In 2015, San Francisco enacted a new city ordinance requiring warnings on ads for soda and other sugary drinks. With the new rules set to go into effect later this summer, a number of trade groups are suing the city to overturn the law. The plaintiffs had hoped to get an injunction preventing San Francisco from enforcing the warning label requirement, but today a federal court said the city can go ahead with the ordinance for now.

The lawsuit was brought in federal court by the American Beverage Association, the California Retailers Association, and the California State Outdoor Advertising Association, all of whom have an interest in putting Coke, Pepsi and other sweet drinks on billboards and elsewhere.

The complaint alleges that the San Francisco ordinance violates the plaintiffs’ First Amendment rights by forcing them to include speech on their advertising that they do not support.

That warning, which would be in a box in any relevant ad posted in the city, will read:
“WARNING: Drinking beverages with added sugar(s) contributes to obesity, diabetes, and tooth decay. This is a message from the City and County of San Francisco.”

The city contends that the purpose of the warnings are intended “to inform the public of the presence of added sugars and thus promote informed consumer choice that may result in reduced caloric intake and improved diet and health.”

The plaintiffs argue that the ordinance goes beyond restricting commercial speech (i.e., the explicit selling of products) and crosses into the realm of restricting non-commercial speech, which would merit a higher degree of protection from the law.

They give the example of Coca-Cola posters reading “Love Wins” following last year’s Supreme Court ruling in favor of same-sex marriages. Those posters did include Coca-Cola branding, but the plaintiffs argue that the use of logos or other brand identifiers only “rendered such speech partly commercial” and that those commercial features are “so inextricably intertwined with the non-commercial messages that the City’s regulation of the whole is subject to strict scrutiny.”

However, in its order [PDF] denying the injunction, the court found that the plaintiffs had failed to establish that a substantial amount of non-commercial speech will be restricted in relation to the amount of commercial speech regulated.

Additionally, the court disagreed with the plaintiffs that the ordinance represents any sort of extraordinary restriction on commercial speech, as it does not restrict or prescribe what the beverage companies can or can’t advertise. It is just a required disclosure on the ads.

The court determined that the city ordinance is likely to pass the “factual and accurate” test for such disclosures. Sugary drinks don’t rot your teeth if consumed responsibly, but they do — as the warning states — “contribute” to tooth decay. Similarly, sugary drinks can contribute to obesity and diabetes.

“There is no real dispute as to the literal accuracy of the required warning,” writes the court. “While it is true that individuals respond differently to different diets depending on behavior… no reasonable consumer would likely construe the warning as specific to him or her and instead would understand the warning is directed to the general public, and that warning is to be viewed in the larger aggregative context of public health.”

Because the boxed warning must occupy 20% of the space in an ad, the plaintiffs contend that the requirement has a chilling effect on free speech. First, it will be such a significant portion of the ad, they argue, that it will itself be the focus of the ad. Second, the advertisers would not have ample room in the remaining space in the ad to counter the warning message.

Yet the judge ruled that the plaintiffs were unlikely to prevail on that front, noting that the warning is text only, and that any pictorial depictions used in the remaining 80% of the space “is not likely to be overcome by the text warning.”

The court dubbed plaintiffs’ claims of being unable to counter the warning in the remaining space “dubious,” as “Not only is 80% of the space available, Plaintiffs have shown that they have employed pithy advertising on how to achieve balanced diets and lifestyles.”

Beverage companies are some of the biggest advertisers, especially for outdoor media. Several companies told the court they would consider ceasing their ad campaigns in San Francisco if the ordinance is enforced, but the judge wasn’t buying it, calling such declarations “self-serving in nature.”

The court calls out PepsiCo’s statement that it “intends to withdraw from advertising burdened by the Ordinance” because the sizable warning would render the aids pointless.

“However, that claim, to the extent made, is not especially credible given that tobacco companies have still profited even with the required warnings on the tobacco products themselves,” counters the court. “To the extent the PepsiCo declaration simply states that the burden of the warning outweighs the benefit of the advertising with the warning, that claim, while plausible, is not sufficiently substantiated.”

In the end, the court denied the plaintiffs’ request for an injunction, holding that they are “not likely to succeed on the merits of their First Amendment claim, and it is unlikely that they would suffer irreparable harm if the ordinance were to go into effect.”

While the lawsuit can continue, the lack of an injunction means the ordinance will go into effect on July 25… unless the plaintiffs can win over an appeals court before then.

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