Appeals Court Decision Jeopardizes Promotion Orders

December 2, 1999

A federal appeals court has struck down the mushroom promotion program as a violation of the first amendment, a surprise decision that puts 12 other commodity promotion programs at risk as well. It had been thought the issue was settled in 1997 with the U.S. Supreme Court's decision that a California promotion program did not violate the first amendment.

If the ruling prevails, it could mean the end of all other promotion programs that operate under a separate statute. There are 12 existing national programs covering beef, cotton, dairy, eggs, fluid milk, honey, mushrooms, popcorn, pork, potatoes, soybeans and watermelon. The peanut program is about to become operational, and other commodity programs are being developed.

In the ruling, the U.S. Court of Appeals for the Sixth Circuit sought to distinguish the facts of the mushroom case, United Foods, Inc. v. USA, from the 1997 decision in Glickman v. Wileman Bros. & Elliott, Inc., in which the Supreme Court held that the California tree fruit promotion program did not violate the First Amendment.

The Appeals Court rejected the government's argument that the degree of regulation of an industry should play no role in determining whether a program that required an industry to fund generic advertising violated the first amendment. The Wileman decision was interpreted as requiring the satisfaction of two factors before a mandated collection for advertising could be deemed consistent with the requirements of the First Amendment.

However, the Appeals Court ruled that an advertising program first must be germane to a valid, comprehensive regulatory scheme, and, second, the content of the advertising must be "nonideological." The Court found the advertising content was nonideological but also determined that the promotion program was not part of a comprehensive regulatory program. That meant, in the Court's opinion, a violation of the First Amendment.

One observer notes the court reaches a "curious conclusion" that the First Amendment is violated when a commodity advertising program for a commodity operates in a free market, while a commodity that operates under a comprehensive regulatory scheme may have such a program without violating the First Amendment.

United Foods is the first appellate decision since Wileman that significantly restricts the reach of that decision. Until now it has been widely understood that the Wileman holding applied to promotion programs put in place as part of a comprehensive regulatory scheme such as marketing orders and promotion programs that were stand-alone research and promotion acts and orders.

Commodity groups with such programs hope Agriculture Secretary Dan Glickman will push for an en banc review of the decision by the full Sixth Circuit, since this decision was rendered by a three-judge panel.

Click here for a full text of the United Foods decision.