Caronia dissent points out FDCA's threatened foundations

U.S. v. Caronia, --- F.3d ----, 2012 WL 5992141 (2d Cir.)

Judge Livingston dissented.  She began with the proposition that Caronia’s intent that Xyrem be used in ways its labeling neither disclosed nor described was revealed through his speech, and it’s unexceptional that speech can constitutionally be used as evidence of motive or intent.  Wisconsin v. Mitchell, 508 U.S. 476 (1993).  By ruling otherwise, “the majority calls into question the very foundations of our century-old system of drug regulation.”

Under the FDCA and its regs, whether a drug’s directions are “adequate … for use” depends on the drug’s intended uses.  Directions are adequate only if they include, for example, “[s]tatements of all ... uses for which such drug is intended,” and “usual quantities [of dose] for each of the uses for which it is intended.”  Unsurprisingly, Caronia didn’t argue that Xyrem’s labeling included adequate directions for the off-label uses he promoted.  Rather, his defense focused on whether he enaged in a conspiracy with others to distribute Xyrem for off-label use.

Intended use has long been a cornerstone of food and drug law.  The Pure Food and Drugs Act of 1906, which prohibited introducing any adulterated or misbranded drug into interstate commerce, defined “drug” to include “any substance or mixture of substances intended to be used for the cure, mitigation, or prevention of disease.”  Courts found violations of the law where (as here) a manufacturer’s speech “demonstrated an intended use that brought it within the scope of the statute.”  The law’s expansion in the Food, Drug, and Cosmetic Act of 1938 “remained anchored to the concept of ‘intended uses,’” and broadened the definition of a “misbranded” drug to include any drug with labeling not bearing “adequate directions for use.”  Courts routinely relied on “oral representations made by ... authorized sales distributors” to determine a product's intended uses. The modern FDCA is to the same effect.

The concept of “intended uses” therefore largely defines the scope of the FDA's regulatory authority. To put the matter in practical terms: it is because of the “intended uses” principle that hardware stores are generally free to sell bottles of turpentine, but may not label those bottles, “Hamlin's Wizard Oil: There is no Sore it will Not Heal, No Pain it will not Subdue.”

The relevant regs have remained essentially unchaged for sixty years.  Intended uses are defined objectively, not subjectively. Xyrem was “misbranded”—and Caronia could be guilty of conspiracy to introduce a misbranded drug into commerce—“if the conduct and statements of the persons legally responsible for labeling the drug (or the conduct and statements of their representatives) demonstrated an objective intent that Xyrem be used for off-label purposes.”

To demonstrate that Xyrem was intended for off-label uses (and thus that it was misbranded) the prosecution in this case relied on Caronia's statements that Xyrem could be used to treat various conditions for which it was unapproved, including multiple sclerosis and fibromyalgia.  (Of course, Caronia also claimed that Xyrem was “very safe” in contradiction to its black box warning, without mentioning the contraindications.  Gleason, a co-conspirator, advocated its use in treating obesity and chronic fatigue and claimed that “for the problems with insomnia there's no better drug, no safer drug, it's as safe as Ambien and Sonata ....”  Caronia’s pay was dependent on his sales; he was unable to meet his sales targets, and at the time was ranked near the very bottom of Orphan’s sales force.)  This was speech used simply as evidence of Xyrem's intended uses, which is totally okay under the First Amendment.

The majority tried to suggest that its reasoning left open the possibility that speech may serve as evidence of intent to introduce a misbranded drug into interstate commerce, but that in this particular case “the government clearly prosecuted Caronia for his words—for his speech” and not for conspiring to introduce a misbranded drug into interstate commerce.  The dissent disagreed, and (like me) failed to see how the majority’s reasoning “would ever allow such speech to support a conviction under [the misbranding provision].”  The district court correctly instructed the jury as to the necessary elements.  When it instructed the jury that “[a] misbranded drug may be shown by a promotion of the drug by a distributor for an intended use different from the use for which the drug was approved by the Food and Drug Administration,” it was explaining the “objective intent” standard with respect to “intended uses.”  In context, it was “instructing the jury that promotion of an off-label use may demonstrate an objective intent that a drug be used for off-label purposes—and thus that it is being placed into interstate commerce without proper labeling.”  And that was no error.  Nor did Caronia argue that the instruction was erroneous or object to references to off-label promotion in the summation.

“At bottom, the majority is troubled that ‘the simple promotion of a drug's off-label use’ can lead to criminal liability under the FDCA.”  But this was a significant departure from precedent.  Even Sorrell noted that “the First Amendment does not prevent restrictions directed at commerce or conduct from imposing incidental burdens on speech. That is why a ban on race-based hiring may require employers to remove ‘White Applicants Only’ signs; … and why antitrust laws can prohibit agreements in restraint of trade.”

True, introducing Xyrem into interstate commerce was generally legal so long as the drug was not intended to be used for purposes that lacked adequate directions on its labeling. And, absent Caronia's speech (and speech by other Orphan representatives), the jury likely would not have found that Xyrem was intended for such off-label uses. But it’s consistent with the First Amendment that otherwise permissible conduct can be impermissible if undertaken with a prohibited motive, which may be proven with evidence of the actor’s speech, e.g., sex discrimination proved by an employer’s statements evidencing improper motive.  “Simply put, that Caronia was otherwise free to introduce Xyrem into interstate commerce does not give him a First Amendment right to introduce it into interstate commerce for any intended purpose he wished.”

Caronia argued that off-label use was itself lawful.  That wasn’t enough.  “There might be no law forbidding the consumption of arsenic. But this would not endow Abby and Martha with a First Amendment right to offer arsenic-laced wine to lonely old bachelors with the intent that they drink it. And any statements Abby or Martha made suggesting their intent—even if all of the statements were truthful and not misleading—would not be barred from evidence by the First Amendment simply because arsenic might legally be consumed.”  In a footnote, the dissent pointed out that

speech encouraging others to engage in certain legal conduct has long been directly regulated or prohibited in a variety of areas. For example, an insider who is privy to an impending corporate merger is prohibited from telling a friend that one of those companies is a good buy—even if that statement is truthful and even if the friend (who does not realize that she has just been made privy to material nonpublic information) may legally buy stock in that company. Each of two corporations may be free to raise its prices, but the Sherman Act forbids them from discussing such a course of action. Likewise, nonlawyers are forbidden from giving legal advice even if the advice is sound, and unlicensed laypersons may not provide medical diagnoses, regardless of their accuracy.

Of course, maybe that’s all unconstitutional, if the First Amendment eats the regulatory state.

Other laws, such as the ones at issue in Sorrell and Thompson v. Western States Medical Center, 535 U.S. 357 (2002), targeted speech directly.  If the jury had a reasonable doubt about whether Caronia actually intended to sell Xyrem, Caronia couldn’t have been convicted, no matter what he said.  But the pharmacies in Sorrell and Thompson violated the law as soon as they disseminated information/advertised: speech alone was enough to trigger punishment, whereas speech alone is insufficient to constitute misbranding.

This was the teaching of Whitaker v. Thompson, 353 F.3d 947 (D.C.Cir.2004), rejecting a a First Amendment right to label a product with a drug claim despite its lack of FDA approval:

Assuming that the government may condition the sale of drugs on passage through the elaborate testing that the statute requires ..., the key step is the [ ]FDCA principle that classification of a substance as a ‘drug’ turns on the nature of the claims advanced on its behalf. That principle, in turn, rests on the idea that claims about a product by its manufacturer and vendors, including product labeling, serve as evidence of the sellers' intent that consumers will purchase and use the product for a particular purpose—and, therefore, as evidence whether the product is or is not a drug. … [I]t is constitutionally permissible for the FDA to use speech, in the form of labeling, to infer intent for purposes of determining that [the plaintiff's] proposed sale of saw palmetto extract would constitute the forbidden sale of an unapproved drug.

Caronia argued that the Whitaker drug couldn’t be sold lawfully, meaning that there were no lawful off-label uses to promote.  But the product in Whitaker, a plant extract, could be sold lawfully as long as it wasn’t a “drug,” “and whether it was a drug depended entirely upon the plaintiff's speech, as evidence of his intent, when he offered it for sale. That case is therefore indistinguishable from this case; indeed, even if the FDA had not approved Xyrem for any medical uses at all, Caronia could presumably have sold Xyrem as an industrial solvent if it happened to be excellent at removing grease and grime…. [T]he simple fact that one is generally allowed to sell something does not imbue one with a constitutional right to sell it for any intended purpose.”

Even if using Caronia’s speech as evidence of his intent required Sorrell/Central Hudson scrutiny, it met that test.  “[O]ne of the [FDCA]'s core objectives is to ensure that any product regulated by the FDA is safe and effective for its intended use.” Brown & Williamson, 529 U.S. at 133 (2000).  Premarket approval is the central mechanism to implement this objective. Before the FDCA, the government had to proceed against misleading claims after the drugs were marketed.  The 1938 act required safety preapproval, and the 1962 amendments added premarket approval for effectiveness for stated uses, based on concerns that “doctors could not adequately evaluate frequently misleading claims by drug manufacturers without a body of objective, reliable information.”

According to the Supreme Court in Western States, “[p]reserving the effectiveness and integrity of the FDCA's new drug approval process is clearly an important governmental interest” and “the Government has every reason to want as many drugs as possible to be subject to that approval process.”  The prohibition on offlabel marketing directly advances this interest.  The ability to market FDA-approved drugs for unapproved uses would leave little incentive to seek FDA approval for those uses.  Prohibiting off-label promotion is one of the few mechanisms available to encourage use of the approval process.

The majority was impressed that doctors can prescribe drugs for off-label purposes, and patients can use them:

But this is also true for substances that have not been approved by the FDA for any medical use at all. The law generally permits a hardware store to sell turpentine, and though such conduct may not be advisable, the law generally permits a consumer to purchase that turpentine and use it as a pain reliever. Under the majority's reasoning, then, any substance that may be legally sold for some purpose may be promoted by its manufacturer for any purpose—so long as the manufacturer's statements are merely unsubstantiated, rather than demonstrably false or misleading. But this reasoning would invalidate the very definitions of “drug” and “device” that undergird the entire FDCA.

The majority emphasized that the prohibition was speaker-based.  “But drug manufacturers are the precise group that the government must encourage to participate in the new drug approval process. Indeed, if the prohibition applied to any broader class of speakers, it would likely fail Central Hudson's fourth requirement that a regulation be ‘narrowly drawn.’”  Whereas in Sorrell, the law didn’t promote the interest in protecting patient privacy because it applied only to a small subset of the groups who could compromise privacy, drug manufacturers were the entirety of the group who could undermine the NDA process by not participating in it.

Also, allowing the promotion of off-label uses would undermine the approval process even for new drugs.  Approval requires consideration of safety and effectiveness.  “If a drug manufacturer must be allowed to distribute a drug for any use so long as it is approved for one use, the government's balancing of a drug's benefits against its risks becomes very difficult or even impossible. Drugs viewed as safe for certain uses might be considered unsafe overall if the benefits and risks being weighed are not for a specific intended use but rather for any use at all, whether supported by evidence or not.”  Thus, the ban on off-label promotion is not just a paternalistic attempt to shield doctors and patients from truthful information.  It makes the whole regulatory scheme work. “[I]f drug manufacturers have a First Amendment right to distribute drugs for any use to physicians or even directly to patients, then the entire FDCA may well be unconstitutional.”

Banning off-label promotion by manufacturers was also the least restrictive alternatives; nothing in the majority’s list would be similarly effective.  Disclaimers etc. wouldn’t leave any incentive to submit drugs for FDA approval, and would encourage promotion based on data much less reliable than that required for FDA approval.  (The court cited conclusions that most prescriptions for off-label use, 73%, have little or no scientific support. See Randall S. Stafford, Regulating Off–Label Drug Use: Rethinking the Role of the FDA, 358 New Eng. J. Med. 1427, 1427 (2008).)  Ceilings on off-label prescriptions would require data from “countless” doctors and patients and could “needlessly (and simultaneously) result in the denial of some effective treatments and the overprescription of ineffective and even dangerous ones.”  A ban on off-label prescriptions “would constitute an unprecedented intrusion into the practice of medicine, and would result in perhaps an even greater restriction on speech.”  Most importantly, because what is a “drug” (or “device”) depends on intended use, often established by reference to speech, the majority’s less-restrictive-alternatives analysis is equally applicable to the entire FDCA scheme.

The idea that the FDCA was content- and speaker-based added nothing.  “Every commercial speech case, by its very nature, involves both content- and speaker-based speech restrictions. Yet the Supreme Court has long acknowledged—and acknowledged again in Sorrell—that ‘the government's legitimate interest in protecting consumers from commercial harms explains why commercial speech can be subject to greater governmental regulation than noncommercial speech.’” Plus, the government’s interest here was in preventing dangerous products with false or misleading labels, and insuring a base of reliable, objective information about prescription drugs.  This is a core Central Hudson case even after Sorrell.  (The Supreme Court has applied Central Hudson to statutes that provide for or allow criminal punishment for speech.)

While the simple fear that people will make bad decisions with truthful information can’t justify content-based burdens on speech, that doesn’t mean that “conveying non-demonstrably false information to consumers must take precedence over all competing government interests.”  The dissent concluded by pointing out that the circuit hadn’t applied heightened scrutiny in other cases involving the use of speech as evidence of intent, such as antidiscrimination cases or prosecutions for criminal inducement, attempt, and conspiracy.  The majority decision “calls into question a fundamental regime of federal regulation that has existed for more than a century,” and thus Judge Livingston dissented.

Here’s a more sanguine take from the Drug & Device Law blog, which likes the new First Amendment defense for off-label promotion (and considers Caronia a good guy who didn’t do anything wrong; compare what he said about safety and teenagers). I think that analysis is wrong, though clever; though it initially says that there’s only a First Amendment defense for truthful speech, the core question is whether “intended use” and “misbranding” can mean what the FDA interprets them to mean. If they can, then Caronia engaged in misbranding; if they can’t, then off-label promotion isn’t misbranding and the government can’t constitutionally stop drugmakers from promoting—including mass market advertising—unapproved indications for approved drugs.  Though it could still prosecute false or misleading statements, the scienter requirement would be quite different: knowing falsity, rather than knowing off-label promotion. How many sales reps will know the information they’ve been given by in-house sources is false, as opposed to knowing that the indication they're promoting isn't on the label?

Prosecuting offlabel promotion as misbranding is unconstitutional

U.S. v. Caronia, --- F.3d ----, 2012 WL 5992141 (2d Cir.)

In the latest round of the expansion of commercial speech doctrine to eat away at the basic foundations of the regulatory state, the Second Circuit reversed a pharmaceutical rep’s conviction for conspiracy to introduce a misbranded drug into interstate commerce because all he did was promote the drug Xyrem for off-label use.

FDA drug approvals require clinical proof of the safety and efficacy of a new drug for each intended use or indication. But once approved, drugs can be prescribed for non-approved uses. The FDA itself has recognized that doctors do this and that it may be “appropriate and rational in certain circumstances, and may, in fact, reflect approaches to drug therapy that have been extensively reported in medical literature.” However, the FDCA prohibits misbranding. Misbranding occurs if a label fails to bear “adequate directions for use,” defined as “directions under which the lay[person] can use a drug safely and for the purposes for which it is intended.” The regulations define intended use by reference to “the objective intent of the persons legally responsible for the labeling of drugs,” which may be demonstrated by, among other evidence, “oral or written statements by such persons or their representatives” and “the circumstances that the article is, with the knowledge of such persons or their representatives, offered and used for a purpose for which it is neither labeled nor advertised.” Misbranding bears criminal penalties.

The FDCA and its regs don’t explicitly ban promotion or marketing of drugs for off-label use, but recognize that promotional statements by pharma reps can serve as proof of a drug’s intended use. Thus, off-label promotional statements could constitute evidence of an intended unapproved use. The FDA has concluded that “[a]n approved drug that is marketed for an unapproved use (whether in labeling or not) is misbranded because the labeling of such drug does not include ‘adequate directions for use.’” “Thus, the government has treated promotional speech as more than merely evidence of a drug's intended use—it has construed the FDCA to prohibit promotional speech as misbranding itself.”

Caronia was a rep for Orphan (now known as Jazz), which made Xyrem, a powerful central nervous system depressant with serious side effects and risks from abuse. Its active ingredient is GHB, known as the “date rape drug.” The FDA approved Xyrem to treat narcolepsy patients who experience cataplexy and those who experience excessive daytime sleepiness, but required a “black box” warning, the most serious warning available. It was not approved for teens. To identify side effects, the FDA also regulated Xyrem distribution, allowing only one pharmacy to distribute Xyrem nationally.

Caronia’s salary was based on his sales. He started “speaker programs” for Xyrem, which pay doctors to speak to other doctors about FDA-approved drug use. Orphan’s procedures required Caronia to decline to answer questions about off-label uses of Xyrem, and instead fill out “medical information request forms” sent to Orphan. Orphan would then send information to the inquiring physician. But doctors employed as promotional speakers by Orphan were permitted to answer off-label use questions.

Caronia and a speaker program doctor, Gleason, promoted Xyrem for unapproved uses, including unapproved indications and unapproved subpopulations—e.g., “the youngest patients we have are sixteen in the studies as old as sixty-five. … [T]here have been reports of patients as young as fourteen using it and obviously greater than sixty-five. It's a very safe drug.” The criminal information filed against Caronia said that he “was marketing Xyrem for medical indications that were not approved by [the] FDA when, as the defendant then and there well knew and believed, Xyrem's labeling lacked adequate directions for such uses and adequate warnings against such uses where uses could be dangerous to the user's health.” That is, it didn’t contain adequate directions for use “because such an ‘off-label’ indication or use and related information were not included in the FDA-approved labeling for the drug.”

Gleason and Orphan pled guilty to related charges. The majority found it to be clear that “the government prosecuted Caronia for his off-label promotion …. Thus, the government's theory of prosecution identified Caronia's speech alone as the proscribed conduct.” (Like many a conspiracy.) The jury found Caronia guilty of conspiracy to introduce a misbranded drug into interstate commerce.

On appeal, Caronia argued that the First Amendment didn’t allow the government to criminalize a pharmaceutical company’s truthful and non-misleading promotion of an FDA-approved drug to physicians for off-label use “where such use is not itself illegal and others are permitted to engage in such speech.” The court found in his favor, on what it said were narrower grounds.

The statute and its regs don’t expressly prohibit or criminalize off-label promotion. They use “promotion” only as evidence of a drug’s intended use. “Thus, under the principle of constitutional avoidance, we construe the FDCA as not criminalizing the simple promotion of a drug's off-label use because such a construction would raise First Amendment concerns. Because we conclude from the record in this case that the government prosecuted Caronia for mere off-label promotion and the district court instructed the jury that it could convict on that theory, we vacate the judgment of conviction.”

The government argued that Caronia’s off-label promotion was used only as evidence of intent to misbrand the drug: evidence that the “off-label uses were intended ones[ ] for which Xyrem's labeling failed to provide any directions.” The court disagreed. Even assuming that the government can offer evidence of off-label promotion to prove intended use (which really must be the case) under the rule of Wisconsin v. Mitchell, 508 U.S. 476 (1993), that the First Amendment “does not prohibit the use of speech to establish ... intent,” that’s not what happened here. The government repeatedly argued that Caronia was a criminal because he promoted and marketed off-label use of Xyrem. Even if the government could have used Caronia’s speech as evidence of intent, the government didn’t limit its use of the speech in that way. Mitchell instructs that speech introduced as evidence of intent should be carefully scrutinized “to be certain the statements are not expressions of mere lawful and permissible difference of opinion with our own government.” The only misbranding alleged was promoting off-label use. (Since Caronia isn’t responsible for the labeling, how could he engage in “misbranding” at all under this theory? Indeed, the court points out that the government never argued that Caronia “conspired to place false or deficient labeling on a drug.”) In a footnote, the court wondered about how the speech-as-evidence-of-intent rule would work here—“would a manufacturer be guilty of misbranding if it ships Xyrem to a doctor who, in placing his order, reveals that he prescribes the drug for off-label use—on a theory that the manufacturer now knows that the drug is not properly labeled for that use—but not if the manufacturer ships to a doctor who does not reveal that he prescribes the drug off-label?”

The district court “flatly” told the jury that pharma reps are prohibited from off-label promotion. But “[s]peech in aid of pharmaceutical marketing ... is a form of expression protected by the Free Speech Clause of the First Amendment,” Sorrell v. IMS Health. To construe “simple promotion” of off-label use by manufacturers and reps as misbranding would violate the First Amendment.

Sorrell held that a Vermont statute regulating pharmaceutical information-sharing was content- and speaker-based and thus subject to heightened scrutiny and presumptively invalid.  Even under Central Hudson, the law would have been invalid.  The government’s view that the FDCA’s misbranding provisions criminalized the promotion of off-label drug use by pharmaceutical manufacturers was content- and speaker-based, and, therefore, subject to heightened scrutiny.  Speech about government-approved use of drugs was permitted, while certain speech about off-label uses wasn’t, even though the off-label use was itself allowed and even though non-manufacturers, including doctors and academics, could speak without restriction.  As in Sorrell, the “express purpose and practical effect” of the government's ban on promotion is to “diminish the effectiveness of [off-label drug] marketing by manufacturers.”  The government’s interpretation “thus has the effect of preventing [pharmaceutical manufacturers]—and only [pharmaceutical manufacturers]—from communicating with physicians in an effective and informative manner.”  Plus, the First Amendment claim was even stronger because this was a criminal regulatory scheme subject to more careful scrutiny.

Under Central Hudson, promoting off-label drug use concerns lawful activity, and its promotion is not itself false or misleading.  The government’s asserted interests in drug safety and public health were substantial (though maybe not according to the D.C. Circuit!).  The government claimed an interest in preserving the effectiveness and integrity of the FDCA's drug approval process, and an interest in reducing patient exposure to unsafe and ineffective drugs.  The government didn’t argue that off-label promotion was itself false or misleading; if it were, it wouldn’t be entitled to any First Amendment protection.

In a footnote, the majority rejected the dissent’s reliance on Whitaker v. Thompson, 353 F.3d 947 (D.C.Cir. 2004), which rejected an asserted First Amendment right to label a product with a drug claim despite its lack of FDA approval.  Whitaker “constituted speech about unlawful activities and therefore did not enjoy First Amendment protection because it was unlawful to sell an unapproved product pursuant to claims about disease treatment.” But, as the dissent will point out a number of times, it’s only unlawful because it’s a drug: if you sold it as “paint” the FDCA wouldn’t apply, which means that the rule violated in Whitaker is exactly as speech-based and speaker-based as the rule here.

So the court turned to Central Hudson prongs three and four: does the regulation directly advance the government’s interests and is it narrowly drawn?  No.  Off-label drug use isn’t unlawful, and the FDA generally expects that approved drugs will be used off-label.  Thus, prohibiting the truthful promotion of off-label drug usage by a particular class of speakers wouldn’t directly further the government's goals of preserving the efficacy and integrity of the FDA's drug approval process and reducing patient exposure to unsafe and ineffective drugs.  Instead, it’s a paternalistic interference with “the ability of physicians and patients to receive potentially relevant treatment information; such barriers to information about off-label use could inhibit, to the public's detriment, informed and intelligent treatment decisions.” In fact, in its safe harbors for manufacturers’ dissemination of off-label information through scientific journals, the FDA itself “recognizes that public health can be served when health care professionals receive truthful and non-misleading scientific and medical information on unapproved uses” of approved drugs.  It’s the doctor’s job to consider multiple factors, including FDA approval or lack thereof, in deciding what drugs to use.   “If the government's objective is to shepherd physicians to prescribe drugs only on-label, criminalizing manufacturer promotion of off-label use while permitting others to promote such use to physicians is an indirect and questionably effective means to achieve that goal.”  (Note that the majority has only really addressed interest two, limiting unsafe prescriptions; it’s said nothing about the FDA approval process, and for good reason—the off-label promotion limits are the thread that unravels the “safety and efficacy” approval process.)

Nor was the regulation narrowly drawn to further the government’s interests.  Less speech-restrictive alternatives were available, as were noncriminal penalties.  (Ok, wait: now we can’t prosecute criminal fraud if civil fraud remedies are available?  Remember that fraud is a classic content-based regulation; it’s just ok to ban.)

The government could “guide physicians and patients in differentiating between misleading and false promotion, exaggerations and embellishments, and truthful or non-misleading information.”  It could “develop its warning or disclaimer systems [ed. note: unless R.J. Reynolds applies!], or develop safety tiers within the off-label market, to distinguish between drugs.”  It could require manufacturers to list all “applicable or intended indications” when initially applying for FDA approval, allowing people to track the drug’s development.  (Hunh?  I’m all for mandatory reporting of drug data, but how would this initial requirement help?)  To minimize evasion of the approval process, the FDA could create caps on off-label prescriptions.  It could “remind” doctors and manufacturers of the legal liability surrounding off-label promotion and treatment, and even perhaps further regulate that liability.  (Query: if the doctor says “I think you should take this drug,” is that protected speech?)  And it could prohibit off-label use entirely where there are exceptional concerns. 

The First Amendment means that regulating speech must be a last, not a first, resort.  (One who considered the historical development of the FDA’s powers through the 20^th century, including that time when all those kids died drinking antifreeze sold as medicine, might have thought that the current scheme was something of a last resort.)  The government’s response to the proposed alternatives was that they weren’t administrable, feasible, or effective, but its claims were too conclusory to credit.

Thus, manufacturer promotion alone can’t be misbranding, even if speech can be used as evidence of a drug’s intended use.  “We construe the misbranding provisions of the FDCA as not prohibiting and criminalizing the truthful off-label promotion of FDA-approved prescription drugs.”

District court upholds strongly worded remedial cigarette disclosures

U.S. v. Philip Morris USA, Inc., --- F. Supp. 2d ----, 2012 WL 5928859 (D.D.C.)

In 2006—seven years after the government first filed its RICO suit—the court issued a final judgment mandating that the defendant tobacco companies publish corrective statements on five topics about which they had deceived consumers.  After multiple appeals, the court finalized the text of the corrective messages, though implementation details remain.

The defendants were found guilty of a RICO conspiracy; they “knowingly and intentionally engaged in a scheme to defraud smokers and potential smokers, for purposes of financial gain, by making false and fraudulent statements, representations, and promises.”  There were detailed findings of fact.  “[E]ach and every one of these Defendants repeatedly, consistently, vigorously-and falsely-denied the existence of any adverse health effects from smoking,” despite “the massive documentation in their internal corporate files from their own scientists, executives, and public relations people” that confirmed that there was little evidence supporting their claims. They embarked on a “campaign of proactive and reactive responses to scientific evidence that was designed to mislead the public about the health consequences of smoking.”

Second, the tobacco companies “have publicly denied and distorted the truth as to the addictive nature of their products for several decades.” Defendants “knew and internally acknowledged that nicotine is an addictive drug,” but “publicly made false and misleading denials of the addictiveness of smoking, as well as nicotine's role in causing that addiction.”  This was a continuing fraud: “no Defendant accepts the Surgeon General's definition of addiction, no Defendant admits that nicotine is the drug delivered by cigarettes that creates and sustains addiction, and no Defendant acknowledges that the reason quitting smoking is so difficult, and not simply a function of individual will power, is because of its addictive nature.”

Third, they “designed their cigarettes to precisely control nicotine delivery levels and provide doses of nicotine sufficient to create and sustain addiction” through multiple choices of additives, substances, and other design aspects, while falsely denying “that they manipulate nicotine content and delivery in cigarettes in order to create and sustain addiction.”

Fourth, for several decades, they marketed and promoted “low tar brands” as less harmful than conventional cigarettes, knowing this to be false because smokers modify their smoking behavior when smoking low tar brands.  Defendants continued to make “false and misleading statements regarding low tar cigarettes in order to reassure smokers and dissuade them from quitting.”

Fifth, the tobacco companies “crafted and implemented a broad strategy to undermine and distort the evidence indicating passive smoke as a health hazard.”  Contrary to their own research, they made “numerous public statements denying the linkage” between secondhand smoke and disease in nonsmokers, and continued to deny the truth.

Based on this conduct, the court concluded that there was a reasonable likelihood that defendants would continue to violate RICO in the future, a conclusion affirmed by the court of appeals even after the passage of the Family Smoking Prevention and Tobacco Control Act of 2009.  (After all, the court of appeals pointed out, the companies had proven themselves willing to violate RICO, with its very large potential penalties.)  The defendants continued to engage in the same or materially indistinguishable conduct not just after the complaint was filed but until judgment.  Still, the district court waited until the ruling in R.J. Reynolds Tobacco Co. v. Food & Drug Administration, 696 F.3d 1205 (D.C.Cir. 2012), to issue its order on corrective statements.

The court ordered defendants to publish corrective statements as to each of the five groups of fraudulent conduct and statements identified above.  The key language in each is:  “A Federal Court has ruled that the Defendant tobacco companies deliberately deceived the American public about [the health effects of smoking, etc.], and has ordered those companies to make this statement. Here is the truth:”

The remaining statements are blunt, starting with “Smoking kills, on average, 1200 Americans. Every day.  More people die every year from smoking than from murder, AIDS, suicide, drugs, car crashes, and alcohol, combined” and continuing through, e.g., “It's not easy to quit. When you smoke, the nicotine actually changes the brain--that's why quitting is so hard” and “There is no safe level of exposure to secondhand smoke.”  Defendants were sad that they were being ordered to tell people that they’d been lying, and argued that a plain language recitation of the court’s massively documented findings was too mean and emotion-laden to satisfy Zauderer as interpreted in R.J. Reynolds.  (Pro tip: if you don’t want people to call you a liar, don’t lose a fraud case, especially not one involving a massive, deadly campaign of deception.)

The district court disagreed.  Previously, the court of appeals upheld the determination that corrective statements, targeted at “reveal[ing] the previously hidden truth” about cigarettes and “correct[ing] Defendants' campaign of deceptive marketing,” would prevent and restrain future RICO violations.  The court of appeals already held that a corrective statements remedy was narrowly tailored to achieve the substantial governmental interest of “preventing Defendants from committing future RICO violations.”  It remanded for the district court to develop statements that would satisfy Zauderer by being “purely factual and uncontroversial information, geared towards thwarting prospective efforts by Defendants to either directly mislead consumers or capitalize on their prior deceptions by continuing to advertise in a manner that builds on consumers' existing misperceptions.”

These previous opinions established that, regardless of whether the test was Central Hudson or Zauderer, the key question of “fit” was the same and was satisfied in this case. Moreover, the court of appeals specifically directed the district court to apply Zauderer.  Since the affirmance, the Supreme Court’s 2010 ruling in Milavetz reaffirmed the power to order disclosure to correct misleading commercial speech: while disclosure requirements can’t be unreasonable or unduly burdensome, “an advertiser's rights are adequately protected as long as disclosure requirements are reasonably related to the State's interest in preventing deception of consumers.” Then, the D.C. Circuit applied Zauderer to uphold a rule requiring that the most prominent figure on airline print advertisements and websites be the final price, including taxes, in order to avoid consumer confusion. Spirit Airlines, Inc. v. Dep't of Transp., 687 F.3d 403 (D.C.Cir. 2012). This rule was reasonably related to the goal of preventing consumer confusion about the total price consumers would have to pay, and survived both Zauderer and Central Hudson scrutiny, given the government’s substantial interest in “ensuring the accuracy of commercial information in the marketplace.”  (Comment: Though keeping people from dying apparently isn’t a similarly substantial interest, per the R.J. Reynolds majority.)  This interest was “clearly and directly advanced” by a rule requiring the total price to be the most prominent price in a particular advertisement, and was likewise “reasonably tailored.”

Reynolds rejected Zauderer because the FDA’s interest in using graphic image was targeted at discouraging smokers, not at correcting misleading or incomplete commercial messages, but the court specifically distinguished the case before it from the present RICO proceeding: “remedial measure[s] designed to counteract specific deceptive claims made by the Companies … are the subject of a pending—and entirely separate—line of litigation against the Companies.”

Reynolds also said the warnings would flunk Zauderer because the images were not “purely factual and uncontroversial.”   This relied on “two crucial concessions”: that the images were “not meant to be interpreted literally,” which raised concerns that the images “could be misinterpreted by consumers,” and that the the images were intended to evoke an emotional response and/or shock the reader into retaining information. Thus the images were “inflammatory,” “unabashed attempts to evoke emotion” and to “browbeat” consumers into quitting rather than “pure attempts to convey information.”  While not patently false, the images didn’t “impart purely factual, accurate, or uncontroversial information to consumers.”  Of course, there is no such thing as a factual disclosure divorced from emotional content—emotions are how we make decisions, including feeling the sting of price—but the district court’s stuck with these words, so that’s what it uses.

Applying Reynolds, Zauderer would apply to required disclosures that are purely factual and uncontroversial and aimed at false and misleading commercial speech.  The corrective statements ordered by the court were purely factual, clear, and accurate, each based on specific findings of fact in the 2006 opinion.  Defendants argued that the introductory preamble isn’t “purely factual,” but they just didn’t like the facts: “a federal court ruled that Defendant tobacco companies deceived the public about the topic of the particular Statement and ordered them to issue an accurate Statement.”  It was also factually true that the corrective statements had been ordered to prevent further untruthfulness by defendants. 

“Recognizing this flaw in their argument,” defendants then argued that the language evokes an “emotional response” and “embarrassment” and thus is not factual under Reynolds.  (Really? Defendants don’t seem very embarrassed to me.)  But the Reynolds images were “not meant to be interpreted literally,” while the corrective statements “contain no pictures and merely disclose facts.” 

Next they argued about the phrasing of particular facts.  The court rejected defendants’ argument that it was not factual to disclose how many Americans die each day from smoking-related illnesses because that number was based on the estimated number who die each year.  To address these concerns about the “roughness” of the estimate, the final version of the corrective statement was amended to read, “Smoking kills, on average, 1,200 Americans. Every day.” The court also rejected other equally trifling criticisms, such as that another corrective statement misleadingly implied that defendants “spike” cigarettes with additional nicotine.  Not so; instead, as the court found, they manipulated nicotine delivery in a number of ways, and that’s what the statement says.

The statements were grounded in affirmed findings of fact; accurate; and didn’t attempt to “shock” the reader or elicit embarrassment, so they were “factual” under Zauderer.  They were also uncontroversial.  Controversy has to mean more than that the defendants “simply disagree with a particular proposition that has been decided against them.”  Reynolds found images controversial when they didn’t clearly convey the particular text, but rather were “subject to misinterpretation” and required “significant extrapolation on the part of consumers.”  The corrective statements, by contrast, were “simple declarative sentences and basic, uncomplicated language. There are no images at issue and the language used does not raise similar concerns about misinterpretation. Nor is there any need for the consumer to ‘extrapolate’ from the text.”

Defendants argued that the preamble was “controversial” because it intended to evoke an emotional response, calling it “unprecedented, self-denigrating language” compelling them to admit past wrongdoing (wrongs they did, in fact, do).  (I already mentioned the science above; how about a feminist take—some emotions count as emotions and others count as rationality.)

“Putting aside Defendants' hyperbole, their argument ignores the fact that the government regularly requires wrongdoers to make similar disclosures in a number of different contexts. The language of the preamble is hardly ‘unprecedented,’ and the variety of contexts in which such language has been approved undermines Defendants' position that the preamble is ‘controversial.’”  The NLRB and the FTC have made similar orders requiring disclosure of unfavorable rulings and determinations for decades, not to mention a bunch of other regulators.  In 2010 the D.C. Circuit affirmed a remedy requiring a seller of supposed cancer remedies to send a letter, on its own letterhead, signed by the seller itself, to individuals who had purchased its product, including the statement, “the Federal Trade Commission (‘FTC’) has found our advertising claims for these products to be deceptive because they were not substantiated by competent and reliable scientific evidence, and the FTC has issued an Order prohibiting us from making these claims in the future.”  The court of appeals pointed out that deceptive commercial speech is unprotected, and, even if it were protected, the FTC’s order would still be fine since it was carefully tailored to protect customers from deception—like the court’s corrective statements here.

Next, the tobacco companies suggested that the court’s findings were inherently “controversial” because no other court has made similar findings, and other courts have let the companies off the hook for their fraud.  But the findings are the law of the case; and in any event, none of the previous cases had an ultimate finding of fact absolving tobacco companies on the grounds that they didn’t engage in fraud—those cases went off on standing, harm, or lack of reliance.

Given that the purpose of the corrective statements was to correct and prevent consumer deception, then, Zauderer was satisfied.  Defendants argued that the statements were “inappropriately motivated” by a desire to induce quitting, but the statements themselves say nothing about individual smokers’ choices. 

The FTC regularly uses similar corrective statements to correct a public campaign of misinformation, as approved in Warner-Lambert Company v. F.T.C., 562 F.2d 749 (D.C.Cir. 1977) (approving corrective advertising requirement: “Listerine will not help prevent colds or sore throats or lessen their severity”).  The Warner-Lambert court of appeals found the corrective statement “well calculated to assure that the disclosure will reach the public.” Though it deleted “contrary to prior advertising” from the required disclosure as unnecessary, the court noted that Warner-Lambert wasn’t an “egregious case of deliberate deception” and that such a statement might be appropriate in another case.  The value of corrective statements was reaffirmed in Novartis Corporation v. F.T.C., 223 F.3d 783 (D.C.Cir. 2000).  Even in this case, the court of appeals had already ruled that corrective statements were an appropriate remedy: “Defendants will be impaired in making false and misleading assurances about, for instance, smoking-related diseases or the addictiveness of nicotine ... if they must at the same time communicate the opposite, truthful message about these matters to consumers.”

Defendants’ only real argument was that the preamble wasn’t reasonably related to the government’s interest because corrective statements had to be focused on facts about the product, not on the speaker’s past conduct.  No dice: alerting people to the deceptive nature of a business practice is tailored to protect consumers from further deception.  Plus, the deception here went far beyond that in Warner-Lambert and Novartis: nearly fifty years of multiple deceptive claims, not merely a single claim that a product provided a benefit it didn’t actually have.  Here, the defendants offered false scientific claims and concealed research data disproving their claims; they marketed to young people to recruit “replacement smokers”; they manipulated cigarette designs to ensure that cigarettes delivered doses of nicotine adequate to create and sustain addiction; they conspired to undermine and discredit the scientific consensus that secondhand smoke causes disease; they destroyed relevant documents to support their public and litigation positions.   “[T]he massive scope of Defendants' campaign of deception and fraud differentiates this case from cases requiring simpler corrective statements such as Warner-Lambert and Novartis.”  Given this record and the likelihood of future RICO violations, the preamble provided “important and necessary context for the consumer to understand the accurate information that follows.”

Likewise, the corrective statements weren’t unjustified or unduly burdensome.  “There is no reason to believe that issuing these Corrective Statements would place any burden on Defendants' speech other than the desired one, namely preventing Defendants from denying the accuracy of them.”

Even if Zauderer didn’t apply, the corrective statements passed Central Hudson scrutiny too.  There was a substantial governmental interest; it was directly advanced by the regulation; there was a reasonable fit between the interest and the means chosen.  Though there’d been some discussion of the quantum of evidence that the government had to provide to show that its interest was directly advanced by a regulation, Lorillard Tobacco Co. v. Reilly, 533 U.S. 525 (2001), made clear that the evidence could come from “studies and anecdotes pertaining to different locales altogether, or even, in a case applying strict scrutiny, to justify restrictions based solely on history, consensus, and simple common sense.”  Here, simple common sense was enough to support the conclusion that revealing the previously hidden truth would prevent and restrain RICO violations.
Defendants argued that their own proposed language would be a lesser burden (I’ll bet!) and that therefore the “fit” between the court’s language and the government’s interest wasn’t reasonable.  But Central Hudson isn’t a least restrictive means test; the court of appeals had already determined that corrective statements were narrowly tailored. 

Plus, the defendants’ proposals could easily be predicted to perform materially worse at preventing future RICO violations.  For example, the evidence of harm from secondhand smoke is overwhelming, which defendants knew as early as 1961.  “Despite publicly promising to fund independent research on the issue, Defendants ‘took steps to undermine independent research, to fund research designed and controlled to generate industry-favorable results, and to suppress adverse research results.’”  But defendants’ proposals would allow them to falsely deny that secondhand smoke causes disease once the two-year corrective statement period expired: “All of the statements on secondhand smoke submitted by the Defendants phrased the fact as merely a ‘conclusion’ held by either the Surgeon General or ‘public health officials.’”  Their proposals depicted well-established scientific fact “as if it were a mere opinion held by public health officials, rather than representing a consensus held by the scientific community at large.”  By contrast, the court’s disclosures ensured that consumers know the history of defendants’ deceptiveness in the past.  After they disclosed the scientific consensus, defendants would be less likely to attempt to dispute the existence of such a consensus.  (I'm not surprised the court rejected such blatant attempts to play on potential consumer distrust of government.)

Finally, the tobacco companies argued that the preamble was “confessional” and “punitive” in violation of due process. Not so.  Its purpose was corrective, and civil cases have ordered defendants to admit wrongdoing and publish corrections.

There remained implementation details.  Originally, the defendants had been ordered to publish the statements on their corporate websites, publish them as full-page ads in major newspapers, run them on major TV networks, and attach onserts containing the statements to their packaging. These media were designed to use the same vehicles that defendants themselves historically used to promote false messages.  In the past six years, though, the types of media in which defendants advertise have changed dramatically, so the parties were ordered to meet and confer with a Special Master on the questions raised, along with other details of implementation (such as the exact configuration of cigarette box onserts and whether they, and corrective ads on websites, should be translated into Spanish).

wishy-washy "may enhance" health claim still actionable

Koehler v. Litehouse, Inc., 2012 WL 6217635 (N.D. Cal.)

Koehler alleged that Litehouse’s Bleu Cheese Yogurt Dressing with Probiotics falsely claimed that it “May boost immunity” and the rear label of the product claims that it “May enhance the body's immune system,” in violation of the usual California statutes (and in breach of express warranty/constituting negligent misrepresentation).

Koehler’s amended complaint quoted from his expert’s affidavit; the court struck the references to the affidavit because they included only conclusory assertions, not nonconclusory factual statements.  Litehouse then argued that all Koehler’s claims failed as a matter of law because of the qualifier “may” in the statements.  Qualifying statements are important for a reasonable consumer’s understanding; the court found that “may” was similar to “up to,” and would signal a lack of certainty to a reasonable consumer.  However, at least some of the complaint seemed predicated on the idea that a consumer would understand the statements to mean that there is a possibility that the product would enhance the immune system, but that it does not, in fact, do so.  If the product doesn’t even have a likelihood or tendency to boost immunity, the advertising is false.  Allegations of this type stated a claim.

Litehouse then argued that, since Koehler only alleged that he read and relied on the label, he couldn’t base his claims on other advertising methods used by Litehouse.  “Whether Koehler as a class representative can present claims on behalf of other class members who may have relied on different advertisements than those on the product label is an issue of typicality and adequacy of representation more properly disputed at the class certification stage. This is very different from the issue of whether Koehler has standing to bring his own claims, which Litehouse does not even dispute.”

Litehouse then argued that Koehler lacked standing to seek injunctive relief because he was at no risk of future injury, given that he now allegedly knew the truth.  This rationale would prevent any injunction from issuing to stop false advertising, “eviscerat[ing]” the California legislature’s intent.

Litehouse then argued that Koehler’s California claims couldn’t be brought on behalf of a nationwide class.  The court granted the motion to dismiss the class action allegations, to the extent asserted on behalf of a nationwide class, since non-California residents lacked sufficient contacts with the state.  It also granted Litehouse’s motion to dismiss Koehler’s request for the disgorgement of all ill-gotten gains, since disgorgement as such wasn’t available under the law, and allowed him to amend his pleading to limit the disgorgement demand to restitutionary purposes only.

Widespread use of Video Downloader doesn't save inadequate specimen of use

OK, I like this because it's about widespread social practices that persist regardless of terms of service or even applicable law and that people are perfectly willing to make public; it has little other significance.

In re Rogowski, No. 77083475 (TTAB Dec. 11, 2012)

Rogowski filed an ITU for ACTIVE REASONER for “audio recordings featuring music.” After his notice of allowance issued, he submitted a specimen that was a photo of a YouTube page with his statement of use.

 

The examining attorney refused registration on the ground that the specimen failed to show the mark used in direct connection with the identified goods (audio recordings).  The TTAB affirmed.

The examining attorney reasoned that “a video recording is not necessarily an audio recording” because “the main purpose of a visual recording is to present visual content, whereas the main purpose of an audio recording is to provide audio content.” (I’m not so sure about that as applied to YT music, but the next reason is better.)  The examining attorney also found that the proposed mark as used on the specimen didn’t identify any tangible musical recording or downloadable audio recording, which were the goods identified in the applied-for class (International Class 9).  Rather, the mark as used in the specimen appeared to identify a “non-downloadable musical video performance” uploaded to and streamed on YouTube.  The specimen failed to indicate that the audio recording could be downloaded.

Applicant argued, with a strong basis in fact though not in YT’s terms of service, that

I, and many others have downloaded my music directly from YouTube. There are many computer programs available for free, on the internet, which enable the user to download music and video. I use Real Player. I apologize for assuming that everyone who uses computers would be aware of the ease of downloading. Being involved in the music industry has made me acutely aware of the music download phenomena….

The TTAB didn’t disagree with the claims about technology.  Rather, it relied on the requirements for a successful specimen.  This one showed the applied-for mark as the name of the channel/poster.  Viewers were invited to “Subscribe” or “Edit My Playlist” through buttons/links.  The mark also appeared accompanied by: “Here are my songs presented in the order they were released on YouTube.”  This specimen didn’t show trademark use for the identified goods.

It was dispositive that the specimen didn’t include a “download” or similar link “to put the consumer on notice that the identified goods (‘audio recordings featuring music’) are indeed available for download or the equivalent thereof.”  (People do this—they embed links to, e.g., Soundcloud or to a personal website in the notes; also if they’re on iTunes or Amazon a buy/download link may appear.)  To the TTAB, this was a failure similar to providing a webpage specimen that fails to show a means for ordering the specified goods or services, which the TTAB has previously held insufficient. Rogowski may intend viewers to use third party software to “record” the audio portions, but the specimen on its face failed to show use in commerce for the identified goods.

Judge Rogers' dissent: image requirements are justified

R.J. Reynolds Tobacco Co. v. Food & Drug Admin., 696 F.3d 1205 (D.C. Cir. 2012)

Judge Rogers, in dissent, had a very different view of the government’s evidence and powers.  The majority wrongly disregarded both the tobacco companies’ history of deceptive advertising and the government’s stated goal: to effectively convey the negative health consequences of smoking.  Given that the warnings presented factually accurate information and combated misleading commercial speech, Zauderer was the appropriate test, and the government only had to show that the warning label requirement was reasonably related to its substantial interest in effectively conveying information to consumers.  Even treating Zauderer as limited to consumer deception cases, judicial, congressional, and FDA findings substantiated the interest in preventing deception here.

The FDA’s interests were complementary, but distinct: effectively conveying information about smoking’s dangers and decreasing smoking rates.  The majority didn’t buy the first interest, but it was there. “Although there are statements in the rulemaking record regarding the government’s interest in reducing smoking rates, nothing in that record, much less the White House press briefing cited by the court, suggests these statements were intended to override the clearly stated interest in effectively communicating information about the negative health consequences of smoking to consumers.”  Even the D.C. Circuit had recognized in the past that the government’s interest in preventing consumer confusion may take on added importance in the context of a product that affects health.  Tobacco is dangerous when used as intended, and highly addictive.  Given the informational interest involved, the government met its burden under Central Hudson or Zauderer, except for the requirement to put 1-800-QUIT-NOW in each label.

The evidence was clear that most people, especially teens, still lack a complete understanding of smoking’s harms and the difficulty of quitting once they start; over 80% of adult smokers became addicted at or under 18.  And tobacco use is the leading preventable cause of death in the US.  In addition, the tobacco companies engaged in a decades-long campaign of deception over these facts (of which more in a later post), and are still spending billions to attract new smokers and retain current ones.  The current warning labels, last revised in 1984, don’t work.

The FDA chose its nine graphic images based on measures of their salience to adults and teens, including “[e]motional reactions, cognitive reactions, and [reactions as to] whether the warning was difficult to look at.”  The reason, the FDA explained, is that “the literature suggests that risk information is most readily communicated by messages that arouse emotional reactions, and that smokers who report greater negative emotional reactions in response to cigarette warnings are significantly more likely to have read and thought about the warnings . . . .” Thus, the graphic warnings effectively communicated the negative health consequences of smoking.

The dissent turned to the “compelled speech” cases.  Zauderer makes clear that it is fine to prescribe “what shall be orthodox in commercial advertising,” as opposed to politics or religion.  Sorrell didn’t change that or overrule Central Hudson, and in any event the objection to the law in Sorrell—that the fear that people will make bad decisions with truthful information can’t justify content-based burdens on speech—was inapplicable here, where the tobacco companies were the ones trying to avoid truthful speech.  It defies Zauderer to say, as the majority did, that “attempts to regulate ‘what shall be orthodox in . . . matters of opinion’ — i.e., whether individuals should buy and use a lawful product — must be subject to strict scrutiny.” 

 

As the dissent pointed out, “because matters of opinion over whether individuals should buy and use a lawful product fall squarely within the domain of commercial advertising recognized by the Supreme Court, the regulation thereof is not … subject to strict scrutiny.”  Because the informational value of speech to consumers is the primary justification for protecting commercial speech at all, disclosure requirements don’t do as much harm to an advertiser’s legitimate interests as bans on commercial speech.  Thus, Zauderer holds that “an advertiser’s rights are adequately protected as long as disclosure requirements are reasonably related to the State’s interest in preventing deception of consumers.”  (Deception was sufficient, but not necessary; in view of the consumer deception and confusion about tobacco, there was no need for the dissent to determine whether some other interest might also support required disclosures.)

Zauderer, and subsequently Milavetz, requires only a possibility of deception or tendency to mislead.  Quoting Milavetz, “where ‘the likelihood of deception’ is ‘hardly a speculative one,’ the government need not produce ‘evidence that [the] advertisements are misleading,’ as the court may rely instead on experience and common sense.”  Milavetz involved law firm ads that the Supreme Court found inherently misleading because they “promise[d] . . . debt relief without any reference to the possibility of filing for bankruptcy, which has inherent costs.”  Without extrinsic evidence, the Court found this omission sufficiently misleading to trigger Zauderer.

Likewise, the DC Circuit in Spirit Airlines, Inc. v. Dep't of Transp., 687 F.3d 403 (D.C. Cir. 2012), applied Zauderer and upheld a rule requiring the most prominent number displayed in airline ads to be the total price, inclusive of taxes.  Even though the airlines had been complying with existing rules, the court accepted the Department of Transportation’s determination, “based on common sense and experience, ‘that it was deceitful and misleading when the most prominent price listed by an airline is anything other than the total, final price of air travel.’”  To the dissent, “[e]ven absent any affirmatively misleading statements, cigarette packages and other advertisements that fail to display the final costs of smoking in a prominent manner are at least as misleading” as airline ads, given the evidence that present warnings are ineffective.

Warner-Lambert Co. v. FTC, 562 F.2d 749 (D.C. Cir. 1977), also supported the FDA’s requirements.  The majority argued that the FDA wasn’t claiming that the images were remedial measures designed to counteract specific deceptive claims.  But even if Warner-Lambert were limited to remedial measures, Congress had provided the appropriate rationale.  Congress specifically found that “[t]obacco product advertising often misleadingly portrays the use of tobacco as socially acceptable and healthful to minors.” And “the FDA did frame its rule as a measure designed to counteract specific gaps in consumers’ knowledge of the health risks of smoking — gaps that align with specific deceptive claims made by the tobacco companies.”  Warner-Lambert also recognized that ads, though not misleading if standing alone, can become misleading in light of past ads.  Indeed, the D.C. Circuit also affirmed a finding that it was reasonably likely, notwithstanding the new restrictions in the Tobacco Control Act, that the tobacco companies would commit future RICO violations.  (More on this soon!)  Capitalizing on decades’ worth of prior deceptions, as the tobacco companies do every day, was enough to create a tendency to mislead justifying a disclosure. 

In addition, the nature of required disclosures, which do not suppress any information, inherently requires less scrutiny; though the tobacco companies argued that they wouldn’t be able to send their own messages on their packaging, “their objection rings hollow in the absence of any evidence of difficulty in conveying their desired messages, notwithstanding a decade of experience under a similar warning label requirement in Canada.”

The textual statements were factually accurate.  The question was whether the images rendered the warnings nonfactual or controversial.  The court should’ve viewed the images in connection with the text in order to answer that question.  The use of graphic images, “even if digitally enhanced, illustrated, or symbolic,” doesn’t necessarily make warnings nonfactual. Zauderer itself recognized that “[t]he use of illustrations or pictures in advertisements serves important communicative functions: it attracts the attention of the audience to the advertiser’s message, and it may also serve to impart information directly.”

The FDA concluded that the effects shown in the images are, in fact, accurate depictions of the effects of the sickness and disease caused by smoking, and the tobacco companies didn’t even argue otherwise.  “That such images are not invariably comforting to look at does not necessarily make them inaccurate.”  The consequences of smoking are disturbing, and the images reflect that fact.  The tobacco companies complained that the images were not chosen to convey information but to evoke negative emotions and discourage smoking.  It’s not a binary.  The evidence showed that warnings that elicit emotional reactions are better processed by consumers.  “Thus, the FDA’s reliance on salience measures was in the service of — not inconsistent with — the warnings’ informational purpose. Moreover, factually accurate, emotive, and persuasive are not mutually exclusive descriptions.”  This wasn’t like Entertainment Software Association v. Blagojevich, 469 F.3d 641 (7th Cir. 2006), which involved a much more subjective and exclusively nonfactual determination about labeling video games deemed to be “sexually explicit.”  The video game labels were nonfactual “because there were no facts to convey.”

It’s certainly true that comprehending the facts about smoking “is likely to provoke emotional reactions and also to discourage the use of cigarettes.”  But the tobacco companies’ position meant that

the more concerning the negative health effects of a particular product, the more constrained the government is in mandating disclosures of those facts. Unsurprisingly, the tobacco companies point neither to any case law in support of this argument nor to any legally significant distinction between fact and emotion. Rather, the greater the harms to public health, the greater the government’s interest in informing consumers of those harms.

This interest was particularly great in view of the tobacco companies’ history of deception.

The tobacco companies specifically objected to five of the nine selected images. They contended that the images of a man smoking through a tracheotomy hole in his throat and a man with chest staples on an autopsy table convey misleading messages about the consequences of smoking, and that the images of a man wearing a t-shirt reading “I QUIT,” a baby enveloped in smoke, and a woman crying convey no information about the consequences of smoking whatsoever.  These arguments ignored the accompanying text and didn’t address whether the overall message of the warning labels was nonfactual.  It wasn’t.  For example, the image accompanying the textual warning “Cigarettes are addictive” depicts a man smoking through a tracheotomy opening in his throat. “Viewed with the accompanying text, this image conveys the tenacity of nicotine addiction: even after under undergoing surgery for cancer, one might be unable to abstain from smoking.”  In fact, 50% of neck and head cancer patients continue to smoke—this image didn’t depict an extreme or unusual situation. 

Likewise, the autopsy image worked with the textual warning “Smoking can kill you.”  Though autopsies might not be “a common consequence of smoking,” per the majority, “neither are coffins or gravestones; yet the status evoked by images of an autopsy-scarred man, a coffin, or a gravestone — death — is a common consequence of smoking. The FDA might have opted for an image of a decaying cadaver or of a pile of ashes to portray the likely physical consequences of smoking, but it was not limited to such images in its representation of those consequences.”  The autopsy scar communicates that the man in the image is dead.

Similarly, “[t]he images of a baby enveloped in smoke and a woman crying both depict the significant harms of secondhand smoke.” They accompanied the textual warnings “Tobacco smoke can harm your children” and “Tobacco smoke causes fatal lung disease in nonsmokers,” respectively.  The former image clearly informed parents that smoking in the presence of children would lead the children to inhale toxins, while the latter highlighted the emotional suffering caused by fatal lung disease and other harms of secondhand smoke, which causes 3000 lung cancer deaths each year among nonsmokers in the US and 38,000 deaths overall. These labels conveyed the message that smoking poses risks not just to smokers but also to family members and others.

The dissent was less impressed by the image of a man wearing a t-shirt that reads “I QUIT,” though it addresses the benefits of quitting: as paired with the textual warning “Quitting smoking now greatly reduces serious risks to your health,” it conveys the message “I quit, and I am alive and healthy.”  Nothing in the image affects the factual, noncontroversial textual warning, and thus the overall label was a factually accurate, uncontroversial disclosure.

Under Zauderer scrutiny, the only question was whether the labels were reasonably related to the government’s interest in effectively conveying the health harms of smoking, and the dissent thought this was done: “In view of the scientific literature supporting the FDA’s reliance on the salience measures reported in its study, the warning label requirement is reasonably related to the government’s interest in effectively communicating information about the negative health consequences of smoking.”  Size and placement were also supported by the literature, many countries’ experience, and common sense.  The majority distinguished Zauderer because the warnings here involved “elements of compulsion and forced subsidization.”  But that’s a feature of commercial disclosure requirements.

However, the dissent would have found that the addition of “1-800-QUIT-NOW” on each warning label “does not directly disclose factual information about the health consequences of smoking.”  Since this requirement was directed towards making it easier to quit (how this differs from raising the salience of quitting is not 100% clear to me), it required analysis under Central Hudson, not under Zauderer. 

Even applying Central Hudson to everything, the majority should have looked at both government interests, conveying true information and decreasing smoking, not just at the latter. The informational interest in effectively conveying the negative health consequences of smoking was clearly substantial, especially given its health harms.  And the record had substantial evidence that the warnings would directly advance that interest, not least by “ensur[ing] that the health risk message[s] [are] actually seen by consumers in the first instance.” “[H]istory, consensus, and ‘simple common sense’” also showed that the requirement satisfied Central Hudson’s fit requirement.  The failure of past warnings, similar to the alternatives now suggested by the tobacco companies, were sufficient to show that the graphic warnings were not more extensive than necessary to serve the government’s substantial interest.

The only exception was “1-800-QUIT-NOW” telephone number. The government’s interest in reducing smoking rates was substantial.  Providing the number would directly advance this interest, since quitting on one’s own is very hard, while quitlines have been found to “significantly increase abstinence rates.” International experience referenced in the rulemaking, further supports the common sense proposition that informing smokers of cessation resources is likely to increase rates of successful quit attempts.   But including the number was more extensive than necessary to serve that interest, because it was presented in imperative terms: QUIT NOW, a command directly contradicting the tobacco companies’ desired message at the point of sale. This was too great a burden.  Alternative means, such as a package insert, had to be considered.

The dissent concluded by emphasizing the basis for First Amendment protection of commercial speech: the interest in truthful information, which the warnings served, especially given the tobacco companies’ history of deception.  “[N]othing in the Supreme Court’s commercial speech precedent would restrict the government to conveying these risks in ways that have already proved ineffective or would prohibit the government from employing the communication tools tobacco companies have wielded to great effect over the years.”

Final note: I understand that a fair number of my readers are more positive about the benefits of expansive trademark protection than I am (and thanks for reading anyway!). I’m enough of an Order Muppet that inconsistency can be worse, to me, than simple wrongness. Let’s set aside abortion warnings as too obvious and politicized (although their First Amendment offensiveness is thereby increased, not decreased!) and just consider trademark. Aside from counterfeiting, does anyone believe that the empirics of plain-vanilla infringement—much less dilution—can be proven to the standard applied by the majority here? Among other things, confusion studies routinely show a not insignificant baseline level of confusion even for the “control,” suggesting that there’s an irreducible level of consumer misunderstanding that trademark law can’t fix. How is that different from the weaknesses identified by the majority in the FDA’s evidence?