosure. Disclo-

sure regulations affect every citizen’s life in great and small ways on a

daily basis from the food and drink we consume,3the clothes we wear,4

the properties in which we reside,5the substances in products we

*Sue and John Staton Professor of Law, Scheller College of Business, Georgia Institute of

Technology.

1Alliance for Open Soc’y Int’l, Inc. v.U.S. Agency for Int’l Dev., 651 F.3d 218, 234 n.3 (2d Cir.

2011).

2Tim Wu, The Right to Evade Regulation: How Corporations Hijacked the First Amendment,NEW

REPUBLIC (June 3, 2013), http://www.newrepublic.com/article/113294/how-corporations

-hijacked-first-amendment.

3See, e.g., 21 U.S.C. § 343(a)–(y) (2012) (governing the labeling of food products); 27 U.S.C.

§§ 205(e), 215(a)(1-2) (2012) (requiring alcoholic beverage containers to disclose alcohol

content and bear health and safety warnings).

4See, e.g., 15 U.S.C. §§ 68c(a), 70b(1-5) (2012) (establishing informational requirements for

labels on wool and textile fiber products).

5See, e.g., 15 U.S.C. § 1261(p)(1) (requiring products to include labels disclosing their toxicity

and flammability); 42 U.S.C. § 4852d(a) (2012) (mandating the disclosure of lead-based

products upon the transfer of residential real property).

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American Business Law Journal

Volume 51, Issue 3, 599–659, Fall 2014

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American Business Law Journal © 2014 Academy of Legal Studies in Business

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utilize,6and, perhaps most intrusively, the income we derive from our

labors.7Such regulations are imperative to the creation of knowledgeable

consumers who have the ability to maximize their choices in an

information-driven age.8

These regulations may engender conflict between the government’s

interest in full and meaningful disclosure and business interests in shield-

ing certain types of information, the disclosure of which could prove

harmful to an industry and its individual members. Government and

industry interests may also come into conflict as a result of the manner in

which information is to be divulged. Another potential problem is pre-

sented by access to information by recipients other than the government

and the public such as competitors and potential future litigants.

These conflicts have recently manifested themselves in numerous

judicial challenges to federal disclosure regulations by individual compa-

nies and trade associations utilizing the First Amendment and, specifically,

the prohibition upon compelled speech. Corporate efforts to overturn

disclosure regulations have been broad based with respect to their subject

matter. Financial regulations adopted by the Securities and Exchange

Commission (SEC), including those arising from the Dodd-Frank

Wall Street Reform and Consumer Protection Act (Dodd-Frank), have

been a common target of compelled speech litigation.9Consumer

6See, e.g., 15 U.S.C. § 1261(p) (requiring disclosures with respect to the presence of hazardous

substances in products intended for household use).

7See, e.g., 26 U.S.C. §§ 1, 61, 63, 6012, 6072, 6151 (2012) (relating to the assessment and

payment of individual income taxes); 26 U.S.C. §§ 11, 881, 882 (relating to the assessment

and payment of corporate income taxes).

8See Jennifer L. Pomeranz, No Need to Break New Ground:A Response to the Supreme Court’s Threat

to Overhaul the Commercial Speech Doctrine,45L

OY. L.A. L. REV. 389, 406 (2012) (noting the

existence of “innumerable federal and state laws requiring the disclosure of factual informa-

tion that promote transparency, fairness, informed decision-making, and fair and efficient

commercial markets”); see also Robert Post, The Constitutional Status of Commercial Speech, 48

UCLA L. REV. 1, 27–28 (2000) (contending that “[d]isclosure requirements are permissible

within the domain of commercial speech . . . because the autonomy of speakers is not at stake,

only the conveyance of information” and that “the primary constitutional value [of commer-

cial speech] concerns the circulation of accurate and useful information”).

9See, e.g., Full Value Advisors, LLC v. SEC, 633 F.3d 1101 (D.C. Cir. 2011) (seeking to overturn

section 13(f) of the Securities and Exchange Act of 1934 requiring disclosures by institutional

investment managers holding at least $100 million in securities); Nat’l Ass’n of Mfrs. v. SEC,

956 F. Supp. 2d 43 (D.D.C. 2013), aff’d in part, rev’d in part, No. 13-5252, 2014 U.S. App.

LEXIS 6880 (D.C. Cir.Apr. 14, 2014) (sustaining section 1502 of the Dodd-Frank Wall Street

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protection and employment-related regulations also have garnered judi-

cial challenges.10

Courts have applied a variety of standards by which to determine the

constitutionality of these regulations. A panel of the U.S. Court of Appeals

for the District of Columbia and the U.S. District Court for the District

of Columbia recently upheld disclosure regulations on the basis of the U.S.

Supreme Court’s opinion in Zauderer v.Office of Disciplinary Counsel.11 These

courts concluded the disclosures compelled by regulations of the U.S.

Departments of Transportation and Agriculture were purely factual,

uncontroversial, reasonably related to a legitimate government interest

and were not unduly burdensome.12 Three courts have applied the

Reform and Consumer Protection Act [hereinafter Dodd-Frank] and SEC Rule13p requiring

the preparation and filing of reports regarding the use of conflict minerals by manufactur-

ers); Complaint at 6, 14, Am. Petroleum Inst. v. SEC, 953 F. Supp. 2d 5 (D.D.C. 2013) (No.

12-1668 (JDB)), 2012 WL 4803691 (seeking to invalidate section 1504 of Dodd-Frank and

SEC Rule 13q requiring publicly listed members of the extractive industry to disclose the type

and amount of payments to foreign governments relating to the commercial development of

oil, gas and mineral resources).

10For examples of compelled speech challenges to consumer protection regulations, see

generally R.J. Reynolds TobaccoCo. v. FDA, 696 F.3d 1205 (D.C. Cir. 2012) (invalidating the

use of color graphic warning labels on tobacco packaging and advertising pursuant to the

Family Smoking Prevention and Tobacco Control Act of 2009 [hereinafter FSPTCA]); Spirit

Airlines, Inc. v. U.S. Dep’t of Transp., 687 F.3d 403 (D.C. Cir. 2012) (upholding a rule

requiring that the total price of a ticket inclusive of taxes be the most prominent figure

displayed on airline advertisements and websites); Am. Meat Inst. v. U.S. Dep’t of Agric., No.

13-CV-1033 (KBJ), 2013 U.S. Dist. LEXIS 129099 (D.D.C. Sept. 11, 2013) (upholding a

regulation requiring separate disclosure of the country of birth, raising, and slaughter for

each animal utilized in the manufacture of various meat products); Fleminger, Inc. v. U.S.

Dep’t of Health & Human Servs., 854 F. Supp. 2d 192 (D. Conn. 2012) (upholding, in

substantial part, an FDA requirement that Fleminger,Inc. include a disclaimer to its qualified

health claim that drinking green tea may reduce the risk of developing breast and prostate

cancers). For an example of a compelled speech challenge to an employment-related regu-

lation, see generally Nat’l Ass’n of Mfrs. v. NLRB, 717 F.3d 947 (D.C. Cir.2013) (invalidating

a rule that employers who failed to post a “Notification of Employee Rights under the

National Labor Relations Act” on their premises and websites were guilty of an unfair labor

practice).

11471 U.S. 626 (1985). See also infra notes 126–45 and accompanying text (discussing the

opinion in Zauderer).

12See Spirit Airlines, Inc., 687 F.3dat 412–14; Am. Meat Inst., 2013 U.S. Dist. LEXIS 129099, at

*24–25; see also infra notes 239–61 and accompanying text (discussing the application of the

reasonable relationship test in American Meat Institute and Spirit Airlines, Inc.).

2014 / The First Amendment and Disclosure Regulations 601