ELR Citation: ELR 20720
No(s). C-92-0660 MHP (N.D. Cal. Dec 23, 1992)

The court holds that §17508.5 of the California Business and Professions Code (CBPC), which regulates environmental product advertising related to consumer goods by mandating statutory definitions for commonly used environmental advertising claims, permissibly restricts commercial speech and, except for subsection (d), is not unconstitutionally vague. In 1990, the California Legislature passed the Environmental Advertising Claims Act, which added §17508.5 to the CBPC. The statute made it unlawful for any person to represent that any consumer good that it manufactures or distributes is "ozone friendly," "biodegradable," "photodegradable," "recyclable," or "recycled" unless that consumer good meets the definitions contained in the statute, or meets definitions established in trade rules adopted by the Federal Trade Commission. An association of advertisers and others challenged the new law claiming that it violated their First Amendment rights and is unconstitutionally vague.

The court holds that the regulated speech in this case is entitled to the qualified protection accorded commercial speech. Although First Amendment review of restrictions on noncommercial messages requires strict scrutiny, regulations affecting commercial speech invite a more relaxed inquiry. Plaintiffs' claim that the statute restricts their ability to express policy views or publish editorial or informational advertisements aimed at inducing public activism is misplaced. First, §17508.5(g) specifically provides that "a wholesaler or retailer who does not initiate a representation by advertising or by placing the representation on a package shall not be deemed to have made the representation." Thus, the statute only applies to representations that a specific consumer good possesses a particular environmental attribute, leaving advertisers free reign to create informational advertisements that contain generalized expressions of an environmental attribute. Moreover, a firm's statement that it supports recycling, for example, is not a representation concerning a consumer good and, thus, is not proscribed by the statute.

The court also holds that the statute does not compel speech, but merely sets forth statutory definitions for common environmental advertising terms. Contrary to the plaintiffs' claim that their commercial advertisements are inseparable from their policy oriented speech designed to educate consumers on current environmental issues, the court holds that the statute does not require the plaintiffs to combine commercial and noncommercial speech in their advertisements. The advertising contemplated by the statute unquestionably proposes a commercial transaction, and because the commercial and noncommercial messages are not inextricably linked, §17508.5 applies only to commercial speech.

The court next applies the three characteristics that the U.S. Supreme Court has established for determining what constitutes commercial speech. First, the court holds that the statute regulates representations concerning a specific consumer good that take the form of advertisements or product labels. Next, the court holds that the statute specifically requires that the representation be made about a specific consumer good that a firm manufactures or distributes. Finally, the court holds that by touting the environmental benefits of consumer products, plaintiffs' association members hope to capture a portion of the "green market."

Turning to the constitutionality of the statute, the court applies the four-part inquiry for analyzing the lawfulness of restrictions on commercial speech established by the U.S. Supreme Court in Central Hudson Gas v. Pub. Serv. Comm'n of N.Y., 447 U.S. 557 (1980). The first prong of the inquiry requires the court to determine whether the expression concerns lawful activity and is not misleading. The court holds that although it cannot say that due to their allegedly misleading nature, the commercial messages at issue are not protected by the First Amendment, the messages are at least potentially misleading to the public and, thus, some form of regulation is justified. The second prong of the Central Hudson inquiry, whether the asserted governmental interest is substantial, requires no discussion because the parties agree that California's governmental interest in ensuring truthful environmental advertising and encouraging recycling and environmentally sound packaging is substantial. The third prong requires that regulations on commercial speech must directly advance the governmental interest at stake. The court holds that the statute directly advances the government's asserted interest, because the link between the uniform definitions and the goal of ensuring that consumers understand the claimed environmental attributes of products is neither tenuous nor speculative. Given the confusion over what advertisers mean when they state, for example, that a product is recyclable or biodegradable, the legislature sought to level the playing field for all advertisers by requiring that they mean the same thing when using the terms set forth in the statute. Finally, the fourth prong of the Central Hudson inquiry requires that restrictions on commercial speech be no more extensive than necessary to further the state's interest. The court holds that California reasonably opted to define the terms to promote consumer and environmental protection goals, rather than allow manufacturers and distributors to evade the dictates of the statute by defining the terms themselves. The court rejects plaintiff's arguments that a more general statute already existed that could be implemented to achieve the same results, and that other alternatives existed to the statutory proscriptions.

Turning to plaintiffs' unconstitutionally void for vagueness challenge to two phrases in the statute, the court holds that the statute's definition of "ozone friendly" is not ambiguous, but the definition of "recyclable" is vague. "Ozone friendly" is comprehensible on its face, and the phrase "or any like term" clearly refers to the modifying phrase "which connotes that stratospheric ozone is not being depleted." Thus, the statute brings within its scope only those advertising claims that suggest the product does not deplete stratospheric ozone. Although the statute defines a consumer good as "recyclable" if it can be "conveniently recycled" in California counties with more than 300,000 people, the statute offers no guidance as to what recycling programs satisfy the "conveniently recycled" requirement. Although legislatures need leeway to advance goals in the commercial speech area, the constitutional requirement of definiteness is not met by this statute's definition of "recyclable." However, the court holds that the infirm "recyclable" definition is independently severable from the statute, and the court upholds the remainder of the statute as a permissible restriction on commercial speech.

Counsel for Plaintiffs
John W. Keker, Susan J. Harriman
Keker & Brockett
710 Sansome St., San Francisco CA 94111
(415) 391-5400

James M. Mattesich
Livingston & Mattesich
1201 K St., Ste. 1100, Sacramento CA 95814
(916) 442-1111

Counsel for Defendant
Albert N. Shelden, Susan E. Henrichsen, Deputy Attorneys General
U.S. Attorney General's Office
940 Front St., San Diego CA 92189
(619) 557-5610

Christopher M. Ames, John G. Donhoff Jr.
Federal Bldg., 450 Golden Gate Ave., San Francisco CA 94102
(415) 556-1126