- August 6, 2012
- Posted by: Seth Heyman
- Categories: Business Law, Marketing & Advertising Law
A recent Supreme Court decision may have an enormous affect on advertising claims. The Court’s opinion in United States v. Alvarez was released on the same day as the Obamacare opinion, and was thus overlooked by both the public and the press. The Alvarez case involved the Stolen Valor Act, a federal law that makes it a crime to falsely represent that one has been awarded a medal, decoration, or badge for service in the armed forces. A member of a water district board in Claremont, California, Xavier Alvarez was prosecuted under the Stolen Valor Act for telling the attendees of a board meeting that he was a retired Marine who had been awarded the Congressional Medal of Honor in 1987. Alvarez never even served in the military.
Although Alvarez’s claim was patently false, he challenged his conviction on First Amendment grounds. Content-based restrictions on speech are generally presumed to be invalid, although there are exceptions to that rule for certain categories of speech – e.g., defamation, fraud, and obscenity. While there have been a number of cases upholding laws that declared false statements to be illegal, Justice Kennedy’s opinion said that those cases all involved some “legally cognizable harm associated with the false statement.” In other words, those laws were intended to prevent a specific type of harm, rather than the speech that causes it. A law against falsely shouting “fire!” in a crowded theater is intended to prevent people from getting trampled in a panic, so it would pass constitutional muster.
And while Kennedy recognized that the government had a legitimate interest in protecting the integrity of the Medal of Honor, he concluded that the means chosen to achieve that interest – the Stolen Valor Act – was not “actually necessary,” and so did not satisfy the “exacting scrutiny” that is applied to content-based restrictions on protected speech. “The facts of this case indicate that the dynamics of free speech, of counterspeech, of refutation can overcome the lie,” Kennedy opined. “The remedy for speech that is false is speech that is true.” (The concurring justices agreed with the plurality on this point, noting that “more accurate information will normally counteract the lie.”) In other words, if the public can easily determine that a statement is false, and the statement is not intended to cause any specific harm, then making that statement is protected under the First Amendment.
The implications of this case with respect to advertising claims should be abundantly clear. Most forms of advertising are regulated by the Federal Trade Commission (FTC), which requires advertising claims to be truthful and not misleading or deceptive. According to the FTC’s Deception Policy Statement, an ad is deceptive if it contains a statement – or omits information – that:
- Is likely to mislead consumers acting reasonably under the circumstances; and
- Is “material” – that is, important to a consumer’s decision to buy or use the product.
The Alvarez decision may render some aspects of the FTC’s guidelines unconstitutional. Take for example, an ad featuring a gorgeous model who proudly states that she lost 50 pounds in one month by using the advertised product. If the claim is false, that statement will bring down the wrath of the FTC. Applying the Court’s logic under Alvarez, although the claim is an outright lie, it is not intended to cause any specific harm, and can easily be refuted by the advertiser by including a disclaimer like “the statement made in this ad is completely untrue.”
Does this mean that the FTC will be forced to change its ways? Maybe, maybe not. Commercial speech is subject to a lesser degree of constitutional protection. Unless an advertiser has the cajones to challenge enforcement action on First Amendment grounds, things will remain as they are.
By the way, in case anyone’s interested, I was awarded the Congressional Medal of Honor back in ’45, when I saved my entire platoon by jumping on an unexploded grenade on Omaha Beach. We lost a lot of good men that day, but of course, that’s another story.