ELR Citation: ELR 20183
No(s). 93-15644 (9th Cir. Nov 18, 1994)

The court holds that a §17508.5 of the California Business and Profession Code, which restricts the use of environmental claims for consumer goods, does not violate the First Amendment to the U.S. Constitution. The law prohibits a manufacturer or distributor of consumer goods from representing that its products are "biodegradable," "ozone friendly," "photodegradable," "recyclable," or "recycled" unless the goods meet the statutory definitions of those terms. The court first holds that the district court correctly applied an intermediate standard of review, because the law is directed only at commercial speech, and does not collaterally stifle noncommercial expression nor create unconstitutionally excessive uncertainty for manufacturers and distributors in their use of the regulated terms in commercial speech. The court holds that the district court correctly found that the law possesses the characteristics the U.S. Supreme Court recognizes as constitutive of commercial speech. Moreover, the trade associations challenging the statute failed to raise any compelling examples of noncommercial representations that the law would regulate, which would trigger strict scrutiny. Section 17508.5's placement among statutory provisions more generally governing advertising, and in particular, false advertising, signifies the law's commercial subject matter and the California Legislature's intent to regulate misrepresentations made in a commercial context exclusively. The court further affirms the district court's findings that the law does not embrace noncommercial messages inextricably linked with commercial speech.

The court next holds that the law satisfies the four-part test for gauging the constitutionality of a statute subject to intermediate scrutiny set forth in Central Hudson Gas v. Public Service Commission of New York, 447 U.S. 557 (1980). The court holds that the statute comports with the first prong, which requires a determination of whether the speech in question concerns lawful activity and is not misleading. Because the truth of the environmental qualities asserted depends on numerous factors that vary between locales, the terms subject to the law may accurately inform consumers that a product is environmentally sound in certain areas, while use of the same terms could be misleading in other areas. Depending on these contingencies, use of the regulated terms may or may not be deceptive, and is accordingly only potentially misleading. The court holds that the district court properly found that the law satisfied the second prong, because California has a substantial governmental interest in ensuring truthful environmental advertising and encouraging recycling. The court holds that the law comports with the third prong of the test, which requires a reasonable fit between the governmental interest and the legislative means to promote it. The court finds sound support for the California legislature's conclusion that ecological claims boost consumer demand for products that do not always live up to their claims. Given the nexus between commercial representations and consumption, the court holds that the standardization of terms used in commercial representations about a product's environmental attributes is directly related to California's indisputably substantial interest in truthful environmental advertising and conservation. Thus, the law directly advances California's interests in consumer and environmental protection by increasing certainty in the market, increasing consumer knowledge and awareness, discouraging exploitation and deception, and creating an incentive for manufacturers of noncomplying products to enhance their goods' environmental attributes, thereby promoting resource conservation and reducing the burden on California's landfills. The law also comports with the fourth prong, which requires that no far less restrictive alternatives to the commercial speech restriction exist. Although somewhat less restrictive alternatives exist, they are either less precise than the law at issue and potentially more inhibiting of truthful environmental representation, or would require more speech.

A dissenting judge would hold that the law violates the First Amendment because it is unconstitutionally vague, has a rough and speculative relation to the state's interests, and discriminates among speakers.

Counsel for Plaintiffs
Floyd Abrams
Cahill, Gordon & Reindel
80 Pine St., New York NY 10005
(212) 701-3000

Counsel for Defendant
Albert N. Sheldon, Deputy Attorney General
Attorney General's Office
110 W. "A" St., Ste. 1100, San Diego CA 92186
(619) 645-2001

Before Choy, Noonan and Marquez,^* JJ.