A class action lawsuit filed in 2000 in Illinois alleged that Philip Morris deceived consumers into thinking that some of its cigarette brands were safer by using descriptors such as "low-tar" and "lights." The plaintiffs prevailed, winning a $10.1 billion judgment against Philip Morris in 2003. However, the case was appealed and in 2005, the Supreme Court ruled for the defense, ordering that the trial judge dismiss the case. This week, the plaintiffs have announced that the are seeking re-institution of the case based on the claim that the "factual" information provided by Philip Morris and relied upon by the Illinois Supreme court was false.
According to an
article in the
Madison St. Claire Record: "Attorney Stephen Tillery is arguing that a judgment in favor of
cigarette maker Philip Morris was "fundamentally flawed," because it was
based on "false facts advanced by Philip Morris at every step in this
litigation." Madison County Circuit Judge Dennis Ruth has reset a
hearing originally scheduled for Tuesday involving Tillery's petition
for relief from the Illinois Supreme Court's dismissal of
Price v. Philip Morris in 2005. The hearing will be held Aug. 21 in the $10.1 billion "light" cigarette labeling judgment that was later overturned. Tillery filed a brief in support of a first amended petition for relief from judgment on May 4."
"According
to Tillery, the FTC never allowed "low tar" descriptors, never had a
policy of permitting descriptors, never required that Philip Morris
disclose test measurements, never allowed the use of descriptors through
consent orders and never intended for non-parties such as Philip Morris
to take guidance from consent orders. "Because Philip Morris
falsely represented contrary 'facts' in the litigation and successfully
convinced Justice Garman to rely on those false 'facts' to dismiss
Plaintiff's claims, plaintiff's petition should be granted," Tillery
wrote."
The Rest of the Story
Unfortunately for the plaintiffs, it is their side, not Philip Morris, which is erring on the facts regarding the FTC's role in propagating the low-tar myth. Let's examine the key points one-by-one:
1.
The FTC never allowed "low tar" descriptors.
As part of the history of the FTC's regulation of low tar descriptors, 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.
As explained by the Illinois Supreme Court: "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."
Thus, the FTC explicitly did allow the use of "low tar" descriptors, as long as the company disclosed the tar and nicotine yields of the brand.
2.
The FTC never had a policy of allowing descriptors.
The FTC may not have had a policy of allowing descriptors, but it clearly did allow descriptors under certain circumstances, under its consent orders as described above.
3.
The FTC never required that Philip Morris
disclose test measurements.
Well, this is kind of misleading. It is technically true that the FTC did not require the disclosure of test measurements on tar and nicotine yields. However, the FTC
threatened to require the release of these test measurements, and in response, all the cigarette companies voluntarily disclosed the information, which is printed each year in an FTC report on tar and nicotine yields of all the cigarette brands on the market. Had Philip Morris ever decided not to voluntarily disclose this information, it is quite clear that the FTC would have then mandated the disclosure. So in fact, there was a "de fact" requirement that cigarette companies disclose the tar and nicotine yields of their cigarette brands.
4.
The FTC never allowed the use of descriptors through
consent orders.
As we have just seen, this is false. In a 1971 consent order, the FTC very clearly allowed the use of low-tar descriptors, as long as the actual yield was provided to consumers and as long as any comparative statements were accompanied by the yields of the relevant products and of the lowest yield product on the market.
5.
The FTC never intended for non-parties such as Philip Morris
to take guidance from consent orders.
I have earlier provided an extensive
discussion of why I believe that the FTC consent decrees do represent industry-wide policy, from which non-parties are to take guidance. Briefly, imagine that the FTC allowed American Brands to advertise cigarettes as
low-tar according to the provisions outlined above, but later, did not
allow Philip Morris to advertise cigarettes as low-tar at all. Even
though the original consent order with American Brands could not be
argued to hold the full force of law with regard to Philip Morris, it
would be difficult to maintain that the FTC's actions were consistent
with the law. This would seem to represent a clear example of unequal
and inconsistent application of the law. Thus, I do not find it
unreasonable for Philip Morris to assume that the consent order with
American Brands provided conditions for the use of the "low-tar"
terminology that could be expected to apply to it as well as American
Brands.
While it is true that as a matter of the force of law,
the consent order did not bind FTC from dealing differently with other
companies, as a practical matter, I think that it did bind FTC. Because a
federal agency cannot willy nilly apply the law differently to
different companies. The reason why the consent order only had the
formal force of law with American Brands was simply that American Brands
was the company about which a complaint had been filed, and which was
therefore party to the consent order. It was not that somehow American
Brands' actions were to be regulated differently than those of other
companies because of some peculiarity about American Brands that did not
apply to Philip Morris and other companies.
Now is it the case that FTC could not now
enforce the disclosure rules among the non-signatory companies because
it did not represent an industrywide policy? I doubt it. I think if the
FTC decided to, it could easily enforce the disclosure requirement and
non-signatories would have no argument at all in claiming that they
didn't sign the agreement so they don't need to disclose. The FTC could
and would (if it had the interest in enforcing it) simply tell the
companies: "Sorry - these are the rules that the industry has to
follow").
I have trouble
accepting the argument that FTC consent orders do not provide overall
industry guidance and policy because it is, in fact, through consent
orders that FTC enforces the law. FTC does not have to issue a trade
regulation rule in order to set industry policy. In fact, enforcement
agreements and orders are one of the primary mechanisms by which it
enforces the law. And it seems illogical to argue that just because a
company is not party to a particular consent order, that the company
does not take general or even specific guidance from that order,
particularly if the order is as specific as the 1971 consent order is in
setting out the precise requirements for the use of tar/nicotine level
descriptors.
For the same reason, I have trouble accepting the
argument that the fact that the FTC did not ever issue a trade
regulation on the issue of descriptors indicates that it never
authorized cigarette companies to use these descriptor terms in their
marketing. I think the consent order clearly implies a set of
requirements that can reasonably be interpreted by the other cigarette
companies as indicating FTC enforcement policy on this issue.
I
think it's important to recognize that federal agency actions with
regard to particular companies do, in fact, serve to set policy and
rules for all companies. The converse seems illogical. Could a company
being investigated by FTC for using the term "Lowest Tar" brand
successfully convince FTC that there was nothing wrong with this action
because FTC's consent order applied only to American Brands? I doubt
anyone would argue that the use of the term "Lowest Tar" cigarette brand
(without appropriate documentation) is lawful under the Federal
Cigarette Labeling and Advertising Act, even though there is no trade
regulation concerning this issue, even though the 1971 consent order
applied only to American Brands, and even though the consent order did
not specifically mention the term "lowest tar." I think it's safe to
argue that federal law (as interpreted and enforced by the FTC) simply
does not allow for the undocumented use of the term "Lowest Tar" brand,
even in the absence of a trade regulation on the issue.
Conclusion
The rest of the story is that the plaintiffs in this case are in a very weak position. They are in a weak position because contrary to what the plaintiff's attorneys would have us believe, the blame with respect to the "low-tar" fiasco 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.
The Price
decision is reminding us, I think, that it is simply not enough to blame
everything on the cigarette companies. It is a poignant reminder that
the federal government has had a role to play in the tobacco epidemic in
this country.
And interestingly, the federal government's
complicity in this epidemic 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.
