FADE-OUT FOR GREEN CALIFORNIA CASE COULD HELP BURY ADS WITH ECO-APPEAL

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If environmental marketing dies, California might be the burial site.

And helping ensure that death would be a court ruling that threatens to isolate 10% of the national marketplace with stiff state rules on how green claims are made.

A federal appeals court recently upheld a California law that establishes stringent definitions for such environmental marketing terms as "recycled" or "biodegradable." Use of the terms outside the boundaries of the state-written definitions carries criminal sanctions.

The ruling, if unchanged, would leave national marketers with a Golden State dilemma: Either fashion separate environmental campaigns for California and the other 90% of the nation's population; forsake the nation's most populous state in favor of a single environmental campaign that's legal in the other 49; or let California's statute dictate the terms of a national campaign.

Certainly it's the behemoth national marketers that are most disturbed by the restrictive law, fearing other states might imitate California's action.

Procter & Gamble Co., Lever Bros. and Kraft General Foods are among those advertisers pressing hardest to fight the California law, all the way to the U.S. Supreme Court if necessary.

The Association of National Advertisers, principal petitioner in the suit filed againstthe California law, considered abandoning the effort after the 2-1 decision of the 9th U.S. Circuit Court of Appeals in San Francisco. But instead, the ANA decided last week to go back to the appeals court, requesting an en banc hearing that, the court clerk said, would involve 11 of the court's 38 judges.

That's an iffy proposition for the ANA, at best.

In its losing battle with the appellate court, the association already pulled out its big legal guns. Noted First Amendment attorney Floyd Abrams argued the case.

The group's decision to return to the court that just denied its previous appeal was largely based on the dissenting opinion of 9th Circuit Court Judge John Noonan Jr., said ANA Exec VP Dan Jaffe.

In his dissent, Judge Noonan called the 1990 California environmental marketing law an "unconstitutional intrusion by a state government into an area where technologies are developing, the free play of ideas is important, and the free speech of everyone, including manufacturers and distributors, is essential to the development of a healthy environment."

"When we go back, we'll argue that the court deferred too much to the California Legislature ... did not subject the law to serious First Amendment scrutiny and make an argument that Judge Noonan made: that this law unconstitutionally limits only the speech of those who speak for profit-advertisers-while allowing the green movement to speak without limitations," Mr. Abrams said. "As Noonan said, you can't privilege one set of speakers while restraining others."

Mr. Jaffe said the importance of the case forced the ANA to appeal, particularly since several other states are believed to be watching.

"This is an extremely important case that could determine the future of environmental marketing," Mr. Jaffe said. "If what California says holds up, then what might Iowa do next? Our members feel strongly because they are afraid of multiple rules and regulations."

But the appellate court majority thought otherwise. It rejected arguments that the law unconstitutionally infringed on the non-commercial speech of marketers and that the state could have adopted less restrictive means to accomplish the same goal.

The creation of definitions that standardize the environmental marketing terms "is directly related to California's undisputedly substantial interests in truthful environmental advertising and conservation," the court said. "California seeks to guard against a direct, predictable and ongoing result of green marketing-increased sales of goods as a result of potentially specious claims or ecological puffery about products with minimal environmental attributes."

The California law was enacted in the wake of a task force report on environmental marketing from attorneys general in 10 states-hence, the concern that other states will follow suit.

Also weighing into the ANA's decision to appeal was the lineup of commercial speech cases currently heading to the Supreme Court, including last week's hearing of a Coors Brewing Co. challenge to a federal statute forbidding alcohol content statements on beer labels.

The Coors decision likely will be delivered before the environmental marketing appeal is heard, probably next year.

Mr. Abrams said a favorable ruling on Coors might improve chances of defeating the California statute.

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