Tobacco ads

Friday, September 13, 2002

Government officials continue to wage war on tobacco advertising. The Federal Trade Commission, the Food and Drug Administration and other federal and state regulators have targeted tobacco manufacturers, accusing them of marketing to minors and restricting what the companies can say in their advertising.

The regulators cite scientific studies showing that tobacco is a harmful product. On the other hand, the First Amendment presupposes that people, not the government, should decide what is best for themselves.

Restrictions on tobacco ads come at a time when juries have awarded astronomical amounts to plaintiffs suing tobacco companies. Many states have attacked big tobacco companies, contending that they have caused serious health problems and related expenses.

Master Settlement Agreement
The culmination of the states’ efforts resulted in a 1998 settlement agreement involving more than 46 states and the six largest tobacco companies — Brown & Williamson Tobacco Corp., Lorillard Tobacco, Philip Morris Companies Inc., R.J. Reynolds Tobacco Co., Commonwealth Tobacco and Liggett & Myers Tobacco Co. Under this settlement, called the Master Settlement Agreement, the parties agreed to settle nearly all litigation between the parties.

In agreeing to the settlement, the tobacco companies placed many restrictions on the marketing and advertising of tobacco products. Some of these self-imposed advertising restrictions include:

  • Tobacco companies cannot use cartoon characters, such as “Joe Camel,” to advertise their products.
  • Tobacco companies cannot target youth in the advertising, promotion or marketing of tobacco products.
  • Tobacco companies cannot sponsor concerts or other events with significant youth audiences, including team sporting events, such as football games.
  • Tobacco brand names cannot be advertised at stadiums and arenas.

Those who wish to curtail tobacco advertising to children lauded the Master Settlement Agreement. Robert Kline, a staff attorney with the Boston-based Tobacco Control Resource Center at Northeastern University, says that “the tobacco industry’s voluntary giving up of advertising rights is a benefit to society” because fewer children will see tobacco ads.

But some believe that the restrictions, if they came in the form of legislation as opposed to a voluntary settlement, would be unconstitutional. “Many of the restrictions on advertising included in the settlement agreement could not be imposed legislatively because they would violate the First Amendment,” says Richard Samp, chief counsel of the Washington Legal Foundation.

The trend in law since the 1998 agreement has been “litigating over the meaning of the Master Settlement Agreement,” Samp said.

In 2001, the California attorney general’s office filed suit against R.J. Reynolds for violating the Master Settlement Agreement by targeting children by advertising in magazines such as Sports Illustrated and Spin. The state said many teenagers read these magazines. The case ended in a settlement agreement in December 2004, under which R.J. Reynolds cannot advertise in publications that have teen audiences comprising 15% or more of their readership and must keep the total number of teenagers exposed to advertising at 30% below the number of adults exposed. R.J. Reynolds is also prohibited from tailoring advertising to teenagers. The company paid nearly $17 million in civil penalties and court costs.

Kline said various other state attorneys general have threatened to force tobacco companies to comply with various restrictions contained in the Master Settlement Agreement. Usually tobacco companies will back down once an attorney general threatens suit, he said.

The Lorillard decision
In spite of the Master Settlement Agreement, some states chose to expand the regulation of tobacco advertising. In 1999, then-Attorney General of Massachusetts Scott Harshbarger announced new regulations on tobacco products. These included advertising restrictions designed to “close holes” in the settlement agreement and “to stop Big Tobacco from recruiting new customers among the children of Massachusetts.”

The Massachusetts regulations were even broader than those contained in the Master Settlement Agreement. For example, the Massachusetts regulations covered far more people and businesses than the settlement, which affected six major tobacco companies.

One regulation targeted “outdoor advertising” of tobacco products. It provided:

Outdoor advertising, including advertising in enclosed stadiums and advertising from within a retail establishment that is directed toward or visible from the outside of the establishment, in any location that is within 1,000 foot radius of any public playground, playground area in a public park, elementary school or secondary school.

Another provision prohibited certain advertising in retail stores visible from the outside. The provision defined “point of sale” advertising defined as any ads placed lower than 5 feet from the floor of any retail establishment.

A group of makers and sellers of tobacco products filed three separate suits in federal court in May 1999, challenging the constitutionality of the Massachusetts regulations. The plaintiffs consisted of cigarette, smokeless tobacco and cigar firms. They made two principal arguments. The cigarette and smokeless tobacco companies argued that the advertising restrictions were preempted by the Federal Cigarette Labeling and Advertising Act, 15 U.S.C. Section 1334(b). The law prohibits a state from imposing any “requirement or prohibition based on smoking and health … with respect to the advertising or promotion of … cigarettes.” The smokeless tobacco and cigar plaintiffs also argued that the restrictions violated their First Amendment free-speech rights.

A U.S. district court called tobacco advertising “functional pornography” and upheld the majority of the advertising restrictions. The court did strike down the “point of sale” provision. The 1st U.S. Circuit Court of Appeals affirmed the lower court and also upheld the point-of-sale restriction. Both courts rejected the preemption claim. The 1st Circuit reasoned that the federal law only preempts the content of cigarette labels and does not affect state laws relating to the location of cigarette ads.

In its 2001 decision in Lorillard Tobacco Co. v. Reilly, the U.S. Supreme Court reversed the 1st Circuit on both the preemption and First Amendment issues. The Court determined that the federal cigarette-labeling law did preempt state restrictions on advertising and promotion of cigarettes.

Justice Sandra Day O’Connor reasoned that “a distinction between state regulation of the location as opposed to the content of cigarette advertising has no foundation in the text of the pre-emption provision.” Four justices dissented on the preemption issues.

The majority then examined the advertising restrictions imposed on the smokeless tobacco and cigar petitioners. The Court determined that the state attorney general had a substantial, even compelling, interest in protecting minors from tobacco products. But it decided that the 1,000-foot restriction on outdoor advertising was simply too broad. “In some geographical areas, these regulations would constitute nearly a complete ban on the communication of truthful information about smokeless tobacco and cigars to adult consumers,” the Court wrote. “The uniformly broad sweep of the geographical limitation demonstrates a lack of tailoring.”

The Court emphasized that the 1,000-foot ban on outdoor advertising was particularly onerous because the law’s definition of outdoor advertising included advertising in a store if the ad was visible from outside the store.

The justices also focused on the fact that the regulations would curtail the speech that adults could receive. Even though the state has a substantial interest in protecting minors from tobacco usage, tobacco manufacturers and adult consumers have a First Amendment right to provide and receive information about lawful products.

The Court also struck down the “point of sale” provision prohibiting advertising lower than 5 feet from the floor of retail advertisements. The majority determined that this restriction did not advance the state’s goals in protecting minors. “Not all children are less than 5 feet tall, and those who are certainly have the ability to look up and take in their surroundings.”

Justice Clarence Thomas wrote separately to emphasize his oft-stated view that commercial speech, including tobacco advertising, should not receive second class status in First Amendment jurisprudence. Thomas stressed that “when the government seeks to restrict truthful speech in order to suppress the ideas it conveys, strict scrutiny is appropriate, whether or not the speech in question may be characterized as ‘commercial.’”

Even the justices who dissented on the preemption issue were troubled by the outdoor advertising regulations. In his dissent, Justice John Paul Stevens said that he would favor sending the case down to the lower court for the development of further evidence on the breadth of the regulation.

Many free-speech experts praised the Court’s decision. “Under the First Amendment, you cannot restrict speech on the mere possibility that a small amount of children might see the speech,” Samp said. “The gist of the Supreme Court’s First Amendment jurisprudence in this area is that the government cannot ban advertising directed to adults simply because a small part of advertising will reach children.”

At least 20 similar laws in different cities and states have been repealed since the Lorillard decision, Samp said.

Most recently, in 2012 a federal district judge in Massachusetts struck down a Worcester ordinance that included broad restrictions on tobacco advertising.
The ordinance, passed by the Worcester City Council in 2010, read, “No person shall display any advertising that promotes or encourages the sale or use of cigarettes, blunt wrap (rolling papers) or other tobacco products in any location where any such advertising can be viewed from any street or park shown on the Official Map of the city or from any property containing a public or private school or property containing an educational institution … .”

In National Association of Tobacco Outlets v. City of Worcester, U.S. District Judge Douglas P. Woodlock found that the ordinance failed to meet the U.S. Supreme Court’s tests for evaluating commercial speech from Central Hudson Gas and Electric v. Public Service Commission of New York, writing that “the City of Worcester may not seek to remove a popular but disfavored type of products — those products that serve tobacco usage — from the marketplace by prohibiting truthful, nonmisleading advertisements directed to adults.”

New FDA regulation

On June 22, 2009, President Barack Obama signed the Family Smoking Prevention and Tobacco Control Act into law. The new law gave the Food and Drug Administration broad authority to regulate tobacco manufacturing, marketing and sale.

In January 2010 a federal judge upheld most of the marketing restrictions in the new law, but overturned two of the restrictions, including a ban on color and graphics in most tobacco advertising.

Then in June 2011 the FDA issued mandatory cigarette labels that would take up much of the packaging to show graphic images of the hazards of smoking.

Tobacco companies challenged the new label requirements. In March 2012, Federal District Judge Richard J. Leon of the U.S. District Court in Washington, D.C., struck down the rule as a violation of the First Amendment. The government appealed the decision.

But later that month, the 6th U.S. Circuit Court of Appeals ruled the required FDA warnings constitutional. The issue remains in contention.

Free-speech advocates note that the Supreme Court has in the past few years granted more protection to commercial speech. Still, tobacco advertisers have not fared well in this age of expanding commercial-speech protection. “Tobacco advertisers have certainly borne the brunt of government regulation,” Samp said.

Tobacco advertising seems likely to remain a target for years to come. It could lead to an even larger body of First Amendment case law with respect to commercial speech.

Updated in April 2012 by Courtney Holliday.