- A federal judge granted the beverage industry an injunction pending appeal to put on hold proposed warning labels for sugary beverage advertisements in San Francisco. The ordinance would have gone into effect July 25.
- Last month, the same judge declined the American Beverage Association's request for a preliminary injunction because of the unlikelihood that a First Amendment argument would succeed or that the industry would suffer irreparable harm as a result of the warning labels.
- In a follow-up ruling Tuesday, the judge granted the injunction pending appeal so the U.S. Court of Appeals for the Ninth Circuit could decide how it would handle compelled disclosure in a case that involved public health and safety. While the appeal could take months, the case may be expedited to limit hardship on the city, the judge said.
The ruling is at least a minor victory for the industry, pending what the appeals court has to say. The federal judge wouldn't grant the longer-term injunction the ABA was originally after, but the shorter-term injunction buys the industry time to refine its argument and plan its next move.
The judge shares the industry's concern that the warning label would be required to take up a significant amount of label real estate — about 20%. Manufacturers might need a portion of that space to include language that explains the warning label and what it signifies on that product.
The judge may not believe ABA's original arguments have merit, but he does understand the need to proceed with "an abundance of caution" in this landmark case, a spokeswoman for San Francisco City Attorney Dennis Herrera told The Wall Street Journal.
If the ordinance goes into effect, other cities could look to San Francisco as an example of how to deal with high sugar consumption and rising obesity rates — especially if the ordinance appears to curb these habits. Manufacturers of both sugary drinks and other sugary foods could have a much larger issue on their hands (besides the new added sugar line in the updated Nutrition Facts panel).
Baltimore is considering a proposal similar to San Francisco's warning labels but would require warning labels on advertisements and also in stores. That could create a new set of challenges for manufacturers if passed.
Berkeley, CA, already made similar history when it passed the first U.S. city soda tax in 2014. Philadelphia may be next, as a city council committee voted earlier this week to approve an amended version of its own proposed 1.5 cent-per-ounce tax on sugary and diet drinks. Though, it isn't the 3 cents-per-ounce tax the mayor originally proposed.