Beef case could have ripple effect

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at least a quarter of a billion dollars of commodity-board marketing-from milk mustaches to cotton-could be at risk now that the Supreme Court has agreed to hear an appeal this fall on whether beef ranchers' mandatory payments for their industry's marketing efforts amount to forced speech.

On May 24, the court said it would hear the Department of Agriculture's appeal of a lower-court ruling that found forced participation in the beef industry's "Beef: It's what's for dinner" ad campaign unconstitutional. A ruling is likely early next year.

Several similar commodity programs already face legal challenge. In past cases, more courts have found the programs unconstitutional, but the courts have split on whether the programs violate the rights of producers who don't agree with the advertising or feel they don't benefit. All the programs require producers to pay into an industry fund-often known as a check-off program since producers agree by checking a box on a form-that supports marketing and research efforts.

"It's unfair. We are having to pay for what someone else wants us to say," said Mabel Dobbs, chairman of the Western Organization of Resource Councils' livestock committee, and who, with the Livestock Marketing Association, originally sued over the beef campaign. "We have no control."

While the industry programs vary somewhat, they generally are all authorized by law and require a referendum of producers Most are administered by the U.S. Department of Agriculture. An unfavorable high-court ruling could also endanger some similar state programs.

In the beef case, the high court will consider the ruling of a three-judge 8th Circuit Appellate Court upholding a lower-court ruling that the $1-a-head-of-cattle fee required to support industry research and marketing efforts was unconstitutional.

That court was pretty clear in its ruling: "We conclude that the government's interest in protecting the welfare of the beef industry by compelling all beef producers and importers to pay for generic beef advertising is not sufficiently substantial to justify the infringement on [cattlemen's] free-speech right."

government speech

In its successful bid to persuade the Supreme Court to hear the case, the Department of Agriculture suggested the First Amendment applies to private speech. It defined the beef industry's program and others as government speech on behalf of the industry, supported by a user fee.

"The First Amendment is inapplicable to government speech. ... Government speech necessarily is paid for by the citizens, some of whom may disagree with its message," the department stated.

Laurence Tribe, a Harvard University professor and a First Amendment expert, said the court's willingness to hear the case is more likely due to the issue's importance than an indication of its stance. He said previous court decisions had distinguished between allowable assessments for industry grading and standardization activities and research, which included some ad activity, and unallowable ones that collected fees just for advertising.

"What the court did was define the polar extremes, but it left for later what degree of regulation might be required and what is the standard," he said. He suggested the court's decision to take the case indicates it is likely to give further guidance.

commercial speech

Douglas J. Wood, a New York advertising lawyer, said the case could also affect commercial speech. "Depending on how broadly they define the test for compelled speech, it could apply to commercial speech." Lower-court verdicts, he said, suggest the programs could be in jeopardy. "If one were to predict based on the lower-court rulings, the people who want to uphold [the programs] have an uphill fight," he said.

Ad-group lawyers said last week they hoped the ruling would allow the programs to continue, and give some clarification of what is allowed.

"Hopefully there will be some clarification and a clearer understanding," said Dick O'Brien, exec VP, American Association of Advertising Agencies.

A beef-industry official praised the decision. "There are lots of other check-off [programs] and this one has been going since 1922," said Mark Thomas, VP, National Cattleman's Beef Association, adding that the "It's what's for dinner" campaign, from Publicis Groupe's Leo Burnett USA, has been successful.

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