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ASSOCIATION OF NATL. ADVERTISERS, INC. v. LUNDGREN

December 23, 1992

THE ASSOCIATION OF NATIONAL ADVERTISERS, INC., GROCERY MANUFACTURERS OF AMERICA, INC., THE SOAP AND DETERGENT ASSOCIATION, NATIONAL FOOD PROCESSORS ASSOCIATION, THE AMERICAN PAPER INSTITUTE, INC., THE AMERICAN ADVERTISING FEDERATION, THE AMERICAN ASSOCIATION OF ADVERTISING AGENCIES, THE CALIFORNIA CHAMBER OF COMMERCE, and CHAMBER OF COMMERCE OF THE UNITED STATES Plaintiffs,
v.
DANIEL LUNDGREN, in his official capacity as Attorney General of the State of California Defendant.



The opinion of the court was delivered by: MARILYN HALL PATEL

 Plaintiffs The Association of National Advertisers, et al., bring this action against defendant Daniel Lundgren, in his official capacity as Attorney General of the State of California. *fn1" Plaintiffs challenge section 17508.5 of the California Business and Professions Code, which regulates certain environmental claims used in advertising, on the grounds that: (1) the statute violates plaintiffs' First Amendment rights, and (2) it is unconstitutionally vague. The matter is presently before the court on plaintiffs' motion for summary judgement. After carefully considering the submissions and arguments of the parties and the amici, *fn2" the court enters the following Order and Opinion.

 I. BACKGROUND

 In March 1990 a ten state task force of Attorneys General conducted public hearings to discuss the problems generated by the use of potentially misleading environmental advertising claims. Based on the testimony and written submissions of representatives from industry, consumer and environmental groups, the task force found:

 The increasing interest in the environmental consequences of purchasing decisions has not been lost on the business community. . . . Many companies have begun claiming that their products provide some benefit to the environment . . . . This marketing strategy, which has become known as "green marketing," can be informative to conscientious consumers when it is used honestly. Unfortunately, attempts to take advantage of consumer interest in the environment have led to a growing number of environmental claims that are trivial, confusing or even misleading.

 Joint Stipulation ("JS"), Ex. 10 at 1. Specifically, the task force noted that in response to the growing consumer desire to purchase "environmentally safe" products, businesses advertised hundreds of products as "degradable," "recyclable," "recycled," and "ozone friendly." Id. at 5. *fn3"

 California has also experienced an increase in the amount of environmental product advertising in the years prior to the enactment of section 17508.5. JS P 49. Moreover, the terms employed in these advertisements are used differently by advertisers when claims are made about a product's environmental attributes. JS P 23. In other words, not all firms mean the same thing when they label their products "ozone friendly," "recyclable," or the like. As the Attorneys General explained:

 Both environmental groups and business representatives noted the growing confusion surrounding many environmental marketing claims and stated their belief that such confusion was fertile ground for abusive advertising practices. . . . The words commonly used in environmental marketing, such as "environmentally friendly," "degradable," "recyclable," and "ozone friendly" have no clear, uniform meaning. Different manufacturers use the terms to promote different environmental benefits.

 JS, Ex. 10 at 13. *fn4"

 It was in this climate that the California Legislature in September 1990 passed AB 3994, the Environmental Advertising Claims Act which, inter alia, added section 17508.5 to the California Business and Professions Code ("section 17508.5"). The statute, entitled "Environmental Representations Relating to Consumer Goods," provides that:

 It is unlawful for any person to represent that any consumer good which it manufactures or distributes is "ozone friendly," or any like term which connotes that stratospheric ozone is not being depleted, "biodegradable," "photodegradable," "recyclable," or "recycled" unless that consumer good meets the definitions contained in this section, or meets definitions established in trade rules adopted by the Federal Trade Commission.

 Cal. Bus. & Prof. Code § 17508.5. *fn5"

 The sole issue before this court is whether the California legislature, in its effort to regulate the "green marketing" phenomenon, has run afoul of the Constitution.

 Under Federal Rule of Civil Procedure 56, summary judgment shall be granted "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986); see also T.W. Elec. Serv. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987) (the nonmoving party may not rely on the pleadings but must present significant probative evidence supporting the claim). A dispute about a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). Moreover, the inferences to be drawn from the facts must be viewed in a light most favorable to the party opposing the motion. T.W. Elec. Serv., 809 F.2d at 631.

 If the court is satisfied that no genuine issue of material fact exists, and that absent any such issue judgment may be entered as a matter of law, the court may sua sponte grant summary judgment to the nonmoving party. Cool Fuel, Inc. v. Connett, 685 F.2d 309, 311 (9th Cir. 1982); see also Celotex 477 U.S. at 326 ("district courts are widely acknowledged to possess the power to enter summary judgment sua sponte. . . .").

 III. DISCUSSION

 A. The First Amendment

 1. What is the Character of the Speech at Issue?

 Initially the court must examine the character of the speech regulated by section 17508.5 in order to apply the appropriate standard for reviewing the statute. To the extent that the statute restricts noncommercial messages, it is subject to strict scrutiny and "may be sustained only if the government can show that the regulation is a precisely drawn means of serving a compelling state interest." Consolidated Edison Co. v. Pub. Serv. Com., 447 U.S. 530, 540 (1980) (citations omitted). Regulations affecting commercial speech, however, invite a more relaxed inquiry. See Bd. of Trustees of State Univ. of N.Y. v. Fox, 492 U.S. 469, 109 S. Ct. 3028, 3033, 106 L. Ed. 2d 388 (1989) ("Our jurisprudence has emphasized that commercial speech enjoys a limited measure of protection, commensurate with its subordinate position in the scale of First Amendment values, and is subject to modes of regulation that might be impermissible in the realm of noncommercial expression.").

 Plaintiffs contend that section 17508.5 sanctions any use of the regulated terms, thereby restricting their noncommercial expression. On this reading of the statute, plaintiffs complain that they are unable to express their policy views or publish editorial or informational advertisements aimed at inducing public activism.

 The plain meaning of section 17508.5, however, supports no such interpretation. The first sentence of section 17508.5 clearly establishes that the law applies only to manufacturers and distributors of consumer goods who make certain representations about their products: "It is unlawful for any person to represent that any consumer good which it manufactures or distributes is . . . ." Cal. Bus. & Prof. Code § 17508.5 (emphasis added). Any uncertainty as to the statute's reach is mitigated by subsection (g) which provides that "a wholesaler or retailer who does not initiate a representation by advertising or by placing the representation on a package shall not be deemed to have made the representation." Id. § 17508.5(g). Finally, that the statute only pertains to product advertising is gleaned from the fact that the legislature placed section 17508.5 in Part 3, Chapter 1, Article 1 of the Business and Professions Code, which is entitled "False Advertising in General."

 In an effort to paint section 17508.5 as a law that restricts noncommercial speech, plaintiffs offer numerous examples of the types of political messages which are allegedly stifled. *fn6" However, since the statute only applies to representations that a specific consumer good possesses a particular environmental attribute, plaintiffs' examples are all unavailing. Educational advertisements which laud the benefits of tin cans in general are not representations concerning the environmental attributes of a particular consumer good, and therefore do not offend the statute. Similarly, informational advertisements that contain generalized expressions of an environmental attribute are not within the statute's ambit. Finally, a firm's statement that it supports recycling is certainly not a representation concerning a consumer good.

 In a further attempt to hoist the level of scrutiny, plaintiffs argue that their commercial advertisements are inseparable from their policy oriented speech designed to educate consumers on current environmental issues. This argument relies on Riley v. Nat'l Fed'n of the Blind of N.C., 487 U.S. 781 (1988) which held that when commercial speech is "inextricably intertwined" with fully protected speech, courts must apply the test for noncommercial speech. Id. at 796. Riley involved a state law which mandated that professional fundraisers disclose to potential donors the percentage of contributions that are actually turned over to the charitable organization. In rejecting the state's contention that deferential commercial speech scrutiny should apply because the mandatory disclosure law only governed commercial transactions, the Court explained that "our lodestars in deciding what level of scrutiny to apply to a compelled statement must be the nature of the speech taken as a whole and the effect of the compelled statement thereon. Id. (emphasis added). For this reason, the Court subjected the law to exacting First Amendment scrutiny.

 The Court's reasoning in Riley has no purchase on the instant case for the simple reason that section 17508.5 does not compel speech; it merely sets forth statutory definitions for common environmental advertising terms. Moreover, the Supreme Court has explicitly rejected a similar attempt to extend the reach of Riley's holding. In Fox the Court reviewed whether a University Resolution which prohibited "tupperware parties" in student dormitories violated the First Amendment. The plaintiff argued that because their demonstrations also touched on subjects such as financial responsibility and how to run an efficient home, pure speech and commercial speech were "inextricably intertwined" and the entirety should be treated as noncommercial speech. The Court, per Justice Scalia, disagreed:


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