Fair warning? The First Amendment, compelled commercial disclosures, and cigarette warning labels.

• Author: Straub, Timothy J.
• Position: II. Tobacco Warnings and the Issue of Interpreting Zauderer B. Litigation over the Tobacco Control Act's Cigarette Warning Labels through Conclusion, with footnotes, p. 1227-1264

2. Litigation Over the Tobacco Control Act's Cigarette Warning Labels

   1. Discount Tobacco City & Lottery Inc. v. United States

   On August 31, 2009, shortly after the enactment of the Tobacco Control Act, five tobacco companies and a tobacco retailer filed suit in the Western District of Kentucky. (194) In the resulting litigation, Commonwealth Brands, Inc. v. United States, the companies challenged each provision of the Act that implicated the First Amendment. (195) The court ultimately enjoined enforcement of two provisions: a ban on color graphics in tobacco advertisements and a ban on claims implying tobacco products are safer as a result of FDA regulation. (196) The district court concluded that every other provision withstood the tobacco companies' challenge, including the provision requiring the cigarette packs to display the new graphic warning labels. (197)

   The district court's discussion of the graphic cigarette warning labels is notable for two reasons. First, it failed to distinguish between restrictions on speech and compulsions of speech. (198) The Commonwealth Brands court applied Central Hudson's four-step analysis to the provisions of the Act restricting tobacco advertising as well as to the inchoate cigarette label warnings. (199) Second, the FDA had not promulgated the final version of the graphics by the time the case was decided. The court stated, nonetheless, that it did not believe "the addition of a graphic image [would] alter the substance of [the government's] message[], at least as a general rule." (200)

   Both the tobacco companies and the United States appealed the Western District of Kentucky's decision, and on March 19, 2012, the Sixth Circuit issued its opinion in the case, recaptioned as Discount Tobacco City & Lottery Inc. v. United States. (201) With the exception of the graphic warning labels, the panel agreed on the constitutionality of each challenged provision of the Tobacco Control Act. (202) Judge Eric L. Clay, who authored the otherwise unanimous opinion, split with his fellow judges on the graphic warning labels' constitutionality. He dissented, arguing that the graphic aspects of the warning labels violated the First Amendment. (203) The other judges, Judge Jane B. Stranch joined by Judge Michael R. Barrett, upheld the constitutionality of the graphic warning label provision of the Tobacco Control Act. (204)

   At the outset, the majority emphasized that it would construe the tobacco companies' challenge facially, rather than as-applied. (205) This meant the court would consider the constitutionality of the provision generally; it would not analyze the nine images published in the FDA's June 2011 Final Rule. (206) For the tobacco companies' facial challenge to succeed, they would have to convince the court that the underlying provision of the Tobacco Control Act offended the First Amendment regardless of which images the FDA ultimately published. (207) The Discount Tobacco City court cited four reasons for restraining itself to a facial assessment of the act's warning label provision. First, the court refused to assess any specific image because the FDA published the Final Rule only one month prior to oral arguments and the selected warnings would not appear until well after arguments. (208) Second, there could be no appellate review of any specific images because, according to the majority, the district court had not ruled on any specific images. (209) Third, the majority emphasized that the tobacco companies' own litigation strategy sought to independently challenge the finalized warning labels in a separate suit, namely R.J. Reynolds v. FDA. (210) Finally, granting the relief that the tobacco companies requested--striking down the warning labels for all tobacco producers and sellers, not merely the parties before the court--required the court to issue a facial ruling on the challenged legislation. (211) According to the majority, "Addressing the specific images would require us to reach a constitutional question that was neither briefed nor argued and turns on facts not available, litigated, or considered by the district court, all of which would fly in the face of the restraint we should exercise during judicial review." (212)

   The Discount Tobacco City court next considered the appropriate level of scrutiny for analyzing compelled commercial disclosures. (213) The majority suggested two options. First, if a commercial disclosure requirement meets the conditions outlined in Zauderer, it garners a lenient rational basis review. (214) Alternatively, if a disclosure requirement falls to satisfy the conditions in Zauderer, courts should treat it like any other law compelling speech and apply strict scrutiny. (215) The Discount Tobacco City majority, therefore, sided with the Seventh Circuit and posited that within the wider realm of First Amendment jurisprudence, Zauderer's analysis provides an exception to the stringent scrutiny typically applied to laws that compel speech. (216)

   Two cases, the Supreme Court's decision in Milavetz (217) and the Second Circuit's decision in National Electrical Manufacturers Association v. Sorrell, (218) highlighted for the majority just how leniently disclosure requirements should be assessed when a disclosure requirement meets Zauderer's triggering conditions. (219) These cases emphasized three important considerations. First, they demonstrated that the government does not need to prove that the disclosure will fulfill its intended aim effectively in all or even most circumstances. (220) Rather, the government must only prove as a matter of common sense that the disclosure will advance the state's purported interest and any effect toward that end, however slight, will suffice. (221) Moreover, no more proof of the disclosure's effectiveness is necessary. (222) When the aim is to prevent consumer deception, disclosures need only provide information that some consumers find pertinent when deciding whether to purchase goods or procure services. (223) Extrapolating from the reasoning in these earlier decisions, the Discount Tobacco City majority posited a very liberal interpretation of the "reasonably related" component of Zauderer's analysis, one highly deferential to a government's intended purpose.

   Second, for Discount Tobacco City all factual disclosures fall within the ambit of Zauderer's analysis. (224) National Electrical Manufacturers Association particularly reinforced for the Discount Tobacco City majority that the critical factor in deciding whether to apply Zauderer's rational basis review is whether the disclosure requirement compels factual information or opinion. (225) Thus, Zauderer's "purely factual and uncontroversial" component functions as a triggering condition for its rational basis review. Moreover, the Discount Tobacco City court consciously simplified "purely factual and uncontroversial" to a question of whether the disclosure reveals factual information. (226) As long as the disclosed information is factual, the disclosure requirement garners the Zauderer's lenient rational basis review. If the condition is not satisfied, Zauderer requires that courts, instead, strictly scrutinize the requirement as they would other forms of compelled speech. (227)

   Third, according to the majority, once a court determines that a disclosure falls within Zauderer's ambit, rational basis review is the sole inquiry. (228) According to the majority, Milavetz and National Electrical Manufacturers conclusively confirmed that Zauderer did not direct courts to weigh the burdens imposed by disclosure. (229) As long as the disclosure is reasonably related to the state's goal, any burdens on the speaker that disclosure imposes are irrelevant to the disclosure requirement's constitutionality. (230) As such, the Discount Tobacco City court refused to address whether the size of tobacco warning labels and the ratio of the package covered by them unduly burdened cigarette companies' own commercial speech. (231)

   Once it had articulated its interpretation of Zauderer, the Discount Tobacco City court's task became a two-step process. (232) First, the court determined whether the graphic warning label provision of the Tobacco Control Act satisfied Zauderer's triggering condition--that is, whether it required a disclosure of facts. Second, if so, the court would apply rational basis review to the constitutionality of the warning label provision. (233)

   The court first distinguished the textual content of the warning labels from their graphic content. It then proceeded to determine whether both the textual content and graphic content were properly factual and thus warranted rational basis review. (234) The textual content of warning labels, the majority stated, is undisputedly factual: "It is beyond cavil that smoking presents health risks described in the warnings, and [tobacco companies] do not contend otherwise." (235) The court summarily concluded that the textual aspect of the warning labels fell within purview Zauderer's analysis. (236)

   The majority more thoroughly evaluated the graphic content required by the warning label provision, (237) but did so without reference to the content in any specific image published in the FDA's Final Rule. (238) The Tobacco Control Act's graphic warning label provision would stand or fall on its own merits. Because the Discount Tobacco City court would not evaluate the content of specific images, the court assessed, generally, whether images could convey factual information and, in particular, whether images could factually convey the negative health consequences of smoking. (239) The court noted just how untenable a facial challenge made the tobacco companies' position. (240) Essentially, to withhold rational basis review, the companies would need to convince the court that images categorically could not convey factual information, a position the court described as "stand[ing] at odds with reason."...