By James M. Beck, Senior Life Sciences Policy Analyst with Reed Smith LLP in its Philadelphia, PA office, and founder of, and a regular contributor to, the award-winning Drug and Device Law blog.

Since the U.S. Supreme Court decisions in Sorrell v. IMS Health, Inc., 564 U.S. 552 (2011), and Reed v. Town of Gilbert, 576 U.S. 155 (2015), there has been considerable debate over whether those decisions require a court to determine if a governmental speech restriction is content based or speaker focused before it applies traditional commercial speech jurisprudence under Central Hudson Gas & Electric Corp. v. Public Service Comm’n, 447 U.S. 557 (1980).  Just last term, in Barr v. American Assn. of Political Consultants, Inc., 140 S. Ct. 2335 (2020), the Court reaffirmed that:

The Court’s precedents restrict the government from discriminating in the regulation of expression on the basis of the content of that expression.  Content-based laws are subject to strict scrutiny.

Id. at 2346 (citing, inter alia, Reed) (plurality opinion of four justices).  Accord id. at 2364 (statute “is a content-based restriction that fails strict scrutiny. … because it allows speech on a subject the government favors … while banning speech on other disfavored subjects”) (Gorsuch, J. concurring in part).

A recent decision, International Outdoor, Inc. v. City of Troy, Michigan, 974 F.3d 690 (6th Cir. 2020), squarely addressed this question, and held that the Sorrell/Reed analysis displaces Central Hudson when the regulation at issue arguably turns on the content of the speech involved:

It follows that the intermediate-scrutiny standard applicable to commercial speech under Central Hudson, 447 U.S. at 563, 100 S. Ct. 2343, applies only to a speech regulation that is content-neutral on its face.  That is, a regulation of commercial speech that is not content-neutral is still subject to strict scrutiny under Reed.

International Outdoor, 974 F.3d at 703 (emphasis added).  Under this rationale, governmental speech restrictions cannot be justified under the intermediate-scrutiny “commercial speech” First Amendment analysis whenever the government resorted to content- or speaker-based criteria in enacting them.

The decision in International Outdoor is significant because, while both Sorrell and Reed recognized that governmental restrictions on free speech require strict scrutiny when based on the content of the speech or the identity of the speaker, neither was explicit as to how the two methods of analysis interacted with one another.  Sorrell also analyzed the speech before it as “commercial,” while Reed involved religious rather than commercial speech.

Sorrell involved pharmaceutical detailing, which the Court expressly held was entitled to First Amendment protection, notwithstanding its obvious commercial context.  564 U.S. at 557 (“Speech in aid of pharmaceutical marketing, however, is a form of expression protected by the Free Speech Clause of the First Amendment.”).  A state law restricted detailing in various ways, that “[o]n its face” imposed “content-and speaker-based restrictions.”  Id. at 563.  “The statute thus disfavors marketing, that is, speech with a particular content” and “disfavors specific speakers, namely pharmaceutical manufacturers.”  Id. at 564.

Because of these content- and speaker-based restrictions, Sorrell held that the statute was subject to strict First Amendment scrutiny.  From “a specific, content-based burden on protected expression, [i]t follows that heightened judicial scrutiny is warranted.”  Id. at 565 (citation omitted).  “The First Amendment requires heightened scrutiny whenever the government creates a regulation of speech because of disagreement with the message it conveys.”  Id. at 566 (citations and quotation marks omitted).  While declaring that “[c]ommercial speech is no exception” to this rule, id. (citing Cincinnati v. Discovery Network, Inc., 507 U.S. 410, 429-30 (1993)), Sorrell obscured the basis of its ultimate holding by not directly declaring the statute at issue unconstitutional under strict scrutiny.  Id.

In the ordinary case it is all but dispositive to conclude that a law is content based and, in practice, viewpoint discriminatory….  As in previous cases, however, the outcome is the same whether a special commercial speech inquiry or a stricter form of judicial scrutiny is applied.

Id. at 571 (citations omitted).  Instead, the Sorrell Court also analyzed—and found that the statute did not satisfy—the traditional commercial speech Central Hudson test.  Id. at 571-79.  The Court’s conclusion in Sorrell did not specify on which basis the statute had been declared unconstitutional.

Citing Sorrell, the Court in Reed held that “[g]overnment regulation of speech is content based if a law applies to particular speech because of the topic discussed or the idea or message expressed.”  576 U.S. at 163.  However, Reed involved “temporary directional signs” for a religious event, which was non-commercial speech.  Id. at 161.  The commercial/non-commercial distinction did not matter in Reed, however, because “[o]n its face, the [ordinance] is a content-based regulation of speech.”  Id. at 164.  The Reed court thus had “no need to consider the government’s justifications or purposes … to determine whether it is subject to strict scrutiny.”  Id. at 164-65.  By virtue of the ordinance being content-based, it was subject to strict scrutiny.  “A law that is content based on its face is subject to strict scrutiny regardless of the government’s benign motive, content-neutral justification.”  Id. at 165.  “[W]e have repeatedly considered whether a law is content neutral on its face before turning to the law’s justification or purpose.”  Id. at 166 (again citing Sorrell) (emphasis added).  However, because the speech at issue in Reed was religious, not commercial, Reed had no occasion to address the issue of content-based governmental restrictions on commercial speech.

International Outdoor is a sign ordinance case, like Reed, but involving “content-based restrictions” on solely commercial outdoor advertising billboards.  974 F.3d at 702.  Thus, the Sixth Circuit had to answer the question that the Supreme Court in Reed did not.  Reed had held that the government “has no power to restrict expression because of its message, its ideas, its subject matter, or its content.”  974 F.3d at 702 (quoting Reed, 576 U.S. at 163).  Logically, the determination that a speech restriction was content based must precede any commercial speech analysis:

Regulation of speech is content-based and therefore subject to strict scrutiny if a law applies to particular speech because of the topic discussed or the idea or message expressed….  The crucial first step in the content-neutrality analysis involves determining whether the law is content neutral on its face.

Id. at 703 (Reed citations and quotation marks omitted).

International Outdoor recognized that, “notwithstanding Reed,” “several circuit courts have held that … the Central Hudson standard still applies to the regulation of commercial speech.”  974 F.3d at 703.  International Outdoor analyzed and found wanting the rationales that courts in Aptive Environmental, LLC v. Town of Castle Rock, 959 F.3d 961 (10th Cir. 2020); Greater Philadelphia Chamber of Commerce v. City of Philadelphia, 949 F.3d 116 (3d Cir. 2020); Vugo, Inc. v. City of New York, 931 F.3d 42 (2d Cir. 2019); and Lone Star Security & Video, Inc. v. City of Los Angeles, 827 F.3d 1192, 1200 (9th Cir. 2016), had used in applying commercial speech analysis to content-based speech restrictions.  974 F.3d at 703-06.  Aptive Environmental gave Reed insufficient consideration, citing it “only in a footnote,” that did “not discuss the standard explicitly adopted by Reed.”  974 F.3d at 704.  Greater Philadelphia “cite[d] Supreme Court decisions from the 1990s and does not mention Reed anywhere in its opinion.”  974 F.3d at 704.  Vugo was “not applicable” because the regulation “regulated commercial speech only” with only an “incidential” burden on speech.  974 F.3d at 705.  Finally, Lone Star, while distinguishing Reed, ultimately concluded that the ordinance at issue was a time, place, and manner restriction rather than being content-based.  974 F.3d at 705-06.

The Sixth Circuit in International Outdoor was fortified in its conclusion that strict scrutiny applied to all content-based speech restriction, commercial or otherwise, by the Supreme Court’s recent Barr decision.  Barr held that an exclusively commercial speech restriction—“a government-debt-collection exception to a prohibition on robocalls”—“failed strict scrutiny.”  974 F.3d at 706.  International Outdoor considered Barr a “repudiat[ion of] the approach taken by contrary circuit court opinions.  Id.  Since “[t]he Supreme Court has flatly confirmed the requirement to apply Reed’s strict-scrutiny” approach in commercial speech cases, id., International Outdoor did so, invalidating the defendant’s content-based sign ordinance under strict scrutiny without any Central Hudson intermediate-scrutiny analysis.  974 F.3d at 706-07.

[T]he ordinance regulated both commercial and non-commercial speech but treated them differently, requiring the [government] to consider the content of the message before deciding which treatment it should be afforded.  But for content-based restrictions on speech, strict and not intermediate scrutiny applies pursuant to Reed.

Id. at 707-08 (citation omitted).

International Outdoor thus creates an explicit circuit split on whether Sorrell/Reed strict scrutiny applies to all content based governmental speech restrictions, regardless of the “commercial” nature of the speech at issue.  While it is not likely that International Outdoor itself will be reviewed by the Supreme Court, because the defendant mooted most of the case by amending the offending ordinance, it should encourage other commercial speakers, disadvantaged by content discriminatory governmental enactments, to pursue similar First Amendment challenges.  In particular, the FDA’s content-based prohibition on all “promotion” of off-label uses of prescription medical products continues to be vulnerable to such challenges, and to date has only survived by virtue of intermediate “commercial speech” review—review that yet another court has now recognized to be erroneously deferential to governmental speech restrictions.