Commonwealth Brands, Inc. v. US

• Decision Date: 14 January 2010
• Docket Number: Civil Action No. 1:09-CV-117-M.
• Citation: 678 F. Supp.2d 512
• Parties: COMMONWEALTH BRANDS, INC.; Conwood Company, LLC; Discount Tobacco City and Lottery, Inc.; Lorillard Tobacco Company; National Tobacco Company, L.P.; and R.J. Reynolds Tobacco Company, Plaintiffs v. UNITED STATES of America; United States Food and Drug Administration; Margaret Hamburg, Commissioner of the United States Food and Drug Administration; and Kathleen Sebelius, Secretary of the United States Department of Health and Human Services, Defendants.
• Court: U.S. District Court — Western District of Kentucky

678 F.Supp.2d 512

COMMONWEALTH BRANDS, INC.; Conwood Company, LLC; Discount Tobacco City and Lottery, Inc.; Lorillard Tobacco Company; National Tobacco Company, L.P.; and R.J. Reynolds Tobacco Company, Plaintiffs v. UNITED STATES of America; United States Food and Drug Administration; Margaret Hamburg, Commissioner of the United States Food and Drug Administration; and Kathleen Sebelius, Secretary of the United States Department of Health and Human Services, Defendants.

Civil Action No. 1:09-CV-117-M.

United States District Court, W.D. Kentucky, Bowling Green Division.

January 5, 2010.

As Amended January 14, 2010.

Charles E. English, Jr., Charles E. English, Sr., D. Gaines Penn, E. Kenly Ames, English, Lucas, Priest & Owsley LLP, Bowling Green, KY, Philip J. Perry, Latham & Watkins, Donald B. Ayer, Geoffrey K. Beach, Noel J. Francisco, Robert F. McDermott, Jr., Jones Day, Washington, DC, Leon F. DeJulius, Jr., Jones Day, Pittsburgh, PA, Floyd Abrams, Joel Kurtzberg, Kayvan Sadeghi, Cahill, Gordon & Reindel LLP, New York, KY, Leanne Moore, National Tobacco Company, Dresden, TN, for Plaintiffs.

Alisa B. Klein, Benjamin S. Kingsley, Daniel Tenny, Mark R. Freeman, Mark B. Stern, Samantha L. Chaifetz, Sarang V. Damle, Nicholas J. Bagley, U.S. Department of Justice-Civil Rights Division, Andrew Edward Clark, Daniel K. Crane-Hirsch, Eugene M. Thirolf, James T. Nelson, Jessica R. Gunder, Joel D. Schwartz, U.S. Department of Justice-Consumer Litigation, Washington, DC, Karen Schifter, U.S. Department of Health & Human Services, Rockville, MD, Michael D. Ekman, William F. Campbell, U.S. Attorney Office, Louisville, KY, for Defendants.

MEMORANDUM OPINION AND ORDER

JOSEPH H. McKINLEY, JR., District Judge.

This matter is before the Court on cross-motions for summary judgment on Plaintiffs' claim that various provisions of the Family Smoking Prevention and Tobacco Control Act, Pub. L. 111-31, 123 Stat. 1776 (2009) individually and collectively violate their free speech rights under the First Amendment; their Due Process rights under the Fifth Amendment; and effect an unconstitutional Taking under the Fifth Amendment. Fully briefed, the matter is ripe for decision. For the reasons that follow, Plaintiffs' motion is GRANTED IN PART and DENIED IN PART and Defendants' motion is GRANTED IN PART and DENIED IN PART.

I. BACKGROUND

On June 22, 2009, President Obama signed the Family Smoking Prevention and Tobacco Control Act, Pub. L. 111-31, 123 Stat. 1776 (2009) into law. The Act aims "to curb tobacco use by adolescents," §§ 2(6), 3(2), while "continuing to permit the sale of tobacco products to adults." Id. § 3(7). To that end, it significantly curtails the ability of tobacco manufacturers to market their products. The Act provides that "each manufacturer, distributor, and retailer advertising or causing to be advertised, disseminating or causing to be disseminated, any labeling or advertising for cigarettes or smokeless tobacco shall use only black text on a white background." See Pub. L. No. 111-31, § 102(a)(2) (adopting 21 C.F.R. § 897.32(a)). It requires tobacco companies to print new government "warnings" on the top fifty percent of both sides of all cigarette packaging for messages like "Cigarettes cause cancer," which must be in 17-point font and include "color graphics depicting the negative health consequences of smoking."¹ Pub. L. No. 111-31 § 201(a) (amending 15 U.S.C. § 1333 to add subsections (a)(2) and (d)).

The Act's Modified Risk Tobacco Products ("MRTP") provision prohibits (1) "the label, labeling, or advertising" of a tobacco product from "explicitly or implicitly" suggesting that the product is less harmful than other tobacco products, and (2) a "tobacco product manufacturer" from taking "any action directed to consumers through the media or otherwise ... respecting the product that would be reasonably expected to result in consumers believing that the tobacco product or its smoke may" be less harmful than other tobacco products, without prior FDA approval of the product as "modified risk." Pub. L. No. 111-31, § 101(b) (amending the FDCA to add § 911(b)(2)(A)). The Act also bans, subject to the Secretary's modification of the provision "in light of governing First Amendment case law," i.e., the Supreme Court's decision in Lorillard Tobacco Co. v. Reilly, 533 U.S. 525, 121 S.Ct. 2404, 150 L.Ed.2d 532 (2001), all "outdoor advertising for cigarettes or smokeless tobacco, including billboards, posters, or placards, ... within 1,000 feet of the perimeter of any public playground or playground area in a public park ..., elementary school, or secondary school." Public Law 111-31, §§ 102(a)(2)(E), 102(a)(2) (adopting 21 C.F.R. § 897.30(b)).

Additionally, the Act bars tobacco manufacturers from promoting their brands through sponsorship of "athletic, musical, artistic, or other social or cultural events"; from distributing any nontobacco good in exchange for purchase of a tobacco product; from distributing any brand-name promotional items; from making any "express or implied" statement "through the media or advertising" that "conveys" that the product is "less harmful" because it is regulated by the FDA or complies with the FDA's prescribed standards; from distributing free samples of their cigarettes; from distributing free smokeless tobacco samples except in very limited circumstances; and from jointly marketing tobacco with any other product regulated by the FDA. Id. at §§ 101(a), 102(a)(2)(G), 103(b)(13). Finally, the Act authorizes federal agencies, state and local governments, and Indian tribes to enact more stringent regulations pertaining to the marketing and sale of tobacco products. Id. at §§ 101(b) (amending the FDCA to add 21 U.S.C. § 916), and 203 (amending the Federal Cigarette Labeling and Advertising Act ("FCLAA") to add 15 U.S.C. § 1334(c)).²

II. STANDARD OF REVIEW

Except for the Modified Risk Tobacco Product provision and the ban on statements implying that FDA regulation of tobacco products makes those products less harmful, the parties agree that where the statute regulates speech it regulates commercial speech and must therefore satisfy the requirements set forth in Central Hudson Gas & Electric Corp. v. Public Service Comm'n of New York, 447 U.S. 557, 100 S.Ct. 2343, 65 L.Ed.2d 341 (1980). Under Central Hudson, the first question is whether the speech concerns lawful activity and is not misleading; if the answer is no, the speech is not protected and may be regulated without violating the First Amendment. Id. at 565, 100 S.Ct. 2343 (explaining that "there can be no constitutional objection to the suppression of commercial messages that do not accurately inform the public about lawful activity"). If the answer is yes, however, the speech can be constitutionally regulated only if the government has a substantial interest in regulating the speech; the regulation directly advances the government's interest; and the regulation is not more extensive than is necessary to serve that interest. Id. at 565, 100 S.Ct. 2343; Board of Trustees v. Fox, 492 U.S. 469, 480, 109 S.Ct. 3028, 106 L.Ed.2d 388 (1989); Pagan v. Fruchey, 492 F.3d 766, 771 (6th Cir. 2007) (en banc).

To grant a motion for summary judgment, the Court must find that the pleadings, together with the depositions, interrogatories and affidavits, establish that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Fed. R.Civ.P. 56. The moving party bears the initial burden of specifying the basis for its motion and of identifying that portion of the record which demonstrates the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the moving party satisfies this burden, the non-moving party thereafter must produce specific facts demonstrating a genuine issue of fact for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "The mere existence of a scintilla of evidence in support of the non-moving party's position will be insufficient; there must be evidence on which the jury could reasonably find for the non-moving party." Anderson, 477 U.S. at 252, 106 S.Ct. 2505.

III. DISCUSSION

Plaintiffs argue that various provisions of the Family Smoking Prevention and Tobacco Control Act, Pub. L. 111-31, 123 Stat. 1776 (2009), violate their free speech rights under the First Amendment; their rights to Due Process under the Fifth Amendment; and effect an unconstitutional Taking under the Fifth Amendment. The government counters that the restrictions on the use of color and imagery, brand-name event sponsorship, and branded merchandise "directly advance the paramount public interest in addressing the crisis caused by the use and marketing of tobacco products, and they do so with minimal infringement on speech"; that the ban on outdoor advertising is not ripe because the Secretary has not yet taken any final action; that the warning requirement, Modified Risk Tobacco Products provision, and the ban against claims implying FDA approval satisfy the First Amendment by making sure that a decision to use tobacco is based on information that is accurate and not misleading; that the restrictions on free samples, gifts, and combination marketing regulate conduct without a "significant expressive element" and therefore do not implicate the First Amendment; and that adjudication of the Takings claim is jurisdictionally barred and without merit. (Government's Brief, pp. 2-3, 5, 45, 55) (quoting Arcara v. Cloud Books, Inc., 478 U.S. 697, 706-07, 106 S.Ct. 3172, 92 L.Ed.2d 568 (1986)). The Court considers these arguments in turn.

A. First Amendment

1. Ban on Color and Graphics

The Act directs the FDA to reissue regulations requiring that labels and advertisements for tobacco products include only black text on a white background with no graphics: "each...