On Monday, the United States Eleventh Circuit Court of Appeals issued another interesting opinion addressing commercial free speech rights in Ocheesee Creamery LLC v. Putnam, Case No. 16-12049 (11th Cir. March 20, 2017). Just last month, in Wollschlaeger v. State of Florida, the same Court upheld physician free speech rights when it overturned a Florida statute barring physicians from discussing gun safety issues with their patients. In the Ocheesee Creamery case, the Court addressed a far more wholesome and less violent product – milk. More specifically, the Court considered whether the State of Florida can lawfully prohibit a Florida creamery from describing its product as “skim milk” even though the product undisputedly meets the well understood definition of “skim milk” as being “milk from which the cream has been skimmed off the top.”
Many will be aghast that our Federal judiciary spends its precious time and resources answering such seemingly inane questions. Indeed, many will be surprised to learn that laws exist governing the definitions of things that seem so obvious. But within this “obvious” question lie some very important issues about the government’s authority to regulate commercial speech by dictating what private companies can and can’t say about their products. As this case demonstrates, even something as simple as the definition of “skim milk” can require careful legal analysis to balance the rights of commercial enterprise against the State’s responsibility to protect consumers.
The dispute began when a small dairy creamery in rural Florida began selling all-natural products including whole milk, cream, and other items like ice cream. One of the by-products of its cream production was all-natural skim milk. As plainly described by the Court, “[c]onsistent with standard practice, the Creamery produces cream by causing it to rise to the top of the milk and then skimming it off. The leftover product is skim milk: milk that has had the fat removed through skimming.” The Creamery then sold the unadulterated product as “skim milk.” Seems obvious and uncontroversial, does it not? Who could possibly make a federal case out of this?
What is less known is that skimming the fat removes most of the vitamin A that is otherwise naturally present in whole milk, and therein lies the source of the dispute. Florida law prohibits the sale of milk or milk products that are not Grade “A.” To meet Grade “A” standards, the vitamin A lost in the skimming process must be replaced. Without the added vitamin A, the Creamery’s “skim milk” was not Grade “A.” It therefore could not be sold as milk or a milk product in Florida. So what is a wholesome creamery supposed to do if it can’t sell its skim milk as “skim milk?” The company had two choices: add vitamin A to its skim milk or stop selling it altogether. Not wanting to “adulterate” its “all-natural” product by adding vitamin A, the Creamery chose to discard the skim milk.
In an effort to find an alternative, the Creamery applied for a permit to sell its “unenhanced” skim milk under Florida’s “imitation” milk statute. (Yes such a statute exists.) To do so, however, the State insisted that the product had to be labeled as an “imitation milk product.” Since there was nothing “imitation” about its skim milk – arguably its product was less “imitation” than Grade A skim milk since it had no additives at all – the Creamery rejected this proposal. The State and the Creamery then tried to negotiate agreeable language to be included on the label. Ultimately, the negotiations reached an impasse because the State refused to allow the Creamery to use the term “skim milk” at all on any of its labeling.
The Creamery sued, claiming the State infringed on its First Amendment free speech rights by censoring the Creamery’s right to use the term “skim milk” on its products. The trial court ruled in favor of the State, finding that allowing the Creamery to use the term “skim milk” would be misleading because the Creamery’s product did not contain the same vitamin content required to meet the definition of Grade A as mandated by Florida law for the sale of milk products.
The appellate court disagreed and overturned the lower court’s decision. The Eleventh Circuit applied the Supreme Court’s framework for analyzing commercial speech restrictions as laid out in Central Hudson Gas & Electric Corp. v. Public Service Commission, 447 U.S. 557, 100 S. Ct. 2343 (1980). The first question was whether the Creamery’s use of the term “skim milk” concerned unlawful activity or was false or inherently misleading. If so, then the Creamery’s “speech” would not be protected. If neither applied, then the State had to demonstrate that: (i) the government had a substantial interest in regulating the speech; (ii) the regulation directly advanced that government interest; and (iii) the regulation was no more extensive than necessary to serve that interest.
On the first issue, because the State and the Creamery agreed that the Creamery was lawfully permitted to sell its skim milk as “imitation” milk, the sale of the product was not “illegal.” Interestingly, the Court suggested that if the State had claimed the product could not legally be sold at all because it did not meet the definition of Grade “A” milk, then the regulation barring the Creamery’s use of the term “skim milk” would have been entirely appropriate, even though the product undisputedly meets the commonly understood definition of “skim milk.” However, because it was not disputed that the Creamery’s skim milk could be sold lawfully, the Creamery satisfied this threshold issue.
Turning to the second prong of the first question, the Court concluded that the Creamery’s use of the term “skim milk” to describe its product was not inherently misleading because the product was, in fact, “skim milk” – meaning it was milk from which the fat had been skimmed off. The State argued that the Creamery’s skim milk lacked the added vitamin A necessary to meet the State’s definition of a milk product. Allowing the Creamery to call its product “skim milk” would therefore be inherently misleading because it was not “milk” as defined by the State.
The Court rejected the State’s argument. The Court concluded that while the State may establish definitions, the act of doing so does not automatically make its definition the only acceptable definition, thereby making any alternative usage of the term “inherently misleading.” To find otherwise, the Court reasoned, would essentially allow the State to circumvent First Amendment protections afforded to commercial speech. As stated by the Court “All a state would need to do in order to regulate speech would be to redefine the pertinent language in accordance with its regulatory goals. Then all usage in conflict with the regulatory language would be inherently misleading.” Because the Creamery’s description of its product as “skim milk” was factually accurate based on the commonly accepted definition of the term, the fact that the product did not meet the State’s preferred definition did not make use of the term inherently misleading.
Having found the Creamery’s use of the term skim milk was neither unlawful nor inherently misleading, the Court looked at the three prong test to determine if the State’s regulation was nevertheless enforceable. Regarding the first prong, the Court found that the State does have a substantial interest in “combating deception and in establishing nutritional standards for milk.” Indeed, that issue was undisputed. The Court skipped over the second prong regarding whether the State had shown its restriction directly and materially advanced those interest because, the Court found, the State’s restrictions were clearly more extensive than necessary to achieve its goals.
On this last prong, the Court concluded that the State had presented no evidence that no other reasonable and less restrictive means were available to achieve the State’s consumer protection goals short of its absolute prohibition on the Creamery’s use of the term “skim milk.” The Court noted that the State had simply disregarded “far less restrictive and precise means” of advancing its interest such as allowing the Creamery to describe its product exactly as it is – namely “skim milk” but adding the qualifier that it lacks Vitamin A as a result of the skimming process. Having chosen an unnecessarily restrictive and overly broad ban on the Creamery’s otherwise lawful and truthful description of its product, the State’s regulation violated the Creamery’s commercial free speech rights.
So, why should anyone really care about whether this small Florida creamery can describe its product as skim milk? One reason is the Court rejected the State’s authority to redefine terms by statute or regulation to limit commercial speech solely to usage that complies with the State’s preferred definition. This may sound technical, but it has very real world implications. Had the Court accepted the State’s argument, it could open the door to government agencies redefining everyday language to prohibit usage of that language that does not comport with the government’s preferred definition.
This, in turn, could lead to the State having authority to sanction, fine, or even shut down private businesses that don’t comply with the State’s preferred definitions. Powerful interest groups or industries could lobby state legislators to adopt definitions that allowed only certain manufacturers’ products to meet the definitions imposed by law. State regulators would then be empowered to sanction or shut down any competitors whose products did not meet the State’s definitions but which otherwise meet generally accepted definitions of the items they produced and marketed. Not only would such regulations limit the commercial free speech rights of businesses, but they could endanger the very nature of our free market economy by allowing the largest, wealthiest and most powerful interests to use the power of the State to inhibit competition and protect their private interests. By preserving one small creamery’s right to market its product as skim milk, the Court protected all businesses from government overreach in its regulation of commercial speech.
The Court’s full opinion can be found here:
http://media.ca11.uscourts.gov/opinions/pub/files/201612049.pdf.
If you would like more information about this decision or have questions about other commercial business disputes, please message me through LinkedIn or visit my website at www.llambertlaw.com.