Lorillard Tobacco Co., et al. v. Reilly, Mass. Atty. Gen. / Altadis U.S.A. Inc., et al. v. Reilly
Lorillard Tobacco Co., et al. v. Reilly, Mass. Atty. Gen. / Altadis U.S.A. Inc., et al. v. Reilly
Lorillard Tobacco Co., et al. v. Reilly, Mass. Atty. Gen. / Altadis U.S.A. Inc., et al. v. Reilly
By: Jennifer Whitson & Lisa Smith, Medill News ServiceQuestions presented
(1) Are the Massachusetts regulations on tobacco advertising void because they are preempted by the Federal Cigarette Labeling and Advertising Act? (2) Do the Massachusetts advertising regulations violate the tobacco companies 1st Amendment right to free commercial speech, either under the strict scrutiny or the tests in Central Hudson Gas?
Brief
After over a year and a half of heated negotiations, Massachusetts Attorney General Scott Harshbarger announced on Nov. 20, 1998 that he would include Massachusetts with 45 other states that were settling their claims against tobacco companies for payment of state funds spent treating sick smokers.
Harshbarger agreed to the settlement, despite his belief that it lacked many of the strict advertising restrictions he sought, because the settlement would give Massachusetts $7.6 billion over 25 years.
Harshbarger vowed to push for the stricter advertising standards through another route: Massachusetts' consumer protection statute. "We need to stop big tobacco from recruiting new customers among our children," Harshbarger wrote in a Dec. 2, 1998 op-ed letter printed in the Boston Globe.
Two months after signing on to the tobacco settlement, Harshbarger issued eleven regulations on tobacco advertising that he had been developing with the help of anti-smoking groups and public hearings since early 1998. The regulations banned outside tobacco advertising within 1,000 feet of elementary or secondary schools, public playgrounds or public parks with a playground, except for "tombstone" signs in black and white stating: "Tobacco products sold here."
The regulations also required warning labels on cigar packaging and the placement of all in-store tobacco advertising at or above 5 feet high so as not to be in the direct line of vision of children. The regulations were to go into effect on Aug. 1, 1999.
Roughly four months later, makers and sellers of cigarettes, smokeless tobacco products and cigars filed three separate lawsuits against the new Attorney General, Thomas Reilly. The suits claimed the Massachusetts regulations were invalid on three grounds.
First, the companies argued that the Federal Cigarette Labeling and Advertising Act (FCLAA) of 1965 preempted state regulations on advertising. The FCLAA [Section 1334 (b)] states: "No requirement or prohibition based on smoking and health shall be imposed under State law with respect to the advertising or promotion of any cigarettes the packages of which are labeled in conformity with the provision of this chapter."
Secondly, the suits claimed that the regulations violated the tobacco companies' 1st Amendment rights to free commercial speech. The companies argued that because their ads are being targeted based on content, their 1st Amendment claims should be held to a higher standard of review than the Central Hudson test usually applied to commercial speech. But, the companies argued, even if held to the more stringent Central Hudson test, the tobacco advertising would be protected.
The Central Hudson test sets out four steps to determine if limits on commercial speech are constitutional: 1.) The advertising must be about lawful activities and may not be misleading.2.) The government interest in limiting the advertising must be substantial.3.) The governmental limitation must "directly advance" the government's interest. 4.) The government limitations must not be more far-reaching than necessary to reach its goal.
And finally, the lawsuits asserted that the cigar packaging and advertising label requirements violated the Commerce Clause of the Constitution because they imposed an undue burden on interstate commerce.
In two separate rulings in December of 1999 and January of 2000, a federal district judge ruled against the tobacco companies on all the major claims. However, the judge did strike down the 1000-foot limitations on inside advertising for lack of basis and the "tombstone" sign requirement on the grounds that it was preempted by the FCLAA.
On July 17, 2000, the 1st Circuit Court of Appeals unanimously affirmed on all but one of the district court's grounds. The 1st Circuit found the required warnings on cigar packages and advertising did conflict with the Commerce Clause because it did not specify that national magazine and internet advertising viewed in Massachusetts were exempt from the regulation.
"The plain language of the regulations, which makes it unlawful to 'cause to be advertised' cigar products in Massachusetts, imposes liability on manufacturers for advertising in national magazines that are distributed in the Commonwealth, as well as for advertising on the Internet which can be viewed from a terminal in Massachusetts," Chief Judge Juan R. Torruella wrote.
On the preemption claims, Torruella wrote that to decide whether federal laws preempted state laws, the court had to consider two conditions. First, the court had to evaluate whether Congress' intent on writing the federal law was clearly to preempt state laws. Secondly, the court had to decide whether the laws were written in an area that was traditionally occupied be a federal presence. In its decision, the 1st Circuit decided the answer to both of these conditions was no in this case, and that the state laws were not preempted by the FCLAA.
The 1st Circuit also found that the tobacco regulations only had to pass the Central Hudson test for limits on commercial speech, and that the regulations did stay within the bounds of the Central Hudson test.
"In declining to impose a more searching review than that mandated by Central Hudson, we are aware of the recent rumblings from members of the Supreme Court and others suggesting that the Central Hudson test may be in need of minor or major modification," Torruella wrote in the opinion.
"Nevertheless, it is not our role to anticipate changes in well-established constitutional doctrines," Torruella added.
The tobacco companies appealed to the U.S. Supreme Court, arguing both preemption and 1st Amendment grounds, according to Kenneth Geller, an attorney for Lorillard Tobacco Co.
On Jan. 8, 2001, the U.S. Supreme Court consolidated the tobacco lawsuits and agreed to hear the case. The court allowed The Washington Legal Foundation, a national non-profit foundation that advocates for free enterprise principles, to file briefs supporting the tobacco companies in the case.
In the meantime, Massachusetts delayed implementing the tobacco advertising regulations as it awaited the Supreme Court's decision.
On June 28, 2001, on the final day of the Court's 2000-01 term, the Court held 5-4 that Massachusetts cannot impose broad regulations on cigarette ads without violating federal law, and unanimously that Massachusetts' outdoor tobacco ad restrictions violate the tobacco companies' 1st Amendment right to free commercial speech under the Central Hudson test.
Though there were five splintered opinions in the case, Justice Sandra Day O'Connor authored the lead opinion, holding that the FCLAA pre-empts Massachusetts' regulations governing outdoor and point-of-sale cigarette advertising. While the majority agreed that "states remain free to enact generally applicable zoning regulations, and to regulate conduct with respect to cigarette use and sales," O' Connor found that there is a distinction between generally applicable zoning regulations and regulations specifically targeting cigarette advertising, which are "inevitably motivated by concerns about smoking and health" and squarely contradict the FCLAA.
"The FCLAA's comprehensive warnings, advertising restrictions, and pre-emption provision would make little sense if a State or locality could simply target and ban all cigarette advertising," wrote O' Connor.
Recognizing that the Court's opinion might be perceived to undercut a public policy regarding tobacco use that the Court once called "perhaps the single most significant threat to public health in the United States," O' Connor concluded her opinion by noting that states are not without tools.
"( I)t is understandable for the States to attempt to prevent minors from using tobacco products before they reach an age where they are capable of weighing for themselves the risks and potential benefits of tobacco use, and other adult activities. Federal law, however, places limits on policy choices available to the States," she wrote.
"The First Amendment also constrains state efforts to limit advertising of tobacco products, because so long as the sale and use of tobacco is lawful for adults, the tobacco industry has a protected interest in communicating information about its products and adult customers have an interest in receiving that information," O' Connor added. "To the extent that federal law and the First Amendment do not prohibit state action, States and localities remain free to combat the problem of underage tobacco use by appropriate means."
Calling the pre-emption issue "straightforward," Justice John Paul Stevens dissented. At the heart of Stevens' argument is his conclusion that the regulations are not pre-empted because they deal with the location of advertising, not its content, which can be pre-empted by Congress. "Congress did not intend to pre-empt state and local regulations of the location of cigarette advertising when it adopted the provision," he wrote for himself and Justices Ruth Bader Ginsburg, Stephen Breyer and David Souter. "There was ? no need to interfere with state or local zoning laws or other regulations prescribing limitations on the location of signs or billboards."
The majority concluded that the FCLAA must be examined as a whole, without distinguishing content from location because the "distinction cannot be squared with the language of the pre-emption provision." Such a distinction also "cannot be reconciled with Congress' own location-based restriction, which bans advertising in electronic media, but not elsewhere," O' Connor wrote.
The majority disagreed with the Attorney General's argument that the State's regulations are not pre-empted because they are not "based on smoking and health," but on youth exposure to cigarettes. The majority said the two areas are "intertwined."
Not only are Massachusetts' outdoor and point-of-sale advertising regulations pre-empted, the Court held, this part unanimously, that they are also in violation of the 1st Amendment.
The Court held that the outdoor advertising regulations prohibiting smokeless tobacco or cigar advertising within 1,000 feet of a school or playground violate the 1st Amendment because their "broad sweep" violates the fourth step of the Central Hudson test. "(T)he regulations prohibit advertising in a substantial portion of Massachusetts' major metropolitan areas; in some areas, they would constitute nearly a complete ban on the communication of truthful information," O' Connor wrote.
The regulations prohibiting indoor, point-of-sale advertising of smokeless tobacco and cigars lower than 5 feet from the floor of a retail establishment located within 1,000 feet of a school or playground fail both the third and fourth steps of the Central Hudson test, the Court held. "The 5-foot rule does not seem to advance the goals of preventing minors from using tobacco products and ? limiting youth exposure to advertising. Not all children are less than 5 feet tall, and those who are can look up and take in their surroundings," wrote O' Connor.
The one regulatory area the Court found to not violate the tobacco companies' 1st Amendment speech rights was in those that restricted sales practices by cigarette, smokeless tobacco, and cigar manufacturers and retailers, by among other things, barring the use of self-service displays and requiring that tobacco products be placed out of the reach of all consumers in a location accessible only to salespersons.
"Massachusetts' sales practices provisions regulate conduct that may have a communicative component, but Massachusetts seeks to regulate the placement of tobacco products for reasons unrelated to the communication of ideas," wrote O' Connor. "We conclude that the State has demonstrated a substantial interest in preventing access to tobacco products by minors and has adopted an appropriately narrow means of advancing that interest."