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State Regulation of Advertising

Lecture 11Commercial Speech Doctrine

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State Regulation of Advertising

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    5. State Regulation of Advertising Often called Printer’s Ink statutes Supremacy Clause limitations Louisiana R.S. 51:411 (Unfair Trade Practices and Consumer Protection law) forbids fraudulent or misleading advertising.

    6. Federal Trade Commission Created in 1914 Initially authorized to field complaints among advertisers Now protects consumers Regulation of advertising only one of its powers

    7. FTC powers Consent order FTC seeks compliance first, but without court order. ALJ issues consent decree next. Then case will go to FTCommissioners; DC Circuit Court, U.S. Supreme Court FTC can go directly to federal court for injunction if advertising violation is egregious. Affirmative Disclosures & Corrective Advertising are among remedies. Industry Guides & Trade Regulation Rules

    10. Valentine v. Chrestensen (1942) Case briefing/Socratic Dialogue with SADIE GOULAS

    11. Valentine v. Chrestensen (1942) City sanitation ordinance against commercial leafleting F.J. Chrestensen advertised “U-boat” tours Printed flyers twice -- second time to include political message. Commercial invitation and price on the front His “political protest” printed on the back Supreme Court rejected the ploy, and held the handbill was primarily advertising lacking First Amendment protection.

    12. New York Times v. Sullivan (1964) Not PURELY commercial speech Conveyed political information Expressed viewpoints Alleged civil rights violations Solicited funds for the cause

    13. Pittsburgh Press v. Pittsburgh Human Relations Commission (1973) Help Wanted Ads (male and female)

    14. Bigelow v. Virginia (1975) NY Abortion clinic VA newspaper Not viewed as PURE commercial speech

    15. VA State Board of Pharmacy v VA Citizens Consumer Council (1976) Prescription drug prices banned; Pure commercial speech deserves protection; Right of consumers to receive information affirmed; Valentine landmark overturned.

    16. Central Hudson Gas and Electric v. PSC of NY (1980) How far can the law limit commercial speech? Apply the four-part Central Hudson test to see… Is advertisement deceptive or product illegal? Does the state have a valid interest in regulating it? Does the law properly advance that interest? Does it do so by narrow tailoring?

    17. Commonwealth of Pennsylvania. v. Pittsburgh Press (1979) SITUATION Wanted ads Distinguished from HELP wanted

    18. Posadas v. Tourism Company (1986) Banned casino ads aimed at residents Dangerous products, harmful services (smoking, drinking and prostitution?) Meaning of “Less Restrictive” shifts

    19. Greater New Orleans Broadcasting Assoc. v. U.S. (1998) Banned casino ads in Louisiana and Mississippi Federal ban unconstitutional as applied to Louisiana-based broadcasters “Powerful sensory appeal” of television and radio overturned as rationale.

    20. Rubin v. Coors Brewing Co. (1995) If casinos are dangerous, why isn’t alcohol? State tried to prevent “strength wars” Struck down bans on listing alcohol content on beer labels.

    21. 44 Liquormart v. RI (1996) Struck down ban on advertising liquor prices. Can’t ban truthful ads about legal products.

    22. Kasky v. Nike, Inc. (2002) Nike responds to investigative reports on alleged overseas sweatshops with public statements. Marc Kasky sues under false-advertising law of California. Supreme Court notes blending of commercial and noncommercial speech with issues of public importance, but sends it back to California without opinion. Kasky and Nike settle out.

    23. Three Steps in Finding Deception Look at the text of the ad; Consider its meaning to reasonable consumers; Consider whether any untruths are material.

    24. Looking at the text: And I can prove it! Factual claims must be supported. If claims seem scientific, then there should be data for support. Demonstrations can be deceptive though… Rapid Shave shaves sandpaper. Listerine fights colds. Wonder Bread builds bodies 12 ways.

    25. Looking at the text: More than I can say Implying erroneous conclusions “Passed all inspections” vs. without defects Geritol, lethargy, and “iron poor blood” Halo effect Anacin and “more” (aspirin) UPS and delivery times True but irrelevant (Carnation Instant Breakfast)

    26. Looking at the text: Who said that? Basic rule is to tell the truth. Celebrity endorsers must be users, but… Is their experience typical? Experts must really have specific expertise. Organizational endorsements must be genuine Fudging in movie testimonials? Not every endorsement triggers the rules… Clearly fictional narratives Celebrities born of the ad campaign

    27. The Reasonable Consumer Seen as more sophisticated than in past. Some audiences seen as more gullible, ie. Children People in crisis Survey research may be used as indication. U.S. action on Product Placements: Sec. 5 FTC Act requires disclosure of sponsorship. In 2005, FTC refused to enforce disclosure because product’s performance not discussed in program.

    28. Material deceptions Material = affecting purchase decision Most textual claims are material Puffery an exception Visual claims more troublesome Mashed potatoes for ice cream?

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