Appeals court blocks S.F. law on ads for soda

San Francisco’s groundbreaking effort to curb soda consumption by requiring health warnings in display ads hit a judicial wall Tuesday when a federal appeals court barred enforcement, saying the messages were onesided and would violate advertisers’ freedom of speech.

The city ordinance, the first of its kind in the nation, was passed unanimously by the Board of Supervisors in 2015 and was scheduled to take effect in July 2016 but has been put on hold by the courts during a legal challenge by the beverage industry. It would require display ads for sugar-sweetened drinks to devote 20 percent of their space to a warning that drinking such beverages

“contributes to obesity, diabetes and tooth decay.”

The warning language would specify that the message comes from the city, not the advertiser. But the Ninth U.S. Circuit Court of Appeals in San Francisco said free speech includes the right of advertisers to refuse to convey warnings about their products, except when the warnings are clearly factual.

Warning labels saying that cigarettes pose a risk of cancer, for example, are clearly factual, but San Francisco’s message misleadingly implies that sugary drinks are more dangerous than other highcalorie products and pose health hazards regardless of the user’s overall diet or lifestyle, the court said.

“By focusing on a single product, the warning conveys the message that sugar-sweetened beverages are less healthy than other sources of added sugars and calories,” Judge Sandra Ikuta said in the ruling by a three-judge panel.

She noted that the U.S. Food and Drug Administration has declared that added sugars “can be part of a healthy dietary pattern when not consumed in excess amounts.” San Francisco did not specifically advise against “overconsumption” of sugared beverages or say they “may contribute” to certain illnesses, but issued an unqualified and thus inaccurate warning, Ikuta said.

Although the U.S. Supreme Court has allowed the government to regulate advertising more closely than individual speech, the law “does not allow the state to require corporations to provide one-sided or misleading messages, or to use their own property to convey an antagonistic ideological message,” Ikuta said.

She also said the 20 percent ad space allotted to the warning would leave advertisers “little room to communicate their intended message.” One member of the panel, Judge Dorothy Nelson, said she would block enforcement of the ordinance solely because of the size of the message, without deciding whether it was misleading.

The ruling overturned a decision in May 2016 by U.S. District Judge Edward Chen of San Francisco, who said the city’s message was “factual and accurate” but agreed to delay enforcement of the ordinance while the industry appealed.

John Coté, spokesman for City Attorney Dennis Herrera, said city officials were disappointed by the ruling and were examining their options, which could include a request to the full court for a rehearing. A more indignant reaction came from state Sen. Scott Wiener, D-San Francisco, who sponsored the ordinance as a city supervisor.

“Apparently, corporate free speech matters more than the health of our children,” Wiener said in a statement. “If these corporations are going to spend billions targeting our communities with misleading advertisements that make it seem like drinking sodas is all happiness and rainbows, we should require them to add a little honesty in the form of a simple warning label.”

The American Beverage Association, which led the legal challenge, praised the ruling.

“America’s beverage companies believe there are better ways to help people reduce their sugar consumption,” the association said. “That’s why we’re taking steps to reduce sugar in our beverages, offer more choices with less sugar and put calorie information up front so people can make informed decisions.”

The court recognized the importance of “the right not to speak,” said Attorney Richard Samp of the Washington Legal Foundation, which filed arguments supporting the beverage industry.

“When government wants to speak, it should do so itself,” through public-service announcements, “and not compel other people to speak,” Samp said.

He said the ruling cast doubt on government efforts to require manufacturers of food products to disclose the use of genetically modified organisms, or GMOs, which are regarded as safe by most but not all scientific organizations.

A federal law enacted last year will require manufacturers of GMO products to disclose the information in codes that consumers can detect by scanning packages with their smartphones. The law has not yet taken effect or been challenged in court.

San Francisco has taken action on other fronts to try to discourage soda consumption. City voters in November, along with voters in Oakland and Albany, approved a penny-perounce tax on sugared drinks, following Berkeley’s passage of the nation’s first such tax in 2014. Bob Egelko is a San Francisco Chronicle staff writer. Email: begelko@ sfchronicle.com Twitter: @egelko