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American Beverage Association v. City and County of SanFrancisco

United States Court of Appeals, Ninth Circuit

September 19, 2017

American Beverage Association; California Retailers Association, Plaintiffs-Appellants,
v.
City and County of SanFrancisco, Defendant-Appellee. and California State Outdoor Advertising Association, Plaintiff,

          Argued and Submitted April 17, 2017 San Francisco, California

         Appeal from the United States District Court for the Northern District of California D.C. No. 3:15-cv-03415-EMC Edward M. Chen, District Judge, Presiding

         COUNSEL

          Richard P. Bress (argued), Melissa Arbus Sherry, and Michael E. Bern, Latham & Watkins LLP, Washington, D.C.; James K. Lynch and Marcy C. Priedeman, Latham & Watkins LLP, San Francisco, California; for Plaintiff-Appellant American Beverage Association.

          Thomas S. Knox, Knox Lemmon & Anappolsky LLP, Sacramento, California; for Plaintiff-Appellant California Retailers Association.

          Theodore B. Olson, Andrew S. Tulumello, and Helgi C. Walker, Gibson Dunn & Crutcher LLP, Washington, D.C.; Charles J. Stevens and Joshua D. Dick, Gibson Dunn & Crutcher LLP, San Francisco, California; for Plaintiff-Appellant California State Outdoor Advertising Association.

          Christine Van Aken (argued), Jeremy M. Goldman, and Wayne Snodgrass, Deputy City Attorneys; Dennis J. Herrera, City Attorney; Office of the City Attorney, San Francisco, California; for Defendant-Appellee.

         SUMMARY[**]

         First Amendment / Preliminary Injunction

         The panel reversed the district court's denial of the plaintiff Associations' motion for a preliminary injunction, seeking to enjoin the implementation of the City and County of San Francisco's ordinance that would require warnings about the health effects of certain sugar-sweetened beverages on specific types of fixed advertising within San Francisco.

         The plaintiffs - the American Beverage Association, the California Retailers Association, and the California State Outdoor Advertising Association - alleged that the ordinance violated their First Amendment right to freedom of speech.

         The panel held that the plaintiffs were likely to succeed on the merits of their claim that the ordinance was an "unjustified or unduly burdensome disclosure requirement[] [that] might offend the First Amendment by chilling protected commercial speech." Zauderer v. Office of Disciplinary Counsel of Supreme Court of Ohio, 471 U.S. 626, 651 (1985). Specifically, the panel joined other circuits in holding that the Zauderer framework applied beyond the context of preventing consumer deception. The panel held that because the required warning was not purely factual and uncontroversial, San Francisco had not established that the plaintiffs' constitutionally protected interest in not providing the warning was minimal under Zauderer. The panel agreed with the plaintiffs that the warning requirements - a black box warning that overwhelmed other visual elements of the ads - unduly burdened and chilled protected speech.

         The panel held that the remaining preliminary injunction factors also weighed in the plaintiffs' favor. The panel concluded that the district court abused its discretion in denying the plaintiffs' motion for a preliminary injunction, and reversed and remanded.

         Judge Nelson concurred in the judgment because she believed that the ordinance, in its current form, likely violated the First Amendment by mandating a warning requirement so large that it would probably chill protected commercial speech. Judge Nelson would reverse and remand without also making the conclusion that the warning's language was controversial and misleading.

          Before: Dorothy W. Nelson and Sandra S. Ikuta, Circuit Judges, and J. Michael Seabright, [*] Chief District Judge.

          OPINION

          IKUTA, Circuit Judge:

         American Beverage Association, California Retailers Association, and the California State Outdoor Advertising Association (we refer to these organizations and their members collectively as "the Associations"), filed suit against the City and County of San Francisco challenging a city ordinance that would require warnings about the health effects of certain sugar-sweetened beverages on specific types of fixed advertising within San Francisco. The Associations argue that the ordinance violates their First Amendment right to freedom of speech. After the district court denied the Associations' motion for a preliminary injunction, the Associations filed this interlocutory appeal. We conclude that the Associations are likely to succeed on the merits of their claim that the ordinance is an "unjustified or unduly burdensome disclosure requirement[] [that] might offend the First Amendment by chilling protected commercial speech." Zauderer v. Office of Disciplinary Counsel of Supreme Court of Ohio, 471 U.S. 626, 651 (1985). The remaining preliminary injunction factors also weigh in the Associations' favor. We hold that the district court abused its discretion in denying the Associations' motion for a preliminary injunction, and we reverse and remand.

         I

         San Francisco enacted an ordinance in June 2015 requiring advertisers who post advertisements for sugar-sweetened beverages within San Francisco to include the following statement:

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.

S.F. Health Code § 4203(a). The ordinance applies to a certain type of advertisement for sugar-sweetened beverages, termed an "SSB Ad." Id. As defined, an "SSB Ad" includes any advertisement or logo that "identifies, promotes, or markets a Sugar-Sweetened Beverage for sale or use" that is posted on billboards, structures, or vehicles, among other things. Id. § 4202.[1] The term "Sugar-Sweetened Beverage" is defined to include soda and other non-alcoholic beverages that contain one or more added sweeteners and more than twenty-five calories per twelve fluid ounces of beverage.[2] Id. The ordinance provides detailed instructions regarding the form, content, and placement of the warning on SSB Ads, including the requirement that it occupy 20 percent of the advertisement and be set off with a rectangular border. Id. § 4203. Failure to comply with the ordinance's warning requirement results in administrative penalties imposed by San Francisco's Director of Health. Id. § 4204. According to the ordinance, San Francisco's purpose in requiring the warning for certain sugar-sweetened beverages is, among other things, to "inform the public of the presence of added sugars and thus promote informed consumer choice that may result in reduced caloric intake and improved diet and health, thereby reducing illnesses to which [sugar-sweetened beverages] contribute and associated economic burdens." Id. § 4201.

         The Associations sued San Francisco in July 2015, seeking injunctive relief to prevent the implementation of the ordinance, which was set to go into effect on July 25, 2016. S.F. Health Code § 4203(a). The district court denied the Associations' motion for a preliminary injunction in May 2016. In concluding that the Associations were not likely to succeed on the merits of their First Amendment challenge, the district court held that the warning was not misleading, would not place an undue burden on the Associations' commercial speech, and was rationally related to a government interest. Nevertheless, the court granted the Associations' motion for an injunction pending appeal. The Associations filed a timely interlocutory appeal.

         II

         We have jurisdiction pursuant to 28 U.S.C. § 1292(a)(1). We review the district court's denial of a preliminary injunction for an abuse of discretion. Inst. of Cetacean Research v. Sea Shepherd Conservation Soc., 725 F.3d 940, 944 (9th Cir. 2013). "A district court would necessarily abuse its discretion if it based its ruling on an erroneous view of the law or on a clearly erroneous assessment of the evidence." Id. (citation and internal quotation marks omitted). When we consider First Amendment claims, "[h]istorical questions of fact (such as credibility determinations or ordinary weighing of conflicting evidence) are reviewed for clear error, while constitutional questions of fact (such as whether certain restrictions create a severe burden on an individual's First Amendment rights) are reviewed de novo." Prete v. Bradbury, 438 F.3d 949, 960 (9th Cir. 2006) (internal quotation marks omitted). This "requirement of independent appellate review . . . is a rule of federal constitutional law, which does not limit our deference to a trial court on matters of witness credibility, but which generally requires us to review the finding of facts by a [trial court] . . . where a conclusion of law as to a Federal right and a finding of fact are so intermingled as to make it necessary, in order to pass upon the Federal question, to analyze the facts." Hurley v. Irish-Am. Gay, Lesbian & Bisexual Grp. of Boston, 515 U.S. 557, 567 (1995) (citations and internal quotation marks omitted). "This obligation rests upon us simply because the reaches of the First Amendment are ultimately defined by the facts it is held to embrace, and we must thus decide for ourselves whether a given course of conduct falls on the near or far side of the line of constitutional protection." Id. Because the questions whether a compelled disclosure is purely factual and uncontroversial and whether it unduly burdens commercial speech are "so intermingled" with the ...


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