Second Circuit Rejects Preemption and First Amendment Challenges to New York City's Rule Requiring Chain Restaurants to Disclose Calorie Counts on Menus
Yesterday the Second Circuit Court of Appeals affirmed the right of the City of New York to require chain restaurants to post calorie counts for items on their menus and menu boards. New York State Restaurant Association v. New York City Board of Health, No. 08-1892-cv (2d Cir. Feb. 17, 2009).
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The City's regulation requires chains with 15 or more locations nationally to display calorie content next to each menu item in the same size and appearance as the name or price of the menu item. Such chain restaurants purportedly account for ten percent of the restaurants in New York City. The regulation permits restaurants to provide additional nutritional information and to include disclaimers that calorie content may vary across servings based on serving size or quantity of ingredients. The courts previously had refused to stay the effectiveness of the regulation during the appeal, so it currently is in effect in New York City.
The New York State Restaurant Association had challenged the City's right to impose such obligations, arguing that the City's regulation was preempted by the federal Nutrition Labeling and Education Act of 1990 ("NLEA"), and that the regulation violated the First Amendment by forcing restauranteurs to emphasize calorie counts over other kinds of nutrition information. The court rejected both arguments.
The Second Circuit's unanimous opinion -- authored by Judge Rosemary Pooler and joined in by Judges Sonia Sotomayor and Jane Restani (sitting by designation from the US Court of International Trade) -- relied heavily on the so-called "presumption against preemption" recently re-articulated in Altria Group, Inc. v. Good, 129 S. Ct. 538, 543 (2008). The court observed that the presumption against preemption is heightened where the state is acting in a traditional sphere of regulation, and it posited that where there is more than one plausible interpretation of a preemption provision, "courts 'have a duty to accept the reading that disfavors pre-emption.'" NYSRA, slip op. at 12 (citing Bates v. Dow Agrosciences LLC, 544 U.S. 431, 449 (2005)); see also id. at 23-24.
To be clear, the court's analysis is solely one involving express preemption, not implied preemption. The NLEA says the statute "'shall not be construed to preempt any provision of State law, unless such provision is expressly preempted under [21 U.S.C. sec. 343-1(a)] of the [FDCA].'" Slip op. at 12 (quoting NLEA).
As for its express preemption analysis, the Second Circuit acknowledged that "the federal statutory scheme regarding labeling and branding of food is a labyrinth and interpreting the statute are a series of agency regulations that sometimes appear to conflict and are difficult to harmonize." Slip op. at 3.
Basically, the federal statute, NLEA (which amended the Food, Drug, and Cosmetics Act), has two relevant provisions. The first is Section 343(q) -- entitled "Nutrition Information" -- which requires mandatory nutrition information to be disclosed for most foods. You and I know this nutrition information as "Nutrition Facts" on the label of most pre-packaged foods. Section 343(q) expressly states, however, that restaurants are exempt from the requirement to provide such information. The express preemption provision relating to Section 343(q) preempts any state or local "requirement for nutrition labeling of food that is not identical to the requirement of [S]ection 343(q) . . ., except a requirement for nutrition labeling of food that is exempt" from this provision -- namely, restaurant food. In essence, restaurants have no obligations under -- and no preemption protection from -- Section 343(q).
The second relevant provision of NLEA is Section 343(r). Restaurants are not exempt from this section and therefore have preemption protection under it. Section 343(r) -- entitled "Nutrition Levels and Health-Related Claims" -- "prohibits the use of terms that 'characterize[]' the level of any nutrient in a food unless they conform to definitions established by the FDA, and requires that claims about the relationship between nutrients and health conditions be supported by scientific consensus." Slip op. at 6. The provision adds that statements of the type required by Section 343(q) -- which does not apply to restaurants -- that appear as part of nutrition information required or permitted by Section 343(q) are "'not a claim which is subject to this paragraph.'" Slip op. at 6 (quoting statute). The express preemption provision relating to Section 343(r) "expressly preempts state or local governments from imposing any requirement on nutrient content claims made by a food purveyor . . . that is not identical to the requirement of Section 343(r)," with certain irrelevant exceptions relating to cholesterol, fat, fiber and the like. Slip op. at 7 (quoting statute).
The Second Circuit reasoned that the text of the statutes thus was very simple: states were free to regulate nutrition information labeling ("Nutrition Facts") for restaurant food because no federal regulations applied to restaurants under Section 343(q), but were preempted from having rules different from the FDA's for nutrition content and health claims on restaurant foods because there were federal regulations for restaurants on those claims under Section 343(r).
The problem, the court recognized, was that the FDA's regulations made it difficult to distinguish "nutrition information" from "nutrition content claims." Is requiring the calorie count "nutrition information" that is not preempted? Or could it be a "nutrition content claim" that might be preempted? The NYSRA had argued that Section 343(q) applied only to pre-packaged food, and that any time a restaurant was required to provide similar information -- such as calorie content -- that was a nutrition content claim governed under Section 343(r). The FDA's regulations gave restaurants flexibility in how to present nutrition information about menu items, the NYSRA maintained, allowing for in-store signs, posters, brochures, or charts.
The court engaged in a tortured analysis of FDA regulation, the parties' proposed interpretations, and the FDA's amicus brief. Ultimately, the court sided with the FDA, concluding that a statement is "nutrition information" if it is of the type generally required or permitted by Section 343(q). Calorie counts fall squarely within that type of "Nutrition Facts," and thus -- for restaurants -- are a fair subject for local regulation, according to the court. Slip op. at 25-26.
The NYSRA also had challenged the regulations on First Amendment grounds, arguing that being forced to convey one piece of nutrition information -- calorie counts -- on menus infringed on its members' First Amendment rights because its members disagreed with the City that calorie counts were the most important factor people should consider in choosing food. The restauranteurs believed that all nutrition information must be looked at in context with the amount of energy being expended by the customer; posting only a calorie count contradicted this message, they argued. The NYSRA argued that such forced speech was unconstitutional under United States v. United Foods, Inc., 533 U.S. 405 (2001), which had held that a monetary assessment imposed on mushroom growers to fund mushroom advertisements violated the First Amendment because it compelled some growers to subsidize commercial speech with which they disagreed.
Those of you who are marginally familiar with commercial speech cases may remember the intermediate scrutiny of regulations that is required under the four-part test of Central Hudson Gas & Elec. Corp. v. Pub. Serv. Comm'n of New York, 447 U.S. 557 (1980). That test focuses on whether there are less speech-restrictive alternatives to achieve the state's legitimate governmental interest.
The Second Circuit held that the intermediate scrutiny of the Central Hudson test was not the appropriate standard for reviewing the City's regulation here. Central Hudson applies where speech is restricted, the court explained, while here the City is merely forcing disclosure of purely factual and uncontroversial information. Thus, although the regulation impacts commercial speech, the Second Circuit held that it is properly measured by the rational basis review standard of Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (1985).
Applying this rational basis review, the court cited materials indicating that there is an obesity epidemic, that people eat more calories when they eat out -- particularly at fast food chain restaurants -- than they do when they eat at home, that consumers have "distorted perceptions about how many calories food contained," and that providing calorie counts on menus (at the "point-of-decision") will help consumers make better choices. The court concluded that the City's regulation easily met the rational basis review standard.
