Did Reed v. Town of Gilbert Silence Commercial Speech Doctrine? Early Signs Point to No

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Robert Niles is the winner of the 2016 Bloomberg Law Write-On Competition for U.S. Law Week. In this, his winning entry, Niles suggests that while the U.S. Supreme Court's holding in Reed v. Town of Gilbert seems to create a uniform strict scrutiny standard for all free speech cases, that hasn't been the reality. Instead, he notes that courts have generally refused to apply Reed in the commercial speech context. Even so, Niles says that Reed may be the latest step in the Supreme Court's commercialization of the First Amendment.

By Robert Niles

Robert Niles is in his final year of the J.D./M.B.A. program at Harvard Law School and Harvard Business School. After graduation, he will clerk for Judge J. Paul Oetken on the U.S. District Court for the Southern District of New York.

Last Term, the U.S. Supreme Court decided a First Amendment case that might have quietly rewritten free speech doctrine.

Reed v. Town of Gilbert, 83 U.S.L.W. 4444, 2015 BL 193925 (U.S. June 18, 2015), involved a small, itinerant church's challenge to the Town of Gilbert's comically ornate sign code, which had vastly different size and timing requirements for religious, political and directional signs.

The justices all agreed that the fine-grained distinctions the sign code drew did not pass muster under the First Amendment. Justice Elena Kagan, concurring in the judgment, argued that the town's failure to provide “any sensible basis” for the sign code's distinctions would not even pass the “laugh test.”

But the six-justice majority went further, announcing a broad standard for when a challenged regulation will be deemed content-based and thus subjected to strict judicial scrutiny.

The court held that a regulation “is content based if a law applies to particular speech because of the topic discussed or the idea or message expressed,” finding the sign code content-based because its restrictions “depend[ed] entirely on the communicative content of the sign.”

This new, broad standard risks making all sorts of reasonable regulations vulnerable to First Amendment challenge, a concern expressed in no uncertain terms by Justice Stephen G. Breyer at oral argument and in his separate opinion in Reed.

But how far Reed’s reach will stretch remains to be seen.

Early indications from the lower courts suggest that Reed changed the law in areas most similar to the facts of the case itself, such as in cases involving challenges to other municipal sign codes and anti-panhandling regulations. See Kimberly Strawbridge Robinson, Robocalls, Panhandling & Ballot Selfies? Thanks SCOTUS! (84 U.S.L.W. 1094, 2/11/16).

But as we move away from Reed’s core—most notably to the area of commercial speech—lower courts have generally resisted Reed’s reach.

Reading Reed in the Commercial Speech Context

For nearly four decades, the Supreme Court has held that commercial speech receive weaker First Amendment protection than comparable non-commercial speech. SeeCentral Hudson Gas & Elec. Corp. v. Pub. Serv. Comm'n, 447 U.S. 557 (1980). But because Reed’s standard seems to apply to all content-based speech, commercial or otherwise, litigants have argued that it should be interpreted to overturn decades of settled precedent in this area.

Looking at the court's majority opinion, this is probably not the most natural reading of Reed. We have long known that regulations of commercial speech are content based but nonetheless deserving of weaker First Amendment protection—Reed’s new standard for deciding whether a regulation is content based gives us nothing new. And nowhere in Reed does the court suggest that it intended to upset commercial speech doctrine: Reed doesn't discuss Central Hudson or other of the court's commercial speech cases.

Nowhere in Reed does the court suggest that it intended to upset commercial speech doctrine: Reed doesn't discuss Central Hudson or other of the court's commercial speech cases.

Lower courts addressing challenges to commercial speech regulations after Reed have generally taken this tack and found that Reed did not change settled commercial speech doctrine. Those courts have continued to follow Central Hudson and its progeny in applying an intermediate level of scrutiny in challenges to regulations of commercial speech rather than the strict scrutiny that Reed seems to require.

For example, district courts have distinguished Reed in challenges to an ordinance governing landlord-tenant negotiations, San Francisco Apartment Assoc. v. San Francisco, 2015 BL 366077 (N.D. Cal. Nov. 5, 2015), and to a statute prohibiting healthcare providers from soliciting car accident victims, Chiropractors United for Research and Educ., LLC v. Conway, 2015 BL 321426 (W.D. Ky. 2015).

Also, in a handful of cases, lower courts have refused to apply strict scrutiny to commercial speech regulations in cases most analogous to Reed’s facts, that is, cases involving challenges to regulations of commercial signs and billboards. See, e.g., Contest Promotions, LLC v. City of San Francisco, 2015 BL 241271 (N.D. Cal. 2015).

In discussing whether Reed applies to regulations of commercial speech, one district court put it bluntly: “The Supreme Court has clearly made a distinction between commercial speech and noncommercial speech and nothing in its recent opinions, including Reed, even comes close to suggesting that that well-established distinction is no longer valid.” CTIA - The Wireless Ass'n v. City of Berkeley, 2015 BL 305375 (N.D. Cal. Sept. 21, 2015).

Based on these early indications, it seems Reed will not upset settled commercial speech doctrine.

Applying Reed to General Commercial Regulations?

Crafty litigants, however, have not stopped at commercial speech in their attempts to leverage Reed to challenge local and state commercial regulations. This strategy comes as no surprise, given a recent general trend towards strategic deployment of the First Amendment by businesses to achieve deregulatory ends. See, e.g., John C. Coates, IV, Corporate Speech and the First Amendment: History, Data, and Implications, 30 Const. Comment. 223 (2015).

But again, lower courts have generally refused to apply Reed to regulations of general commercial conduct.

Courts have distinguished Reed in challenges to a minimum wage ordinance, Int'l Franchise Ass'n, Inc. v. Seattle, 803 F.3d 389 (9th Cir. 2015), a zoning ordinance, BBL, Inc. v. City of Angola, 809 F.3d 317 (7th Cir. 2015), and even a statute banning use of commercial social networking websites accessible to minors by registered sex offenders, State v. Packingham, 777 S.E.2d 738 (N.C. 2015). Again, this seems to be consistent with Reed’s text, which applies only to regulations of speech and not to regulations of conduct.

However, this response has not been uniform. There are conflicting cases from the U.S. Courts of Appeals for the Second and Eleventh Circuits addressing challenges to regulations prohibiting credit-card surcharges.

On the one hand, the Second Circuit upheld a New York anti-surcharge regulation as a permissible regulation of conduct; since the regulation did not govern speech, Reed “is of no relevance whatsoever.” Expressions Hair Design v. Schneiderman, 808 F.3d 118 (2d Cir. 2015).

But on the other hand, the Eleventh Circuit struck down a similar Florida statute as a regulation of speech. Dana's R.R. Supply v. Attorney Gen., 807 F.3d 1235 (11th Cir. 2015). Claiming that the anti-surcharge regulation failed any heightened standard of review, the Eleventh Circuit declined to decide whether Reed applied, though it suggested that it might.

It is also worth noting that the U.S. Court of Appeals for the Fifth Circuit recently agreed with the Second Circuit, finding that Texas' anti-surcharge law was not a regulation of speech. Rowell v. Pettijohn, 2016 BL 62986 (5th Cir. 2016) (84 U.S.L.W. 1295, 3/10/16).

This circuit split might tee up the controversy over Reed’s reach for Supreme Court review.

Conclusion: Not Out of the Reeds Yet?

Though Reed will certainly have substantial impact on free speech doctrine in challenges to regulations of non-commercial speech, the first wave of lower-court decisions suggests that reports of the death of government regulatory power in the face of First Amendment challenge after Reed were greatly exaggerated.

Courts have generally refused to apply Reed in the commercial speech context and have refused to extend it to cover challenges to regulations of general economic conduct with only tenuous connections to speech. This is probably the best reading of the case itself and will limit its potentially destabilizing effects. If the court intended to replace settled First Amendment doctrine with a unified standard of strict scrutiny, it certainly failed to make that intention clear in Reed.

But in time, Reed may turn out to have been only an intermediate step in the court's commercialization of the First Amendment. While Justice Antonin Scalia's replacement is likely to lead to reshaping wide swaths of constitutional law, she or he may be unable to stop a libertarian shift in commercial speech doctrine.

The reason is as simple as counting to five: In both Reed and Sorrell v. IMS Health Inc., 79 U.S.L.W. 4591, 2011 BL 165775 (U.S. June 23, 2011), another key case invalidating a commercial regulation under the First Amendment, the opinion of the Court had the support of not five, but six justices. The five justices one might expect (Chief Justice John G. Roberts Jr. and Justices Scalia, Anthony M. Kennedy, Clarence Thomas and Samuel A. Alito Jr.) were joined in both Reed and Sorrell by Justice Sonia Sotomayor, an Obama appointee who may now become an unexpected yet absolutely critical swing vote in future First Amendment challenges to commercial regulations.1

1For a more in depth analysis of Reed's likely impact on First Amendment doctrine, see Note, Free Speech Doctrine After Reed v. Town of Gilbert, 129 Harv. L. Rev. (forthcoming May 2016).