First Amendment - Commercial Speech - D.C. Circuit Holds That Rule Prohibiting Airlines from Displaying Taxes "Prominently" Does Not Violate the First Amendment
Government regulation of advertising has recently reemerged as a major constitutional issue. Most prominently, the D.C. Circuit and the Sixth Circuit have disagreed over whether the government can require cigarette manufacturers to display graphic warnings on their packaging. (1) Constitutional questions related to advertising have also appeared in a variety of other contexts. (2) Recently, in Spirit Airlines, Inc. v. U.S. Department of Transportation, (3) the D.C. Circuit held that a Department of Transportation (DOT) rule requiring airlines to state the total price of tickets explicitly and prohibiting them from displaying taxes "prominently" in their advertisements did not violate the First Amendment. (4) In upholding the rule under the deferential standard of review from Zauderer v. Office of Disciplinary Counsel, (5) the court signaled a willingness to apply Zauderer to laws that not only mandate factual disclosures but also restrict the manner of commercial speech by limiting the size and appearance of other claims in an advertisement.
In April 2011, DOT issued a final rule (the "Airfare Advertising Rule") modifying existing regulations of airline advertising. (6) The existing regulations had required airlines to disclose "the entire price to be paid by the customer" in their advertisements, (7) but airlines could satisfy that obligation by listing separately the base fare, taxes, and fees, requiring consumers to add those numbers to determine the total price. (8) The Airfare Advertising Rule made two significant changes to the existing regulations: First, it required airlines to state the total price explicitly (9) (the "total price provision"). Second, it specified that component prices, such as taxes, "may not be displayed prominently [and] may not be presented in the same or larger size as the total price" (10) (the "prominence provision").
In June 2011, Spirit Airlines filed a petition in the D.C. Circuit challenging the Airfare Advertising Rule. (11) Spirit argued the rule was arbitrary and capricious because there was insufficient evidence showing that existing advertising practices caused confusion. (12) Spirit also alleged that the rule was unconstitutional. (13) Maintaining that its advertisements were political speech intended to inform consumers about the government's tax policies, (14) Spirit contended that DOT unconstitutionally restricted that speech "to suppress information that is unfavorable to the government." (15) Alternatively, Spirit claimed the rule violated the First Amendment under commercial speech standards. (16)
A divided panel of the D.C. Circuit denied the petition for review. (17) Writing for the panel, Judge Tatel (18) began by rejecting Spirit's claim that the rule was arbitrary and capricious. (19) He explained that the total price provision retained the key language of existing regulations requiring airlines to disclose the total price of tickets and that DOT had interpreted the regulations to require that airlines state the total price explicitly. (20) Judge Tatel, noting that DOT had relied on numerous comments to support the change, reasoned that Spirit had not shown that DOT acted arbitrarily. (21) Moving on to the prominence provision, Judge Tatel argued that the rule merely required that the total price be the most prominent, which was a reasonable way to "prevent airlines from confusing consumers about the total cost." (22)
Judge Tatel also rejected Spirit's First Amendment arguments. (23) Before discussing the merits of the constitutional claims, he considered which of three possible standards of review should apply. (24) First, the strict scrutiny standard governs laws restricting political speech. (25) Second, the standard articulated in Central Hudson Gas & Electric Corp. v. Public Service Commission (26) applies to most laws burdening commercial speech. (27) Under Central Hudson, a restriction on commercial speech is permissible if (1) the government's interest is substantial, (2) the restriction directly advances that interest, and (3) the restriction is no more extensive than necessary. …