In a previous post, I commented on the express preemption argument in the Altria v. Good case that is now before the Supreme Court. The oral arguments focused on this aspect of the case as well. In this post, I comment on the implied preemption aspect of the case.
I believe that Philip Morris is correct when it argues that state-law damage claims based on fraudulent advertising of "light" or "low-tar" cigarettes are impliedly preempted because the Federal Trade Commission has specifically authorized the use of these descriptors if used in a certain way.
There were two consent orders in which the FTC specifically permitted certain "low-tar" and "light" claims and set out conditions under which these claims could be made.
One of these was American Tobacco Co., FTC Docket No. C-3547 in 1994. According to the Illinois Supreme Court's description of this consent order: "The agreed order provided, further, that 'presentation of the tar and/or nicotine ratings of any of respondent’s brands of cigarettes and the tar and/or nicotine ratings of any other brand (with or without an express or implied representation that respondent’s brand is ‘low,’ ‘lower,’ or ‘lowest’ in tar and/or nicotine) shall not be deemed' to violate the ban on numerical comparisons. American Tobacco, 119 F.T.C. at 11."
Another relevant consent order was issued in 1971 and involved a complaint against American Brands for implying in its advertising that certain cigarettes were low-tar: "The dispute between the FTC and American Brands was resolved in 1971, with the entry of a consent order that required American Brands to cease and desist from: Stating in advertising that any cigarette manufactured by it, or the smoke therefrom is low or lower in ‘tar’ by use of the words ‘low,’ ‘lower,’ or ‘reduced’ or like qualifying terms, unless the statement is accompanied by a clear and conspicuous disclosure of: 1. The ‘tar’ and nicotine content in milligrams of the smoke produced by the advertised cigarette; and 2. If the ‘tar’ content of the advertised brand is compared to that of another brand or brands of cigarette, (a) the ‘tar’ and nicotine content in milligrams of the smoke produced by that brand or those brands of cigarette, and (b) the ‘tar’ and nicotine content in milligrams of the lowest yield domestic cigarette.” American Brands, 79 F.T.C. at 225."
The Illinois Supreme Court concluded that: "the FTC could, and did, specifically authorize all United States tobacco companies to utilize the words “low,” “lower,” “reduced” or like qualifying terms, such as “light,” so long as the descriptive terms are accompanied by a clear and conspicuous disclosure of the “tar” and nicotine content in milligrams of the smoke produced by the advertised cigarette."
The Rest of the Story
Since the Maine smokers are asking for damages suffered due to the current, or recent advertising of Philip Morris cigarettes, I do not believe that such claims are allowable because they relate to a time period during which the Federal Trade Commission has specifically authorized the use of these descriptors and spelled out the conditions under which these descriptors can be used.
A consent order, while it may only affect a particular company, does provide guidance to the overall industry and thus can be interpreted as an authorization of company behavior in that area.
One important lesson here is the degree to which the federal government bears some responsibility in the deception of smokers about the safety of using low-tar and light cigarettes. The Federal Trade Commission, which has assumed jurisdiction over the tar and nicotine content of cigarettes and the advertising of cigarettes with regard to this content, has failed in its regulatory efforts.
The deception of smokers is not just in the hands of the cigarette companies. It is also in the hands of the federal government, for assuming jurisdiction over, but failing miserably to address the advertising of tar and nicotine levels to smokers. In fact, the federal government has knowingly misled smokers for years by requiring labeling that is inherently deceptive. The cigarette companies have been required by law to provide these deceptive figures.
While one can certainly place blame on the cigarette companies prior to the time when the facts about compensation (the process by which smokers inhale differently to obtain the same amount of nicotine in a low-yield product) were widely known by the government, one can no longer view things in the same way. The federal government - specifically, the FTC - now bears that responsibility. It is only in the last few months that the FTC has finally questioned its own decision to mandate the tar and nicotine ratings, as it has recently asked for public comment about disbanding or altering this long-standing system.
Interestingly, the federal government's complicity stems not so much from its failure to assert jurisdiction over tobacco products, but from its having asserted jurisdiction over aspects of tobacco in a weak and ineffective way, but in a way that ended up preempting meaningful state and local regulation as well as providing a large measure of immunity to the tobacco companies.
We would be far better off, I believe, if the government had simply stayed out of the regulation of tobacco completely.
I opined earlier this week that the Court will issue a close decision (probably 5-4) with regards to the express preemption aspect of the case. While I originally declined to actually make a definitive prediction, upon further thought I believe that at least one justice (beyond the 4 who will clearly interpret FCLAA's preemption clause as being sweeping) will be swayed by Philip Morris' argument that the Cipollone plurality (seven justices ruled that fraudulent advertising claims are not preempted by FCLAA) is not applicable to the Good case because the intent in Cipollone was to allow claims regarding the material misrepresentation of facts, not misleading or depeptive advertising claims.
Given the extensive FTC history on this issue and the fact that the tobacco companies are, to some extent, making a factual representation (albeit misleading) in using the term "light" to refer to cigarettes with lower yields on the FTC test, I believe that at least one of the required justices will find that while FCLAA's preemption does allow for fraudulent advertising claims, the specific claim being made in this case is not allowed because it does not involve the material misrepresentation of factual information.
Thus, I am amending my prediction to call for a 5-4 victory for Philip Morris on the express preemption argument (the "swing" justice[s] will concur in part, and dissent in part - concur on the disallowance of the claim in this case, but not agree that all fraudulent advertising claims are disallowed).
I believe that the implied preemption argument is even stronger, because it doesn't present the uncomfortable position of a justice having to concede that a consumer cannot make any claim against tobacco companies for deceptive advertising, no matter how patently false the advertising may be. With the implied preemption claim, the argument is simply that the FTC has specifically authorized the use of the "lights" and "low-tar" descriptor.
Therefore, I expect a 6-3 victory for Philip Morris on the implied preemption argument.