TCS Daily

Taxing and Chilling Speech

By Radley Balko - July 15, 2003 12:00 AM

Last month in Boston, nannyists, trial lawyers and the obesity police gathered at Northeastern School of Law for a hush-hush strategy session on how to get rich off America's expanding waistline. Attendees were required to sign an affidavit promising not to divulge specifics of the conference to the media or to "the food industry." Under the auspices of the benignly-named Public Health Advocacy Institute, featured speakers included the likes of self-promoting torts king John Banzhaf, a man whose vanity license plate is an abbreviation for "Sue the Bastards;" Northwestern Law Professor Richard Daynard, who once claimed that a pimply movie concession clerk's attempt to talk him into a bigger bag of popcorn was part of a fraudulent food industry conspiracy to make him fat; and Yale professor Kelly Brownell, villainous mind behind the "Twinkie tax."

Meanwhile, at just about the same time, the U.S. Supreme Court issued a troubling ruling on commercial speech that was mostly buried under the avalanche of media coverage of the Lawrence sodomy case and the two affirmative action cases at the University of Michigan. The case involved footwear king Nike, and a California State Supreme Court ruling that basically paved the way for consumer activists to sue corporations who "mislead" the public while defending themselves from, in the case of Nike, allegations that its products are manufactured under sweatshop working conditions.

The U.S. Supreme Court balked on the case, sending it back for trial in California. That means Nike will have to defend itself against charges that it fraudulently defended itself. And the deck is stacked against the sportswear giant. Activists protesting Nike do so behind the shield of "political" speech, meaning whatever allegations they can concoct are virtually immune from legal challenges. Nike, meanwhile, defends itself behind the thin veneer of "commercial" speech, meaning it gets far less First Amendment protection than its antagonists do.

It's possible, perhaps even likely, that the Supreme Court will revisit the case if Nike loses. But that it's even going to trial sets a troubling precedent.

If the Supreme Court doesn't revisit the case, it will effectively cast a frigid chill over consumer speech, exposing any corporation that deigns to defend itself against blistering activist campaigns to the creative whims of trial lawyers.

Washington Post columnist Robert Samuelson wrote of the decision:

It's a disaster. Just about the last people you'd want to put in charge of the First Amendment are trial lawyers, whose business is suing large companies on any available pretext. The latest pretext imperils free speech, but the Supreme Court -- out of intellectual laziness or reckless indifference -- has unwisely given trial lawyers the power to curb and to tax free speech.

The losers are not just companies. The value of free speech goes beyond the ability of people to vent their views. It presumes that open debate -- thrashing out conflicting views and facts -- is the best way that a free society informs itself and settles controversial issues...

...the practical effect is to expose Nike and other companies to expensive trials and huge economic risks. Their choice may be to shut up or pay up. This taxes free speech. The result must "chill" open discussion -- as Justice Stephen Breyer noted in dissent -- because when you tax something, you often get less of it.

He's right. And the implications of the Nike case reach far beyond the globalization/sweatshop debate. If you want to do business in California, you must now take into consideration that every pamphlet, every commercial, every promotional item, virtually every word uttered, printed or emailed under your company's banner could land you in court. In the meantime, activists groups are free to slander your name under the broader umbrella of political speech.

Now consider that obesity conference in Boston last month. And consider Prof. John Banzhaf.

Banzhaf told the Sacramento Bee that he's brainstorming all sorts of creative ways to capitalize on the alleged obesity epidemic. He's considering suing the dairy industry, for example, for running those milk mustache ads without disclosing the hazards of eating too much dairy, and for failing to disclose the health benefits of skim milk. He's considering suing the pork industry for misleadingly marketing its product as "the other white meat," a tag Banzhaf says implies health benefits pork doesn't have. He has basically intimated that any food industry marketing campaign that doesn't also mention the potential hazards of the food being promoted could be ripe for litigation.

And Banzhaf's not alone. Conference attendee and New York University Professor Marion Nestle has called for the food industry to be subject to the same level of scrutiny we put on tobacco and alcohol manufacturers. She has criticized fast food, cereal, and snack food companies for misleading marketing campaigns she says the industry aims at children. The Center for Science in the Public Interest (CSPI) has attacked the likes of movie popcorn, fettuccini alfredo, and Chinese food with scare-mongering imagery like "heart attack on a plate."

Should it go unchecked, the Nike case is a Godsend for activists like Nestle and Banzhaf. In theory, any effort by any leg of the food industry to defend itself from CSPI's and like scare campaigns could have trial lawyers like Banzhaf seeing dollar signs. The dairy industry would be helpless against attacks from Banzhaf, or PETA. Likewise for pork, fast food, sugar, and cereal makers.

Keep in mind, they don't need to win all of these cases -- or even a sizeable number of them. We learned that from tobacco. The modern class action game is a war of attrition. Banzhaf and his cronies need only to find a jurisdiction where they won't be penalized for bringing an onslaught of frivolous claims. Sooner or later, the industries they're after will wear down, calculate that it's easier to settle than to continue litigating, and they'll start making concessions.

That's when John Banzhaf and his fellow trial lawyers win, and you and I lose. Because that's when the food fascists that gathered in Boston last month begin to dictate to the food industry what choices we consumers will have when we go out to eat, how much we pay for what's on the menu, and what portions we'll get for what we pay.

Remember, these are the same "consumer activists" who have made the absurd claim that restaurant patrons today get too much food for their money. Nestle has dismissed the principle of "freedom of consumer choice" as a "self-interested action" of the food industry. She has called for federal regulation of portion sizes, and for federal price controls designed to make snack food more expensive.

Samuelson's warning that, left alone, the Nike case will put the First Amendment into the hands of trial lawyers merely scratches the surface.

In most cases, "shut up" simply isn't an option. Corporate America will continue to do business in California, and it will continue to advertise, market and promote its wares. But if the repercussions of the case go unadressed by the California legislature, or aren't taken up again by the Supreme court, you can pretty much count on Banzhaf-ian lawsuits overwhelming California's already taxed civil courts.

Inevitably, the corporations will cave. The result? Sweeping new powers for activist, nanny, and so-called consumer advocacy groups, whose fingerprints will be all over the lawsuits, who will be elbows-deep in the settlement negotiations, and who have made no secret of their desire to control what you and I eat and drink.

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