The tobacco industry and the First Amendment (1): an analysis of the 1998 Master Settlement Agreement.

• Author: Luka, Lori Ann

1. INTRODUCTION

   Prior to 1995, the tobacco industry was an impenetrable fortress. The industry admitted nothing, denied everything, and successfully defended nearly every lawsuit filed against it. (2) Then, in 1995, a war was waged against the tobacco industry by both the federal and state governments. The war began on the federal level with President Clinton's approval of federal legislation that declared nicotine an addictive drug and authorized the Federal Food and Drug Administration (FDA) to seek jurisdiction over tobacco products as "drug delivery devices." (3) Additionally, the President announced broad executive action which sharply restricted the advertising, promotion, distribution and marketing of tobacco products with the goal of protecting children and adolescents from the dangers of tobacco products. (4)

   Following President Clinton's lead, U.S. Attorneys General from 46 states (5) joined forces to file a single lawsuit that has made the participating tobacco companies (6) willing to settle to terms that will change the tobacco industry forever. (7) This settlement is known as the Master Settlement Agreement. For example, banned are advertisements on billboards, in sports arenas and stadiums, shopping malls, buses and trains. Sales of T-shirts, caps and other merchandise are banned, as well as promotion of tobacco products in movies, TV shows, theater productions, music performances, videos and video games. (8)

   Because a number of the terms contained in the Master Settlement Agreement have sharply restricted the tobacco industry's ability to market and advertise its products, the settlement agreement has First Amendment commercial speech implications. Should challenges to the Master Settlement Agreement arise, the Supreme Court would employ the pathbreaking decision for determining when the government may restrict commercial speech, Central Hudson Gas & Electric Corp. v. Public Service Commission of New York (9) and its progeny to assess its constitutionality. (10)

   This Note discusses and assesses the Government's likelihood of passing constitutional scrutiny with the Master Settlement Agreement's restrictions in light of the First Amendment case law. A majority of the restrictions will likely pass constitutional scrutiny because they meet the demanding requirements of Central Hudson and its progeny. The author believes that a few of the restrictions need to be more narrowly tailored in order to pass constitutional scrutiny. Suggestions on how to narrowly tailor the restrictions to comport with Central Hudson are proffered by the author.

   Section II provides an overview of the history of First Amendment commercial speech jurisprudence. It discusses cases that foreshadowed the Central Hudson decision, the Central Hudson decision itself, the progeny of Central Hudson which has slightly refined the original four prong test for commercial speech, and addresses the possible trends in light of the progeny. Section III of the note addresses why the Master Settlement Agreement may have problems passing constitutional scrutiny and what parties may have standing to challenge the provisions. Section IV gives an in-depth look into how the restrictions will fare when analyzed under the Central Hudson four prong test, and individually assesses selected restrictions. Finally, Section V makes suggestions on how the government can cure the restrictions that may be found constitutionally infirm.

2. THE COMMERCIAL SPEECH DOCTRINE

   1. The Supreme Court's Traditional View on Commercial Speech

      In the early days of the commercial speech doctrine, the Supreme Court afforded no protection to "expression related solely to the economic interests of the speaker and its audience." (11) The Court stressed the "traditional view" that communications to which First Amendment protection would be given were not of a purely commercial nature. (12) The Supreme Court, however, rejected the traditional view that commercial speech was not subject to First Amendment protection when it decided Virginia State Board of Pharmacy v. Virginia Citizen's Consumer Council, Inc. (13) The Court held that speech that proposes no more than a commercial transaction can be protected under First Amendment law. (14) The Court refused to accept the State's paternalistic approach, forbidding it from completely suppressing the dissemination of concededly truthful information about entirely lawful activity because it was fearful of the information's effect upon its disseminators and its recipients. (15) The Court acknowledged that society has a strong interest in "the free flow of commercial information", including the "proper allocation of resources in a free enterprise system". (16) Therefore, the First Amendment can protect commercial speech from unwarranted governmental intrusion. (17)

   2. Central Hudson's Four-Prong Standard for Analyzing Commercial Speech

      After deciding Virginia Pharmacy, the Supreme Court determined Central Hudson, (18) thereby laying down a four-part test for determining whether a given regulation of commercial speech violates the First Amendment. The government is permitted to regulate commercial speech if the following four conditions are met: (1) the speech qualifies for protection in that it is neither misleading nor concerns an unlawful activity; (2) the asserted governmental interest in support of the restriction is substantial; (3) the restriction directly advances the interest; and (4) the regulation is not "more extensive than is necessary to serve that interest." (19) The third and fourth prongs of the Central Hudson test require consideration of the fit between the government's substantial interest and the means chosen to accomplish that objective. (20) These elements of the test have proven to be the most difficult to satisfy.

      Applying the test to the facts of Central Hudson, the Court held that the utilities' promotional advertising was speech protected by the First Amendment. The State had two interests that the Court found to be substantial, conservation of energy and maintenance of a fair and efficient rate structure. Although, the Court found that there was a direct link between the ban and the substantial interest of energy conservation, the ban on energy conservation was more extensive than needed to further the state's interest and, therefore, the State failed to satisfy the fourth prong of Central Hudson. (21)

   3. Modifications to the Central Hudson Four-Prong Standard

      In Edenfield v. Fans, (22) the Supreme Court struck down a stale ban against solicitation by certified public accountants (CPA's) for failure to satisfy the third prong of Central Hudson. The State of Florida imposed a blanket ban on direct, in-person, uninvited solicitation by CPA's who sought to communicate truthful non-deceptive information proposing a lawful commercial transaction. (23) The Court stated that the government identified certain interests in regulating solicitation in the accounting profession that are important and within its legitimate power, but that the government failed to provide substantial evidence to show that the regulation directly and materially advanced the state's purported interest. (24) Most importantly in Edenfield, the Court watered down the "not more extensive than is necessary" fourth prong of Central Hudson. Thus, the current requirement to satisfy the fourth prong "means-end fit" is that the means be "tailored in a reasonable manner" to serve the government objective. (25) In other words, some looseness in the means-end fit will be tolerated where what is regulated is commercial speech. (26)

      Another important case in First Amendment commercial speech jurisprudence was Posadas de Puerto Rico Associates v. Tourism Company of Puerto Rico. (27) In Posadas, the Court held that the government could ban advertising for casino gambling aimed at Puerto Rican residents because the commercial speech at issue concerned a lawful activity and was not misleading or fraudulent. (28) Posadas was significant because the Court's opinion stood for the idea that if an activity could be completely banned, advertising of the activity could be completely banned, or tightly regulated. (29) This holding gave state legislatures greater power to regulate the advertising of products that are lawful, but believed by the legislature to be harmful. Examples of such "vice" products are cigarettes, liquor, and gambling.

      This theory, however, was rejected in 44 Liquormart v. Rhode Island (30) by a number of Justices of the Supreme Court because "it is quite clear that banning speech may sometimes prove far more intrusive than banning conduct...." (31) "[A] state legislature does not have the broad discretion to suppress truthful, nonmisleading information for paternalistic purposes." (32) In 44 Liquormart, the Court indicated a willingness to apply a more stringent standard of review to government restrictions of commercial speech. The Court unanimously struck down a Rhode Island statute that provided for a blanket ban on all retail price advertising for alcoholic beverages on the ground that the state failed to establish a "reasonable fit" between the restriction and the stated goal of reducing alcohol consumption. (33) Specifically, the Court reasoned (1) that the state offered insufficient proof that the restriction would advance its interest, and (2) that alternative forms of regulation were available to the state to achieve its goals that would not involve a restriction of speech. (34) However, the Court refused to engage in "speculation or conjecture," finding it an unacceptable means of demonstrating that a restriction on commercial speech directly advances the State's asserted interest. (35) Following 44 Liquormart, it became clear that the majority of the Court intends to review stringently government regulation of accurate commercial speech regarding a lawful activity.

   4. Recent Trends in First Amendment Law in Light of 44...