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Advertising Issues—Legal Perspective

October 26, 2000: Framework Convention on Tobacco Control






Thomas Perrelli, Esquire, Department of Justice

Mr. Thomas Perrelli from the U.S. Department of Justice spoke about the history of restrictions on tobacco advertising and related legal issues. He indicated that a large number of people and processes are involved with tobacco advertising and the law. State and local officials are involved in billboard placement; the FTC has long been involved with issues related to misleading advertising and warning labels; and states are currently involved through the MSA without a clear ultimate impact—perhaps simply to shift advertising dollars from one place to another. With regard to the FCTC, U.S. law must inform the process. International treaties to which we are a party must be consistent with the U.S. Constitution, particularly the First Amendment.

To protect minors, the current Administration has focused on imposing the most restrictive advertising requirements possible under the Constitution. This spurred the FDA to promulgate regulations. Tobacco advertising was considered by the Supreme Court as far back as 1932 in upholding billboard and streetcar restrictions in Utah. The FTC in the 1950s and 1960s did a great deal of work in building our knowledge about tobacco advertising and its impact as well as examining some of the explicit and implicit health claims being made by the tobacco companies in that era. Congress became involved in the 1960s and passed the 1969 Federal Cigarette Labeling and Advertising Act, which requires warning labels on cigarette packages. The Act preempted a number of state and local regulations on advertising. At the same time, Congress also prohibited tobacco advertising on any medium of electronic communications subject to the jurisdiction of the Federal Communications Commission, including television. The statute was eventually upheld by the Supreme Court in 1971.

The renewed momentum for tobacco advertising regulation grew from two different sources: state litigation to recover health care costs and change the way the industry markets to children and the FDA's effort to make a case for addiction and efforts to address in a comprehensive way marketing and promotion to children. The 1996 FDA rule banned outdoor advertising within a thousand feet of schools and playgrounds and placed restrictions on brand name sponsorship. Note that, although those restrictions were struck down by the Supreme Court and the FDA was ruled not to have jurisdiction on those matters, it was not done on First Amendment grounds. The U.S. Department of Justice believes the restrictions under current law as well as the FDA rules restrictions are fully Constitutional.

While the FDA rule was being litigated, the first state settlement took place in July 1997. It included a series of marketing restrictions that went beyond the FDA rule. That settlement would have come into effect if Congress had enacted legislation giving some level of protection from future liability to the tobacco companies. In 1998, Congressional debate and consideration of the McCain bill took place and eventually a set of restrictions similar to the FDA rule (but including liability protection for tobacco companies that voluntarily restricted their advertising to a greater extent) were introduced. Ultimately, Congress did not enact legislation and the state and tobacco companies went back to the drawing board. Further negotiations between the states and the tobacco companies resulted in the MSA in 1998.

The Agreement allows a number of avenues for tobacco advertising, particularly in the print medium. In addition, although the Agreement has a general provision against targeting youth, it is likely that State Attorneys General and the tobacco companies may have different views on the meaning of the provision. After the failure of federal tobacco legislation, the U.S. Department of Justice began to consider whether there was a viable legal basis on which to sue the tobacco companies under federal law. This effort resulted in the lawsuit that was brought in September 1999. The suit seeks, among other things, additional marketing restrictions on the sale of cigarettes. Other current activities include state and local ordinances related to placement of certain kinds of advertising. Currently, four of five circuit courts have ruled that local governments can regulate the placement.

Mr. Perrelli then provided an overview of legal principles currently at issue under the commercial speech doctrine (as tested under the landmark Central Hudson case—447 US 557). Considering tobacco advertising regulation, we need to consider whether the regulated speech is related to an unlawful activity or is misleading and whether the government interest asserted to regulate the speech is substantial. He believes that years spent building the case that restricting tobacco advertising to protect youth is a compelling government interest. Under the Central Hudson test, a restriction on commercial speech must also directly advance the government interests asserted (states and localities have demonstrated that keeping tobacco advertising away from children will influence smoking initiation and/or continuation). Finally, the Central Hudson test requires that the fit between the ends and the means of a regulation on commercial speech be reasonable. A law that bans substantially more speech than is necessary is less likely to prevail. It is likely that we will have more guidance in this area in the next couple of years because the Supreme Court will be considering one of the cases involving state and local regulation of outdoor cigarette advertising.

Thus far, the courts have found it of great significance that this was not a typical restriction on commercial speech and that it involves regulation of the sale of a product that is banned to children. The courts have expressed concern about children who might be victimized by the highly addictive nature of the product and focused, among other things, on their inability to understand the impact of starting or continuing to smoke. Finally, the courts did not appear to be troubled that a Massachusetts ban on advertisement is very broad, saying that there are other avenues for tobacco advertising.

Mr. Perrelli then stressed three points: legal principles will be more clear in a couple of years; the First Amendment does leave room for a significant number of restrictions in this area, such as those currently in the FDA rule, and the most promising areas are those related to consent and work on the most extensive restrictions on a voluntary basis (whether through the consent orders on which the FTC has worked or through a larger legislation resolution, as was attempted after 12 years).

Mr. Perrelli declined to respond to a question related to cigarette advertising on the Internet and coverage under the Federal Cigarette Labeling and Advertising Act. To a question related to placement issues, Mr. Perrelli indicated he believed that the next set of state and local ordinances will likely litigate whether that is permissible. In the past, the U.S. Department of Justice has taken the position that those restrictions are permissible. Ms. Rosso volunteered that the First Circuit Court's decision in Massachusetts included generous language giving the state some amount of discretion in limiting in-store displays.

Dr. Koplan asked for data on the percentage of sales of tobacco products sold in pharmacies but Ms. Rosso indicated that there are no national data that would provide information at that level. However, the FDA Web site may include information on a non random sample of stores, looking at what places are more likely to sell to children. Dr. Chaloupka mentioned that, in his experience, pharmacies are the least likely of all types of stores to make use of advertising and promotion. It was pointed out that, under economic (and not speech) regulation, certain products/services cannot be sold in the same place. A brief discussion on freedom of religion and of advertising and speech ensued but Mr. Perrelli indicated this is not an area that has received a great deal of attention.

To a question about the U.S. Department of Justice lawsuit against the tobacco manufacturers, its dependence on Congressional funding, and predictions with the change of administration, Mr. Perrelli indicated that without the appropriate funds the lawsuit will have to be dismissed.

To a question about the FCTC and how strong a Convention the United States could sign on to, Mr. Perrelli indicated that we could go as far as possible to the extent permitted under domestic law. Dr. Novotny stressed that this has not prevented us from taking a strong position and very few countries (mainly third world ones) are advocating for complete bans in advertising. Even if some of the protocols include language with which we cannot agree, that should not prevent us from signing the FCTC, Dr. Novotny told the group. Mr. Perrelli declined to answer a question related to a total ban on advertising and promotion of tobacco products and its ability to meet the Central Hudson test.

At the conclusion of the formal presentations, Dr. Satcher invited public comments. None were made. He thanked the speakers, committee members, and participants for their contributions to the meeting. The meeting was adjourned at 1 p.m.

 
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