Tuesday, March 27, 2012

Tobacco regulations: conduct restrictions

Part III: Sampling, loyalty programs, and sponsorship regulation
Next, the court turned to bans on brand-name sponsorship and merchandise, sample tobacco products, and “continuity” programs (rewards of non-tobacco products in consideration for tobacco purchases).  You may be surprised to see which one it found an unconstitutional restriction on free speech.
The Act directed the FDA to ban free samples; non-tobacco items with the name or logo of a tobacco brand; continuity programs; and sponsorship by tobacco companies “of any athletic, musical, artistic, or other social or cultural event, or any entry or team in any event,” using a tobacco brand identifier.
Plaintiffs argued that the government had failed to justify these bans as measures that directly and materially advanced the interest in decreasing youth tobacco use.  Further, the bans covered marketing geared to and largely received by adults.  As less restrictive alternatives, plaintiffs suggested restricting media coverage of brand-sponsored events (because that’s First Amendment-friendly!), limiting the merchandise ban to items that can become “walking ads,” strengthening laws preventing sales to minors, raising the legal age of purchase to 19, penalizing youth who smoke, and other antismoking educational campaigns.
The district court held that the bans on free samples and gifts with purchase didn’t implicate, let alone violate, the First Amendment, since this was conduct without a significant expressive element.  The court of appeals, however, agreed with plaintiffs that “sampling and continuity programs are protected speech” because they “are promotional methods that convey the twin messages of reinforcing brand loyalty and encouraging switching from competitors’ brands.”
Comment: This is an amazing conclusion, and one that can’t mean what it says. It’s a well-known issue in First Amendment law.  There is no doubt that a racially motivated murder is communicative: it conveys its message of terror very powerfully. But conduct that sends a message, whether “you’re not welcome here” or “smoking is fun” is not thereby free speech.  Nor is conduct that changes how those who are exposed to it think about it thereby free speech: my opinions about Crest toothpaste were changed by my exposure to various flavors thereof, but that doesn’t make toothpaste speech.  Still less is anything that makes an experience more pleasurable (reward programs, free hugs accompanying purchase) thereby free speech.  Consider, for example, bribery.  Or, given what the Supreme Court is doing with campaign finance, maybe don’t.  Perhaps O’Brien analysis is appropriate—though even there I have my doubts, since Congress isn’t trying to deter the communication but instead trying to deter smoking—but that at most makes these programs communicative conduct, not “protected speech.” 
In a footnote, the court said that O’Brien was indeed the right standard for a regulation of communicative activity.  But the government has to be regulating the noncommunicative aspects of the conduct, not the expressive elements.  (Which is the aspect where you get the free stuff?  That sure seems noncommunicative to me.)  Here, the Act’s regulation of sampling and continuity programs was an attempt to regulate the “communicative impact” of the activity, not the activity itself. “The government has not articulated an interest in generally regulating the distribution of T-shirts, baseball caps, bobblehead dolls, or any other merchandise that may be available as part of a continuity program, or of regulating continuity programs themselves. Nor has it articulated an interest in regulating the act of providing free samples of products across consumer categories.” 
Me again: Yes, because the government was interested in regulating the sales of tobacco, as promoted by these “gifts” designed to trigger feelings of goodwill and reciprocity in recipients.  Note how broadly the court’s principle sweeps: there are a number of regulations of specific fields that would appear to be jeopardized by this standard, including restrictions on the kinds of tie-in benefits that sellers of real estate can offer, see, e.g., Coldwell Banker Residential Real Estate Services, Inc. v. New Jersey Real Estate Commission, 576 A.2d 938 (N.J. App. Div. 1990), and restrictions on holding sweepstakes with respect to certain product categories (alcohol, banking, dairy products, food retailers, insurance, gasoline, and our friend tobacco).  These are generally justified by reference to special concerns with the underlying products—and yes, the “dairy products” restrictions are probably dumb, but the repudiation of Lochner was about letting legislatures do dumb things with respect to ordinary economic activity.  And, of course, those are only the narrow applications of what the court said; more generally, putting any product on sale communicates that it’s worth buying, and banning the product suppresses the communication of that message.  You can say that usually this will survive First Amendment scrutiny, but the mistake, as Fred Schauer would point out, is to think that First Amendment scrutiny has any business here in the first place.
Back to the court’s analysis: Congress’s stated purpose was to reduce tobacco use and one mechanism it chose to do that was to regulate tobacco advertising and marketing.  That was further evidence that the primary intent of the marketing bans was the regulation of commercial expression.  (Or that’s just circular.  If I lower the price of a product to make it more attractive--a promotion--is the low price now free speech?)
All this puts us in Central Hudson territory.  Here the government gets a bit back: “Though Plaintiffs would have us believe that there is no causal connection between product advertising and the consumer behavior of children, such a claim stretches the bounds of credulity, even in the absence of the extensive record submitted by the government, which indicates the contrary. The tobacco industry spent approximately $13 billion in advertising to promote its products in 2005, and though Plaintiffs claim that all of it was spent to attract and retain adult consumers, it is impossible to believe that promotion so successful in the adult context that it is valued by Plaintiffs at $13 billion dollars had absolutely no effect on anyone below the age of eighteen.”  And adult users (who almost all start when they’re underage) are extremely brand loyal—only about 9% will switch among major brands.  That’s why ads target youth.  Courts have repeatedly found that tobacco ads have a “dramatic” impact on youth smoking, and have been intended to do so.  The court found a substantial state interest in curbing youth smoking that would be directly advanced by limiting marketing of tobacco products.
Plaintiffs argued that a ban on free sampling wasn’t narrowly tailored.  But this was easy: there was extensive evidence that free samples were easily accessible to young people.  A free sample “may serve as the best advertisement of all for a product that is physiologically addictive, and socially attractive to youth.”
Likewise, the distribution of branded non-tobacco products was also a good way of promoting smoking to adolescents, both current smokers and nonsmokers.  The government submitted studies showing that obtaining tobacco branded non-tobacco products “precedes, and reliably predicts, smoking initiation, even when controlling for other factors that have been shown to influence smoking uptake.” Thus, the government met its burden to show that the ban materially advanced its interest in preventing juvenile smoking. 
Plaintiffs argued that more tailored solutions were available, such as limiting the ban to items that can be “walking ads” and not covering keychains and matchbooks.  As a matter of fact, the Act contains an exemption for matchbooks as “adult-written publications” allowed to contain ads, though the FDA can remove this exemption if it’s inappropriate for the protection of public health.  The fact that plaintiffs were left with only one product allegedly unreasonably covered by the regulation was strong support for a finding of sufficient tailoring.
Event sponsorship: substantial evidence also supported Congress’s finding that young people are widely exposed to sponsored events, including via TV broadcast.  In 1996, more than 64 million children each year were exposed to tobacco ads on TV through auto racing sponsorship alone.  This affected youth tobacco use, according to the tobacco companies themselves: Philip Morris identified the objectives of TV sponsorship as “[r]egain[ing] momentum in the hearts and minds of our target market—young adult smokers under 25”; and “look[ing] at current and new program opportunities to extend our reach with starters and young adult smokers.”
Plaintiffs argued that the ban wasn’t narrowly tailored.  It included Lorillard’s Newport Pleasure Draw blackjack tournament in a youth-restricted casino, which wasn’t covered in the media.  The government responded that the manufacturers could still sponsor events in their corporate names.  The government won: “Just as branded non-tobacco merchandise reaches a wide audience of juveniles and contributes to their decisions to use tobacco products, so too does branded event sponsorship.” The incidental suppression of the ability to brand a single youth-restricted event wasn’t enough to make the law unconstitutional.  “Plaintiffs have failed to show that anything other than a nominal amount of protected speech is swept into the regulation.”
Now here’s the kicker, and why it matters when you call conduct "expression": the ban on continuity programs was unconstitutional. Continuity programs “are designed to maintain the loyalty of existing customers, not to attract new ones.”  In 1996, the FDA found that reward programs were “an instrumental form of advertising in affecting young people’s attitudes toward and use of tobacco.”  In 1992, about half of adolescent smokers and ¼ of nonsmokers owned Marlboro Miles or Camel Cash, about the same as owned tobacco-branded clothing.  Many teens, including many nonsmokers, reported participating in promotional activities.  But this was old evidence, and not enough compared to the overwhelming evidence supporting most of the other measures in the Act.  Because adults consume more than 98% of all tobacco sold, and continuity programs are naturally linked to consumption, “logic dictates that the overwhelming beneficiaries, both numerically and comparatively, of these continuity programs are adult consumers.”  Thus, the ban on continuity programs failed Central Hudson scrutiny.
Expect Supreme Court action on this case.

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