Brown & Williamson Tobacco Corp. v. F.T.C., 82-5594

Decision Date24 June 1983
Docket NumberNo. 82-5594,82-5594
Citation710 F.2d 1165
Parties1983-1 Trade Cases 65,460 BROWN & WILLIAMSON TOBACCO CORPORATION, Plaintiff-Appellant, v. FEDERAL TRADE COMMISSION, Defendant-Appellee.
CourtU.S. Court of Appeals — Sixth Circuit

Martin London (argued), Paul, Weiss, Rifkind, Wharton & Garrison, New York City, George Dudley, Charles Cassis (lead), Louisville, Ky., for plaintiff-appellant.

Alexander T. Taft, Jr., Louisville, Ky., John Carley (argued), F.T.C., Washington, D.C., for defendant-appellee.

Cornish F. Hitchcock (argued), Alan B. Morrison, Public Citizen Litigation Group, Washington, D.C., amicus curiae for appellee Public Citizen Health Research Group.

Before KEITH and MERRITT, Circuit Judges, and BROWN, Senior Circuit Judge.

MERRITT, Circuit Judge.

The appellant, Brown & Williamson Tobacco Company (B & W), appeals the decision of the District Court for the Western District of Kentucky dismissing its suit against the Federal Trade Commission (FTC). Brown & Williamson challenges the following proposed actions and statements of the FTC which the agency planned to publish in the Federal Register:

(1) the FTC has concluded that its present testing methodology does not accurately assess the "tar" and nicotine yields of B & W's Barclay cigarettes;

(2) the FTC's December, 1981 Report, which stated that the "tar" yield of Barclay cigarettes is 1 mg., is inaccurate and should be corrected;

(3) pending a revision in the test methodology, future FTC reports, if any, will not include results for Barclay cigarettes; and (4) the FTC has concluded that "there is a significant likelihood" that the FTC method of testing does not assess accurately the "tar" and nicotine yields of B & W's Kool Ultra and Kool Ultra 100's which use the same filter design as the Barclay cigarette.

This June 25, 1982 announcement concluded a year long study by the FTC into the "tar" and nicotine content of Barclay cigarettes.

I. Background

The FTC has a long history of involvement in the testing and reporting of the "tar" and nicotine content of cigarettes. In 1967, the FTC established its own testing laboratory; the agency has made periodic reports to the public since that time. In 1971, while the FTC was in the process of promulgating a rule requiring the cigarette companies to include "tar" and nicotine figures in their advertisements, the major companies voluntarily entered into an agreement among themselves to advertise the figures.

In June, 1981, the FTC received a complaint from the R.J. Reynolds Tobacco Company, a competitor of B & W, alleging that the testing system presently used by the FTC to measure the "tar" content of the Barclay cigarette is inaccurate. The FTC method was never intended to provide precise measurements of "tar" and nicotine delivery to each smoker because consumers smoke cigarettes in different fashions. Instead, the tests were designed to provide consumers with figures by which to compare the many brands of cigarettes on the market.

Cigarette manufacturers have traditionally lowered the "tar" content of cigarettes by allowing air to be mixed with the smoke to dilute the intensity of the smoke. Most low "tar" cigarettes have a filter surrounded by porous paper with one or more rows of small ventilating holes encircling the filter which allow air into the smoke channel. The Barclay cigarette, however, has four lengthwise channels to conduct the air from the ventilating holes directly into the mouth. The air does not mix with the smoke until both are in the smoker's mouth. The amount of air dilution in the Barclay cigarette may be reduced if the smoker crushes or blocks the channels with his lips.

Citing its own studies, R.J. Reynolds argued to the FTC that the unique filter on the Barclay cigarette was being enclosed by smokers' lips so that the claimed reductions in "tar" and nicotine were not occurring with Barclay. R.J. Reynolds claimed that the testing machine does not collapse the filter as does a human smoker and that the machine indicates a much lower "tar" content when testing Barclay than is typically delivered by Barclay to consumers.

After receiving the R.J. Reynolds letter, the FTC solicited comments from the five major cigarette companies including Brown & Williamson. The FTC also retained three independent experts who reviewed the extensive studies submitted by the cigarette companies. After a year of study, the FTC determined that the Barclay cigarette was indeed incorrectly measured by the testing machine. To prevent further dissemination to the public of what the FTC believed to be misleading information, the agency in a press release made the announcement described above which it proposed to publish in the Federal Register.

On that same day, June 25, 1982, Brown & Williamson filed suit in District Court to prevent the FTC from taking the actions described in the proposed Federal Register notice. Circuit Judge Boyce F. Martin, sitting as District Judge by designation, issued a temporary restraining order so as to preserve the status quo pending a comprehensive review of the issues. The TRO prevented the FTC from:

(1) prohibiting B & W from relying upon the FTC's present cigarette testing methodology and upon the figures for Barclay reported in the December, 1981 FTC Report to substantiate B & W's advertising claim that Barclay is a 1 mg. "tar," 0.2 mg. nicotine cigarette;

(2) amending the December, 1981 FTC Report as to the "tar" and nicotine content of Barclay;

(3) refusing to continue to test Barclay cigarettes with the FTC's present methodology or to publish the results of these tests in future FTC Reports;

(4) publishing in the Federal Register any notice of changes or proposals to alter the FTC's present cigarette testing or reporting program.

District Judge Ballantine continued the temporary restraining order on July 27, 1982 and further ordered that the administrative record and other documents filed by the FTC be placed under seal. On September 27, 1982 the District Court dissolved the temporary restraining order and denied Brown & Williamson's motion for injunctive relief after concluding that the court lacked jurisdiction to hear the case. The District Court ruled that the FTC had not taken final agency action that was reviewable in federal court at that time.

Judge Ballantine did, however, issue a stay identical to the temporary restraining order pending appeal to this Court in order to prevent immediate and irreparable injury to Brown & Williamson. The FTC challenged the stay before a motions panel of this Court, but the motion was denied. After oral argument on March 22, 1983, this Court ordered that the stay be lifted, with the exception of the District Court's seal on all documents. We held that the appellant had failed to show that it was likely to succeed on the merits, one of the four requirements for a stay pending appeal.

Brown & Williamson maintains in this appeal that the District Court had jurisdiction to decide this case because the actions to be announced in the Federal Register notice constituted final agency action. On the substantive issues, appellant claims first, that the FTC did not follow the procedures mandated by the Administrative Procedure Act, 5 U.S.C. Secs. 551 et seq., governing the promulgation of a rule by an agency. Specifically, B & W alleges that the FTC failed to comply with the notice and comment requirements of 5 U.S.C. Secs. 553(b) and (c). Second, Brown & Williamson argues that the actions of the FTC were arbitrary, capricious and an abuse of agency discretion. The appellant urges this Court to remand the case for review on the merits by the District Court and to reinstate the stay pending the lower court's ruling on the motion for an injunction.

The FTC argues that the District Court's dismissal of the case was appropriate because its attempt to publish the announcement did not constitute agency action but was merely a statement of future policy. Even if the announcement should fall within the APA's definition of agency action in 5 U.S.C. Sec. 551(13), the FTC maintains that it was not final agency action under 5 U.S.C. Sec. 704 and, therefore, not subject to judicial review. The FTC points to the lack of any enforcement proceeding pending or threatened. The agency stresses that pre-enforcement judicial intervention is warranted only upon a showing that the aggrieved party must incur unduly burdensome business expenses to comply or face grave risks of criminal and civil sanctions for noncompliance.

The Public Citizen Health Research Group, a non-profit consumer organization which engages in research, education and advocacy on a range of health and safety issues, has filed a brief in this case as amicus curiae. Their primary objective is to have this Court lift or substantially modify the seal placed by the District Court on the administrative record and all other documents filed by the FTC. They maintain that the public has a right of access to these papers under the Freedom of Information Act, the First Amendment, and the common law.

For the reasons discussed below, we hold that the District Court erred when it dismissed this action for lack of jurisdiction. The steps taken by the FTC on June 25, 1982 were final agency action subject to judicial review to prevent substantial hardship to Brown & Williamson. We also hold, reaching the merits, that Brown & Williamson's claims under the APA are lacking in substance and are unsupported by the record. Finally, we reverse the District Court's order placing the documents in the case under seal and hold that under applicable legal principles they should be released for public inspection as are other court records and documents.

II. Final Agency Action

Judicial review under the Administrative Procedure Act may be sought only by a "person suffering legal wrong because of agency action or adversely affected or aggrieved by agency...

To continue reading

Request your trial
836 cases
1 firm's commentaries
4 books & journal articles
  • Enemy aliens.
    • United States
    • Stanford Law Review Vol. 54 No. 5, May 2002
    • 1 Mayo 2002
    ...to criminal trials); Richmond Newspapers, Inc. v. Virginia, 448 U.S. 555 (1980) (same); Brown & Williamson Tobacco Corp. v. FTC, 710 F.2d 1165, 1178 (6th Cir. 1983) (deciding that the First Amendment protects right of access to open civil trial), cert. denied, 465 U.S. 1100 The closure ......
  • Settlement Confidentiality: A 'Fracking' Disaster for Public Health and Safety
    • United States
    • Environmental Law Reporter No. 45-5, May 2015
    • 1 Mayo 2015
    ...See, e.g. , Publicker Indust. v. Cohen, 733 F.2d 1059, 1069 (3d Cir. 1984); Brown & Williamson Tobacco Corp. v. Federal Trade Comm’n, 710 F.2d 1165, 1179 (6th Cir. 1983). 115. In re Reporters Comm. for Freedom of the Press, 773 F.2d 1325 (D.C. Cir. 1985). 116. Harold L. Cross, The People’s ......
  • Access to civil commitment proceedings & records in Alabama: balancing privacy rights and the presumption of openness.
    • United States
    • Jones Law Review Vol. 9 No. 1, January 2005
    • 1 Enero 2005
    ...Trust & Sav. Ass'n v. Hotel Rittenhouse Assocs., 800 F.2d 339, 343 (3d Cir. 1986); Brown & Williamson Tobacco Corp. v. F.T.C., 710 F.2d 1165, 1179 (6th Cir. 1983), cert. denied, 465 U.S. 1100 (1984); In re Nat'l Broad. Co., 653 F.2d 609, 613 (D.C. Cir. 1981); Barron v. Florida Freed......
  • PRIVATE (UTILITY) REGULATORS.
    • United States
    • 22 Diciembre 2020
    ...have been one of the biggest Chapter 11 sectors in recent years). (227) Brown & Williamson Tobacco Corp. v. Fed. Trade Comm'n, 710 F.2d 1165, 1180 (6th Cir. (228) Zero-Based Budgeting: Zero or Hero?, DELOITTE 1 (2015), https://perma.cc/4L46-LZJP. (229) Id. (280) Id. (231) Id. at 3 n.24;......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT