Protecting truthful advertising by attorney-cpas—ibanez V. Florida department of business & professional regulation, board of accountancy

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Edward L. Birk*
©1995 Florida State University Law Review

I. Introduction
When Winter Haven attorney Silvia S. Ibanez advertised her qualifications as a member of The Florida Bar, as a certified public accountant (CPA), and as a certified financial planner (CFP), she knew she was telling the truth about her qualifications. She also thought she was providing information to her clients and potential clients that would help them make informed choices. The Florida Board of Accountancy1 (the Board), however, saw Ibanez's advertisements quite differently. The Board attempted to reprimand her for using the initials JD, CPA, and CFP in her telephone advertisements, on her business cards, and on her firm letterhead.2 The Board proposed a reprimand and accused Ibanez of engaging in false, misleading, and deceptive advertising.3
Ibanez fought back, challenging the Board's action before a state administrative tribunal, in state court and, ultimately, in front of the United States Supreme Court, asserting her right to advertise truthful information that could be useful to potential clients.4 The Supreme Court decided in Ibanez's favor by upholding her right to advertise her professional qualifications.5 In doing so, the Court affirmed the standards for government regulation of commercial speech that it announced in 1980 with Central Hudson Gas & Electric Corp. v. Public Service Commission of New York6 and has consistently affirmed in the years since.7 The popular press heralded Ibanez's fight and the Court's decision in her case as a vindication of free speech.8 Others, however, have been less enthusiastic about the holding in Ibanez and the impact it will have on regulation of professional advertising.9
This Note examines Ibanez and considers the substantial government interests states must demonstrate before they may regulate truthful commercial speech.10 It concludes that the Ibanez Court failed in its reasoning and holding to extend—under its own precedent—the maximum possible protection to consumers who may be misled, or at least left uninformed, by professional advertising similar in content and form to that used by Ibanez.11
II. Ibanez: Attempting to Regulate Truthful Commercial Speech
As case law in general and Ibanez in particular indicate, the Supreme Court's rules for regulating professional advertising have been on a course toward increasingly well-settled doctrine.12 This trend notwithstanding,13 state interpretation and application of those rules has been less settled as state bar associations and other regulatory agencies explore their power in an attempt to prevent public disrespect for the practice of law and other professions through restrictions on otherwise protected professional commercial speech.14
A. The Facts
1. Advertising the Truth
Silvia Ibanez is a sole legal practitioner who holds degrees in business administration15 and law;16 she has been licensed to deal in securities, annuities, and insurance; she is a certified circuit court mediator; and she established her own financial planning firm in 1985 and operated it until 1988, when she started her law practice.17 She has been a member of The Florida Bar since 1983.18 As a CPA, she is licensed by the Board of Accountancy to perform the "attest" function of auditing.19 She also holds the designation of CFP, issued by the Certified Financial Planner Board of Standards, a private, non-profit group.20 Ibanez believed that all of these qualifications could be important to potential clients, so she included them on her letterhead, on her business cards, and in telephone book listings.21
2. The Complaint
The Florida Board of Accountancy issued a complaint against Ibanez after an anonymous source sent a page torn from the Winter Haven Yellow Pages directory.22 Circled on the telephone book page was Ibanez's attorney advertisement, which included the initials CPA and CFP next to her name.23 Upon investigation, the Board discovered her other uses of CPA and CFP.24 In spite of the veracity of her advertisements,25 the Board charged in its administrative complaint that she violated the Board's "holding-out" rule, which prohibited Ibanez and others from advertising her status as a CPA unless she practiced as one.26 The three-count complaint also charged that Ibanez was practicing public accountancy in an unlicensed accounting firm,27 was using a specialty designation—CFP—not approved by the Board28 and, by advertising her CPA designation, was implying that she had complied with the Public Accountancy Act's prohibition against "fraudulent, false, deceptive, or misleading" advertising.29 The Board asserted Ibanez was holding herself out as a CPA through an unlicensed accounting firm—a fact Ibanez readily acknowledged—and therefore "an uninformed person may not be able to differentiate whether she is in the practice of public accounting."30
Ibanez responded to the Board's disciplinary complaint and filed an additional complaint under the Florida Administrative Procedure Act31 challenging the validity of the Board's "holding-out" rule.32 During the administrative challenge, Ibanez freely admitted her use of the CPA designation, asserted that her legal clients derived benefit from her training and experience as an accountant, and protested the Board of Accountancy's attempt to impose jurisdiction over her legal practice.33 The hearing officer decided in favor of Ibanez, finding the "holding out" rule to be an invalid exercise of delegated legislative authority because the rule
seems intended to prohibit publication of a licensee's CPA status when that publication would confuse or mislead consumers as to whether the licensee is performing public accounting services . . . . The rule does not accomplish that intent, but rather utterly confuses a licensee as to when an activity, legitimate on its face, is proscribed and subject to disciplinary prosecution.
The Board seeks to impose disciplinary oversight to protect the public against both fraud and negligence, but one statutory and regulatory scheme ranges far beyond that legitimate purpose, contrary to the expressed legislative intent for the Board. The rule is overbroad, vague, contradictory, and ambiguous.34
In her disciplinary proceeding, Ibanez argued that she was practicing law, not accountancy, and therefore should not be subject to the Board's regulatory power.35 She argued that her advertising was nothing more than "nonmisleading, truthful, commercial speech."36 For some reason, the Board dropped its single count of practicing public accounting in an unlicensed firm, and subsequently, the hearing officer ruled in Ibanez's favor on all remaining counts.37
The Board, however, rejected the hearing officer's recommended order, substituted its own final agency order and found Ibanez guilty of "false, deceptive, and misleading" advertising.38 The final agency order reasoned that to attach the initials CPA to one's advertising was to invoke the Board's jurisdiction.39 The Board asserted that Ibanez had so invoked its jurisdiction, but then denied the Board's authority to regulate her activity as an attorney.40 This, the Board reasoned, was to render her use of the CPA designation misleading to the public because the Board protects the public by regulating CPAs. For Ibanez to flout Board jurisdiction, members reasoned, was to leave the public not knowing to whom Ibanez should answer for regulatory violations.41 The Board also held against Ibanez for her use of the CFP designation, reasoning that any use of the word "certified" to refer to any organization other than the Board "inherently misleads the public into believing that state approval and recognition exists."42
B. The Holding
Ibanez appealed the Board's final order, and the First District Court of Appeal issued a per curiam affirmance without opinion.43 The U.S. Supreme Court granted certiorari44 and subsequently reversed the Board's final order.45
Ibanez, issued on the same day as another noteworthy decision upholding First Amendment principles,46 was a strong reaffirmation of the principle that state actors must show substantial government interest if they seek to regulate truthful advertising.47
The record reveals that the Board has not shouldered the burden it must carry in matters of this order. It has not demonstrated with sufficient specificity that any member of the public could have been misled by Ibanez's constitutionally protected speech or that any harm could have resulted from allowing that speech to reach the public's eyes. We therefore hold that the Board's decision censuring Ibanez is incompatible with First Amendment restraints on official action.48
The Court unanimously upheld Ibanez's right to use the CPA designation in her attorney advertising and on her law office letterhead.49 The Court, by a 7-to-2 vote, also upheld her right to advertise her CFP status without a disclaimer identifying the organization that had conferred the designation.50

C. The Reasoning
Stated broadly, the Court was faced with two issues: whether Silvia Ibanez was subject to the jurisdiction of the Board of Accountancy even though she was practicing only law and not accountancy; and whether, in spite of the apparent truthfulness of her advertising, the Board could restrict her use of professional designations she had earned and maintained according to the requirements of reputable conferring organizations.51
Initially, Ibanez asserted that, although she was a licensee of the Board, the Board had no power to exercise jurisdiction over her because she did not engage in any professional services that could be construed as public accountancy.52 The Board argued to the Court that by using the CPA designation in her advertising, Ibanez was telling the public that she abided by all rules and regulations of the Board. But by denying the Board's jurisdiction, the Board argued that "she believes and acts as though she is not" subject to its jurisdiction.53 The Board provided no evidence beyond Ibanez's assertions denying Board jurisdiction to prove that she actually was flouting Board regulations.54 Ruling on this first issue, the Court held that regardless of the Board's ability to exert regulatory jurisdiction over her, Ibanez's beliefs alone were not grounds for sanction.55 The Court relied on Baird v. State Bar of Arizona56 in holding that neither Ibanez's beliefs nor the Board's mere assertions of her unwillingness to comply with Board regulations would be sufficient to justify official discipline:
To survive constitutional review, the Board must build its case on specific evidence of noncompliance. Ibanez has neither been charged with, nor found guilty of, any professional activity or practice out of compliance with the governing statutory or regulatory standards. And as long as Ibanez holds an active CPA license from the Board, we cannot imagine how consumers can be misled by her truthful representation to that effect.57
The Court next addressed the Board's contention that use of the CFP designation was inherently or potentially misleading, a threshold requirement for state regulation of commercial speech. The Board contended that otherwise uninformed consumers would know that the state had "certified" Ibanez as a public accountant and would therefore assume erroneously that because Florida had conferred the CPA designation on Ibanez, the State also had "certified" her as a financial planner, when in fact it was a private organization that had conferred the CFP designation.58 This, the Board asserted, would be inherently misleading.59
In rejecting the Board's claim that Ibanez's advertising was inherently misleading, the Court relied on Peel v. Attorney Registration and Disciplinary Commission of Illinois60 when it ruled seven-to-two that "[t]he Board's justifications for disciplining Ibanez for using the CFP designation are scarcely more persuasive" than its justification for sanctioning Ibanez's defiant attitude toward the Board's authority.61 Following Peel, the Court further held that absent any evidence of actual deception, the Board's "concern about the possibility of deception in hypothetical cases is not sufficient to rebut the constitutional presumption favoring disclosure over concealment."62
The Ibanez majority noted that the Peel decision left open the possibility for regulation of professional advertising when the materials had the real potential to confuse consumers.63 For example, if an organization conferring a professional designation were not well known, the potential for misleading consumers would grow as would the state's justification for regulation. The Ibanez Court, however, noted that more than 27,000 people nationwide have earned the CFP designation and that more than fifty accredited universities and colleges have established courses of study in financial planning approved by the Certified Financial Planner Board of Standards.64 The CFP Board also requires rigorous examination of candidates before conferring the CFP designation.65
As in Peel, the Ibanez majority was satisfied that the layperson would be well protected from such potential confusion and well informed simply by telephoning the organization conferring the specialty status of certified financial planner.66 Although the Board of Accountancy regulates the use of non-Board specialty designations by requiring automatic disclosure of a conferring organization's full identity, the Court on this issue deferred to the rules of The Florida Bar.67 The Bar's rules require attorneys to disclose details of their experience, training, and specialty certifications only when asked.68 Further, the majority held that to require as detailed a disclaimer as the Board had sought from Ibanez in her advertisements might prohibit advertising in the Yellow Pages or on business cards because of space limitations.69
The Board had attempted to justify its disclaimer requirement by arguing that placement of the CFP and CPA designations close to one another was potentially misleading.70 In response to that contention, the Court relied on Zauderer v. Office of Disciplinary Counsel of the Supreme Court of Ohio.71 The Ibanez Court held that the phrase "potentially misleading" could not operate as a shibboleth, the mere invocation of which would allow those seeking to regulate commercial speech to overcome their heavy burden of "demonstrat[ing] that the harms it recites are real and that its restriction will in fact alleviate them to a material degree."72
The Zauderer Court quoted In re R.M.J., when it noted that "[t]o the extent that potentially misleading statements of private certification or specialization could confuse consumers, a State might consider screening certifying organizations or requiring a disclaimer about the certifying organization or the standards of a specialty."73 The Ibanez Court affirmed, that in the case of truthful advertisements that are only potentially misleading, disclaimers are an appropriate and narrowly tailored response.74 The Ibanez Court, however, did not find the CFP designation or its placement confusing.75 Had Ibanez's advertisements been demonstrably false, the Board would have been able to regulate those claims, perhaps by imposing an outright ban on their use.76
In concluding, the majority noted that Ibanez is a sole legal practitioner, and she did not engage in any professional conduct reserved exclusively for CPAs.77 For this reason, the Court found significance in the fact that The Florida Bar Rules of Professional Conduct authorize use of the CFP designation.78 Additionally, Ibanez was not advertising a specialty designation conferred by an organization that had "made no inquiry into petitioner's fitness" or had simply issued the designation for a fee.79 Such a designation would be per se misleading and thus subject to state regulation.80 Finally, the majority reminded the Board that it had presented a record so bare of substantive justification for the restriction of commercial speech, that "[t]o approve the Board's reprimand of Ibanez would be to risk toleration of commercial speech restraints in the service of . . . objectives that could not themselves justify a burden on commercial expression."81
D. The Dissent
Justice O'Connor and Chief Justice Rehnquist concurred in the majority decision permitting Ibanez's use of the CPA designation. They dissented, however, on the issue of displaying the CPA and CFP designations in close proximity without requiring a disclaimer identifying the conferring organizations, arguing that Ibanez may have created the potential for misleading the public into believing that the state had issued, and would monitor, both certifications, rather than just the CPA certification.82 According to the dissent, had Ibanez included some statement explaining what organization had conferred her certified financial planner designation, the Board's claim would have carried less merit.83
Justices O'Connor and Rehnquist also suggested that the Board could refile its only charge that held some chance of success—practicing public accountancy in an unlicensed accounting firm.84 This would allow the Board to exert its jurisdiction over Ibanez, revoke her CPA license, and then discipline her if she continued advertising as a CPA.
III. The First Amendment: Some Speech Is More Equal Than Others
To non-lawyers, Silvia S. Ibanez was merely advertising herself when she listed her name and professional qualifications in the attorney section of the telephone book, on her law practice business cards, and on her law office letterhead. To lawyers, however, she was speaking in the realm of commercial speech—the middle ground of the First Amendment's three-tiered classification of speech protections.86 Maximally protected against government regulation is political speech, the theoretical core of the First Amendment.87 On the opposite end of the spectrum is obscenity, which enjoys no protection from government regulation.88 Adrift in the middle region is commercial speech—protected from government restraint if it is truthful, yet subject to regulation if it has the potential to mislead, is false, or pertains to illegal activity.89 Commercial speech, formerly unprotected like obscenity, has gained this measured degree of protection in the past twenty years as a method to ensure consumers have access to information they need for decision-making in the marketplace.90
This next section gives a brief history of the commercial speech doctrine and commercial speech in the context of advertising by attorneys and other professionals.

A. History of the Commercial Speech Doctrine
Under the theory of our federalist system of democracy, the Constitution ostensibly grants to the central government only those powers the states relinquish.91 Thus, Alexander Hamilton asked in the Federalist Papers why our democracy should need constitutional language expressly protecting the rights of speech, press, religion, and of association when the Constitution granted no powers to the federal government permitting the abridgement of such rights.92 Several states balked at Hamilton's idealistic thinking.93 The result of this balking, however, was the Bill of Rights, passed in the first session of Congress in 1789.94 In retrospect, it was wise of the states to require the First Amendment and the other amendments in the Bill of Rights. Although the language of the First Amendment is absolute—"Congress shall make no law . . ."95—Congress has enacted, and the Supreme Court has enforced, many abridgements of the freedoms of speech and press.96 One can only imagine what Congress or the executive branch might have achieved without First Amendment constraints.97
Although the Court has deemed political speech to represent the founding purpose of the First Amendment,98 commercial speech was, for many years, not deemed part of that founding purpose.99 As recently as 1942, the Supreme Court held in Valentine v. Chrestensen that while governments could not "unduly burden or proscribe" otherwise protected speech in public places, the Constitution imposed "no such restraint on government as respects purely commercial advertising."100 This rule would remain steadfast until 1976, when the Supreme Court held in Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, Inc. that the First Amendment affords a measure of protection for speech pertaining to commercial transactions.101 The Court based its decision on a policy that consumers receiving product information could make better-informed purchase decisions than consumers kept in the dark by government regulations.102 In Virginia State Board of Pharmacy, the Court rejected Chrestensen when it invalidated a Virginia statute declaring pharmacists unprofessional if they advertised their prices for prescription drugs.103 The Court reasoned that the statute could leave consumers ignorant of information vital to their health,104 and that speech does not lose its First Amendment protection simply because money is spent to disseminate the speech.105 To justify government regulation of commercial speech, there must be a more substantial government interest.106
Four years later, when the state of New York attempted to promote energy efficiency by enacting a blanket ban on advertising that advocated the use of electricity, the Court—as it had in Virginia State Board of Pharmacy—found the statute's scope was broader than necessary to achieve its stated purpose, in this case conservation.107 In Central Hudson Gas & Electric Corp. v. Public Service Commission of New York,108 the Court recognized New York's important state interest in promoting energy efficiency and conservation because of the 1970s oil embargoes and attendant escalation of energy prices.109 Nevertheless, the Court held that a blanket ban on utility advertising was too broad to meet this interest.110
Under Central Hudson, a regulation of commercial speech must pass four hurdles to be valid.111 First, the speech must be truthful, must concern lawful activity, or must not otherwise be subject to regulation. Second, there must be a substantial government interest in regulation. Third, the regulation must directly advance that substantial government interest. Fourth, the regulation cannot reach further than necessary to achieve its intended result.112
Since 1980, advertisers generally have received Central Hudson and the protection of commercial speech enthusiastically.113 Professional advertisers such as attorneys and certified public accountants have enjoyed increasingly well-settled commercial speech doctrines allowing them to advertise free from government regulation in most instances. Regulators of professional advertising, however, have frequently been on the losing side of disputes challenging restrictions of such speech.114 State bar associations, in particular, have been challenged by the commercial speech doctrine to craft constitutional regulations of attorney advertising that address their concern for the public image of the legal profession yet survive consitutional scrutiny under Central Hudson.115
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