Privacy Law

Privacy Laws and Strict Scrutiny

by Evan Enzer

It’s becoming standard for trade groups that oppose privacy legislation to claim that strict scrutiny applies to privacy statutes, and therefore, those laws presumptively violate corporations’ free speech rights. Lawyers have offered this argument in cases challenging the Illinois Biometric Information Privacy Act and in statements against California’s Age-Appropriate Design Code, among other examples. This argument has not been a winning one. A Maine court went so far as to call it a “shoot for the moon” claim. But is the argument legally sound? The evidence suggests not.

The idea that strict scrutiny should apply to privacy laws is strained but easy to understand. Privacy legislation arguably regulates speech because it affects how “information might be used or disseminated.” Privacy laws also typically regulate the use and dissemination of information for profit, so they are often “commercial speech” regulations. “Content based” restrictions are usually subject to strict scrutiny, but most courts apply Central Hudson intermediate scrutiny to all commercial speech limitations.

The Supreme Court added confusion to the commercial speech test in Sorrell v. IMS Health, a case it decided over ten years ago. The Sorrell Court ruled that a state law prohibiting pharmacies from selling certain medical records to pharmaceutical companies was “content based.” The content based classification was familiar to First Amendment law but had not been applied in commercial speech cases like Sorrell. But because the law was content based, the court said it would normally apply “heightened-judicial scrutiny” to the statute. 

Contrary to what some assume from Sorrell’s lengthy pontificating, “content based” distinctions and “heightened scrutiny” had no part in Sorrell’s operative reasoning. The Court did not explain what it meant by “heightened judicial scrutiny” and went on to apply a “special commercial speech inquiry” analogous to the Central Hudson test. It did not matter whether the law was content based or not. Some think “heightened judicial scrutiny,” as the phrase is used in Sorrell, is synonymous with “strict scrutiny,” but the Court deliberately chose to apply intermediate scrutiny in that case. Sorrell did little more than reaffirm Central Hudson.

Some think Reed v. Town of Gilbert expanded Sorrell to apply strict scrutiny to any content based regulation, but this is not true. Reed includes broad language, but it did not mention commercial speech. It only reaffirmed that strict scrutiny usually applies to facially and as-applied content based laws.

New dicta in Austin v. Reagan National Advertising supports a limited reading of Reed. Austin’s majority does not speak to the proper standard to apply to content based commercial speech. Still, it does repudiate one expansive interpretation of Reed that would have expanded traditional notions of what qualifies as a content based law. Rejecting one broad interpretation of Reed suggests the Court may reject others. Two of the three remaining justices that joined the majority in Sorrell (Alito, Roberts, Thomas) also voted with the majority in Austin.  Alito cited Sorrell in his concurrence to claim that “regulations of commercial speech are analyzed differently” than noncommercial  speech.  Roberts joined Austin’s majority in full. It seems these justices are not eager to apply strict scrutiny to commercial speech as Austin’s dissent (drafted by Thomas) argued is proper.

Sorrell and Reed have had almost no impact on commercial speech. Most circuits have affirmed that Central Hudson applies in commercial speech cases, even when the regulation is content based. Only the Sixth Circuit has held otherwise, ruling that strict scrutiny applies to any content based rule. The Sixth Circuit’s reasoning finds less support in precedent than the majority view. It cites cases that either do not concern commercial speech or were partly overruled by Austin. It also cites American Association of Political Consultants v. Barr, a case that explicitly did not change the traditional commercial speech analysis and left commercial speech regulations in place.

It seems clear that strict scrutiny does not apply to commercial privacy regulations currently, but the Supreme Court has not entirely ruled it out. While the Sixth Circuit’s jurisprudence adds some legitimacy to the idea, the Supreme Court has ignored Sorrell’s most ambitious language, rejected one expansive interpretation of Reed, and six justices do not appear eager to change commercial speech precedent.

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