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The U.S. Court of Appeals for the D.C. Circuit April 4 agreed to rehear en banc a March 28 panel ruling that a group of meat industry representatives was unlikely to succeed in their challenge to a rule revising meat labeling requirements and therefore were not entitled to a preliminary injunction against its implementation (Am. Meat Inst. v. USDA, D.C. Cir., No. 13-5281, 4/4/14; Am. Meat Inst. v. USDA, 2014 BL 86913, D.C. Cir., No. 13-5281, 3/28/14).
The vacated opinion extended the holding from Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (1985), which holds that regulations requiring factual, noncontroversial commercial speech need only be reasonably related to a state interest, to situations where curing consumer deception is not the state interest.
The meat industry representatives had argued before the panel that the higher standard announced in Cent. Hudson Gas & Elec. v. PSC of New York, 447 U.S. 56 (1980), should apply.
Both sides expressed confidence that they would be successful under either standard on rehearing.
Mark Dopp, senior vice president for regulatory affairs and general counsel of the American Meat Institute, said that it was difficult to discern the government interest in requiring labeling that he asserted was both costly and not demanded by consumers.
Jonathan Lovvorn, general counsel of the Humane Society of the United States and professor of animal law at Georgetown University Law Center, Washington, said that “establishing a First Amendment right to conceal information about the origin or production of a food product is both a dangerous anti-consumer policy, and totally inconsistent with prevailing First Amendment jurisprudence.”
The rule, if constitutional, would require retailers of meat other than ground meat to label their products with more specific information regarding the country or countries where the animal providing the meat was born, raised and slaughtered.
Initial Ruling Favors Regulation. The now-vacated opinion decided that AMI was unlikely to win on the merits of its case, and denied its request for a preliminary injunction. Although likelihood of success on the merits is only one factor to consider when granting a preliminary injunction, “it would be remarkable if we could find an abuse of discretion in the district court’s finding against the plaintiffs,” Judge Stephen F. Williams, writing for the panel, said.
According to Lovvorn, the decision could have “big implications for consumers, small farmers and efforts to provide more humane treatment of food animals” if affirmed en banc.
Dopp had called the panel decision “disappointing,” saying that it would “just add cost” without serving any consumer demand.
Former Rule Revised. The American Meat Institute sued to stop the 2013 version of the rule implementing the Country of Origin Labeling (COOL) statute, 7 U.S.C. § 1638a, from taking effect, and sought a preliminary injunction against it. The rule it replaces had been implemented in 2009.
Under the new rule, retailers must label their meat to indicate each country where the animal was born, raised and slaughtered, with certain exceptions when the animal was raised in more than one country. Previously, retailers merely had to label meat as a “Product of” countries where production steps had taken place.
The new rule also eliminates the allowance for “commingling,” which had allowed retailers to list on labels all countries where production steps had taken place when animals from multiple origins were slaughtered in the same day.
Commercial Speech. The heart of the panel’s decision, the focus of the en banc rehearing and the part of most interest to many of the nongovernment defendants, according to Lovvorn, was its discussion of AMI’s argument that the labeling regulation unconstitutionally compels speech.
The First Amendment argument centered on which standard to apply. Defendants argued for the more deferential Zauderer standard, which holds that regulations governing factual, noncontroversial commercial speech need only be reasonably related to a state interest.
AMI argued that Zauderer applied only when the state’s aim was preventing consumer deception, and tried to analogize the case to Int’l Dairy Foods Ass’n v. Amestoy, 92 F.3d 67 (2d Cir. 1996), which invalidated a Vermont regulation requiring dairy manufacturers to disclose the use of recombinant bovine somatotropin (rBST).
Here, the panel distinguished Amestoy on the facts, saying that the inference of potential health effects to be drawn from an rBST disclosure is different in kind than a COOL one, and more likely to be drawn by consumers.
Although this regulation is not about curing consumer deception, Zauderer should apply in this case, the panel decided. However, the panel did note that it had never held that Zauderer applies beyond the context of curing consumer deception, and invited the parties to request an en banc rehearing to decide whether or not its decision was correct.
The full circuit took up that invitation on its own initiative.
Rule Not Inconsistent. The regulation also survives review on its own terms, the panel held.
Because the statute invokes distinctions between the three phases of production throughout, it was not unreasonable for the USDA to require labeling along those lines, even though the statute, according to the AMI, allowed it only to require a list of countries of origin, the panel held.
Neither did language in the statute which might be construed as permissive render the rule unreasonable, when coupled with language later in the statute that reinforced the mandatory nature of the statute, the panel said.
Commingling Ban. AMI’s argument that the regulation unlawfully banned commingling fails because the rule “does not actually ban any element of the production process,” the panel held.
The panel acknowledged that under current practices processors could not meet the heightened labeling requirements, but this was no more an imposition than any regulation that requires changes that producers would not otherwise make.
Neither does the statute require an exception for commingling, the panel held. At best it contemplates that commingling may occur, but that does not make a regulation requiring more specific labeling unreasonable, the panel said.
The question of whether AMI had standing to challenge the rule was resolved in its favor. Although none of the plaintiffs is a meat retailer to whom the rule directly applies, the new rule forces entities further up the production chain, including the plaintiffs, to provide more information to retailers in order to allow them to comply with the new rule. This is sufficient for Article III standing under Lujans v. Defenders of Wildlife, 504 U.S. 555 (1992), the panel held.
Lovvorn speculated that retailers did not challenge the regulation because they did not believe that it would fundamentally affect their bottom line. COOL requirements might alter which meat consumers purchase, but not the amount.
The panel’s holdings regarding standing, the commingling ban and whether the rule is inconsistent with the COOL statute will not be reviewed en banc.
High Interest. The litigation attracted the involvement of a diverse array of organizations, intervening on the government’s side. In addition to representing HSUS, Lovvorn also represented a coalition including the United Farm Workers and the Organization for Competitive Markets in the litigation. The diversity was because of the broad array of interests that wanted to ensure that the USDA has the ability to require food labeling beyond what is minimally required for consumer health and safety, such as to indicate humane treatment of animals, Lovvorn said.
Terence Stewart, of Stewart & Stewart, Washington, represented several associations of meat producers. In a BNA phone interview April 2, he noted that meat producers were looking to differentiate their products, and said he hoped that the revised USDA labeling requirements would help.
The plaintiffs were meat processors and producers that sued to enjoin what AMI called a “protectionist and costly” rule that “is hurting livestock producers and meat companies while offering little benefit to consumers.”
USDA undertook the rulemaking after an arbitrator for the World Trade Organization, acting on a complaint from Mexico and Canada, found that the former rule was insufficiently precise.
Judges Sri Srinivasan and Merrick B. Garland joined the panel opinion.
Hogan Lovells US, LLP represented American Meat Institute.
Attorneys from the Department of Justice represented USDA.
BY NICHOLAS DATLOWE