Phillip Morris Inc. v. Reilly, No. CIV.A.96-11599-GAO.

CourtUnited States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Massachusetts
Writing for the CourtO'Toole
PartiesPHILLIP MORRIS INCORPORATED; R.J. Reynolds Tobacco Company; Brown & Williamson; Tobacco Corporation; and Lorillard Tobacco Company, Plaintiffs v. Thomas F. REILLY, Attorney General of the Commonwealth of Massachusetts, and Howard K. Koh, Massachusetts Commissioner of Public Health, Defendants. United States Tobacco Company; Brown and Williamson Tobacco Corporation; Conwood Company, L.P.; National Tobacco Company, L.P.; the Pinkerton Tobacco Company; and Swisher International, Inc., Plaintiffs v. Thomas F. Reilly, Attorney General of the Commonwealth of Massachusetts, and Howard K. Koh, Massachusetts Commissioner of Public Health, Defendants.
Docket NumberNo. CIV.A.96-11619-GAO.,No. CIV.A.96-11599-GAO.
Decision Date07 September 2000

Page 129

113 F.Supp.2d 129
PHILLIP MORRIS INCORPORATED; R.J. Reynolds Tobacco Company; Brown & Williamson; Tobacco Corporation; and Lorillard Tobacco Company, Plaintiffs
v.
Thomas F. REILLY, Attorney General of the Commonwealth of Massachusetts, and Howard K. Koh, Massachusetts Commissioner of Public Health, Defendants.
United States Tobacco Company; Brown and Williamson Tobacco Corporation; Conwood Company, L.P.; National Tobacco Company, L.P.; the Pinkerton Tobacco Company; and Swisher International, Inc., Plaintiffs
v.
Thomas F. Reilly, Attorney General of the Commonwealth of Massachusetts, and Howard K. Koh, Massachusetts Commissioner of Public Health, Defendants.
No. CIV.A.96-11599-GAO.
No. CIV.A.96-11619-GAO.
United States District Court, D. Massachusetts.
September 7, 2000.

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COPYRIGHT MATERIAL OMITTED

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Thomas J. Griffin, Jr., Goodwin, Procter & Hoar, Boston, MA, John B. Connarton, Jr., Connarton, Wood & Callahan, Boston, MA, Carol Lynn Bear, Connarton, Wood & Callahan, Boston, MA, for Phillip Morris Inc.

John H. Henn, Foley, Hoag & Eliot, Boston, MA, John B. Connarton, Jr., Connarton, Wood & Callahan, Boston, MA, Carol Lynn Bear, Connarton, Wood & Callahan, Boston, MA, for R. J. Reyunolds Tobacco Co, Brown & Williamson Tobacco Corp.

Thomas A. Barnico, Rebecca P. McIntyre, Rosalyn Garbose, Attorney General's Office, Boston, MA, for L. Scott Harshbarger, David H. Mulligan.

MEMORANDUM AND ORDER

O'TOOLE, District Judge.


The plaintiffs in these companion cases are manufacturers of cigarettes and smokeless tobacco products. They filed these suits seeking declaratory and injunctive relief prohibiting the defendants from enforcing certain provisions of Mass. Gen. Laws ch. 94, § 307B (the "Disclosure Act").1 The plaintiffs contend that enforcement

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of the Act would violate rights guaranteed them under the United States Constitution in three ways: (1) it would effect an uncompensated taking of property by the State in violation of the Fifth and Fourteenth Amendments, (2) it would deprive them of valuable property without procedural due process in violation of the Fourteenth Amendment, and (3) it would constitute an improper encroachment by the Commonwealth into the domain of interstate commercial regulation which the Commerce Clause reserves to the national government.

Earlier in the case, this Court granted partial summary judgment in favor of the defendants on the plaintiffs' claim that the Disclosure Act was preempted by the Federal Cigarette Labeling and Advertising Act ("Labeling Act"),15 U.S.C. § 1331 et seq., or the Comprehensive Smokeless Tobacco Health Education Act of 1986 ("Smokeless Tobacco Act"), 15 U.S.C. §§ 4401-08. The Court also granted a preliminary injunction restraining the Commonwealth from enforcing the statute pending a full adjudication of the remaining claims. After interlocutory appeals, those rulings were affirmed. See Philip Morris, Inc. v. Harshbarger, 122 F.3d 58 (1st Cir.1997); Philip Morris, Inc. v. Harshbarger, 159 F.3d 670 (1st Cir.1998).

The Court now addresses the parties' cross-motions for summary judgment. For the reasons that follow, the plaintiffs' motions are GRANTED, and defendants are permanently enjoined from enforcing so much of the Disclosure Act as requires manufacturers of cigarettes, snuff or chewing tobacco to disclose brand-specific information identifying constituent ingredients of their products.2

STANDARD OF REVIEW

Summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). Simply alleging that a factual dispute exists will not defeat the motion. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The dispute must be "genuine," which means that sufficient evidence must exist to permit a reasonable trier of fact to resolve the issue in the nonmovant's favor; the evidence must go beyond raising a colorable question of fact and show that differing versions of the facts exist. See Casas Office Machs., Inc. v. Mita Copystar Am., Inc., 42 F.3d 668, 684 (1st Cir.1994) (citing Boston Athletic Ass'n v. Sullivan, 867 F.2d 22, 24 (1st Cir.1989)).

The plaintiffs contend that the statute is unconstitutional on its face. Striking down a law on its face results in the wholesale invalidation of the law in all of its possible applications, and thus it is "strong medicine" that should only be prescribed as a last resort against constitutional infirmity. See National Endowment for the Arts v. Finley, 524 U.S. 569, 580, 118 S.Ct. 2168, 141 L.Ed.2d 500 (1998). The Supreme Court has said that a statute may only be invalidated on its face if one can fathom no set of circumstances

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under which the law could be constitutionally applied. See United States v. Salerno, 481 U.S. 739, 745, 107 S.Ct. 2095, 95 L.Ed.2d 697 (1987).3

When evaluating a facial challenge to a state statute, a federal court does not confine itself strictly to its own interpretation of the statute's language; it must also "consider any limiting construction that a state court or enforcement agency has proffered." Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 494 n. 5, 102 S.Ct. 1186, 71 L.Ed.2d 362 (1982). And the Court assumes, as it must, that the state agencies charged with the execution of the statute will carry out its terms in good faith. See Sullivan v. Everhart, 494 U.S. 83, 94, 110 S.Ct. 960, 108 L.Ed.2d 72 (1990).

UNDISPUTED FACTS

The plaintiffs in these related cases manufacture cigarettes (96-11599-GAO) and smokeless tobacco products (96-11619-GAO). Their products are manufactured outside the Commonwealth and sold nationwide. Each plaintiff adds ingredients other than tobacco, water, or reconstituted tobacco sheet to brands sold in Massachusetts and elsewhere.

Federal law requires the plaintiffs to disclose, once a year, a list of the ingredients added to the tobacco products that they manufacture. The list need not identify particular companies, brands, or the absolute or relative quantities of ingredients. The plaintiffs have made all of the required disclosures, but have carefully avoided linking the ingredients to particular companies or brands in those disclosures.4 The Commonwealth's Department of Public Health (the "DPH") has a copy of the plaintiffs' 1993 list.5

These added ingredients produce distinctive flavors, tastes, and aromas which vary from brand to brand and are a reason why consumers choose one brand over another.6 The ingredients, therefore, are considered important to competitive success.7 The plaintiffs have spent millions of dollars developing the ingredient formulas used in specific cigarette brands, and those brands are themselves valued by the plaintiffs at billions of dollars in the aggregate.8 Brand-specific ingredient information for smokeless tobacco products is also extremely valuable.9

Each plaintiff keeps secret the recipe of ingredients for its brands. For each plaintiff, the identity of the specific ingredients in a given product, and the relative quantities in which the ingredients are used, are kept secret from the public, from other

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plaintiffs, and from the plaintiffs' other competitors.10 Even within the plaintiff companies, information regarding ingredient recipes is purposely compartmentalized. While many employees may each know a bit of a recipe, very few persons have access to any particular recipe in its entirety.11 To date, the plaintiffs have successfully maintained the secrecy of their ingredient recipes,12 even though the plaintiffs and their competitors are always alert to discovering competitors' recipes. Several plaintiffs have made attempts in the past to discover the ingredients used in other plaintiffs' brands, but these attempts have been unsuccessful.13 Although "reverse-engineering" may permit identification of what chemicals are present in a particular product, knowing the chemical composition of a brand apparently does not by itself disclose the ingredients, or the relative amounts of them, that were used to make the product.14 A list that disclosed what specific ingredients are used in an identified brand, arranged in descending order according to the relative amounts of each ingredient used, would aid a competitor's efforts to duplicate that brand, even if the list did not tell exactly how much of each ingredient was used.15

The Disclosure Act would require the plaintiffs to provide the DPH with a list of the ingredients used in any tobacco products sold within the Commonwealth. The list for each brand would identify the ingredients used in that brand ranked "in descending order according to weight, measure, or numerical count." In addition to the ingredient list, each brand's "nicotine yield rating," which is the estimated amount of nicotine an average consumer would ingest by using the product, must also be revealed. See Mass. Gen. Laws ch. 94, § 307B. Both the ingredient list and nicotine yield rating for each brand "shall" become public record, in full or redacted form, if two conditions are met. First, the DPH must determine that "there is a reasonable scientific basis for concluding that the availability of such information could reduce risks to public health." Second, the Attorney General of the Commonwealth must advise the DPH that the public release of the information would not cause an unconstitutional taking of property. See id.; Mass. Regs.Code tit. 105, § 660 et seq. (the "implementing regulations").

The defendants contend that some of the facts described above are the subject of genuine dispute, but they do little more than raise the sort of "metaphysical doubt" about those facts which are not enough to create a genuine factual dispute. See...

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2 practice notes
  • Philip Morris, Inc. v. Reilly, No. 00-2425.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • December 2, 2002
    ...and Order granting the tobacco companies' motions and denying appellants' motion for summary judgment. Phillip Morris, Inc. v. Reilly, 113 F.Supp.2d 129 (D.Mass.2000) [hereinafter Phillip Morris III]. The court found that the Disclosure Act violates the Takings, Due Process, and Commerce Cl......
  • Harvard Apparatus, Inc. v. Cowen, No. Civ.A. 98-11124-MBB.
    • United States
    • United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Massachusetts
    • January 23, 2001
    ...Jet Spray Cooler, Inc. v. Crampton, 361 Mass. 835, 282 N.E.2d 921, 925 (1972) ("Jet Spray I"); Phillip Morris Inc. v. Reilly, 113 F.Supp.2d 129, 135 (D.Mass.2000). Page 175 "[T]he result in each case depends on the conduct of the parties and the nature of the information." Jet Spray I, 282 ......
2 cases
  • Philip Morris, Inc. v. Reilly, No. 00-2425.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • December 2, 2002
    ...and Order granting the tobacco companies' motions and denying appellants' motion for summary judgment. Phillip Morris, Inc. v. Reilly, 113 F.Supp.2d 129 (D.Mass.2000) [hereinafter Phillip Morris III]. The court found that the Disclosure Act violates the Takings, Due Process, and Commerce Cl......
  • Harvard Apparatus, Inc. v. Cowen, No. Civ.A. 98-11124-MBB.
    • United States
    • United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Massachusetts
    • January 23, 2001
    ...Jet Spray Cooler, Inc. v. Crampton, 361 Mass. 835, 282 N.E.2d 921, 925 (1972) ("Jet Spray I"); Phillip Morris Inc. v. Reilly, 113 F.Supp.2d 129, 135 (D.Mass.2000). Page 175 "[T]he result in each case depends on the conduct of the parties and the nature of the information." Jet Spray I, 282 ......

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