July 24, 2012
DC Circuit Upholds Airline Fee Disclosure Regulation in First Amendment Challenge
In Spirit Airlines v. US Department of Transportation, a divided opinion by a DC Circuit panel today upheld DOT regulations. The airlines challenged three regulations, all on arbitrary and capricious grounds, but also included a First Amendment challenge to the regulation that requires the most prominent figure displayed on print advertisements and websites be the total price, inclusive of taxes.
There were several arguments about the correct standard of review under the First Amendment:
- Strict scrutiny, applied to laws burdening political speech. The airlines argued they have “a First Amendment right to engage in political speech that informs [their] customer base of the huge tax burden that the federal government imposes on air travel.”
- Intermediate scrutiny, as defined in Central Hudson and applied to laws regulating commercial speech, Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n of N.Y., 447 U.S. 557 (1980);
- Reasonableness review, as defined in Zauderer and applied to laws requiring “purely factual” disclosures “reasonably related to the State’s interest in preventing deception of consumers,” Zauderer v. Office of Disciplinary Counsel of the Supreme Court of Ohio, 471 U.S. 626, 651 (1985).
The court easily rejected thepolitical speech argument, concluding that prices are "quintessentially commercial." As between Central Hudson and Zauderer, however, the panel found that Zauderer governs mandated disclosures, citing Milavetz, Gallop & Milavetz, P.A. v. United States (2010). The rule, the panel held, was clearly directed as disclosure, and allowed airlines to call attention to taxes and fees in their advertisements, but not by making them more prominent than the total, final price the customer must pay. This, the majority held, was clearly reasonable.
However, the majority reasoned that the rule also satisfied Central Hudson - - - a point of disagreement with the dissenting judge, who concluded not only that the Central Hudson test applied but that it was not met. Senior Judge Randolph, dissenting, gave more credence to the airlines political speech argument than the majority, and his reasoning is worth reading. However, assuming the speech was commercial, he was skeptical of the government interests and in any case found that they were not directly advanced by the regulation.
The opinion, coincidentially rendered on the 115th birthday of aviator Amelia Earhart, pictured above, would make a great commercial speech problem for First Amendment class. It challenges students to consider the boundaries between political speech, commecial speech, and "mere" disclosure.
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