Mrs Winslow’s syrup contained alcohol and morphine and was sold from the 1840s to the 1930s. Today, advertising it as safe for children would be considered fraud.
Do corporations have a First Amendment right to deceive the public? Is it legal to knowingly lie about products or their public health or environmental impacts?
These days the question comes up in the context of the climate change debate, but the fight over corporate and commercial speech has a long and storied history.
Until about a century ago, advertising was unregulated, and advertisers were perfectly free to lie without taking responsibility for their products. “Soothing syrups” of opium and morphine were good for children, they said; radioactive drinks like “Radithor” healed like having the sun on the inside, they said; and Grape-Nuts cereal would cure appendicitis without medical help, they said.
This sort of fraud is an abuse of the marketplace of ideas, and it was ended with a Progressive-era campaign to regulate advertising.
And yet, by the 21st century, international corporations were insisting on a First Amendment right to champion junk food, to market tobacco, to fabricate information about sweat shop working conditions in developing nations, and to use outright nonsense to challenge legitimate science on fossil-fuel induced climate change.
Advocacy in these areas has become part of a corporate legal trend that deceptively casts businesses as victims, using the language and style of civil rights, but with the intention to undermine consumer rights and influence the marketplace of ideas.
For example, investigations into Exxon-Mobil’s climate change denial by state attorneys general in Massachusetts and New York during the spring and summer of 2015 have been an attempt to lift the lid on this presumed right to lie.
The Exxon-Mobil axis responded with typically feigned outrage. “F*** off, fascists” is the eloquent response oil industry front man Alex Epstein gave to the Massachusetts Attorney General’s office in June of 2016.
The Exxon-Mobil axis also objected to a proposed California state law that would have allowed civil claims against businesses and organizations that spread misinformation about climate change. The bill was tabled in June, but not until right wing bloggers claimed that they were being persecuted for climate skepticism. Radio personality Glen Beck claimed that the California bill would throw anyone in jail who disagreed with climate scientists. The Washington Times and others repeated the charge, claiming: “The First Amendment is now dead.” Columnist George Will said that the bill was an attempt to stifle dissent. (Of course its not true: See this Snopes site).
The claims all had similar themes, noted Sen. Sheldon Whitehouse, D-RI in a Columbia Journalism Review article July 12, 2016. “Fraud is not protected speech” under the First Amendment. He believes that investigations of corporate climate science denial could turn up the same kind of deliberately false information spread about tobacco in the late 20th century.
Historically, reining in false or fraudulent advertising has not been considered controversial. Advertising did not really have any First Amendment protection after Congress created the Food and Drug Administration in 1906 and the Federal Trade Commission in 1914. And in a 1942 challenge, the US Supreme Court said that that advertising could be regulated in the Valentine v. Chrestensen case (316 U.S. 52).
Legal scholars trace the change in the judicial philosophy of advertising regulation to three major developments: 1) Recognition of the political content inherent in some advertising, such as the 1964 New York Times v Sullivan civil rights advertising case; 2) Placing advertising regulation into an “intermediate scrutiny” framework with a four-part test, giving advertising some limited protection, as in the Central Hudson v PUC case of 1980; 3) And placing corporate speech regulation into a “strict scrutiny” category in the 1978 First National Bank of Boston v Bellotti case (435 U.S. 765 ).
The Bellotti case, although initially narrow, is behind the modern claims of First Amendment rights for corporations, including campaign contributions that emerged with the Citizens United case of 2010.
The decision in the Bellotti case did not really affirm First Amendment rights for corporations. Instead, in the final opinion, the Court said:
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The Constitution often protects interests broader than those of the party seeking their vindication. The First Amendment, in particular, serves significant societal interests. The proper question is not whether corporations “have” First Amendment rights and, if so, whether they are coextensive with those of natural persons. Instead, the question must be whether [the law] abridges expression that the First Amendment was meant to protect. We hold that it does. |
As Tamara R. Piety put it in a 2016 University of Maryland Business and Technology Law Journal, the Court here was engaged in a bit of sophistry:
Reformulating the question this way does not answer whether the First Amendment was meant to protect the political speech of corporations. The question was whether … corporate political speech was indeed part of the core speech the First Amendment was meant to protect. But framing it this way certainly made it seem as if the answer to the question posed was easy and self-evident.
The second thing that is interesting about this reframing is the way in which [the Court] proposes that freedom for corporate speech is predicated on a public interest… It is easy to see how truthful commercial speech could conceivably represent a public benefit. Obviously, false commercial speech is not in the public interest. [Previously. in the Virginia Pharmacy case.] the Court conspicuously and scrupulously reaffirmed the power of the government to make sure that commercial speech was in fact truthful.
But truthfulness is precisely what the government may not regulate in the political sphere. While false political speech may be just as deleterious, perhaps more so, to the public than false commercial speech, it is quite a different matter for the government to propose to regulate false political speech. But it is one thing to say that the government ought not to be the arbiter of truth and falsity in the sphere of political speech; it is another thing to characterize all political speech as a public benefit, regardless of whether it is true.
So the impact of the Bellotti case was a slowly mounting claim for First Amendment rights for corporations in an area that could not be directly regulated because it was political. As Piety says:
The First Amendment has become a powerful weapon against regulation of all kinds. Regulations that have been on the books for decades are being challenged. And many regulations that have been a thorn in the side of business, and the source of much litigation, are now under a constitutional cloud… Whatever the motivations, the fact remains that what started out as a limited right to hear truthful information (but not false information and without any rationale for a speaker’s right to speak commercial information) has morphed into a right which resides primarily in the speaker, one that can be used to rebuff the consumer’s interest in blocking unwanted advertising and hearing truthful information.
But it is a denatured sort of right. It is not one expressed in terms of the speaker’s right to speak, but rather in a rejection of discrimination, thus leaving the corporation as rights holder in the background and its bona fides, in terms of its claim, separate from its owners, shareholders, directors or managers, to First Amendment rights of all kinds, unclear. I remain concerned that this expansive First Amendment will prove to be an unworkable burden on beneficial regulation intended to protect public health, safety, and welfare.
Similarly, in a Washington Monthly (Jan-Feb, 2014) article, the authors argue that freedom of speech has become the freedom to destroy government regulations of all kinds.
And in a Washington Post op-ed, Yale law school dean Robert Post argued that the point is a simple one:
If large corporations were free to mislead deliberately the consuming public, we would live in a jungle rather than in an orderly and stable market.
ExxonMobil and its supporters are now eliding the essential difference between fraud and public debate. Raising the revered flag of the First Amendment, they loudly object to investigations recently announced by attorneys general of several states into whether ExxonMobil has publicly misrepresented what it knew about global warming… (And) Hans A. von Spakovsky, speaking for the Heritage Foundation, compared the attorneys general to the Spanish Inquisition.
Despite their vitriol, these denunciations are wide of the mark. If your pharmacist sells you patent medicine on the basis of his “scientific theory” that it will cure your cancer, the government does not act like the Spanish Inquisition when it holds the pharmacist accountable for fraud.
LINKS
Killie, L., “Corporate speech and the First Amendment: History, data and implications” Shorenstein Center, 2015
Edwards, H. “The Corporate Free Speech Racket,” Washington Monthly, 2014
Piety, T., Selected Works
