National Association of Manufacturers, et al., v. U.S. Securities and Exchange Commission (2015)

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Status: Closed

Legal Issue

Whether the court should grant en banc review of National Association of Manufacturers, et al. v. U.S. Securities and Exchange Commission, given the panel’s novel holdings that, if broadly adopted, would have a significant impact on the robust mandatory disclosure regimes required in public health and safety.


This case is about mandatory disclosure laws, which play a crucial role in protecting public health and safety and are critical in tobacco control  First, a little background:  In R.J. Reynolds v. FDA (2012), the U.S. Court of Appeals for the D.C. Circuit held that the U.S. Food and Drug Administration’s requirements that certain graphic warnings appear on cigarette packages violated the First Amendment. The majority in that case refused to apply Zauderer v. Office of Disciplinary Counsel (1985), explaining (1) that Zauderer applies only where the disclosure is factual and uncontroversial, and the graphic warnings were playing on emotion rather than conveying factual information, and (2) that Zauderer applies only where the government’s interest is in preventing deception of consumers, whereas here the interest was in making people quit smoking. The court then applied Central Hudson Gas & Electric Corp. v. Public Service Commission, under which the law failed because the court felt there wasn’t evidence to show that the proposed warnings would directly cause a material decrease in smoking rates.

In April 2014, the Consortium filed an amicus brief in American Meat Institute v. United States Dept. of Agriculture. That case involved an industry challenge to a federal regulation mandating detailed county-of-origin labeling for meat products offered for sale in the United States. The issue before the court was which test should be used when reviewing a government requirement that factual information be disclosed for reasons other than preventing consumer deception. In July 2014, the full court upheld the constitutionality of the USDA mandatory disclosure rules, applying Zauderer, and held that disclosures could be required for reasons other than preventing deception. Even with that victory, we knew that the court’s opinion, while favorable, left some unanswered questions.

Enter the National Association of Manufacturers v. U.S. Securities Exchange Commission (Conflict Minerals) case. Pursuant to a law passed by Congress in 2010 in response to human rights violations in the Congo and armed groups profiting by minimally regulated mining operations, the Securities Exchange Commission (SEC) adopted rules requiring financial firms to disclose whether their supply chains were “conflict-mineral free.” The National Association of Manufacturers challenged the SEC rules arguing, among other things, that the disclosure requirements violate the First Amendment. Amnesty International intervened and became a party in the case, supporting the SEC rules. In August, the three judge panel held that the disclosure requirements do indeed violate the First Amendment, even when using Zauderer. The two-judge majority said that (1) the SEC needed to conduct a before-the-fact assessment of the effectiveness of the disclosure, (2) Zauderer only applies to disclosures at the point of sale and in labels, not in this type of situation, and (3) information disclosed related to hot-button issues may not meet the hurdle of being “factual and uncontroversial.”

The panel’s decision conflicts directly with American Meat Institute and, if left unchallenged, would have the effect of requiring that the government conduct difficult and burdensome studies to conclusively prove disclosures’ effectiveness before they ever go into effect. In addition, the decision would place inappropriate limitations on where Zauderer applies; that lenient standard should cover not only point-of-sale requirements and warnings on labels, but also other types of disclosures including those on industry websites or in the places ordered by Judge Kessler in the RICO case. Finally, given that the tobacco industry ensures that tobacco control is always a hot-button issue, following the reasoning in National Association of Manufacturers could end up meaning that no factual, but contested, tobacco warning statement could ever be required.

On October 14, 2015, the Tobacco Control Legal Consortium filed an amicus brief supporting the appellees’ petitions for en banc review of the 2-1 panel Opinion from August that interpreted Zauderer in a manner that was inconsistent with the decisions of other circuits and the D.C. Circuit itself.  Joining us on the brief was the American Cancer Society Cancer Action Network, the Campaign for Tobacco-Free Kids, the National Association of County and City Health Officials, the Public Health Law Center, and Truth Initiative. Our brief argues that mandatory disclosure laws are critical in promoting and protecting public health and safety; that other courts have interpreted Zauderer broadly, based on the First Amendment interests at stake; and that Zauderer applies to “uncontroversially true factual disclosures,” regardless of their impact. The outcome of this case will directly impact the graphic warning requirement that the U.S. Food and Drug Administration hopefully will develop, the ability of local governments to require stores to post warnings about tobacco products, and disclosure of other information about tobacco products or industry practices.


On November 9, 2015, the D.C. Circuit denied rehearing en banc, leaving in place this dangerous precedent. In early 2017, the SEC and the Trump administration signaled their intent to suspend the remainder of the conflict minerals rule.