Analysis: A rough day for the FTC
(Updated 3:10 p.m.)
A hearing on claims of deception by cigarette companies in their advertising of “light” cigarettes led Monday to strongly worded complaints by Supreme Court Justices that, if consumers were misled, it was partly — maybe even mainly — the government’s fault. Justices Samuel A. Alito, Jr., and Antonin Scalia suggested that the Federal Trade Commission had known for years that those ads were founded on flawed claims, and did little or nothing about it. The comments came as the Court opened its new Term with the hearing in Altria Group, et al., v. Good, et al. (07-562).
Justice Alito was the most blunt: “The FTC’s position seems to me incomprehensible,” he remarked to a lawyer for the Commission. “You’ve created this whole problem by, I think, passively approving the placement of these figures in the advertisements. And if they are misleading, then you have misled everybody who’s bought those cigarettes for a long time.” The lawyer speaking for the Commission and the Justice Department, Assistant to the Solicitor General Douglas Hallward-Dreimeier, tried to put the onus back on the tobacco industry, saying the companies knew as early as 1967 that its claims of low tar and nicotine in “light” smokes were not valid, yet failed to tell the FTC.
But that argument did not dissuade Justice Scalia. “When did the Commission know this stuff? I had a case when I sat on the Court of Appeals, so it had to be before 1984…It’s been general knowledge for a long time, and the FTC has done nothing abput it.”
The government’s counsel also drew some implied criticism from Chief Justice John G. Roberts, Jr., who wondered why the Solicitor General’s office had decided to take part in the Altria Group case on only one of the two issues at stake. Roberts pressed unsuccessfully to get the government’s current view on the other issue, but then Justice Scalia said the government had taken a position years ago, favoring the tobacco industry on that point, and he would “hold you to that” if the government did not state a position now.
The case tests whether individual smokers are barred, by federal law, from suing under state law to challenge alleged deception in the ads promoting “light” cigarettes as being low in tar and nicotine. The industry is making two claims to try to head off such lawsuits: first, that federal law on cigarette labeling and other marketing tactics expressly preempts state law claims, and, second, that actions by the FTC over the years allowed such ads, actions that amounted to implied preemption of state law claims.
Joining in the case, the FTC and Justice Department opted to side with the smokers who sued, but only on the implied preemption question. They argued that the FTC has never ordered or authorized claims of low tar and nicotine for “light” cigarettes. (Since 1966, the FTC has been telling the industry that it would not challenge them if they made such claims based on a testing method the FTC had endorsed. Only now is the FTC considering whether to withdraw that guidance, saying the evidence now is that that method produces misleading results.)
The Chief Justice told the government lawyer that Philip Morris and its parent, Altria Group, had given up on the implied preemption issue, so it would be “pretty easy” for the government to win on that question. So, Roberts asked, what is the goverment position on the express preemption issue. Hallward-Driemeier repeatedly insisted that it had no position.
Theodore B. Olson, a Washington attorney representing the company, in rebuttal told the Chief Justice that it had not given up on the implied preemption, and had focused on its “strongest” argument — express preemption — because that involved something on which Congress had explicitly spoken. (At one point in his opening argument, Olson said “I’d like to spend no time on the implied preemption argument,” to which Justice Scalia responded: “Good idea.”)
David C. Frederick, a Washington lawyer speaking for the four Maine smokers seeking to sue under state law for deception in Philip Morris ads for “light” smokes, had major difficulty with his main argument: that the case was not about smoking and health, but only about deceptive advertising. But several Justices said the only reason smokers would worry about tar and nicotine content was because of the health hazards of those substances.
In his initial argument and in rebuttal, sought to undermine any suggestion that the Maine smokers’ case was directed at deceptive advertising, not at smoking and health issues. He frequently read from the smokers’ complaint, and contended that the state law claims at issue “track nearly verbatim” the preemption provision of the federal cigarette labeling law.
Overall, Olson’s argument on express preemption was a sweeping one. Although he at a couple of points suggested that there could be a role for the FTC or for a state attorney general to act to police deception in cigarette advertising, when pressed he made it clear that the concession — if it was one — was limited to situations where the ad claims had literally nothing to do directly or indirectly with smoking and health.
He gave as one example an ad that claimed wrongly how many cigarettes there are in a pack. “There is not a preemption if there is not a relationship between the prohibition and smoking and health,” Olson said. He said, in response to a hypothetical suggested by Justice Anthony M. Kennedy, that there could not be a requirement that a cigarette maker disclose that smoking while using a particularly drug would cause a severe allergic reaction.
“I think the point here,” Olson summed up, “is that Congress decided that it wanted one uniform source of regulation of advedrtising of cigarettes with respect to smoking and health” — the labeling law. “Congress wanted the statements, certain statements, on cigarette packages. It didn’t want any confusion about what the marketing or promotion of cigarettes would be.”
In his rebuttal, he sought blunt the efforts by Frederick to make the core of his case the issue of deception rather than regulating messages on smoking and health. “I ask the Court,” Olson said, “to sit down and compare the labeling statute with the [smokers’] complaint. And the words are indistinguishable….Consumers understand that reducing the quantities of tar and nicotine in cigarettes reduces their adverse health effects. That is what this case is all about.”