COMPANY v. KAWAMURA

Filed 2/01/08

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

THIRD APPELLATE DISTRICT

(Sacramento)

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Story Continues from Part I .

B. Gallo Presents No Persuasive Reasons for Taking
a Different Course from Johanns

Gerawan I follows the reasoning in People v. Teresinski (1982) 30 Cal.3d 822 (Teresinski) for determining whether to follow the United States Supreme Court in matters concerning free speech doctrine. (Gerawan I, 24 Cal.4th at pp. 510-513.) Decisions of the United States Supreme Court, nevertheless, are entitled to respectful consideration [citations] and ought to be followed unless persuasive reasons are presented for taking a different course. (Teresinski, supra, 30 Cal.3d at p. 836.) The Teresinski opinion recites four categories of potential sources of such persuasive reasons: (1) something in the language or history of the California provision suggests that the issue before us should be resolved differently than under the federal Constitution (ibid.); (2) the high court hands down a decision which limits rights established by earlier precedent in a manner inconsistent with the spirit of the earlier opinion (ibid.); (3) there are vigorous dissenting opinions [or] incisive academic criticism of those decisions (ibid.); or (4) following the federal rule would overturn established California doctrine affording greater rights (id. at p. 837). Gallo argues that we should reject the Johanns view because there are persuasive reasons in each Teresinski category to take a different course. Gallos arguments are not persuasive.

1. No persuasive reasons arise under either the first or fourth Teresinski categories.

a. The language and history of the California free speech provision
do not suggest that Johanns should be rejected.

As to the language and history of the California provision, Gallo submits that the reasoning in Gerawan I weighs in its favor. Gallo points to the assertion in the majority opinion that practically everything in [the California provisions] language and history mandates a different resolution. (Gerawan I,supra, 24 Cal.4th at p. 512.) However, different resolution in that context only meant different from Glickmans view that the right to freedom of speech was not implicated by a commodity assessment for generic advertising. There is no analogy between the threshold issue of implication of free speech in Gerawan I and the issues concerning government speech doctrine in this case.

All the court held in Gerawan I is that a program that requires agricultural producers to fund nongovernmental commercial speech implicates article Is free speech clause, and that a court must conduct some unspecified inquiry into whether the program violates that clause. Although the Gerawan I court engaged in a general historical discussion, quoted in part above, in support of the position that compelled subsidization of commercial speech implicates the free speech clause (Gerawan I, supra, 24 Cal.4th at pp. 494-497), no specific constitutional test can be derived from that discussion (Gerawan II, supra, 33 Cal.4th at p. 16).

Gallo argues that the history of the California provision suggests that the issue before us should be resolved differently because in a footnote^[1]in Gerawan I the majority observed that government speech means speech concerning public affairs and suggested that term does not appear to cover generic advertising under a marketing order. (Gerawan I, supra, 24 Cal.4th at p. 503.) However, this passing remark cannot count as a contrary history of interpreting the California provision. It is supported solely by citation of federal authorities and the Gerawan I opinion expressly eschews a resolution of the question soon thereafter in a subsequent footnote.^[2] Moreover, as related, the question is expressly left open in Gerawan II, supra, 33 Cal.4th at page 28. (See pp. 14-15, ante.)

There is no persuasive reason arising from the language or history of the California provision impelling a different resolution from that under the federal Constitution.

b. No established California doctrine suggests that Johanns should be rejected.

A fortiori, Gallos argument, under the related fourth Teresinski category, that following Johanns would overturn established California doctrine affording greater rights, is unsupported. There is no established California doctrine affording greater rights.

2.Johanns does not limit rights established by earlier precedent
in a manner inconsistent with its spirit.

Gallo argues that Johanns should be rejected under the second Teresinski category because it presents a departure from precedent. The rationale for the second Teresinski category is to avoid abandoning settled applications of the terms of the California Constitution every time changes are announced in the interpretation of the federal charter. (Teresinski, supra, 30 Cal.3d at p. 836, quoting People v. Pettingill (1978) 21 Cal.3d 231, 248.) The short, unsettled case law history of the application of the free speech provisions to assessments for generic advertising under marketing orders belies the notion that Johanns overturns settled law. There is no prior holding concerning the application of the government speech doctrine. This area of the law is a frontier and the second Teresinski category is inapplicable.

3. There is a dissenting opinion in and academic criticism of Johanns;
however, we find their reasoning unpersuasive.

That brings us to the remaining Teresinski category, dissenting opinions and academic criticism. Dissenting opinions and academic criticism may be a source of persuasive reasons not to follow the federal rule: [W]e have on occasion been influenced not to follow parallel federal decisions by the vigor of the dissenting opinions and the incisive academic criticism of those decisions. (Teresinski, 30 Cal.3d at p. 836.) What is dispositive is whether the reasoning in the dissenting opinions and academic criticism is persuasive.^[3]

Gallo argues, perforce, that this court should reject the view of the Johanns majority opinion and adopt the view of the principal dissenting opinion and its academic supporters. That dissenting opinion concludes that in order to render compelled subsidy of generic commodity advertising constitutional, the advertising must be explicitly labeled as coming from the government. (Johanns, supra, 544 U.S. at pp. 575-580 [161 L.Ed.2d at pp. 916-919] (dis. opn. of Souter, J.).)

The Johanns dissent reasons as follows: There is a First Amendment interest in avoiding forced subsidies. As to government speech, that interest is ordinarily satisfied because the political process serves as a check on what government chooses to say. Government speech funded by a targeted assessment is more galling to those offended in the targeted group than is the case when the subsidy is more remotely shared by every taxpayer. Because of the closer linkage, government speech funded by a targeted assessment impinges more acutely on the presumptive autonomy as speakers of those who fund that speech. Hence, greater care is required to assure that the speech is subject to effective democratic checks. A practical opportunity for political response requires that the ads so funded disclose they are speech by the government. (Johanns, supra, 544 U.S. at pp. 575-579 [161 L.Ed.2d at pp. 916-919].)

The Johanns majority opinion replies as follows: The dissent cites no prior practice, no precedent, and no authority for this highly refined elaboration‑‑not even anyone who has ever before thought of it. It is more than we think can be found within Congress shall make no law . . . abridging the freedom of speech. (Johanns, supra, 544 U.S. at p. 564, fn. 7 [161 L.Ed.2d at p. 909, fn. 7].) The [free speech precept] does not confer a right to pay ones taxes into the general fund, because the injury of compelled funding (as opposed to the injury of compelled speech) does not stem from the Governments mode of accounting. (Id. at pp. 562-563 [161 L.Ed.2d at p. 908].) The dissents reliance on the presumptive autonomy of assessment payers as speakers conflates an interest in avoiding attribution of the speech with an interest in avoiding paying for speech of the government. Apportioning the burden of funding government operations (including speech) through taxes and other levies does not violate autonomy simply because individual taxpayers feel singled out or find the exaction galling. (Id. at p. 565, fn. 8 [161 L.Ed.2d at pp. 909-910, fn. 8].)

We find the reasoning of the Johanns majority more persuasive than Justice Souters dissent. We do not agree that the posited threat of a greater likelihood of outrage and intemperate response warrants creation of a novel special disclosure requirement. If explicit disclosure ought to be required by the free speech interest, so that government speech is subject to the check of the political process, then it ought to be required across the board. We are also skeptical that such a special disclosure requirement would, as a practical matter, provide a significantly greater assurance that such speech will be subject to effective democratic checks.

In our judgment, the taxpayers autonomy interest is correctly addressed by the Johanns majority as a factual question of misattribution. Whether the individual respondents who are beef producers would be associated with speech labeled as coming from Americas Beef Producers is a question on which the trial record is altogether silent. We have only the funding tagline itself, a trademarked term that, standing alone, is not sufficiently specific to convince a reasonable factfinder that any particular beef producer, or all beef producers, would be tarred with the content of each trademarked ad. (Johanns, supra, 544 U.S. at p. 566 [161 L.Ed.2d at p. 910], fn. omitted.) If the injury is misattribution, the remedy should be to correct the misattribution and to remedy the damage, if any, attributable to the misattribution.

For all the foregoing reasons, the trial court did not err in accepting the reasoning of Johanns for use in resolving free speech issues arising under the California Constitution.

II. The Use of a Package Certification Seal Does Not Render a Marketing Order
Advertising Program Unconstitutional by Compelling Speech

Gallo contends that the trial court erred in failing to grant it relief, regardless of acceptance of Johanns. Gallo submits that the Real California Cheese package certification seal component of the advertising program renders it unconstitutional, in any event. Gallo argues that the package certification seals or labels make this a true case of compelled speech rather than one of mere compelled subsidy. Gallo acknowledges that it is not legally compelled to carry the Real California Cheese certification seals on its cheese packages. However, Gallo asserts that it is economically compelled to do so, and that compulsion renders the promotion campaign unconstitutional.^[4]

Gallo objects to the Real California Cheese message because it suggests all cheeses made from California milk are equally good. Gallo asserts it participates in such programs to recoup the milk assessment money it pays to CDFA. Gallo would rather have that money to advertise its own cheese as superior. Gallo asserts that the generic Real California Cheese seal gives the advertising advantages of a Real California Cheese brand to competing store-brand cheeses. Gallo claims that it is compelled to carry the Real California Cheese seal with the Milk Boards message or it will lose shelf space to store-brand cheeses. Gallo also complains that it cannot participate in in-store promotion events subsidized by the Milk Board unless it uses the Real California Cheese seal on its cheese packages.

Gallo points to the following passage in the majority opinion in Gerawan I for validation of its claim of harm. By way of illustration, when some producers, like Gerawan, develop and use brands in marketing their goods, and others do not, the former may find themselves disadvantaged by generic advertising in their competition against the latter. Generic advertising may portray goods as indistinctive in spite of brand, and may thereby minimize[] consumer desire to distinguish inter se. (Comment, The Effect ofGlickman v. Wileman Brothers & Elliott, Inc. on Nongeneric Commodities: A Narrow Focus on a Broad Rule (1999) 9 San Joaquin Agr.L.Rev. 95, 113.) Even when no producers develop or use brands in marketing their goods, some may find themselves disadvantaged by generic advertising in their competition against others. Generic advertising can be manipulated to serve the interests of some producers rather than others, as by allowing some to develop a kind of brand by means of funds assessed from all and then use it for their own exclusive benefit. Thus, in any given case, a producer who objects to generic advertising may not be attempting to ride free on the funds of others‑‑a familiar charge‑‑but may merely be making an effort to prevent others from hijacking his own funds as they drive to their own destination. (Gerawan I, supra,24 Cal.4th at p. 504.)

We note, preliminarily, that in this case there is no indication that the Milk Boards generic advertising was manipulated by Gallos competitors to disadvantage Gallo. Most milk producers are not cheese makers; their only discernible aim in adopting the Real California Cheese program is to create greater demand for milk. Nor is it the case that the brand-like characteristics of the program are designed to be used for the exclusive benefit of a subgroup of milk producers or cheese makers. All cheese makers are eligible for the benefits of the program.

More to the point, whether the resulting effects of a government program intervening in the economy are unfair, too unfair, or unfair enough to override the resulting advantages, is ordinarily a question of public policy assigned to the Legislature. (See, e.g., Glickman, supra, 521 U.S. at pp. 475-476 [138 L.Ed.2d at pp. 603-604].) Here, however, Gallo seeks to use its claim of unfairness on the constitutional plane, to preclude legislative choice whether to adopt or continue such a marketing order program. Thus the question is not whether Gallo suffers a disadvantage if it declines use of the Real California Cheese seal. It is, rather, whether such a disadvantage is cognizable for purposes of making out a compelled speech claim. (See, e.g., Warner Cable Communications, Inc. v. City of Niceville (11th Cir. 1990) 911 F.2d 634, 638 [A City-owned cable system, if successful, will no doubt reduce the audience for Warners speech and diminish the profitability of that speech. Such economic loss, however, does not constitute a first amendment injury].)

Gallo notes the general doctrine that government benefits cannot be denied on the basis of the exercise of freedom of speech. (See, e.g., Perry v. Sindermann (1972) 408 U.S. 593 [33 L.Ed.2d 570] [public employment cannot be denied in retaliation for the exercise of the constitutional right of free speech]; Healy v. James (1972) 408 U.S. 169 [33 L.Ed.2d 266] [school cannot deny campus recognition to organization based on radical advocacy].) Gallo also notes various statements in free speech case law on the theme that governmental action may be subject to constitutional challenge even though it has only an indirect effect on the exercise of First Amendment rights. (Laird v. Tatum (1972) 408 U.S. 1, 12-13 [33 L.Ed.2d 154, 163] [holding there is no standing to claim chilling effect of Armys surveillance of lawful and peaceful civilian political activity unless surveilled (id., at p. 2 [33 L.Ed.2d at p. 157])]; see also American Communications Assn. v. Douds (1950) 339 U.S. 382, 402 [94 L.Ed. 925, 946] [indirect discouragements undoubtedly have the same coercive effect upon the exercise of First Amendment rights as imprisonment, fines, injunctions or taxes].)

The meaning of these general pronouncements about an indirect effect on the exercise of First Amendment rights is provided by their application to facts. None of the cases Gallo cites provides an example of indirectly compelled speech that is analogous to this case. Here the government benefits are not denied in retaliation for, or to discourage or penalize, the exercise of the constitutional right of free speech.

If the government offers to pay for advertising, say for military recruitment, a media outlet can decline to place the ad on the ground it does not like the content. However, it cannot prevent any such government advertising with which it disagrees or demand a refund of a ratable portion of its taxes based on a free speech claim. Refusing to pay for government advertising unless it is run is not economic compulsion unconstitutionally compelling speech. (Cf. Rust v. Sullivan (1991) 500 U.S. 173 [114 L.Ed.2d 233] [regulations prohibiting those who take federal clinic money from engaging in abortion counseling do not infringe freedom of speech].)

Gallos core claim is analogous to that of a media outlet that cannot get paid unless it publishes the government speech. It can only derive the full benefit of the Real California Cheese advertising if it uses the Real California Cheese label on its packages. Brands, trademarks, and slogans are the staple of advertising, devices to build positive associations with products. You cannot get the full benefit of product advertising unless you use them in point-of-sale materials. If the government is not permitted to use these devices, it is effectively prohibited from government speech of this nature.

Gallos compelled speech claim is that the government must give up the Real California Cheese package certification seal or Gallo must be relieved of the obligation as a milk producer to pay its milk assessments, so that it can pursue its own advertising strategy. This, in effect, would require the government to fund Gallos speech. That is not a viable constitutional claim. The government may choose to fund only its viewpoint when the government is itself the speaker or uses private speakers to transmit specific information pertaining to its own program. (See, e.g., Legal Services Corp. v. Velazquez (2001) 531 U.S. 533, 541 [149 L.Ed.2d 63, 72].)

Gallo submits that the assessment program funding of the Real California Cheese message unconstitutionally drowns out its branded message that its cheese is superior, citing R.J. Reynolds Tobacco Co. v. Shewry (9th Cir. 2005) 423 F.3d 906, 923. However, that doctrine requires that the government speak in such a way as to make private speech difficult or impossible, such that opponents do not truly have the opportunity to communicate their views even to those who might wish to hear them. (Ibid.) Gallo concedes it could disclaim the imputed Real California Cheese message that all cheese made from California milk is equal in its own advertisements and speech. As Gallo offers no reason why the Real California Cheese seal makes it difficult or impossible to communicate its own message, that Gallo cheese is the best of the lot, its drowning out claim is unpersuasive.

Gallo suggests that this is a special case because its own money, assessed against it as a milk producer, has been used to create an advantage for competing cheese makers. However, the source of the funding, whether limited assessment or general taxation, has no bearing on whether elective speech taking commercial advantage of the positive associations of the funded advertising is compelled speech. (See Glickman, supra, 521 U.S. at p. 470 [138 L.Ed.2d at p. 600].)^[5] Most cheese makers are not milk producers. An ordinary cheese maker does not directly pay a milk producer assessment. However, presumably that cost is passed on to the cheese maker as a milk buyer, in the production cost of California milk. A compelled speech claim of such a cheese maker based on the inducement to use the Real California Cheese seal is, in principle, equal to that of Gallos claim.

Gallo also complains that participation in advantageous in-store promotions under the Real California Cheese seal are limited to cheese packaged to carry the Real California Cheese certification seal. However, this is no more offensive than that Gallo cannot get the full benefit of the program without the label. In-store promotions are an ordinary part of an integrated advertising campaign to build positive associations to increase aggregate sales. If you are eligible and want to participate you may do so. If not, you cannot garner the positive associations of the advertising program. For the reasons already given, we see no reason grounded in the constitutional free speech doctrine to preclude the government from using this device.

The trial court did not err in failing to hold the assessment program is unconstitutional on the ground that the Real California Cheese certification seal component economically compels Gallo to voice a message with which it disagrees.

DISPOSITION

The judgment is affirmed. Respondent shall recover its costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1).) (CERTIFIED FOR PUBLICATION.)

BUTZ , J.

We concur:

ROBIE , Acting P.J.

CANTIL-SAKAUYE , J.

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^[1] Footnote 8 of Gerawan I states as follows: Without contradiction by the Glickman majority, Justice Souter noted that generic advertising under Marketing Order No. 917 did not represent so-called government speech, with respect to which the Government may have greater latitude in selecting content than otherwise permissible under the First Amendment . . . . ([Glickman], supra, 521 U.S. at p. 482, fn. 2 [138 L.Ed.2d at p. 607, fn. 2] (dis. opn. of Souter, J.).) [This assertion about the Glickman dissent is incorrect; compare the text of the footnote, cited at fn. 6, ante.] Government speech is, somewhat tautologically, speech by the government itself concerning public affairs. (See [Keller], supra, 496 U.S. at p. 10 [110 L.Ed.2d at p. 12]; [Abood], supra, 431 U.S. at p. 259, fn. 13 [52 L.Ed.2d at p. 299, fn. 13] (conc. opn. of Powell, J.).) It does not appear to cover generic advertising under a federal marketing order, which is not so much a mechanism of regulation of the producers and handlers of an agricultural commodity by a governmental agency, as a mechanism of self-regulation by the producers and handlers themselves. (Gerawan I, supra, 24 Cal.4th at p. 503, fn. 8.)

^[2] Footnote 13 of Gerawan I states: Whether, and how, article Is free speech clause may accommodate government speech (see ante, at p. 502, fn. 8) is a question that we need not, and do not, answer. In its amended complaint, Gerawan did not allege facts that would show that generic advertising under the California Plum Marketing Program‑‑which is not so much a mechanism of regulation of the producers and handlers of an agricultural commodity by a governmental agency, as a mechanism of self-regulation by the producers and handlers themselves‑‑amounts to speech of this sort. Neither did the Secretary of Food and Agriculture so claim in his motion for judgment on the pleadings. At oral argument, counsel for certain of the amici curiae supporting the secretarys position attempted to raise the point. Too little, too late. (Gerawan I, supra, 24 Cal.4th at p. 515, fn. 13.)

^[3]Gallo does not relate reasoning in the academic criticism to which it points, that provides grounds for rejecting Johanns beyond those in the dissenting opinion of Justice Souter. Accordingly, we provide no separate discussion of the academic literature.

^[4]Gallo also argues that the trial court erred prejudicially in failing to make certain findings addressing this issue in the statement of decision. The trial court is required upon appropriate request to issue a statement of decision explaining the factual and legal basis for its decision as to each of the principal controverted issues. (Code Civ. Proc.,  632.) If the trial court fails to resolve a controverted issue and the record shows that the omission or ambiguity was properly brought to the attention of the trial court, the appellate court may not draw factual inferences in support of the judgment. (Code Civ. Proc.,  634.) However, where the disposition of an issue turns entirely on legal conclusions, a complaint of insufficiency of the trial courts statement of the legal basis for its decision is unavailing unless the appellants legal theory that the judgment is infirm is correct. (See 7 Witkin, Cal. Procedure (4th ed. 1997) Trial,  398, subd. (c), p. 459.) Here, as we explain in the text, Gallos legal theory, that the economic incentive to use of the Real California Cheese seal on its packaging results in compelled speech, is incorrect.

^[5]Glickman provides: Respondents argue that the assessments for generic advertising impinge on their First Amendment rights because they reduce the amount of money that producers have available to conduct their own advertising. This is equally true, however, of assessments to cover employee benefits, inspection fees, or any other activity that is authorized by a marketing order. The First Amendment has never been construed to require heightened scrutiny of any financial burden that has the incidental effect of constraining the size of a firms advertising budget. The fact that an economic regulation may indirectly lead to a reduction in a handlers individual advertising budget does not itself amount to a restriction on speech. (Glickman, supra, 521 U.S. at p. 470 [138 L.Ed.2d at p. 600].)