Ninth Circuit Deals Blow to San Franciscos Requirement for Soda Warning

San Francisco’s effort to crack down on soda consumption suffered a defeat this week after a panel of federal appeals court judges found unconstitutional an ordinance requiring a warning on certain types of advertising for sugar-sweetened beverages.

In holding a district court judge abused his discretion, the Ninth Circuit ruled the American Beverage Association and two other associations were likely to prevail on their claim that the ordinance chilled commercial speech, offending the First Amendment.

Adopted in 2015, the ordinance would require the following disclosure on advertisements for certain sugar-sweetened beverages posted on billboards, structures or vehicles: “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."

Writing for the court, Circuit Judge Sandra S. Ikuta noted the government failed to meet its burden of showing the warning was entirely factual, uncontroversial and not unduly onerous. She cited FDA’s statements contrary to the warning that added sugars are “generally recognized as safe" and “can be part of a healthy dietary pattern when not consumed in excess amounts."

Commenting on the misleading nature of the warning, the judge wrote, “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. This message is deceptive in light of the current state of research on this issue."

The appeals court also found the required disclosure was unduly burdensome.

The requirement for a black box warning covering 20 percent of an advertisement “overwhelms other visual elements," wrote Ikuta, who pointed out major companies manufacturing sugar-sweetened beverages filed declarations, asserting they would remove ads from covered media if the ordinance takes effect.

“Because the ordinance is not purely factual and uncontroversial and is unduly burdensome, it offends the associations’ First Amendment rights by chilling protected speech," Ikuta wrote. She was joined in the opinion by J. Michael Seabright, Chief U.S. District Judge in the District of Hawaii, who was one of three judges designated to hear the appeal.

In a concurring opinion, Circuit Judge Dorothy W. Nelson said she agreed with the judgment because “the ordinance, in its current form, likely violates the First Amendment by mandating a warning requirement so large that it will probably chill protected commercial speech."

However, she described as “tenuous" her colleagues’ conclusion that the language in the warning is controversial and misleading.

2015 Lawsuit

In July 2015, the American Beverage Association, California Retailers Association and California State Outdoor Advertising Association filed a lawsuit in federal district court, challenging the ordinance one year before it was scheduled to take effect.

In a declaration filed with the court, PepsiCo discussed the potential impact of the required disclosure on its advertising.

“Because of its size, format, and content – including its all-capitals ‘WARNING’ – PepsiCo is concerned that the required warning would substantially overwhelm PepsiCo's intended messages on advertisements impacted by the ordinance," the company noted.

Responding to the city’s message in the same advertisement, PepsiCo said, would not be feasible.

“Trying to do so would turn an advertisement into a scientific debate," the company asserted. “Given the requirements imposed by the city, there would also be too little room left for the original message."

Edward M. Chen, a U.S. District Judge in the Northern District of California, denied the associations' motion for a preliminary injunction, but he nonetheless granted a request to prevent the ordinance from taking effect pending an appeal.

Chen found the ordinance was likely accurate and factual, rejecting the associations’ arguments that the ordinance suggests it’s dangerous to drink beverages with added sugar regardless of a person’s diet or lifestyle and that consuming such drinks uniquely contributes to obesity and diabetes.

The required warning “only says that SSBs [sugar-sweetened beverages] ‘contribute’ to obesity and diabetes, not that they will necessarily result in diabetes or obesity in any particular case; nor does the disclosure state that SSBs are the sole or even dominant cause," Chen wrote in his 2016 order, denying the associations’ request for a preliminary injunction.  

But in holding the lower court abused its discretion, the Ninth Circuit’s Ikuta noted the associations were likely to prevail on their constitutional claim and met the other requirements for a preliminary injunction—including a demonstration that they were likely to suffer irreparable harm without the requested relief.

American Beverage Association, San Francisco City Attorney Respond

The Ninth Circuit’s ruling “affirms our position that the San Francisco warning mandate not only violates the constitutional right to free speech but it is also deceptive and misleading to consumers," the American Beverage Association said in an emailed statement.

Added the Washington-based association: “America's beverage companies believe there are better ways to help people reduce their sugar consumption. That's why we're taking steps to reduce sugar in our beverages, offer more choices with less sugar and put calorie information up front so people can make informed decisions about their drinks."

John Coté, communications director for the Office of San Francisco City Attorney Dennis J. Herrera, said his office was “disappointed" in the Ninth Circuit’s ruling.

“We’re analyzing the decision and evaluating all of our options," he said in an emailed statement. “San Francisco remains committed to being a leader when it comes to protecting the health of our residents, especially our children."