Freedom of Speech: Vape Shop Owner Sues Oregon

Portland Vape Shop Owner Sues Oregon Health Authority

A metallic rack with the urgent warning “Censor Before Stock!” has become the focal point of a free speech lawsuit. The issue in question: Have the restrictions on e-juice imagery and packaging gone too far? Paul Bates, owner of Portland based Division Vapor, argues that the Oregon Health Authority has overstepped its bounds and the issue is being thrown to courts. In a lawsuit filed at Multnomah County Circuit Court, Bates says that Oregon’s packaging restrictions amount to an assault on his free speech. Commercial free speech is protected by Oregon’s robust Bill of Rights. At least that is the case being made by the libertarian think-tank the Goldwater Institute, which outlined their case and support of Bates in a press release. At issue are censorship stickers. They must be applied to any e-juice that runs afoul of Oregon’s wide-ranging interpretation of what is considered “packaging attractive to minors”. It turns out that what the state considers enticing to children, Bates considers to be informative and factually accurate descriptions of products being sold legally.

Packaging Attractive to Minors

The Oregon Health Authority considers a fairly wide range of imagery to be attractive to minors. It is possible to see the logic behind deeming “cartoons, celebrities, mascots and fictitious characters played by people, or other people likely to appeal to minors”, as being a legitimate concern. The ban on toys, sports equipment, and animals adheres to the same sort of thinking. Alas, my line of e-juices based on James Garner TV characters has been shot down before it could ever take flight. Maverick Strawberry and Rockford Firebird will never hit the store shelves now. What is not a joking matter is that Oregon has fully embraced the old fruity flavor fallacy: the belief that fruit/dessert flavored e-juices are manufactured to hook children. The state expressly bans advertising and labels that contain candy, desserts, soda, food or beverages with sweet flavors including fruit or alcohol. That is right. Fruit. Which lends itself to the question:
Is there a difference between Doc McStuffin’s Furby Candy flavored e-juice and a product that features a picture of a watermelon?
This is the core of the controversy and lawsuit. You literally cannot include words like apple, watermelon or strawberry on e-juice packaging in Oregon. Even at establishments where minors are barred from entry. At Division Vapor, fruit names and images have to be covered by outsized stickers. This impedes their ability to do business because majority of adults prefer these flavors. But you would never guess that based on recent, hysterical coverage of the teen vaping crisis. The mainstream narrative seems to be that these flavors are so prevalent because they appeal to children.

Bates v. Oregon Health Authority

The lawsuit attacks the constitutionality of such labeling restrictions:
 “These rules are content-based speech restrictions on protected speech. They are also vague, incomprehensible, and overbroad, and they censor truthful, non-misleading speech about legal products. For instance, under these rules, a vape shop is forbidden from putting the word "strawberry" or a picture of a strawberry on the label of a strawberry-flavored vaping liquid.”
According to the lawsuit, “these censorship stickers make it difficult for customers to differentiate between vaping fluids.” Due to this wide reaching definition of what is enticing to children, “Division Vapor has been forced to cease selling certain product lines because the labels must be completely covered by censorship stickers, rendering sale of these products economically impracticable.” Customers are denied the opportunity to read product labels and must rely on employees to obtain information that would otherwise be readily available. The business incurs an additional expense because of the time they must dedicate, amounting to several hours a week, to individually censor both images and words on e-juice bottles. All of this at an establishment that does not admit anyone under the age of 21. If the amount of time and effort that Division Vapor dedicates to applying these stickers does not seem to be that great of a burden, consider the constitutional implications instead. The violation of constitutional rights provides sufficient grounds to sue. A right without a remedy is not a right at all. Citizens must be able to assert their constitutional rights both offensively and defensively. In this case, suing the government for relief was the only option Division Vapor had.

Freedom of Speech in Oregon

The Oregon Constitution has some of the strongest free speech protections in the US, “No law shall be passed restraining the free expression of opinion, or restricting the right to speak, write, or print freely on any subject whatever.” The Goldwater Institute describes this as the “Doctrine of Total Freedom of Expression.” Unless there is a legal precedent, the government cannot censor speech. This applies to both individuals and businesses. The Goldwater Institute argues that, “The government may indeed have an interest in protecting children from things that can harm them, but that interest does not give government officials carte blanche to censor speech, between adults, about products that are legally allowed to be sold in the state.”

Past Supreme Court Decisions

Ideally, this issue will be worked out quickly and the Oregon Health Authority will tweak their approach to protect businesses, deter minors from vaping and keep the obstacles confronting adult vapers to a minimum. It is likely that the issue will not be resolved so cleanly, in part because there are a number of seemingly contradictory Supreme Court decisions that may serve as a precedent. The prevalence of zombie vaping myths and the relentless campaigning of anti-vaping hysterics who fight tirelessly for flavor bans have created an unpredictable witch's brew. There are a few bright spots, such as when Iowa’s Attorney General Thomas Miller blasted the new FDA regulations and came out in support of harm reduction, but there is no question that we are an industry under siege. From new FDA regulations on e-cigs to proposed Senate bills, everyone seems to have a solution for the “teen vaping epidemic”.

The Central Hudson Test

At the Federal level, there are fewer protections provided to “commercial speech” when compared to the individual’s right to free speech. The Central Hudson test, a four step analysis, was developed by the Supreme Court in 1980 to determine when commercial speech can be censored. It was formulated in response to a law that prohibited electrical providers from advertising during the 1970s energy crisis, and was designed to serve as the definitive rubric through which commercial speech is analyzed.

The 4 Prongs of the Central Hudson Test

  1. Is the expression protected by the First Amendment? For speech to come within that provision, it must concern lawful activity and not be misleading.
  2. Is the asserted governmental interest substantial?
  3. Does the regulation directly advance the governmental interest asserted?
  4. Is the regulation more extensive than is necessary to serve that interest? There must be a "reasonable fit" between the government's ends and the means for achieving those ends.
These 4 prongs set the table for an interesting case. Division Vapor is engaged in lawful activity and operates an establishment where minors are not admitted.  But there is also no debating the second point. The asserted government interest is substantial and not really open for debate: Oregon wants to keep vaping products out of the hands of minors. The outcome should be determined by the final 2 prongs. The third prong can be addressed empirically. Gates and the Goldwater Institute can make a strong case against the labeling restrictions. Covering images of apples at his store does nothing to keep vaping products out of the hands of minors. Division Vapor does not admit individuals under the age of 21. Anyone in the store is of legal age to buy the product. The fourth prong is problematic because it has the potential to set a legal precedent that could theoretically hurt the vaping industry. An unfortunate but conceivable outcome is that a labeling ban on fruit names will be upheld. A much worse outcome is if the court decides to legislate from the bench. If the court concludes that banning a wide swathe of names and images is a reasonable fit for the governments stated purpose of reducing use of e-cigarette use by minors, could this create an opening for an outright ban on these flavors?

Impossible to Predict the Outcome

Unfortunately, the Central Hudson test has proven to be quite elastic in practice. In the controversial Posadas de Puerto Rico Associates v. Tourism Co. of Puerto Rico, a narrow 5-4 decision upheld that the Puerto Rican government could restrict casino advertising from targeting local residents, even if the activity was legal and advertising to tourists was permitted. Mostly ignored as a precedent, there have been calls for this decision to be officially overruled but it still stands today. Posada v. Puerto Rico is a cautionary tale about the unpredictable nature of lawsuits. Hovering like an ominous specter behind the Oregon e-juice labeling rules is the flavor ban, an avowed goal of anti-vaping activists for several years. If Bates does not prevail in court, a catastrophic chain reaction could ensue: a precedent setting case that opens the doors for a total ban on fruit flavors. Adverse outcomes are always a risk in court, especially when anti-vaping hysteria has reached a fever pitch in recent months. It takes courage to assert your rights in the midst of such public furor, but freedom of commercial speech is a right worth fighting for. Clearly, Gates and the Goldwater Institute think the Oregon Health Authority's laws are vulnerable because of their outrageous scope. Hopefully, the timing of this lawsuit is right and the embattled business owner can strike a blow against regulatory excess.

Liquormart, Inc. v. Rhode Island

A more favorable lawsuit was cited in the lawsuit. Justice Stevens wrote the following in his 1996 opinion on the Supreme Court case Liquormart, Inc. v. Rhode Island, “It is a mistake to assume that commercial speech was not entitled to protection under the First Amendment.” This case set an important precedent: legislatures may not promulgate total bans on truthful commercial advertisements. In a bid to promote temperance, Rhode Island had banned listing liquor prices in advertisements.  Although no price was listed on Liquormart's original advertisement, the state viewed placing a “Wow” graphic next to an image of rum and vodka bottles to be in violation. The Supreme Court found that the State of Rhode Island violated the first amendment rights of Liquormart when they fined the company $400.00 for implying that they had low liquor prices. Lower courts had ruled against Liquormart, ruling that the 21st Amendment permitted Rhode Island to restrict liquor advertising. The Supreme Court ended up reversing this decision.
“Bans that target truthful, nonmisleading commercial messages rarely protect consumers from such harms. Instead, such bans often serve only to obscure an “underlying governmental policy” that could be implemented without regulating speech. In this way, these commercial speech bans not only hinder consumer choice, but also impede debate over central issues of public policy.”- Justice Stevens

Protecting the Free-Speech Rights Of Businesses

The Goldwater Institute is seeking similar relief for Bates. It is hard to argue with their conclusion, “Just as our democracy depends on the protection of free speech about political issues, so our market based society depends on protections for the free-speech rights of businesses and of entrepreneurs like Paul Bates.”

Responsible Business Practices

A salient issue in this lawsuit is that no one under 21 is admitted into Division Vapor. We also take age-verification seriously at Vapor4Life. We rely on Veratad, the industry leader in age verification technology. This is the same system that is used by the largest companies selling age restricted products online including vaping supplies, ejuice, alcohol and sports betting. Rather just a meaningless check box, this system compares purchaser data against multiple trusted data sources. In addition, all of our sales and customer service team members have completed We Card training.  We Card is the industry leading standard for in-store age confirmation.  In fact, we exceed the local legal requirement and card all customers regardless of age at our Northbrook Vape Shop. Incidents such as a recent Chicago crackdown on e-juice sellers do not reflect well on the industry. It is crucial that we keep our products out of the hands of minors. This can and actually is being accomplished. The vast majority of underage vapors obtain their devices through social contacts. On the flip side of the coin, the oft-vilified convenience stores and gas stations complied with FDA age verification standards almost 97 percent of time during a series of official checks this summer. It is unclear how a sticker covering an apple image furthers the goal of reducing teen vaping in any way, shape or form. Hopefully, commonsense will prevail sometime soon.

Public Sentiment

There is the potential that this lawsuit will be dismissed or worse still set a precedent for increasingly punitive restrictions on e-juice and vaping advertisements.  Timing is crucial for lawsuits of this nature. Public sentiment towards vaping is not favorable at the moment due to the FDA's e-cig new regulations and constant coverage of what is described as a teen vaping crisis. That said, Oregon's restrictions are particularly onerous and whether their laws meet all the required prongs of the Central Hudson test is open for debate. Challenging the government while the fortunes and public standing of vaping are at low-ebb is a risky call but there is no reason to think regulators will ease up unless someone stands up to them. Mr. Bates should be applauded for possessing the courage to fight back through the legal channels afforded him as a business owner and citizen. Even if the Oregon e-juice laws were not costing him one red cent, his right to free commercial speech is worth defending.