030719 Beef Ad Program Ruled Unconstitutional

Washington (AdAge.com) - An federal appeals court ruled that the beef industry's marketing program is unconstitutional because it violates the free speech rights by forcing beef producers to pay for the ads.

The decision by the U.S. Court of Appeals for the 8th Circuit upheld a lower-court ruling against collecting marketing fees from cattle producers that went to the Cattlemen's Beef Promotion and Research Board. The fee, $1 per head of cattle, was authorized under 1985's Beef Promotion and Research Act.

$80 million raised a year

The mandatory marketing had been challenged by Livestock Marketing Association, which had originally gone to court seeking a new referendum as to whether to continue the program, which raises $80 million a year. About $13 million of that is spent on ads, from Publicis Groupe's Leo Burnett USA, under the tagline "Beef. It's what's for dinner."

The ruling by the three-judge panel Tuesday also throws into further question the fate of other commodity marketing programs from orange juice to milk. An appellate court decision on a second ad program, for pork, is imminent.

The appellate court said the beef program is identical to a mandatory advertising program by the mushroom industry that the U.S. Supreme Court in 2001 ruled was unconstitutional.

Infringing free speech rights "We conclude that the government's interest in protecting the welfare of the beef industry by compelling all beef producers and importers to pay for generic beef advertising is not sufficiently substantial to justify the infringement on [cattlemen's] free speech right," the court wrote.

Eric Davis, president of the National Cattlemen's Beef Association, issued a statement yesterday saying his group is "deeply disappointed" by the ruling and that "the beef industry would not be as successful as it is today" without the marketing program.

Agriculture Secretary Ann M. Veneman said she was "disappointed." She said her agency "regards such programs, when properly administered, as effective tools for market enhancement. We are consulting with the U.S. Department of Justice to determine the next steps regarding this matter."

The Livestock Marketing Association, meanwhile, praised the decision. The association's president, Billy Perrin, said the ruling "affirms all American beef producer's First Amendment, free-speech right."

Confusing ruling

Ad groups said the Supreme Court's decision in the mushroom case is confusing because the court attempted to draw a line between situations in which advertising is the "principal object" of collecting fees, which is unconstitutional, and instances when it isn't the main reason.

Dick O'Brien, executive vice president of the American Association of Advertising Agencies, said the case may force the Supreme Court to take another look at its earlier ruling.

"It may prompt the justices to more clearly place all association advertising back under the protection of the First Amendment," he said.

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