Product-defining speech

The state of Florida requires all milk sold in the state to contain Vitamin A. Thus, skim milk products, which have most of the naturally occurring vitamin A skimmed off with the cream, has to be fortified with added vitamin A in order to meet Florida's standards. This was a problem for the Ocheesee Creamery, which prided itself in creating dairy products without additives. The state provided a route for Ocheesee to sell its skim milk under its regulations for imitation milk, but Ocheesee would have been prohibited from labeling its skim milk "skim milk" and would instead have had to use the term "imitation milk product." Yum.

The creamery challenged the regulation under the First Amendment, and the U.S. Court of Appeals for the 11th Circuit sided with the creamery. The result of the case is not surprising given how absurd the facts are. Although the state has admirable reasons for wanting milk to be fortified with vitamin A, it was torturing the English language by prohibiting sellers from using the words "skim milk" to describe what is, in fact, skim milk in its purest possible form. The facts would have been less absurd for the state if the popular understanding of the word "milk" was not the stuff produced by cows (and other mammals) but a product that always necessarily contains vitamin A. This, though, does not fit common usage.

Even though I think the court got this case right, I also believe that what the state of Florida was doing in this case is not at all unusual. The holding in this case may have broader implications than the litigants or 11th Circuit panel realize.

In a nutshell, what Florida wanted to do was force all milk producers to ensure that their products contain vitamin A for public health reasons. Not every product has to have vitamin A, of course - just milk does. And how do we know what "milk" is? Rather than defining the nature of the substance, regulators can look to see how the sellers describe their own products. If they are selling something that they themselves refer to as "milk," then it's milk and must comply with the vitamin A rules.

This approach to product definition is very common. Regulators frequently define the scope of their product and service regulations based on the promotional speech of vendors. Let me give two examples to demonstrate that it is not unusual.

First, credit reports. The Fair Credit Reporting Act creates a set of rights and obligations for credit reporting agencies and the creditors or employers that access consumer reports. But what is a "consumer report?" Here is the statutory definition:

15 U.S. Code § 1681a (d)Consumer Report.- (1)In general.-The term "consumer report" means any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer's eligibility for- (A) credit or insurance to be used primarily for personal, family, or household purposes; (B) employment purposes; or (C) [some other uses associated with credit, insurance, or business transactions]

And a consumer reporting agency, in a nutshell, is any entity that assembles information "for the purpose" of furnishing consumer reports to third parties. (15 USC §1681a (f).)

The problem, though, is that employers (and creditors, too) frequently use information outside standard credit reports to make decisions about lending and hiring. For example, employers sometimes google prospective employees or look at their public Facebook accounts before making interviewing or hiring decisions. Google has knowledge that its search services are used to make employment decisions and stands to benefit (at least marginally) from searches by employers. Does that mean Google is a credit reporting agency?

To avoid the dire consequences of applying the FCRA in a way that locks in a vast range of information service providers, the Federal Trade Commission and courts have limited the scope of "credit reporting agency" to instances where a purpose to create consumer reports is demonstrated through speech - that is, when a company has promoted the use of its information services for employment or credit decisions. This is why Spokeo was presumed to be subject to the FCRA in the recent Supreme Court case, Spokeo v. Robins. Spokeo opted into the regulatory strictures of the FCRA through commercial speech encouraging employers to use its profiles for employment decisions. Since Google hasn't promoted its search services for use by employers (so far as I know), it has avoided the application of the FCRA.

Thus, the FCRA is a product-defining speech regulation. There are two layers of speech here because the product itself is also speech - employability and creditworthiness information. But the requirements of FCRA apply not based on how creditworthiness information is used, but rather based on whether it is advertised for that use.

Another very important example comes from the Federal Food, Drug, and Cosmetic Act (FDCA). How do we know whether a chemical available on the open market is a "drug," requiring significant testing and preapproval by the FDA? The meaning of a "drug" (as well as a "food" or a "supplement") is surprisingly obtuse. Just listen to Margaret Hamburg, a former FDA commissioner, avoid defining "food" and "drug" in this Freakonomics podcast and then refer the show's host to FDA attorneys (starting at minute 7:50.)

The boundaries of the term "drug" are made by product-defining speech. If a company says that its product can be used for a therapeutic purpose, then it is a drug and must be approved and labeled appropriately for that particular medical use.

I should make clear that this is not a universally accepted view. My colleague Chris Robertson argues that the FDCA is not a regulation of speech because speech is used only as evidence of the seller's intent to introduce a drug into the marketplace. I disagree. As I explain in my new draft article, "Snake Oil" (forthcoming in the Washington Law Review), the FDA has carefully avoided using forms of evidence that would easily meet the standards for a mental state of knowledge or purpose. For example, a drug manufacturer that knows that a drug is used frequently (even more often than not) for an off-label purpose and happily supplies it for those uses is not treated by the FDA as introducing a "mislabeled" drug. But if the company acknowledges through speech that the drug has been successfully used for an off-label treatment of some sort, then the manufacturer faces heavy fines and criminal liability. The sine qua non nature of speech to prove "intent" is evident not only from the history of FDA enforcement, but also from the FDA's own memo on the First Amendment's application to public health law, which anticipates using commercial speech as evidence of intent and provides no examples of what other, non-speech conduct could be used to prove intent.

So, should free-speech jurisprudence treat regulations of product-defining speech with the same skepticism and probing scrutiny that it applies to other regulations of speech? Or is product-defining speech a sensible way to limit the scope of product regulations without having to define the essential nature of things such as "milk," "credit reports" and "drugs?" After all, regulations that hinge on commercial speech give sellers some flexibility. Sellers can avoid a set of regulations by avoiding certain forms of speech (like off-label promotion). There is also little room for doubt about when a regulation will apply, since manufacturers are necessarily on notice when they label or describe their products.

But these benefits (if they even are benefits) do not outweigh the free-speech problems. First, when regulators avoid defining the scope of a product regulation using objective terms, it means that they are leaving significant loopholes for unregulated products. If there is a serious public health risk from all or a subset of off-label prescription drug use (or from milk or creditworthiness information, for that matter), current regulations leave the public exposed to much of that risk by allowing doctors to prescribe the drugs, and pharmacies and drug companies to supply them.

Conversely, to the extent off-label drug use is appropriate and even good for patients, suppression of commercial speech comes with significant public health consequences, too, by removing a particularly powerful form of information-sharing. Promotional speech, in other words, is often used as a rough proxy for a product's risks when regulators could and should identify the scope of a product in objective terms and directly manage its risks.

The best defense of these types of uses of speech regulations, which again comes from my colleague Chris Robertson, is that these regulations can act as a sort of brake on the market that incentivizes sellers to produce research and gather evidence to evaluate whether a drug is safe and effective. But FDA pre-screening is a costly and circuitous way to accomplish these goals, particularly for foods and drugs that have a history and known track record for human consumption.

Others have justified regulations of drug manufacturers' speech on the basis that such promotion, without appropriate pre-vetting, are presumptively false or misleading. As my next post will explain, determining whether words are false or misleading is not nearly as simple as the free-speech cases and scholarly literature suggest.