Last week, a panel of the Ninth Circuit court strengthened protections for commercial speech (speech that proposes a commercial transaction between the speaker and the reader) in Retail Digital Network v. Appelsmith (RDN). RDN is a middleman in the advertising industry. It installs Liquid Crystal Displays (LCDs) in retail stores for advertising and contracts with parties looking to advertise their products on the displays. RDN then pays the retail stores a portion of the advertising fee generated by the LCD displays. But when RDN tried to enter into agreements with distributors to advertise their alcoholic beverages, RDN ran into roadblocks. Distributors seemed to be concerned that they would violate the California alcoholic advertising ban if they advertised on LCDs. RDN challenged the alcoholic advertising ban, claiming that it violates the First Amendment.
The trial court held that a 1985 decision in Actmedia v. Stroh controlled RDN’s case. In Actmedia, the Ninth Circuit held that California Business and Professional Code section 25503, which forbids manufacturers and wholesalers of alcoholic beverages from paying stores to advertise alcoholic products, does not violate the First Amendment.
But in RDN, the Ninth Circuit recognized that the Supreme Court’s 2011 decision in Sorrell v. IMS Health, Inc. changed the landscape of commercial speech law. The court held that Sorrell required heightened judicial scrutiny in commercial speech cases, rather than the intermediate scrutiny applied in Actmedia. This is important because the higher the judicial scrutiny is, the more difficult it is for the government to justify its actions. The court also pointed out that the Second, Third, and Eighth Circuits have all come to the same conclusion that Sorrell requires heightened scrutiny of both content-based and speaker-based restrictions. The Ninth Circuit held that Actmedia could not be reconciled with Sorrell. In light of Sorell, the court remanded RDN to the trial court to determine whether Section 25503 is constitutional under the more demanding standard for commercial speech.
The decision in RDN is a positive development in First Amendment law. Over the past several decades, the Supreme Court has provided commercial speech more legal protection. Some on the Court have begun to accept the idea that the First Amendment does not discriminate between different forms of speech. But there is more to be done. For example, the Supreme Court and the Circuit Courts can strengthen the First Amendment by ending the exclusion of some forms of speech from constitutional protections by characterizing it as “conduct.” RDN and Sorrell are nevertheless positive steps in the development of First Amendment jurisprudence.