July 29 (Bloomberg) -- North American meat producers lost another court ruling in their bid to defeat mandated labels showing where an animal was born, raised and slaughtered, a decision that may crimp corporations’ efforts to fend off regulation on free-speech grounds.
The full U.S. Court of Appeals in Washington today rejected the arguments by trade groups representing meat producers including Tyson Foods Inc. and JBS USA Holdings Inc. that the U.S. Department of Agriculture’s labeling rule violated their First Amendment rights by forcing them to issue statements against their will.
The government’s interest in providing consumers with information overcomes any speech claims raised by the meat companies, U.S. Circuit Judge Stephen Williams wrote for a divided panel of 11 judges.
Today’s ruling might make it harder for companies to block regulation on free speech grounds, in part because it comes from an appeals court that has been receptive to such arguments, according to Leslie Kendrick, a law professor at the University of Virginia and a specialist in First Amendment law.
Exactly what the government may require businesses to disclose, or what it can prevent them from saying, remains unsettled, making this “the kind of case the Supreme Court could well be interested in,” Kendrick said in a phone interview.
A three-judge panel of the court, which upheld a trial judge who reached the same conclusion as today’s decision, made a rare request for a full-court review of the First Amendment claims, reflecting the stakes and the unsettled nature of the law on the subject.
James Hodges, interim head the American Meat Institute, which brought the case with U.S., Canadian and Mexican trade groups, said he was disappointed by the decision.
“The country of origin rule harms livestock producers and the industry and affords little benefit to consumers,” he said. “We will evaluate our options moving forward.”
The majority today said that giving First Amendment protection to commercial speech, such as the contents of a product label, is justified mainly by its value to consumers. The meat producers’ free speech claims would be stronger if the government was seeking to bar them from putting out information rather than withholding it, the court ruled.
The court, the country’s leading panel for handling disputes over federal regulations, looked at factors such as how country-of-origin disclosure helps consumers to choose American-made products and “individual health concerns and market impacts that can arise in the event of a foodborne illness outbreak,” Williams wrote.
In a dissent, U.S. Circuit Judge Janice Rogers Brown said the ruling means “a business owner no longer has a constitutionally protected right to refrain from speaking, as long at the government wants to use the company’s product to convey ‘purely factual and uncontroversial speech.’”
The decision “hacks the First Amendment down to fit in the government’s hip pocket,” Brown said. “I will not join in the carnage.”
U.S. Circuit Judge Karen LeCraft Henderson also dissented.
The regulations, known as Country of Origin Labeling, or COOL, were adopted in May 2013 and took full effect in November. Today’s ruling denied meat producers’ request for a preliminary order blocking implementation of the rule.
That still leaves the merits of the suit to be resolved. Also pending is a complaint about the rule by Canada and Mexico before the World Trade Organization.
“COOL isn’t out of the woods, but it has survived this particular hurdle,” said Chris Waldrop, director of the Food Policy Institute at the Consumer Federation of America, which filed a brief in the case in support of the government.
While companies can still be expected to challenge regulators’ labeling demands, the decision “will put agencies on firmer footing” in defending mandatory disclosures, Waldrop said.
The case is among a flurry of challenges by businesses to labeling and disclosure rules on First Amendment grounds.
In July 2012, Spirit Airlines Inc. lost a challenge to a Transportation Department rule requiring carriers to display the total cost of a ticket more prominently than the pretax price. The House yesterday passed a measure that would undo the rule.
Also in 2012, a court found that mandating visual-image warnings such as diseased lungs on cigarette ads and packaging ran afoul of tobacco companies’ free speech rights.
This year, an appeals panel ruled that forcing manufacturers like Boeing Co. to disclose whether “conflict minerals” mined in Democratic Republic of the Congo and neighboring countries were used in their products was a First Amendment violation.
In the meat-labeling case, industry trade groups argued that the government can only require factual disclosures when trying to correct a deception, something that wasn’t claimed by the Agriculture Department when it promulgated the rule.
The U.S., in its filings, said that factual, non-controversial labeling can be required if it serves other government interests, such as satisfying consumers’ desire to know where their food is coming from.
A lower court rejected the meat producers’ request to suspend the country-of-origin requirement while awaiting trial.
The case is American Meat Institute v. U.S. Department of Agriculture, 13-cv-005281, U.S. Court of Appeals, District of Columbia (Washington).
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