Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Beeman v. Anthem Prescription Management, LLC

Supreme Court of California

December 19, 2013

Jerry BEEMAN et al., Plaintiffs and Respondents,
ANTHEM PRESCRIPTION MANAGEMENT, LLC, et al., Defendants and Appellants. Jerry Beeman et al., Plaintiffs and Respondents,
TDI Managed Care Services, Inc., et al., Defendants and Appellants.

Page 330

[Copyrighted Material Omitted]

Page 331

[Copyrighted Material Omitted]

Page 332

[Copyrighted Material Omitted]

Page 333

[165 Cal.Rptr.3d 803] Morrison & Foerster, Shirley J. Hufstelder and Benjamin J. Fox, Los Angeles, for Defendant and Appellant Argus Health Systems, Inc.

Gibson, Dunn & Crutcher, Theodore J. Boutrous, Jr., Gail E. Lees, Christopher Chorba, Blaine H. Evanson, Los Angeles; Husch Blackwell, Thomas M. Dee and Christopher A. Smith, for Defendant and Appellant Express Scripts, Inc.

Morgan, Lewis & Bockius, Thomas M. Peterson, Molly Moriarty Lane, San Francisco, and Richard S. Odom, for Defendant and Appellant Anthem-Prescription Management, LLC.

Steptoe & Johnson, Martin D. Schneiderman and Jason Levin, Los Angeles, for Defendants and Appellants AdvancePCS, AdvancePCS Health L.P., PharmaCare Management Services, Inc., and TDI Managed Services, Inc.

Holland & Knight, Richard T. Williams, Los Angeles, and Tara L. Cooper, for Defendants and Appellants PharmaCare and TDI Managed Services.

Heller Ehrman, Richard S. Goldstein, John M. Landry, Los Angeles; Orrick, Herrington & Sutcliffe and Richard S. Goldstein, for Defendant and Appellant Medco Health Solutions, Inc.

Troutman Sanders, C. Leeann McCurry; Musick, Peeler & Garrett and Kent A. Halkett, Los Angeles, for Defendant and Appellant Benescript Services, Inc.

Pillsbury WinthropShaw Pittman, Thomas N. Makris, Sacramento, and Brian D. Martin, San Diego, for Defendant and Appellant First Health Services Corp.

Roxborough, Pomerance, Nye & Adreani, Craig Pynes, Agoura Hills, Nicholas P. Roxborough and Marina N. Vitek, Woodland Hills, for Defendant and Appellant National Medical Health Card.

Snell & Wilmer and Sean M. Sherlock, Costa Mesa, for Defendant and Appellant Restat, LLC.

Reed Smith, Kurt C. Peterson, Margaret M. Grignon, Kenneth N. Smersfelt, Los Angeles, Judith E. Posner and Brett L. McClure, Los Angeles, for Defendant and Appellant Tmesys, Inc.

Sonnenschein Nath & Rosenthal, David S. Alverson, Los Angeles, Stephen J. O'Brien, Rachel M. Milazzo; SNR Denton, Stephen J. O'Brien and Rachel M. Milazzo, for Defendant and Appellant Cardinal Health MPB, Inc.

Hogan & Hartson, Hogan Lovells U.S. and Neil R. O'Hanlon, Los Angeles, for Defendant and Appellant Mede America Corporation.

Dykema Gossett, J. Kevin Snyder and Vivian I. Kim, Los Angeles, for Defendant and Appellant Prime Therapeutics.

Kirtland & Packard and Robert A. Muhlbach, El Segundo, for Defendant and Appellant RX Solutions, Inc.

McDermott, Will & Emery, Robert Mallory and Matthew Oster, Los Angeles, for Defendant and Appellant WHP Health Initiatives.

Deborah J. La Fetra, Sacramento, and Lana Harfoush, for Pacific Legal Foundation as Amicus Curiae on behalf of Defendants and Appellants.

The Consumer Law Group, Alan M. Mansfield; Peitzman Weg and [165 Cal.Rptr.3d 804] Michael A. Bowse, Los Angeles, for Plaintiffs and Respondents.

Seth E. Mermin, Thomas Bennigson and Timothy Sun for Consumer Action, Consumers for Auto Reliability and Safety, The Public Health Law Center, Inc., and Public Good Law Center as Amici Curiae on behalf of Plaintiffs and Respondents.


Page 334

[315 P.3d 74] We granted a request from the United States Court of Appeals for the Ninth Circuit, sitting en banc, to address the following issue of state law

Page 335

pursuant to California Rules of Court, rule 8.548: Does Civil Code section 2527 compel speech in violation of article I, section 2 of the California Constitution?

Civil Code section 2527 requires prescription drug claims processors to compile and summarize information on pharmacy fees and to transmit the information to their clients. Defendants contend that this statute is a content-based speech requirement that cannot satisfy either strict scrutiny or intermediate scrutiny under California's free speech guarantee. Plaintiffs counter that the statute only requires the transmission of " objective, statistical data" and therefore does not implicate any free speech protection. In addition, plaintiffs contend that the statute, if it implicates a right to free speech, is ordinary economic regulation subject to rational basis review and, in any event, would satisfy the intermediate scrutiny standard that applies to restrictions on commercial speech.

As explained herein, we hold that Civil Code section 2527 does implicate the right to free speech guaranteed by article I of the California Constitution. At the same time, we hold that the statute, which requires factual disclosures in a commercial setting, is subject to rational basis review and satisfies that standard because the compelled disclosures [315 P.3d 75] are reasonably related to the Legislature's legitimate objective of promoting informed decisionmaking about prescription drug reimbursement rates.


In the panel decision now being reviewed en banc, the Ninth Circuit provided the following description of the parties to this litigation: " Plaintiffs own five independent retail pharmacies licensed in California. Defendants are current or former pharmacy benefit managers (‘ PBMs'). They ‘ contract with third-party payors or health plan administrators such as insurers, HMOs, governmental entities, and employer groups to facilitate cost-effective delivery of prescription drugs to health plan members or other persons to whom the third-party payors provide prescription drug benefits.’ PBMs assist in the ‘ processing of prepaid or insured prescription drug benefit claims submitted by a licensed California pharmacy or patron thereof.’ In other words, PBMs act as intermediaries between pharmacies and third-party payors such as health insurance companies. Pursuant to this role, PBMs may create networks of retail pharmacies that agree to accept certain reimbursement rates when they fill prescriptions for health plan members. According to Defendants, network reimbursements ‘ generally are lower than what pharmacies would charge uninsured, cash-paying customers.’ " ( Jerry Beeman and Pharmacy Services v. Anthem Prescription Management (9th Cir.2011) 652 F.3d 1085, 1090( Beeman II ).)

Page 336

In 2002, plaintiffs filed a federal class action suit alleging that defendants failed to comply with Civil Code section 2527. (All further statutory references are to the Civil Code unless otherwise indicated.) Section 2527 imposes specific obligations [165 Cal.Rptr.3d 805] on " prescription drug claims processor[s]" as a prerequisite of entering into or performing any contracts with licensed California pharmacies or processing or assisting with the processing of any prescription drug claim involving licensed California pharmacies. (§ 2527, subd. (a).) The act defines " prescription drug claims processor" as " any nongovernmental entity which has a contractual relationship with purchasers of prepaid or insured prescription drug benefits, and which processes, consults, advises on, or otherwise assists in the processing of prepaid or insured prescription drug benefit claims submitted by a licensed California pharmacy or patron thereof." (§ 2527, subd. (b).) For purposes of this litigation, defendants do not contest that they are " prescription drug claims processors" subject to section 2527. ( Beeman II, supra, 652 F.3d at p. 1090, fn. 1.)

Section 2527, subdivision (c) requires prescription drug claims processors to " conduct[ ] or obtain[ ] the results of a study or studies which identifies the fees, separate from ingredient costs, of all, or of a statistically significant sample, of California pharmacies, for pharmaceutical dispensing services to private consumers. The study or studies shall meet reasonable professional standards of the statistical profession. The determination of the pharmacy's fee made for purposes of the study or studies shall be computed by reviewing a sample of the pharmacy's usual charges for a random or other representative sample of commonly prescribed drug products, subtracting the average wholesale price of drug ingredients, and averaging the resulting fees by dividing the aggregate of the fees by the number of prescriptions reviewed. A study report shall include a preface, an explanatory summary of the results and findings including a comparison of the fees of California pharmacies by setting forth the mean fee and standard deviation, the range of fees and fee percentiles (10th, 20th, 30th, 40th, 50th, 60th, 70th, 80th, 90th). This study or these studies shall be conducted or obtained no less often than every 24 months."

Section 2527, subdivision (d) requires prescription drug claims processors to send the studies to their clients: " The study report or reports obtained pursuant to subdivision (c) shall be transmitted by certified mail by each prescription drug claims processor to the chief executive officer or designee, of each client for whom it performs claims processing services. Consistent with subdivision (c), the processor shall transmit the study or studies to clients no less often than every 24 months. [315 P.3d 76] [¶] Nothing in this section shall be construed to require a prescription drug claims processor to transmit to its clients more than two studies meeting the requirements of subdivision (c) during any such 24-month period. [¶] Effective January 1, 1986, a claims processor may comply with subdivision (c) and this subdivision, in the event

Page 337

that no new study or studies meeting the criteria of subdivision (c) have been conducted or obtained subsequent to January 1, 1984, by transmitting the same study or studies previously transmitted, with notice of cost-of-living changes as measured by the Consumer Price Index (CPI) of the United States Department of Labor."

Section 2528 provides for civil enforcement of section 2527: " A violation of Section 2527 may result only in imposition of a civil remedy, which includes, but is not limited to, imposition of statutory damages of not less than one thousand dollars ($1,000) or more than ten thousand dollars ($10,000) depending on the severity or gravity of the violation, plus reasonable attorney's fees and costs, declaratory and injunctive relief, and any other relief which [165 Cal.Rptr.3d 806] the court deems proper. Any owner of a licensed California pharmacy shall have standing to bring an action seeking a civil remedy pursuant to this section so long as his or her pharmacy has a contractual relationship with, or renders pharmaceutical services to, a beneficiary of a client of the prescription drug claims processor, against whom the action is brought provided that no such action may be commenced by the owner unless he or she has notified the processor in writing as to the nature of the alleged violation and the processor fails to remedy the violation within 30 days from the receipt of the notice or fails to undertake steps to remedy the violation within that period and complete the steps promptly thereafter."

Sections 2527 and 2528 were enacted in 1982. (Stats. 1982, ch. 296, § 1, pp. 936-938; Assem. Bill No. 2044 (1981-1982 Reg. Sess.) (Assembly Bill 2044).) The bill was sponsored by the California Pharmacists Association in an effort to increase the rate of reimbursement by third-party payors. (Assem. Com. on Finance, Insurance & Commerce, Analysis of Assem. Bill No. 2044 (1981-1982 Reg. Sess.) for hearing on May 12, 1981, p. 6 (Bill Analysis).) Assembly Bill 2044 was prompted not only by a concern with the reimbursement rates to pharmacists (see Bill Analysis, at pp. 1-2) but also by the United States Supreme Court's 1979 decision holding that the federal antitrust exemption for the " business of insurance," where regulated by state law, does not extend to contracts between insurers and pharmacies ( Group Life & Health Ins. Co. v. Royal Drug Co. (1979) 440 U.S. 205, 99 S.Ct. 1067, 59 L.Ed.2d 261; see Bill Analysis, at p. 5). As a result of that decision, pharmacists were unable to collectively bargain for fees or collectively refuse to participate in third-party payment programs. (Bill Analysis, at pp. 5, 7.)

As introduced, Assembly Bill 2044 would have imposed specific prices on prescription drug claims processors by requiring nongovernmental third-party payors to reimburse pharmacies for services rendered to group plan members at no less than the " usual charges of the pharmacy for the same or similar services to private consumers not covered by a group plan." (Bill Analysis, at

Page 338

pp. 1-2, underscoring omitted.) The bill also prohibited any third-party payor from imposing any payment systems in which the upper limit on claim payments was " less than the 90th percentile of usual charges within the state." ( Id. at p. 2.) The bill was opposed by insurance companies, unions, and healthcare service plans, all of which were concerned it would result in increased costs. ( Id. at pp. 3-4.) The Governor and the Department of Insurance also opposed the bill because it would " inhibit or prevent attempts by insurers at cost control" and " would have the probable result of raising the reimbursable amounts throughout a large portion of the state." (Legis. Counsel Brian L. Walkup, Dept. Insurance, letter to Assembly member Bill Lancaster, June 2, 1981, p. 1.)

After failing to make it out of committee, Assembly Bill 2044 was amended to replace the minimum-reimbursement requirements with the current requirement that prescription drug claims processors conduct or obtain, and transmit to their clients, studies identifying the prevailing fees of California [315 P.3d 77] pharmacies for pharmaceutical dispensing services. (Assem. Bill 2044, as amended Jan. 18, 1982.) These changes were proposed by the original bill sponsor, the California Pharmacists Association. (See John H. Simons, Cal. Pharmacists Association, mem., Dec. 22, 1981, in Assem. Com. on Finance, Insurance & Commerce bill file.) As the bill's author explained in a letter to the Governor: " An interim hearing of the Assembly Finance, [165 Cal.Rptr.3d 807] Insurance and Commerce Committee last November established that because of antitrust constraints, pharmacists are unable to negotiate directly with the underwriters or processors. And neither the underwriters or processors conduct statistical analyses of pharmacy pricing levels prior to adopting a reimbursement policy. [¶] These findings caused me to amend [Assembly Bill] 2044 to include essentially the provisions that are now before you.... [¶] I am hopeful that the legislation will serve to break the reimbursement logjam that has temporarily strained relationships between pharmacists, underwriters and claims processors." (Assembly member Bill Lancaster, letter to Governor (1981-1982 Reg. Sess.) June 14, 1982, Governor's chaptered bill files.) The Department of Insurance offered this analysis of the enrolled bill: " [T]he bill is significantly limited in scope.... [¶] We point out that the bill is fairly innocuous in its impact, since it merely requires a study to be made and distributed to clients, and does not require any action to be taken based on the study. Nevertheless, it may help identify areas for cost-containment in the future." (Dept. of Insurance, Enrolled Bill Rep. on Assem. Bill No. 2044 (1981-1982 Reg. Sess.) p. 2.)

Although section 2528 provides for private enforcement of section 2527, it does not appear that the statute prompted any litigation until 2002, when plaintiffs initiated a series of suits in federal and state court. In its request for this court's review, the Ninth Circuit, sitting en banc, provided this account: " Plaintiffs filed class action complaints against defendant prescription drug claims processors in the Central District of California in 2002 and 2004 (the

Page 339

Beeman cases) alleging, among other things, that Defendants failed to comply with the reporting requirements of section 2527. The district court dismissed the cases for lack of standing without reaching the merits. While Plaintiffs' appeal of the standing issue was pending in our court, three of the five plaintiffs sued some, but not all, of the defendants in Los Angeles Superior Court, again alleging violations of section 2527. The California Court of Appeal affirmed the trial court's dismissal of the suit in an unpublished opinion and declared section 2527 unconstitutional under article I, section 2 of the California Constitution. See Bradley [ v. First Health Services Corp. (Feb. 28, 2007, B185672, 2007 WL 602969) [nonpub. opn.]]. The Bradley court relied on ARP Pharmacy [ Services, Inc. v. Gallagher Bassett Services, Inc. (2006) 138 Cal.App.4th 1307, 1312, 42 Cal.Rptr.3d 256] in which the Court of Appeal also found section 2527's reporting requirements unconstitutional. The California Supreme Court denied review of Bradley on June 13, 2007.

" In the Beeman cases, the Ninth Circuit panel concluded that Plaintiffs had standing, reversed the district court and remanded for further proceedings. See Beeman v. TDI Managed Care [ Services, Inc. (2006) ] 449 F.3d 1035, 1037.... On remand, Defendants moved for judgment on the pleadings, arguing that section 2527 unconstitutionally compels speech in violation of both the United States and California Constitutions. Defendants based their constitutional arguments on the decisions in Bradley, ARP [ Pharmacy Services ], and A.A.M. [ Health Group, Inc. v. Argus Health Systems, Inc. (Feb. 28, 2007, B183468, 2007 WL 602968) [nonpub. opn.]]. Each of those California Court of Appeal decisions holds the reporting requirement of section 2527 unconstitutional under article I, section 2 of the California Constitution. Denying Defendants' motions, the district court concluded that there was ‘ convincing evidence’ that the California Supreme Court would not follow the holdings of the intermediate appellate courts. [165 Cal.Rptr.3d 808] Defendants then filed this interlocutory appeal.

" The majority of a three-judge panel of this court also declined to follow the intermediate California court decisions striking down section 2527 as unconstitutional under California's free speech clause. Instead, it independently assessed the constitutionality of [315 P.3d 78] the statute under First Amendment principles, reasoning that the California Supreme Court would decide the state constitutional question ‘ by relying, primarily, if not exclusively, on First Amendment precedent.’ Beeman [ II, supra ], 652 F.3d at 1094. The majority identified two critical errors in the Court of Appeal decisions that it was convinced the California Supreme Court would not make: (1) giving insufficient weight to Rumsfeld v. Forum for Academic and Institutional Rights, Inc., 547 U.S. 47, 126 S.Ct. 1297, 164 L.Ed.2d 156 (2006) ... and (2) misinterpreting Riley v. National Federation of the Blind of North Carolina, Inc., 487 U.S. 781, 108 S.Ct. 2667, 101 L.Ed.2d 669 (1988).

Page 340

" The dissent argued (1) we were bound by the Erie doctrine to follow the California Court of Appeal decisions; (2) the California Supreme Court would not necessarily rely upon First Amendment jurisprudence to interpret its own state's constitutional free speech clause, which ‘ enjoys existence and force independent of the First Amendment,’ [citation], and is ‘ broader and more protective’ than the First Amendment, [citation]; and (3) the California Courts of Appeal had in fact correctly analyzed First Amendment law and incorporated those principles into the decisions to strike down section 2527 under the California Constitution." ( Beeman v. Anthem Prescription Management, LLC (9th Cir.2012) 689 F.3d 1002, 1006-1007, fn. omitted (en banc) ( Beeman III ), quoting Gerawan Farming, Inc. v. Lyons (2000) 24 Cal.4th 468, 489, 101 Cal.Rptr.2d 470, 12 P.3d 720, and Los Angeles Alliance for Survival v. City of Los Angeles (2000) 22 Cal.4th 352, 366, 93 Cal.Rptr.2d 1, 993 P.2d 334.)

The Ninth Circuit explained the need for guidance from this court as follows: " The outcome of this appeal is dictated by the scope of the free speech clause of the California Constitution as applied to section 2527. This constitutional question is critical to California's interest in consistent enforcement and interpretation of its constitution and laws in both state and federal courts. It is only because the panel's Beeman [ II ] decision has been withdrawn that the result that section 2527 is enforceable in federal, but not state, courts has been avoided. The majority of the three judge panel acknowledged that this situation, if left in place, would lead to forum shopping and the inconsistent enforcement of state law. [ (See Erie R. Co. v. Tompkins (1938) 304 U.S. 64, 74-78, 58 S.Ct. 817, 82 L.Ed. 1188.) ] Without the California Supreme Court's examination of this question, the risk remains that the en banc court would follow the lead of the panel majority to the same end. If, of course, the California Supreme Court itself were to agree with the panel majority, then it too would conclude that the statute is constitutional, and its decision would control in California state and federal courts. The conflicting views of the law in the panel opinion illustrate the importance of this question in the context of (1) whether our court is bound to follow the precedent of ARP Pharmacy [ Services ] , and (2) to what degree, if any, federal First Amendment precedent affects the constitutionality of section 2527 under California's free speech clause." ( Beeman III, supra, 689 F.3d at p. 1007.)

We granted review in order to resolve this question of state constitutional law.

[165 Cal.Rptr.3d 809] II.

The free speech guarantee of the California Constitution provides: " Every person may freely speak, write and publish his or her sentiments on all subjects, being responsible for the abuse of this right. A law may not restrain or abridge liberty of speech or press." (Cal. Const., art. I, § 2, subd. (a).)

Page 341

In considering a free speech claim under article I, " we begin with the unquestioned proposition that the California Constitution is an independent document and its constitutional protections are separate from and not dependent upon the federal Constitution...." ( Los Angeles Alliance for Survival v. City of Los Angeles, supra, 22 Cal.4th at p. 365, 93 Cal.Rptr.2d 1, 993 P.2d 334; see Gerawan Farming, Inc. v. Lyons, supra, 24 Cal.4th at pp. 489-490, 101 Cal.Rptr.2d 470, 12 P.3d 720( Gerawan I ).) " The state Constitution's free speech provision is ‘ at least as broad’ as [citation] and in some ways is broader than [citations] the comparable provision of the federal Constitution's First Amendment." [315 P.3d 79]( Kasky v. Nike, Inc. (2002) 27 Cal.4th 939, 958-959, 119 Cal.Rptr.2d 296, 45 P.3d 243( Kasky ).) Unlike the First Amendment, California's free speech clause " specifies a ‘ right’ to freedom of speech explicitly and not merely by implication," " runs against ... private parties as well as governmental actors" and expressly " embrace[s] all subjects." ( Gerawan I, at pp. 491-493, 101 Cal.Rptr.2d 470, 12 P.3d 720.) However, " [m]erely because our provision is worded more expansively and has been interpreted as more protective than the First Amendment ... does not mean that it is broader than the First Amendment in all its applications." ( Alliance for Survival, at p. 367, 93 Cal.Rptr.2d 1, 993 P.2d 334; see Kasky, at p. 969, 119 Cal.Rptr.2d 296, 45 P.3d 243.) Our case law interpreting California's free speech clause has given respectful consideration to First Amendment case law for its persuasive value, while making clear that " federal decisions interpreting the First Amendment are not controlling." ( Alliance for Survival, at p. 367, 93 Cal.Rptr.2d 1, 993 P.2d 334.)

Applying this approach here, we examine the constitutionality of section 2527 by disentangling two questions: Does the statute's requirement that prescription drug claims processors transmit information on pharmacy fees to their clients implicate the right to freedom of speech under the California Constitution? If so, what level of judicial scrutiny applies to section 2527's speech requirement? We address the first question in this part and, answering it in the affirmative, turn to the second question in part III below.

As noted, section 2527 requires prescription drug claims processors to conduct or obtain, and to transmit to their clients, the results of studies identifying the fees charged by California pharmacies to private customers. The information at issue— a " study report" that includes " a preface, an explanatory summary of the results and findings" that provide various statistics comparing pharmacy fees (§ 2527, subd. (c))— is factual in nature. This statutorily required communication, we conclude, implicates California's free speech guarantee.

The text of California's free speech guarantee makes clear that the freedom to speak extends to " all subjects." (Cal. Const., art. I, § 2, subd. (a).) In Gerawan I, we emphasized the " ‘ unlimited’ scope" of this language in contrast to the First Amendment, which " was ‘ not intended’ to embrace all subjects." ( Gerawan I, supra, 24 Cal.4th at pp. 493, 486, 101 Cal.Rptr.2d 470, 12 P.3d 720.) Just as we

Page 342

observed in Gerawan I that the phrase " all subjects" [165 Cal.Rptr.3d 810] in article I " ‘ does not exclude’ commercial speech from its ‘ protection’ " ( Gerawan I, at p. 494, 101 Cal.Rptr.2d 470, 12 P.3d 720), here we see no textual basis for excluding from article I's coverage factual statements like the study report required by section 2527.

Further, it is well established that freedom of speech under article I includes both the right to speak and the right to refrain from speaking. " Article I's right to freedom of speech, like the First Amendment's, is implicated in speaking itself. Because speech results from what a speaker chooses to say and what he chooses not to say, the right in question comprises both a right to speak freely and also a right to refrain from doing so at all, and is therefore put at risk both by prohibiting a speaker from saying what he otherwise would say and also by compelling him to say what he otherwise would not say." ( Gerawan I, supra, 24 Cal.4th at p. 491, 101 Cal.Rptr.2d 470, 12 P.3d 720.) In Gerawan I, we observed that when article I was originally adopted in 1849, " the prevailing political, legal, and social culture was that of Jacksonian democracy," a culture that valued " equality and open opportunity, economic individualism, and wide and unrestrained commercial speech." ( Gerawan I, at p. 495, 101 Cal.Rptr.2d 470, 12 P.3d 720.) Informed by article I's text and the historical context of its adoption, we held— in a departure from then-controlling First Amendment precedent ( Gerawan I, at pp. 497-509, 101 Cal.Rptr.2d 470, 12 P.3d 720 [discussing Glickman v. Wileman Bros. & Elliott, Inc. (1997) 521 U.S. 457, 117 S.Ct. 2130, 138 L.Ed.2d 585( Glickman ) ] )— that a government order requiring a plum grower to fund generic advertising about plums implicates (but does not necessarily violate) the right to freedom of speech under article I. ( Gerawan I, at pp. 509-515, 517, 101 Cal.Rptr.2d 470, 12 P.3d 720.) The broad principles [315 P.3d 80] set forth in Gerawan I — that article I's coverage of " all subjects" is " ‘ unlimited’ in scope" ( Gerawan I, at p. 493, 101 Cal.Rptr.2d 470, 12 P.3d 720) and that the right to speak freely includes the right not to speak at all ( id. at p. 487, 101 Cal.Rptr.2d 470, 12 P.3d 720)— support the conclusion that a statute requiring transmission of factual information to a business entity in a commercial context implicates article I's free speech clause.

This understanding draws further support from principles articulated by the United States Supreme Court in interpreting " freedom of speech" under the First Amendment. The high court precedent involving speech that most closely approximates the factual information at issue in section 2527 is Sorrell v. IMS Health Inc. (2011) 564 U.S. __, 131 S.Ct. 2653, 180 L.Ed.2d 544( Sorrell ). There, the high court considered a First Amendment challenge to a Vermont law " restrict[ing] the sale, disclosure, and use of pharmacy records that reveal the prescribing practices of individual doctors." ( Id. at p. __, 131 S.Ct. at p. 2659.) In discussing whether the " prescriber-identifying information" should be characterized as " a mere ‘ commodity’ " or as protected speech, the high court noted the general rule that " the creation and dissemination of information are speech within the meaning of the First Amendment." ( Id. at pp. __, 131 S.Ct. at pp. 2666-2667.) The high court then said: " Facts, after all, are the beginning

Page 343

point for much of the speech that is most essential to advance human knowledge and to conduct human affairs. There is thus a strong argument that prescriber-identifying information is speech for First Amendment purposes." ( Id. at p. __, 131 S.Ct. at p. 2667.) But the high court stopped short of deciding the issue and instead held that the state restriction, which specifically prohibited disseminating or using [165 Cal.Rptr.3d 811] the information for marketing, worked an impermissible " speaker-and content-based burden on protected expression," " even assuming ... that prescriber-identifying information is a mere commodity." ( Ibid. )

In support of its suggestion that factual information qualifies as protected speech, the high court in Sorrell cited Rubin v. Coors Brewing Co. (1995) 514 U.S. 476, 115 S.Ct. 1585, 131 L.Ed.2d 532( Rubin ), which invalidated a federal regulation banning disclosure of alcohol content on beer labels. (See Sorrell, supra, 564 U.S. at p. __, 131 S.Ct. at p. 2667.) In Rubin, there was no dispute that the brewing company sought " to disclose only truthful, verifiable, and nonmisleading factual information about alcohol content on its beer labels." ( Rubin, at p. 483, 115 S.Ct. 1585.) The high court concluded that the factual information about alcohol content was protected commercial speech and that restrictions on such speech require substantial justification, which the government in that case failed to provide. ( Id. at pp. 481-486, 115 S.Ct. 1585.)

The Ninth Circuit panel here recognized that the government " may not prohibit speakers from disseminating facts" but determined that it is " quite different" for the government to compel factual speech. ( Beeman II, supra, 652 F.3d at p. 1100, fn. 14.) Citing Rumsfeld v. Forum for Academic and Institutional Rights, Inc., supra, 547 U.S. 47, 126 S.Ct. 1297( FAIR ) and Riley v. National Federation of Blind, supra, 487 U.S. 781, 108 S.Ct. 2667( Riley ), the Ninth Circuit panel concluded that " not all fact-based disclosure requirements are subject to First Amendment scrutiny. Instead, such requirements implicate the First Amendment only if they affect the content of the message or speech by forcing the speaker to endorse a particular viewpoint or by chilling or burdening a message that the speaker would otherwise choose to make." ( Beeman II, at pp. 1099-1100, fn. omitted.) Respectfully, we do not believe FAIR or Riley supports the Ninth Circuit panel's conclusion that the reporting requirements of section 2527 " are not subject to any form of First Amendment scrutiny." ( Beeman II, at p. 1106.)

FAIR rejected a First Amendment challenge by various law schools to the 1996 Solomon Amendment's requirement that institutions of higher education, as a condition of receiving federal funds, provide military recruiters the same access provided to other recruiters. (10 U.S.C. § 983.) Addressing the law schools' claim of compelled speech, the high court observed that " ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.