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Legal Principle at Issue

Whether the U.S. Secretary of Agriculture may constitutionally require handlers of California peaches, nectarines, and plums to fund generic advertising of those fruits.

Action

Reversed. Petitioning party received a favorable disposition.

Facts/Syllabus

Under regulations (7 C.F.R. pts. 916 and 917) issued by the Secretary of Agriculture pursuant to the Agricultural Marketing Agreement Act of 1937, 7 U.S.C. _ 601 et seq., all handlers of California peaches, nectarines, and plums are, among other things, annually assessed an amount that is used in part to finance generic advertising of these products. A number of handlers, whose total annual assessment chargeable to this advertising has been in excess of $500,000, challenged the regulations on several grounds, including that the regulation that required them to support the generic advertising campaign violated their First Amendment right to freedom of speech. The administrative law judge ruled in favor of the handlers, but the Judicial Officer of the U.S. Department of Agriculture reversed that decision. The handlers then appealed to the U.S. District Court for the Eastern District of California, which also rejected the handlers' First Amendment argument. On appeal, the Ninth Circuit Court of Appeals held that the Secretary of Agriculture could not constitutionally require the handlers to finance the generic advertising campaign.

Since 1980, the Court usually has analyzed First Amendment issues involving commercial speech under the standard that it set forth in Central Hudson Gas & Elec. Corp., 447 U.S. 557 (1980). Under Central Hudson, regulation of lawful, non-misleading commercial speech must be evaluated under a three-part test: whether the governmental interest asserted in support of the regulation is substantial, whether the regulation directly advances that interest, and whether the regulation is more extensive than necessary to serve that interest. In Abood v. Detroit Bd. of Educ., 431 U.S. 209 (1977), and Keller v. State Bar of California, 496 U.S. 1 (1990), however, the Court held that members of organizations can be required to contribute financially to speech with which they disagree, as long as the speech is germane to the governmental interest that justifies the compelled membership.

Importance of Case

The Court appears to have taken a step back from its recent decisions expanding protection for commercial speech. The Court, however, appears unlikely to extend the rationale used in this case to cases in which the compelled speech is even remotely political or ideological. Interestingly, Justice Scalia joined Justice Thomas' call for the Court to reject Central Hudson and to give commercial speech full First Amendment protection.

The Court first found that the compelled speech was part of an extensive regulatory scheme and that the regulations did not require any participant to engage in actual speech or to endorse any political or ideological view. Based upon these findings, the Court held that the decisions in Abood and Keller were more applicable than that in Central Hudson. The Court then concluded that the compelled speech was germane to the overall regulatory plan and therefore was constitutional. The dissent argued that the forced advertising was commercial speech worthy of the protections established in Central Hudson and that the governmental regulations failed the Central Hudson analysis.