Free Speech Inc.
The most illuminating free-speech case of 2015 has nothing to do with political speech, or civil-rights protests, or hate speech, or any other issues we used to associate with the First Amendment. It has to do with an obscure provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act that directs the Securities and Exchange Commission to require companies to inform the public if their products use conflict minerals.
The case, brought by the National Association of Manufacturers, is the culmination of a stunningly successful corporate movement to transform the First Amendment into an all-purpose shield against even modest regulation. Let’s give the movement a name: Free Speech Inc.
The conflict minerals controversy came to a head in 2012, when the SEC issued a regulation requiring companies to conduct a “reasonable country of origin inquiry” to see if their products use minerals that are sold to finance war and humanitarian catastrophe in covered nations -- principally Congo. If they do, then companies must report those products, publicly, on an SEC website.
In 2014, the court of appeals ruled that this requirement was reasonable and consistent with Dodd-Frank. The only problem involved the First Amendment. The court noted that the government is usually free to require companies to disclose “purely factual and uncontroversial information,” but insisted that this principle is limited to government efforts to protect consumers from deception.
In the case of conflict minerals, the government’s goal is to let consumers know whether the products they buy are helping to finance a war. To the court, that’s unconstitutional, because “it requires an issuer to tell consumers that its products are ethically tainted, even if they only indirectly finance armed groups.” (Is it a lot less bad to help finance war if you do it “only indirectly”?)
Because of an intervening decision that drew its ruling into question, the court of appeals has agreed to revisit the question this year. But Free Speech Inc. has been winning a lot of important cases. More than a decade ago, the U.S. Supreme Court struck down Massachusetts' attempt to regulate outdoor advertising of tobacco products within a thousand feet of public playgrounds or schools. More recently, a court of appeals invalidated a regulation from the Food and Drug Administration, responding to a direction from Congress, that would have required graphic warning labels on cigarette packages.
What's going on here? In 1975, no one could have imagined such rulings, or foreseen that the SEC’s disclosure requirement for conflict minerals would have run into any constitutional difficulty.
The right to free speech, at its inception, was closely connected with the defining idea of government by We the People. Elaborating the principle, James Madison explained that self-government “depends on the knowledge of the comparative merits and demerits of the candidates for the public trust.” In his view, “free communication among the people” is “the only effectual guardian of every other right.”
From the founding period until late in the 20th century, the court never ruled that the First Amendment protects commercial advertising. Then suddenly, in 1976, it reversed course with a decision in a case brought by Virginia consumers who objected to a law that barred pharmacists from advertising prescription drug prices. Emphasizing that consumers have a keen interest “in the free flow of commercial information,” the court ruled that the state could not forbid truthful, nondeceptive advertising.
In dissent, Justice William Rehnquist objected to the “far reaching” implications of “a decision which elevates commercial intercourse between a seller hawking his wares and a buyer to the same plane as had been previously reserved for the free marketplace of ideas.” If anything, Rehnquist understated the implications.
As my colleague John Coates, a professor of law at Harvard, has demonstrated, recent decades have seen a genuine revolution in free speech law. Far from being used to ensure the preconditions for self-government, the First Amendment is being regularly invoked as a barrier to fairly modest regulatory requirements. Ironically, those requirements are usually designed to ensure that consumers are informed.
Birthed by a consumers’ rights decision in 1976, Free Speech Inc. has already been an astonishing success story. The conflict minerals controversy will provide crucial evidence about its future.
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Cass R Sunstein at firstname.lastname@example.org
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Mary Duenwald at email@example.com