As we have discussed over the last few months, the fate of the conflict minerals rule has been uncertain. In April 2014, in the National Association of Manufacturers (“NAM”) case, the Court of Appeals for the D.C. Circuit invalidated portions of the conflict minerals rule on First Amendment grounds. However, it has been widely recognized that the American Meat Institute (“AMI”) en banc review – then pending at the time of the NAM decision – could change the framework for evaluating the conflict minerals rule.
In American Meat Institute, decided on July 29, 2014, a panel of the D.C. Circuit applied a more relaxed standard of review established by the Supreme Court in the 1985 Zauderer case. Until Zauderer, the general test for First Amendment commercial speech restrictions was the test formulated by the Supreme Court in Central Hudson in 1980. Under Central Hudson, the governmental regulation in question had to (i) directly advance the state interest involved, and (ii) be narrowly tailored to serve that end. Zauderer applies to mandated disclosures that are “purely factual” and “non-controversial,” and if a disclosure meets these two requirements, there must be a “reasonable fit” or “reasonable proportion” between the means and the ends. Recently the D.C. Circuit expounded upon the type of government interest that may receive the Zauderer standard of judicial review, rather than a more stringent level of review.
Prior to the en banc hearing, the D.C. Circuit was at odds with itself over the proper standard of judicial review in cases of compelled commercial speech. In NAM, the D.C. Circuit held that the Zauderer exception could only be used in compelled speech cases where the governmental interest at issue involved preventing consumer deception. Conversely, in AMI, the D.C. Circuit used the Zauderer test to review mandated disclosure of country-of-origin information about meat products, thereby extending Zauderer beyond the consumer deception arena. The D.C. Circuit convened en banc to decide whether Zauderer could in fact be applied to a compelled speech case not involving consumer deception. The en banc court in AMI held that Zauderer does in fact “reach beyond problems of deception, sufficiently to encompass the disclosure mandates at issue.”
The AMI court began by explaining that the Zauderer test applies to government mandates requiring disclosure of “purely factual and uncontroversial information” appropriate to prevent deception in the regulated party’s commercial speech. However, the court observed that the language the Zauderer court used to explain its application sweeps more broadly than the interest in remedying consumer deception. Focusing on Zauderer’s distinction between prohibiting speech and compelling speech, the court in AMI emphasized that compelled disclosure of purely factual and uncontroversial information implicates only a “minimal” First Amendment interest. Compelling disclosure of such information is a different and less protected interest than withholding commercial information, the court said.
The court went so far as to cite directly to the NAM case in its opinion — stating that “to the extent that other cases in this circuit may be read as holding to the contrary and limiting Zauderer to cases in which the government points to an interest in correcting deception, we now overrule them.” The court did not attempt to spell out the range of government interests that may be reviewed under the Zauderer standard.