R.J. Reynolds Tobacco Co. v. Food & Drug Admin., 696 F.3d 1205 (D.C. Cir. 2012)
The majority struck down the FDA’s new image-based tobacco warnings on First Amendment grounds. If the government seeks cert, it will of course be granted. The case offers another opportunity for the Supreme Court to muddle around in commercial speech doctrine, with potential implications for the Lanham Act and the FTC. (Note, however, that simple denial is likely to protect trademark: trademark is just different from other commercial speech regulation, somehow, even if the Justices can’t say why.)
Congress gave the FDA a mandate to create new, large warning labels for cigarette packages and ads. Relying on part on a strong worldwide consensus, the FDA proposed a “dramatic expansion” of the existing warnings. (Over thirty countries require graphic warnings, and more are considering them, but the majority stated that they don’t necessarily protect “individual liberties”—for which read “commercial speech”—as strongly as we do.) The aim was to clearly and effectively convey the negative health consequences of smoking, which would discourage nonsmokers, especially kids, from starting and encourage current smokers to quit. The FDA promulgated a regulation specifying nine images, one for each warning statement, and required each one to include the phone number for the National Cancer Institute’s Network of Tobacco Cessation Quitlines, 1-800-QUIT-NOW.
The majority was extremely unimpressed with the FDA’s evidence. The FDA selected the final images based on an 18,000-person internet study, which looked at whether the graphics increased intention to quit/not smoke, increased knowledge of the health risks of smoking and second-hand smoke, and were “salient,” defined in part as causing viewers to feel “depressed,” “discouraged,” or “afraid”—all compared to control text. Criticisms of the study—which didn’t just come from the tobacco companies—included that it didn’t assess long-term effects, only reported intentions, and some recommended a long-term study. (Too soon to tell?) Another criticism was that there was selection bias in recruiting an internet panel for an FDA-sponsored study. The court of appeals snidely described the FDA’s argument that intention to quit is important on the path to quitting as “shocking.” The FDA argued that, though this particular study didn’t link intent to quit with actual quitting, the rest of the scientific literature provided evidence that increased attention to the health risks of smoking would work.
The FDA thought the study was good enough, especially given evidence from similar graphic warnings in other countries. The court of appeals reiterated that those countries generally don’t have an analogue to the commercial speech protections conferred by our First Amendment, though why that would change warning effectiveness was unclear. More directly, the tobacco companies argued that the Canadian data didn’t show any statistically significant decline in smoking rates after similar graphic warnings were introduced. The FDA argued that other studies showed that the Canadian warnings had been “effective at providing . . . smokers with health information, making consumers think about the health effects of smoking, and increasing smokers’ motivations to quit smoking.”
The district court granted summary judgment to the tobacco companies. The FDA appealed. The companies did not (at this time, and probably not ever because of how invisible they are) challenge the current textual warnings, only the graphic image and the 1-800-QUIT-NOW requirements.
In what is the most troubling and, I suspect, vulnerable part of the decision, the majority first held that forcing an individual or a corporation to express certain views or subsidize speech to which they object is always subject to strict scrutiny, and this is true whether the forced speech/subsidization involves an expression of value or a statement of fact. Just to be clear: this means that the SEC’s registration procedure is subject to strict scrutiny, and the tax returns on which Uncle Sam tells me to tell it how much I made last year and what I did with it, not to mention much of the rest of the regulatory state (nutrition labels, black-box warnings on drugs and the rest of the drug facts, endorsement disclosures, “typical results are X,” “equal opportunity housing,” et cetera). But don’t worry—I’m sure we’ll be fine without those.
Anyway, the majority said this was both compulsion and forced subsidization. Though factual disclosure is also subject to strict scrutiny according to the majority, it went on to endorse the companies’ argument that the graphic warnings were designed “to shame and repulse smokers and denigrate smoking as an antisocial act,” making the message “ideological and not informational.” People already know smoking is bad, but the companies argued that this was “‘shouting’” something they already knew, and that communicated “‘a point of view on how people should live their lives: that the risks from smoking outweigh the pleasure that smokers derive from it, and that smokers make bad personal decisions, and should stop smoking.’” These weren’t warnings, but admonitions not to buy the product.
The government can use “shock, shame, and moral opprobrium” to discourage smoking and make smoking “economically prohibitive and socially onerous.” And it can require consumers to be fully informed about the dangers of hazardous products. But this regulation raised “novel” questions” about the government’s authority to force a manufacturer to go beyond “purely factual and accurate commercial disclosures and undermine its own economic interest” by making every single pack a “mini billboard” for the government’s message. As it turns out, some disclosure requirements are reviewed under Zauderer’s relaxed standard for ads, which turns on whether they attempt “only to prescribe what shall be orthodox in commercial advertising” or to “prescribe what shall be orthodox in … matters of opinion.” The “element of compulsion” creates an argument for using strict scrutiny.
(1) Okay, so certain disclosure requirements aren’t subject to strict scrutiny? Good to know; would have been nice to say so in the holding. (2) This won’t be the last time I’ll say this: the question is only “novel” if you completely ignore abortion restrictions, which you have to do to avoid embarrassing contradictions—which, admittedly, are likely to exist on both sides of the political divide. (3) Wow, “element of compulsion” is a truly bad distinction. We are evaluating disclosure requirements, which is why both descriptions of the ok and the not-ok use the same word, “prescribe.” Plainly, Zauderer involved compulsion. Most likely, the majority means ideology v. fact, except that it can’t full-on say that because the line between the two is … rather malleable. The alternative reading—tobacco warnings are extra compulsory because anyone who sells cigarettes has to use them regardless of what other factual claims their ads make or don’t make—is also dumb; anyone who sells tobacco creates the same health risks and the same need for disclosure, the same way anyone who made the affirmative claim at issue in Zauderer (that clients wouldn’t need to pay “fees” unless they won) created the same need for disclosure.
Laying another mine, the majority “assum[ed]” that marketing—“packaging, branding, and other advertisements”—could properly be classified as commercial speech. There is nothing to assume here. As long as there’s a commercial speech doctrine, those things are commercial speech. Not for nothing, that’s the basis of the Lanham Act. The question remained: “how much leeway should this Court grant the government when it seeks to compel a product’s manufacturer to convey the state’s subjective—and perhaps even ideological—view that consumers should reject this otherwise legal, but disfavored, product?” Assuming, without deciding, that such compulsion is constitutionally permissible, it still had to withstand the appropriate level of scrutiny.
According to the majority, there are two primary exceptions to strict scrutiny “in the commercial speech context.” Most obviously (though the majority puts it second), commercial speech regulation isn’t subject to strict scrutiny under Central Hudson, though the majority described the Central Hudson standard as demanding nonetheless. How this is an “exception” to strict scrutiny “in the commercial speech context” is left as an exercise for the reader. (Some ad regulation could be subject to strict scrutiny, if we took Justice Stevens’s approach—regulations designed to preserve the fairness of the bargaining process are reviewed with great leniency, and everything else gets strict scrutiny.) The second exception is that, under Zauderer, “purely factual and uncontroversial” disclosures are permissible if they are “reasonably related to the State’s interest in preventing deception of consumers,” provided the requirements are not “unjustified or unduly burdensome.” This is close to rational basis review.
First, the government argued that Zauderer applied. In that case, the Court reasoned that an advertiser’s constitutional interest in not providing additional factual information was “minimal,” given that commercial speech is constitutionally protected because of its informational benefits to the audience. Zauderer said that an advertiser’s rights were adequately protected as long as disclosure requirements were reasonably related to the state’s interest in preventing deception. The FDA argued that Zauderer’s lenient standard applied to disclosures of health and safety risks, but the court of appeals disagreed: it’s only for preventing deception. (What about the evidence that consumers don’t fully understand just how dangerous smoking is? Why aren’t health and safety regulations anti-deception regulations?)
Zauderer didn’t apply in United Foods, which was about an assessment on mushroom producers to support generic advertising. Ibanez also suggests that Zauderer only applies when the government “affirmatively demonstrates” a threat of deception, since it found that the state hadn’t shown that use of an attorney’s Certified Financial Planner designation was “potentially misleading”; the state’s posited harm was “purely hypothetical.” Zauderer only applies when the government shows that an ad will likely mislead consumers. (This conveniently ignores the actual record in Zauderer, which was hardly that robust—it was common sense to the Court at the time.) Milavetz, the most recent pronouncement, upheld a disclosure requirement for ads that were “inherently misleading” because they “promis[ed] . . . debt relief without any reference to the possibility of filing for bankruptcy, which has inherent costs.” Justice Thomas’s concurrence cautioned against reading Milavetz broadly to endorse disclosure requirements just because consumer deception might “plausibly” be at stake. The government must show that, absent a warning “there is a self-evident—or at least ‘potentially real’—danger that an advertisement will mislead consumers.”
In light of other restrictions on cigarette ads barring them from making health claims and banning “light,” “mild,” “low,” or similar descriptors, along with the absence of any congressional findings on the misleading nature of cigarette packaging itself, there was no Zauderer justification for the graphic warnings. The companies didn’t argue that no disclosure requirements were warranted; they objected to these proposed disclosures.
The dissent argued that consumers were still being misled about the nature and extent of the risks of smoking, secondhand smoke, and addiction. “But none of the proposed warnings purport to address the information gaps identified by the government.” And the broader context of years of deception preceding these warnings was only relevant as part of a corrective order necessary to “dissipate the effects of respondent’s deceptive representations,” whereas the FDA didn’t frame the graphic warnings as remedial measures designed to counteract specific deceptive claims that would keep going forever.
Plus, the graphic warnings weren’t “purely factual and uncontroversial” information, Zauderer, or “accurate statement[s],” Milavetz. Those disclosures “were both indisputably accurate and not subject to misinterpretation by consumers. The FDA’s images are a much different animal.” The FDA argued that the images were not meant to be interpreted literally, but symbolized the textual warnings, which provided context for the images. But consumers might misinterpret the images: “the image of a man smoking through a tracheotomy hole might be misinterpreted as suggesting that such a procedure is a common consequence of smoking—a more logical interpretation than FDA’s contention that it symbolizes ‘the addictive nature of cigarettes,’ which requires significant extrapolation on the part of the consumers.” (Once again, courts’ confidence in words as bearers of singular meaning does damage—words can be misinterpreted too, and images can predictably convey important messages without conveying universality. Compare, for example, the FTC’s new Guides on Endorsement, which now disfavors “results not typical” when an image of a particularly successful product user is shown—that guideline is clearly at risk from this decision.)
Anyway, the graphic warnings were not “purely” factual “because—as FDA tacitly admits— they are primarily intended to evoke an emotional response, or, at most, shock the viewer into retaining the information in the text warning.” See, there is reason, and there is emotion, and they can be easily distinguished (despite all the evidence we have that this is not so; people who cannot feel, it turns out, cannot think). The court of appeals interpreted the FDA’s citation of research showing that pictures are easier to remember than words as being about “shocking”—why can’t it be about “remembering, which we know is aided by emotional cues”? Likewise, the court didn’t like the FDA’s reliance on a “substantial body” of scientific literature showing that emotional responses “such as worry and disgust, ‘reliably predict the likelihood that consumers will understand and appreciate the substance of the warnings.’” Apparently the government is not allowed to use a warning that works if the mechanism travels through the emotions—as in fact words/symbols do too (for example, research shows that price signals, similar to the required disclosure in Zauderer and Milavetz, trigger negative emotional reactions that mitigate consumers’ desires for the advertised products), but why worry about that difficulty?
The court didn’t like that many of the images didn’t convey typical “warning” information at all,
much less make an “accurate statement” about cigarettes. For example, the images of a woman crying, a small child, and the man wearing a T-shirt emblazoned with the words “I QUIT” do not offer any information about the health effects of smoking. And the “1-800-QUIT-NOW” number, when presented without any explanation about the services provided on the hotline, hardly sounds like an unbiased source of information. These inflammatory images and the provocatively-named hotline cannot rationally be viewed as pure attempts to convey information to consumers. They are unabashed attempts to evoke emotion (and perhaps embarrassment) and browbeat consumers into quitting.
These images weren’t “patently false,” but they didn’t “impart purely factual, accurate, or uncontroversial information to consumers.”
Without Zauderer, the question was whether strict or intermediate scrutiny was appropriate. Central Hudson was the answer for mandatory disclosures applied to commercial speech, despite conflicting precedent from other circuits. The test: a substantial government interest directly advanced by the regulation that isn’t more extensive than necessary, with the government bearing the burden of justification.
The government’s interest was in decreasing smoking rates both through preventing initiation and through encouraging quitting. In a footnote, the court suggested that this wasn’t actually a substantial interest: “we are skeptical that the government can assert a substantial interest in discouraging consumers from purchasing a lawful product, even one that has been conclusively linked to adverse health consequences.” Comment: I bet Planned Parenthood would be super, super surprised to hear that. Also, even assuming that the rules for abortion weren’t directly contrary, this is ridiculous. We do not live in a world in which that which is not permitted is required, or that which is allowed is therefore okay. If “smoking kills people” isn’t enough to create a substantial interest in decreasing smoking, then what would be? (Note that this factor is supposedly about the government’s interest, not about the mechanism of regulation.) We know that the interest in protecting children from molestation is substantial, but molestation is less serious than death. Even the court, though, had to admit that “the Supreme Court has at least implied that the government could have a substantial interest in reducing smoking rates because smoking poses ‘perhaps the single most significant threat to public health in the United States.’” FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000).
Okay, that assumption out of the way, the next question was whether the FDA had offered substantial evidence showing that the warnings directly advanced the asserted governmental interest. Ineffective or remote support for the government interest wasn’t enough, nor was mere speculation or conjecture. And the FDA hadn’t provided “a shred of evidence” showing that the graphic warnings would directly advance its interest in reducing smoking. Despite the international consensus on the effectiveness of graphic warnings, there was no evidence that such warnings
directly caused a material decrease in smoking rates in any of the countries that now require them. While studies of Canadian and Australian youth smokers showed that the warnings on cigarette packs caused a substantial number of survey participants to think— or think more—about quitting smoking, and FDA might be correct that intentions are a “necessary precursor” to behavior change, it is mere speculation to suggest that respondents who report increased thoughts about quitting smoking will actually follow through on their intentions. And at no point did these studies attempt to evaluate whether the increased thoughts about smoking cessation led participants to actually quit.
One Australian study found increased quit attempts after the enactment of large graphic warnings but “no association with short-term quit success.” Some Canadian and Australian studies suggested that the warnings induced reduced consumption and helped former smokers stay away, but didn’t purport to show an actual reduction in smoking rates. True, Canadian smoking rates dropped after graphic warnings were introduced, but the FDA couldn’t directly attribute any decrease to the warnings because Canada implemented other smoking control initiatives too during the same period. Thus, the FDA’s evidence was mere speculation and conjecture. The regulatory impact assessment, despite favorable assumptions, estimated that the new warnings would reduce smoking rates by “a mere 0.088%, a number the FDA concedes is ‘in general not statistically distinguishable from zero.’” And one of the principal researchers on whom FDA relies recently surveyed the relevant literature and conceded that “[t]here is no way to attribute . . . declines [in smoking] to the new health warnings.”
“In light of the number of foreign jurisdictions that have enacted large graphic warning labels, the dearth of data reflecting decreased smoking rates in these countries is somewhat surprising, and strongly implies that such warnings are not very effective at promoting cessation and discouraging initiation.” Even deferential review couldn’t defer to this. The FDA argued that the studies only made the unremarkable point that it’s difficult to determine with precision the relative causal impact of multiple contributing factors, especially given small data sets. “But FDA cannot get around the First Amendment by pleading incompetence or futility.” It failed to meet its burden.
The FDA also argued that the court should defer to Congress’s judgment about the effectiveness of graphic warnings, per Turner, but deference is only warranted when Congress bases its conclusions on substantial evidence. (Ah, Eldred, the lost cause.)
Nor could the FDA assert a separate interest in effectively communicating health information, which is just a redescription of the means by which it was trying to reduce smoking rates. Anyway, that just begs the question of what “effectively” means. If effectively isn’t cashed out in reductions in smoking rates, then it’s a meaningless constraint on government regulation.
In conclusion, the court noted the FDA’s position that “previous efforts to combat the tobacco companies’ advertising campaigns have been like bringing a butter knife to a gun fight. According to the FTC, tobacco companies spent approximately $12.49 billion on advertising and promotion in 2006 alone, employing marketing and advertising experts to incorporate current trends and target their messages toward certain demographics.” The graphic warnings were the FDA’s attempt to level the playing field, but the fact that the government finds expression too persuasive doesn’t permit it to silence the speech or burden its messengers.