According to the article: "The U.S. government is asking a federal appeals court to rehear a challenge to a Food and Drug Administration requirement that tobacco companies to put large graphic health warnings on cigarette packages to show that smoking can disfigure and even kill people. The Justice Department filed a petition Tuesday asking for the full court to rehear the case after a three-judge panel of the U.S. Court of Appeals in Washington affirmed in August a lower court ruling blocking the mandate, saying it ran afoul of the First Amendment's free speech protections. However, the court rarely grants such appeals." ...
"In a 2-1 decision, the appeals court panel wrote that the case raises "novel questions about the scope of the government's authority to force the manufacturer of a product to go beyond making purely factual and accurate commercial disclosures and undermine its own economic interest — in this case, by making 'every single pack of cigarettes in the country (a) mini billboard' for the government's anti-smoking message."
The court also wrote that the FDA "has not provided a shred of evidence" showing that the warnings will "directly advance" its interest in reducing the number of Americans who smoke." ...
"But in its appeal seeking a full court rehearing, the government argued that the text of the new warnings are "indisputably accurate" and the format, including the use of graphics, is tailored to the demand of a "market in which the vast majority of users become addicted to a lethal product before age 18." It also argued that the First Amendment does not require the government to show how one part of a multi-faceted anti-smoking public health campaign directly reduces smoking rates."
The Rest of the Story
There are a number of factors that influence the decision of whether to grant en banc (full Court) review of an appeals court panel's decision. Giles et al. provide a fascinating, systematic, analytic study of these factors, considering both ideological and legal concerns. Although granting en banc review is not common, it is often granted in cases of "extraordinary" significance or in cases where there are disagreements between appeals courts on similar issues. It is possible that the graphic warning label issue meets these criteria.
In any case, the fact that the Department of Justice is requesting an en banc review suggests to me that it will indeed appeal the case to the Supreme Court (if the full Appeals Court fails to overturn its panel's decision). And I think the Supreme Court will most certainly take the case.
Thus, I believe the ultimate disposition of the case is going to occur at the Supreme court level.