Restricting Commercial Advertising Because It Might Persuade People

Today’s Sorrell v. IMS Health Inc. is a complicated case; I think the majority (the conservatives plus Justice Sotomayor) is basically right, but I don’t want to focus on the details of this particular case right now. Instead, I want to talk about what this case means to a much broader question having to do with the First Amendment and commercial advertising: May commercial advertising be generally restricted on the grounds that it might persuade people to do something that the government thinks is bad (as opposed to on the grounds that it’s false, or misleading, or improperly intrusive on its listeners, or some such)?

The Court had left this question unresolved for quite some time, but it looks like Sorrell might strengthen the case that the answer is “no” (at least setting aside the special case of speech that urges an unlawful commercial transaction). Let me chart the history of the debate.

1. From 1942 until the mid-1970s, the Supreme Court took the view that commercial advertising is entirely excluded from First Amendment protection. But in Virginia State Bd. of Pharmacy v. Virginia Citizens Consumer Council, Inc. (1976), the Court held that such advertising is generally protected (though less so than other speech). The case involved a ban on price advertising by pharmacies, and the government argued that such price advertising would lead people to go to the lowest-cost pharmacists, who would in turn provide less service; and other pharmacists would likely be lead by competitive pressure to have to similarly provide low cost and less service. But the Court disagreed: Under the First Amendment, speech can’t be restricted because it will persuade people to do something that’s supposedly harmful. “[The choice] between the dangers of suppressing information, and the dangers of its misuse if it is freely available, [is one] that the First Amendment makes for us. Virginia is free to require whatever professional standards it wishes of its pharmacists; it may subsidize them or protect them from competition in other ways. But it may not do so by keeping the public in ignorance of the entirely lawful terms that competing pharmacists are offering.”

2. Linmark Assocs v. Township of Willingboro (1977) took a similar view. The township had banned the posting of “For Sale” signs, apparently to limit white flight. The Court disapproved of this, because “The Township Council here, like the Virginia Assembly in Virginia Pharmacy Bd., acted to prevent its residents from obtaining certain information…. The Council has sought to restrict the free flow of these data because it fears that otherwise homeowners will make decisions inimical to what the Council views as the homeowners’ self-interest and the corporate interest of the township: they will choose to leave town.” And this, the Court said, was unconstitutional, because (quoting Virginia Pharmacy), “this kind of choice, between the dangers of suppressing information, and the dangers of its misuse if it is freely available, [is one] that the First Amendment makes for us.”

3. But then came Central Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n (1980). The case reached a speech-protective result, and announced a famous four-part test that the Court has since largely cited in commercial advertising cases. But behind the result lurked the endorsement of the principle that the government may indeed restrict speech because it might persuade people to do bad things.

In Central Hudson, the Public Service Commission of New York banned “all advertising that ‘promot[es] the use of electricity,’” reasoning in part that such advertising would persuade listeners to use more electricity, and would interfere with “the State’s interest in energy conservation.” And Justices Brennan, Blackmun, and Stevens would have rejected this argument on the Virginia Pharmacy grounds that I described above. But a five-Justice majority seemed to take the view that a restriction that was limited to advertising that indeed promoted wasteful uses of electricity would be constitutional. “[T]he State’s [substantial] interest in energy conservation is directly advanced by the Commission order at issue here. There is an immediate connection between advertising and demand for electricity. Central Hudson would not contest the advertising ban unless it believed that promotion would increase its sales. Thus, we find a direct link between the state interest in conservation and the Commission’s order.” The majority struck down the law only because it concluded that the law also banned advertising of “electric devices or services that would cause no net increase in total energy use.” So restricting commercial advertising because it might persuade people to do harmful things was constitutional under the majority’s view, so long as the restriction was indeed limited to persuasion to do harmful things and didn’t cover persuasion to do harmless things.

4. Posadas de Puerto Rico Associates v. Tourism Co. of P.R. took this Central Hudson reasoning even further, upholding a ban on commercial advertising of (lawful) casinos in Puerto Rico, reasoning that such a ban was a permissible way of decreasing gambling by Puerto Rico residents whom the advertising might persuade to gamble.

5. But then in 44 Liquormart, Inc. v. Rhode Island (1996), four Justices (Stevens, Kennedy, Thomas, and Ginsburg) returned to the Virginia Pharmacy approach, and took the view that a commercial advertising restriction — there, a ban on price advertising of alcohol — couldn’t be justified on the grounds that the speech might persuade people to do bad things (e.g., drink more alcohol). And Justice Thomas made this more explicit, arguing that, “In cases such as this, in which the government’s asserted interest is to keep legal users of a product or service ignorant in order to manipulate their choices in the marketplace, the balancing test adopted in Central Hudson, should not be applied …. Rather, such an ‘interest’ is per se illegitimate and can no more justify regulation of ‘commercial’ speech than it can justify regulation of ‘non-commercial’ speech.”

But four other Justices (Rehnquist, O’Connor, Souter, and Breyer) did not endorse this view, though they ultimately concluded that the restriction was still unconstitutional even under Central Hudson. And Justice Scalia expressed uncertainty about which approach was right, but concluded that there was no need to decide that in that case. Still, Posadas, at least, was overruled; both the Stevens bloc and the Rehnquist bloc agreed to that, and Scalia said nothing on the subject.

6. In Thompson v. Western States Medical Center (2002), a five-Justice majority (Scalia, O’Connor, Kennedy, Souter, and Thomas), seemed to endorse the Stevens opinion in 44 Liquormart (though Stevens himself was in the dissent in Thompson, joined by Ginsburg as well as Rehnquist and Breyer). In striking down a ban on advertising of pharmacy-compounded drugs, the Court concluded that one of the government’s concerns “amounts to a fear that people would make bad decisions if given truthful information about compounded drugs. We have previously rejected the notion that the Government has an interest in preventing the dissemination of truthful commercial information in order to prevent members of the public from making bad decisions with the information.” But the scope of this conclusion wasn’t clear (might it have applied only to purely paternalistic laws that seek to prevent supposed harm to the listeners themselves, as opposed to harm caused by the listeners’ reliance on the advertising), and this was just one majority opinion, arrayed against the still not overruled Central Hudson opinion.

7. Now we get to Sorrell v. IMS Health Inc.. The law here (to oversimplify) restricted the conveyance of certain information to pharmaceutical companies, and the use of that information by pharmaceutical companies in promoting their products to particular doctors. Part of the state’s argument was that such use of information would lead doctors to prescribe medicines that were too expensive and not sufficiently beneficial. (The law was not limited to a ban on misleading speech to doctors, or even a requirement that certain disclosures be made alongside the sales pitch.) And the six-Justice majority disagreed:

The State contends that §4631(d) advances important public policy goals by lowering the costs of medical services and promoting public health. If prescriber-identifying information were available for use by detailers, the State contends, then detailing would be effective in promoting brand-name drugs that are more expensive and less safe than generic alternatives….

While Vermont’s stated policy goals may be proper, §4631(d) does not advance them in a permissible way…. The State seeks to achieve its policy objectives through the indirect means of restraining certain speech by certain speakers — that is, by diminishing detailers’ ability to influence prescription decisions.

Those who seek to censor or burden free expression often assert that disfavored speech has adverse effects. But the “fear that people would make bad decisions if given truthful information” cannot justify content-based burdens on speech. “The First Amendment directs us to be especially skeptical of regulations that seek to keep people in the dark for what the government perceives to be their own good.” These precepts apply with full force when the audience, in this case prescribing physicians, consists of “sophisticated and experienced” consumers. [The Court here cited, among other cases, Virginia Bd. of Pharmacy, Linmark Associates, and the Stevens 44 Liquormart opinion. -EV]

As Vermont’s legislative findings acknowledge, the premise of §4631(d) is that the force of speech can justify the government’s attempts to stifle it. Indeed the State defends the law by insisting that “pharmaceutical marketing has a strong influence on doctors’ prescribing practices.” This reasoning is incompatible with the First Amendment. In an attempt to reverse a disfavored trend in public opinion, a State could not ban campaigning with slogans, picketing with signs, or marching during the daytime. Likewise the State may not seek to remove a popular but disfavored product from the marketplace by prohibiting truthful, nonmisleading advertisements that contain impressive endorsements or catchy jingles. That the State finds expression too persuasive does not permit it to quiet the speech or to burden its messengers.

I set aside here the State’s other interests, which focused on the supposed intrusion onto doctor’s privacy as a result of the practices that the law restricted; the Court dealt with those elsewhere in the opinion. Here I want to talk about the more commonly recurring issue of restrictions justified by a worry that listeners will be persuaded by the commercial advertising and will do bad things as a result.

And as to this issue, the Virginia Pharmacy approach now seems to have become the dominant view in Supreme Court opinions — given the most recent decisions on the subject, Thompson and Sorrell — and the Central Hudson approach, while not expressly overruled, has become the outlier. I would now feel much more comfortable arguing to lower courts that the government generally may not restrict commercial advertising out of a worry about its persuasive effects, at least unless the advertising is misleading or promotes an illegal commercial transaction (or perhaps involve some special circumstances, such as an underage audience).