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American Beverage Association v. City and County of San Francisco

United States Court of Appeals, Ninth Circuit

January 31, 2019

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

          Argued and Submitted En Banc September 25, 2018 Pasadena, California

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

          Richard P. Bress (argued), George C. Chipev, Michael E. Bern, and Melissa Arbus Sherry, Latham & Watkins LLP, Washington, D.C.; Marcy C. Priedman, Latham & Watkins LLP, San Francisco, California; for Plaintiffs-Appellants.

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

          Wencong Fa and Meriem L. Hubbard, Pacific Legal Foundation, Sacramento, California, for Amicus Curiae Pacific Legal Foundation.

          Robert Corn-Revere, Ronald G. London, Davis Wright Tremaine LLP, Washington, D.C., for Amicus Curiae The Association of National Advertisers, Inc.

          Warren Postman and Katheryn Comerford Todd, Litigation Center Inc., Washington, D.C.; Jeremy J. Broggi, Megan L. Brown, and Bert W. Rein, Wiley Rein LLP, Washington, D.C., for Amicus Curiae Chamber of Commerce of the United States of America.

          Mark S. Chenoweth, Cory L. Andrews, and Richard A. Samp, Washington Legal Foundation, Washington, D.C., for Amicus Curiae Washington Legal Foundation.

          Allison M. Zieve, Julie A. Murray, and Scott L. Nelson, Public Citizen Litigation Group, Washington, D.C., for Amicus Curiae Public Citizens, Inc.

          Sophia TonNu, Thomas Bennigson, and Seth E. Mermin, Public Good Law Center, Berkeley, California; Sabrina Adler, Ian McLaughlin, and Benjamin D. Wing, Changelab Solutions, Oakland, California, for Amici Curiae American Heart Association, American Academy of Pediatrics, California, California Academy of Family Physicians, California Chapter of the American Association of Clinical Endocrinologists, California Endowment, California Medical Association, California Pan-Ethnic Health Network, Changelab Solutions, Community Health Partnership, Crossfit Foundation, Diabetes Coalition of California, Healthy Food America, Latino Coalition for a Healthy California, National Association of Chronic Disease Directors, National Association of Local Boards of Health, Network of Ethnic Physician Organizations, Nicos Chinese Health Coalition, Prevention Institute, Public Health Institute, Public Health Law Center, San Francisco Bay Area Physicians for Social Responsibility, San Francisco Community Clinic Consortium, San Francisco Medical Society, Southern California Public Health Association, and Strategic Alliance.

          Rachel Bloomekatz, Gupta Wessler PLLC, Washington, D.C., for Amici Curiae American Cancer Society Cancer Action Network, Public Health Law Center, Action on Smoking & Health, African American Tobacco Control Leadership Council, American Lung Association, American Thoracic Society, Americas for Nonsmokers' Rights, Campaign for Tobacco-Free Kids, NAATPN, and Truth Initiative Foundation.

          Maia C. Kats, Center for Science in the Public Interest, Washington, D.C., for Amicus Curiae Center for Science in the Public Interest.

          Peter C. Tolsdorf and Linda E. Kelly, Manufacturers' Center for Legal Action, Washington, D.C.; J. Michael Connolly, Thomas R. McCarthy, and William S. Consovoy, Consovoy McCarthy Park PLLC, Arlington, Virginia; for Amicus Curiae National Association for Manufacturers.

          Deborah R. White, Retail Litigation Center Inc., Arlington, Virginia; Gabriel K. Gillett, Jenner & Block LLP, Chicago, Illinois; Adam G. Unikowsky, Jenner & Block LLP, Washington, D.C., for Amicus Curiae Retail Litigation Center.

          Catherine E. Stetson, Hogan Lovells U.S. LLP, Washington, D.C., for Amicus Curiae Grocery Manufacturers Association.

          Before: Sidney R. Thomas, Chief Judge, and Dorothy W. Nelson, Susan P. Graber, William A. Fletcher, Marsha S. Berzon, Sandra S. Ikuta, Mary H. Murguia, Morgan Christen, Jacqueline H. Nguyen, Andrew D. Hurwitz, and John B. Owens, Circuit Judges.

         SUMMARY[*]

         Civil Rights

         The en banc court reversed the district court's denial of a preliminary injunction and remanded in an action challenging the City and County of San Francisco's Sugar-Sweetened Beverage Warning Ordinance, which requires health warnings on advertisements for certain sugar-sweetened beverages.

         Plaintiffs, the American Beverage Association, California Retailers Association, and California State Outdoor Advertising Association, argued that the Ordinance violated their First Amendment right to freedom of speech. The en banc court, relying on National Institute of Family & Life Advocates v. Becerra (NIFLA), 138 S.Ct. 2361 (2018), concluded that Plaintiffs will likely 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, 471 U.S. 626, 651 (1985). The en banc court determined that the remaining preliminary injunction factors also weighed in Plaintiffs' favor.

         Concurring, Judge Ikuta stated that because the Associations had shown a likelihood of prevailing on the merits and because the other factors for granting a preliminary injunction weighed in the Associations' favor, she agreed with the majority's conclusion that the district court abused its discretion by denying the Associations' motion for a preliminary injunction. But Judge Ikuta stated that because the majority failed to apply NIFLA's framework for analyzing when government-compelled speech violates the First Amendment, she dissented from the majority's reasoning.

         Concurring in part and concurring in the judgment, Judge Christen, joined by Chief Judge Thomas, agreed with the majority that Zauderer's framework applied to the government-compelled speech at issue in this case. Judge Christen also agreed that the district court's decision must be reversed, but she would not reach the issue the majority relied upon. Judge Christen would reverse because the City and County of San Francisco could not show that the speech it sought to compel was purely factual.

         Concurring in the judgment, Judge Nguyen disagreed with the majority's expansion of Zauderer's rational basis review to commercial speech that is not false, deceptive, or misleading. Judge Nguyen stated that because the majority reached the right result under the wrong legal standard, she respectfully concurred only in the judgment.

          OPINION

          GRABER, Circuit Judge

         Plaintiffs American Beverage Association, California Retailers Association, and California State Outdoor Advertising Association challenge Defendant City and County of San Francisco's Sugar-Sweetened Beverage Warning Ordinance, City & Cty. of S.F., Cal., Bd. of Supervisors Ordinance No. 100-15, § 1 (June 16, 2015). The Ordinance requires health warnings on advertisements for certain sugar-sweetened beverages ("SSBs"). Plaintiffs argue that the Ordinance violates their First Amendment right to freedom of speech. Relying on the United States Supreme Court's decision in National Institute of Family & Life Advocates v. Becerra ("NIFLA"), 138 S.Ct. 2361 (2018), we conclude that Plaintiffs will likely 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, 471 U.S. 626, 651 (1985). The remaining preliminary injunction factors also weigh in Plaintiffs' favor. We therefore hold that the district court abused its discretion by denying Plaintiffs' motion for a preliminary injunction, and we reverse and remand.

         FACTUAL AND PROCEDURAL BACKGROUND

         In June 2015, Defendant enacted the Ordinance, which requires that certain SSB advertisements ("SSB Ads") 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.

         City & Cty. of S.F., Cal., Health Code art. 42, div. I, § 4203(a) (2015). An "SSB Ad" covers

any advertisement, including, without limitation, any logo, that identifies, promotes, or markets a Sugar-Sweetened Beverage for sale or use that is any of the following: (a) on paper, poster, or a billboard; (b) in or on a stadium, arena, transit shelter, or any other structure; (c) in or on a bus, car, train, pedicab, or any other vehicle; or (d) on a wall, or any other surface or material.

Id. § 4202. Under section 4202, though, an "SSB Ad" does not include advertising in or on: periodicals; television; electronic media; SSB containers or packaging; menus; shelf tags; vehicles used by those in the business of manufacturing, selling, or distributing SSBs; or logos that occupy an area of less than 36 square inches. Id. The Ordinance defines "SSB" as "any Nonalcoholic Beverage sold for human consumption, including, without limitation, beverages produced from Concentrate, that has one or more added Caloric Sweeteners and contains more than 25 calories per 12 ounces of beverage." Id. But "SSB" does not include drinks such as milk, plant-based milk alternatives, natural fruit and vegetable juices, infant formulas, and supplements. Id. The Ordinance provides detailed instructions regarding the form, content, and placement of the warning on SSB Ads, including a requirement that the warning occupy at least 20% of the advertisement and be set off with a rectangular border. Id. § 4203(b).

         Defendant's stated purpose in requiring the warning is, among other reasons, 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 SSBs contribute and associated economic burdens." Id. § 4201. Failure to comply with the warning requirement can result in administrative penalties imposed by San Francisco's Director of Health. Id. § 4204(a).

         Plaintiffs sued to prevent implementation of the Ordinance. The district court denied Plaintiffs' motion for a preliminary injunction. Concluding that Plaintiffs likely would not succeed on the merits of their First Amendment challenge, the district court held that the warning is not misleading, does not place an undue burden on Plaintiffs' commercial speech, and is rationally related to a substantial governmental interest. But the court stayed implementation of the Ordinance pending this timely interlocutory appeal.

         A three-judge panel of this court reversed the district court's denial of a preliminary injunction, Am. Beverage Ass'n v. City & County of San Francisco, 871 F.3d 884 (9th Cir. 2017). We then ordered that the case be reheard en banc, 880 F.3d 1019 (9th Cir. 2018).

         JURISDICTION AND STANDARDS OF REVIEW

         We have jurisdiction under 28 U.S.C. § 1292.

         We review the denial of a preliminary injunction for abuse of discretion. Harris v. Bd. of Supervisors, 366 F.3d 754, 760 (9th Cir. 2004). A district court abuses its discretion if it rests its decision "on an erroneous legal standard or on clearly erroneous factual findings." United States v. Schiff, 379 F.3d 621, 625 (9th Cir. 2004) (internal quotation marks omitted). "We review conclusions of law de novo and findings of fact for clear error." All. ...


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