In a split decision Tuesday, a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit struck down a portion of an SEC rule requiring publicly traded companies to disclose whether their products “have not been found to be ‘DRC conflict free’”—a term defined to mean that they do not contain “conflict minerals” (gold, tantalum, tin, and tungsten that originate in the Congo region of Central Africa) that finance or benefit armed groups in the Democratic Republic of Congo and adjoining countries. The panel’s decision in National Association of Manufacturers v. SEC is unusual in its explicit criticism of an en banc (i.e., full court) decision of the same court, American Meat Institute v. USDA. That decision upheld country-of-origin disclosure requirements for meat labels and in the process overruled an earlier decision of the panel striking down a portion of the conflict minerals rule. This time around, the panel reached the same result by different means.
The case, like a number of other recent and pending cases around the country, involves the scope of a 30-year-old Supreme Court decision called Zauderer v. Office of Disciplinary Counsel, which provides among other things that disclosure requirements applicable to commercial speech are subject to a much more lenient First Amendment standard of review than other kinds of regulation of commercial and noncommercial speech. But the scope of Zauderer remains a major point of contention as companies push back against requirements that they disclose information about their products and practices, likening them to the compelled speech condemned by the Supreme Court in cases challenging slogans on license plates and forcing schoolchildren to recite the pledge of allegiance.
The conflict minerals decision is the latest move in a back-and-forth dialog on the D.C. Circuit over Zauderer as well as a broader wave of litigation nationally targeting requirements that companies disclose information to the public. As such, it is required reading (both Judge Randolph’s majority opinion and Judge Srinivasan’s dissent) for anyone following the issue.
At least it’s an interesting read. The majority opinion starts off with several pages criticizing the en banc ruling in Meat Institute before moving on to find three grounds, consistent with Meat Institute in the majority’s view, for declining to apply the Zauderer standard. It’s not often that you see senior circuit judges attacking recent en banc decisions of their court, and beyond that Judge Randolph’s opinion is spiced with literary references, including to Dickens, Koestler, Twain, and Orwell. Much as I love any reference to Pudd’nhead Wilson’s New Calendar, however, I’d take Srinivasan’s bottom line over Randolph’s given the choice.
By the way, Pudd’nhead Wilson’s New Calendar also notes: “It is by the goodness of God that in our country we have those three unspeakably precious things: freedom of speech, freedom of conscience, and the prudence never to practice either of them.” I wonder what Mark Twain would think of corporations claiming freedom of conscience not to describe where they get their tantalum.
Note: Public Citizen Litigation Group represents Amnesty International, which intervened in the litigation in support of the conflict mineral rule, and I am one of the attorneys assisting in the representation.