Hanna and Vesilind: Supreme Court doesn’t look favorably on Vermont’s David v. Goliath style arguments

Editor’s note: This analysis of the U.S. Supreme Court ruling in Sorrell v. IMS Health Inc., is by Vermont Law School professors Cheryl Hanna and Pamela Vesilind.

Anna Nicole Smith seems to be haunting Vermont Attorney General Bill Sorrell.

Today, the U.S. Supreme Court issued its opinion in Sorrell v. IMS Health, striking down Vermont’s prescription confidentiality law as a violation of the First Amendment. The Court also issued its opinion in Stern v. Marshall, holding that the estate of the late Anna Nicole Smith does not get $88 million from her now deceased husband’s estate. Back in 2006, when the Court heard arguments in Randall v. Sorrell, the case striking down Vermont’s campaign finance law, the Court also heard an earlier version of Smith’s financial battle. The troubled celebrity model was in the audience that day and no one paid much attention to Sorrell.

But today’s Sorrell opinion should warrant great attention as its implications for the First Amendment and corporate speech could be sweeping. The Court, in a 6-3 opinion by Justice Kennedy, held that Vermont’s law, which restricted pharmaceutical companies from purchasing information about doctor prescription patterns, a practice called “detailing,” violated the First Amendment. In a strongly worded opinion, the Court criticized both Vermont’s Attorney General for changing his position on the scope of the statute during the course of the litigation, and the Vermont Legislature for passing such a broad prohibition on speech.

The law, the Court said, lacked coherence and careful crafting. The tone of the opinion suggests the state was unsophisticated and inattentive to the demands of the Constitution in both its drafting and its interpretation and intent of its own law.

But the Court’s decision doesn’t just strike down Vermont’s law. Rather, because the law itself so blatantly targeted pharmaceutical companies while allowing just about anyone else to access physician data, it gave the Court an opportunity to expand the rights of companies to engage in targeted marketing, particularly when medicine and public health are at issue.

When Vermont restricted the use of “detailing,” it was essentially restricting speech by an industry it didn’t like. The consequence of that, the Court held, is to withhold otherwise true and accurate information from consumers. If state tries to do so, it must have, in plain English, a really, really good reason. But Vermont couldn’t come up with a really, really good reason. The law didn’t protect physician privacy, it didn’t lower the cost of medical services, and it didn’t promote public health.

What the law did, the Court said, was suppress speech that was “too persuasive” and contrary to the state’s own policy goals of promoting generic drug use. In essence, the Court said Vermont had engaged in censorship for political reasons. The state may not like pharmaceutical companies, but it doesn’t have the right to keep them quiet.

The dissent, authored by Justice Breyer, is primarily concerned that the Court’s decision opens the floodgates for private information to be used by private industries to enhance their bottom lines. The decision has two significant implications: First, states will now likely have a much harder time restricting the use of data, which is much more easily garnered in the digital age, for targeted marketing. This leaves little room for states to regulate all sorts of personal information. Second, Vermont’s unapologetic targeting of pharmaceutical companies simply did not play well in the Court.

This state-versus-industry political dynamic is also at issue in Vermont’s dispute with Entergy over the future of the Vermont Yankee nuclear plant. While that case involves different constitutional questions, the Court’s ruling today shows it doesn’t like Vermont using its regulatory power to “shut down” companies that engage in practices that are contrary to its own political values.

In both the 2006 Randall campaign finance case and today’s Sorrell decision, Vermont compromised constitutional precision in favor of political popularity, positioning the state as David and financially powerful voices as Goliath. In both cases, the Court saw it the other way around. That doesn’t bode well for Vermont if, as expected, the Vermont Yankee legal dispute ends up before the Supreme Court. If it does, not even another Anna Nicole Smith case will likely distract the justices from their concern over Vermont’s 0-2 record on these key constitutional matters.