On December 29, the National Association of Manufactures (NAM) et al. filed their supplemental brief asking a panel of the U.S. Court of Appeals for the District of Columbia to reaffirm its holding that the SEC's conflict minerals rule violates the First Amendment by compelling corporations to label their products “not DRC conflict free.” The brief follows one filed earlier by the SEC (discussed here). At issue in the pending action is the reach of the American Meat Institute decision which found that Zauderer v. Office of Disciplinary Counsel does not apply unless the government-mandated statements are “of ‘purely factual and uncontroversial information’ about the good or service being offered.” Thus, if the label “not DRC conflict free” is found to be “purely factual and uncontroversial information” it will likely withstand First Amendment scrutiny under Zauderer and the portion of the Court of Appeals panel decision holding to the contrary will be reversed.
In support of their position that “not DRC conflict free” is not purely factual and uncontroversial information” NAM makes three primary arguments.
- First, the compelled statement is not factual in nature, but rather constitutes an ideological judgment that companies who cannot confirm where the minerals in their products originated bear some “moral responsibility for the Congo war.” Nat’l Ass’n of Mfrs. v. SEC, 748 F.3d 359, 371 (D.C. Cir. 2014). As the panel explained, the government is forcing companies to “confess blood on [their] hands” and “tell consumers that [their] products are ethically tainted.” Id.
- Second, the compelled statement is both non-factual and controversial because it is highly misleading, susceptible to interpretations that are not factually accurate. In many cases, issuers forced to make the compelled statement will have no connection to the region at all, but will be simply unable to identify the source of their minerals due to the length and complexity of their supply chains, making their compelled association with the armed conflict misleading and inaccurate.
- Third, the compelled use of the government’s “DRC conflict free” slogan is controversial because it forces companies to inject themselves into a contentious debate over the causes of a foreign conflict, to adopt the government’s loaded terminology classifying products as not “conflict free” depending on the minerals they contain, and to appear thereby to endorse the government’s view that the mineral trade is responsible for the conflict. This is a highly controversial position, with which many policy experts disagree.
The brief stresses the importance of the First Amendment aspect of the argument:
- The Supreme Court has emphasized the importance of independent appellate review of First Amendment issues, “to make sure that the judgment does not constitute a forbidden intrusion on the field of free expression.” Bose Corp. v. Consumers Union of U.S., Inc., 466 U.S. 485, 499 (1984). This “rule of independent review assigns to judges a constitutional responsibility that cannot be delegated to the trier of fact,” id. at 501, even if “in other contexts application of such a legal standard would likely be considered a mixed question of law and fact,” FEC v. Christian Coal., 52 F. Supp. 2d 45, 62 (D.D.C. 1999). Indeed, while the appellees variously describe the “uncontroversial information” requirement as a “mixed question of law and fact,” SEC Br. 4, or a “question of law” “in most instances,” Amnesty Br. 13, all parties agree that the Court should resolve the issue here de novo.
Battle lines have clearly been drawn. The ultimate decision will have important things to say about the reach of Zauderer and the ability of various governmental agencies to use disclosure regulation.