045: It Couldn’t Have Happened to a Nicer Industry

Stella Case No. 045, Originally Published: 30 April 2003

Tobacco companies have long been the boogiemen of U.S. industry. It was proven that they manipulated nicotine levels and lied about the safety of their product, leading to hundreds of thousands, if not millions, of deaths in the U.S. alone. Long pounded in the courts, “big tobacco” finally lost big time with a multi-billion-dollar “settlement” to be paid to each of the 50 states to compensate the states for caring for indigent tobacco victims, and to help educate their citizens as to the dangers of smoking.

045: It Couldn’t Have Happened to a Nicer Industry
Mr. R.J. Reynolds himself, c1890. He added saccharin to chewing tobacco to make it sweet, and got rich. Right, an RJR ad campaign in the mid 40s promoted the idea that smoking is healthy.

No state has been more active in anti-smoking public awareness campaigns than California, which started anti-tobacco advertising long before the settlement in a bold attempt to convince smokers to stop, and non-smokers not to start. The ads are funded by a 25-cent-per-pack tax on cigarettes voters approved in 1988. In the ads, the state likes to say that it’s “America’s smoke-free section,” and apparently the campaign is working: since the special tax passed, cigarette sales have dropped by half in California.

R.J. Reynolds spokeswoman Ellen Matthews says that the decade-long ad effort in California has “infiltrated every segment of the media in California.” That was pretty much the state’s goal, but RJR says that result has prejudiced potential jurors in any future anti-tobacco court action in the state against them — so much so that the tobacco companies are “vilified” by the people who may have to judge them in future lawsuits.

Thus, R.J. Reynolds and Lorillard, two of the largest tobacco companies in the U.S., have sued California in federal court in Sacramento, asking the court to order a stop to the state’s anti-tobacco advertising.

“Suing to stop the most successful tobacco prevention program in the nation is further proof that they’re not serious in saying they don’t want kids to smoke,” said Bill Corr, executive director of the Campaign for Tobacco-Free Kids in Washington, D.C.

California Gov. Gray Davis is ready for the fight the companies have picked. “I say, Bring it on,” Davis said. “They spend infinitely more than we do [on marketing] to get their message out. I don’t think anyone should feel too sorry for them.”

Tobacco companies “vilified”? The horror! But it’s hardly surprising that an industry so often sued would think of using the courts to get what it wants. As in love and war, the tobacco business thinks turnabout is fair play.

Sources

  • “Tobacco Companies Sue State, Saying Ads ‘Vilify’ Industry”, Associated Press, 2 April 2003

Case Status

The basis of the tobacco companies’ suit was a “novel First Amendment claim,” judges said: the companies argued that California violated their First Amendment rights by imposing a surtax on cigarettes, and then using some of the proceeds of that surtax to pay for advertisements that criticize their industry. That makes it “compelled subsidization of speech,” prohibited by the First Amendment, they said.

Further, they argued the advertisements improperly stigmatized them in violation of the Fourteenth Amendment, that the advertisements interfered with their right to a jury trial under the Seventh and Fourteenth Amendments, and that the advertisements violated the California Constitution.

The state countered that the advertisements are government speech, which is entirely immune from First Amendment attack, and made a motion to dismiss, arguing that even if all of the companies’ claims were proven, there could not be reparation to the companies.

In July 2003, the U.S. District Court (Eastern District of California) found that the companies “state no claims upon which relief can be granted,” and dismissed the suit. The companies appealed. In May 2004, the 9th Circuit Court of Appeals upheld the ruling. Case closed? Read on.

My 2020 Thoughts on the Case

It keeps on: on 1 June 2020, R.J. Reynolds, joined by the American Snuff Company (no, really), and the Santa Fe Natural Tobacco Company, sued the County of Los Angeles. Their complaint: the city passed an ordinance, which went into effect 1 May 2020, prohibiting the sale of flavored tobacco products, which is often the gateway for the young into the tobacco habit.

Reynolds is in a losing business. Governments are tired of having to clean up the health mess created by the companies, and is using everything in their power to reduce smoking, ideally to zero. The companies should consider another line of business. Maybe buy Nabisco? Nah: that company wouldn’t want them around either.

So while this week’s featured case was closed, there have been others along the same vein since. The tobacco companies have been sued again and again and again, so my conclusion in 2003 seems to have held up well: “As in love and war, the tobacco business thinks turnabout is fair play.”

Letters

The letters about about the proposal by the American Bar Association to make it illegal for anyone but a lawyer to provide any sort of legal advice (Editorial: Power Grab) continued to stream in. Let’s start with a law student:

Bryan in Washington: “Actually, I’m all for the proposed law — as long as we’re going to socialize lawyers first. Everybody is entitled to equal protection under the law, so sure: they should go ahead and make it so only lawyers can deliver legal advice, but they should also prohibit the private practice of law if they do that. But then I’m all for socialized law practice anyway. How can we have equality without equal representation?”

Bryan’s idea is certainly interesting, but I’m not sure how much I like it — imagine the bureaucracy of having the government involved in every legal matter. But at least it’s an “out of the box” sort of thought on how to start reforming the legal system from the ground up.

Cristy in Oregon: “While I read the special essay, I did not realize what danger this ‘law’ could place me in. I am a union steward. For those of you that are not unionized, a steward is a regular employee of a company that has a contract with a union that covers their employees. In an adversarial environment this would mean I represent the employee(s) in grievances. As a steward employee, I routinely advise both the employee and employer (HR and management) with contract interpretations. I also routinely screen state and federal websites regarding labor rights/laws and advise employees I represent what their rights are under the current labor laws. I also advise the employer when there is a possible conflict with contractual rights or labor laws. I am interpreting this ABA definition as placing me and my fellow stewards, as well as other union staff employees, at great risk. In the strictest definition, it sounds like we would have to have lawyers to do contract negotiations, interpretations and employee representations. Can you imagine the additional costs associated with this? If a lawyer was required to do the contract interpretations, labor law interpretations, and worker rights law disseminations, my employer and union would have to close the doors; they would be unable to support the lawyers this law would require.”

Peter, an army officer in England: “Sometime between 1939 and 1945, you chaps sent some soldiers over to Europe to help get rid of a Fascist dictator who was laying the law down and severely punishing anyone who did not do as he said. He did it to protect his own interests. As the ABA is obviously thinking along the same tracks as the Fascist guy (I think his name was Hitler or something), would you all like us Brits to send some soldiers over to help you get rid of these ABA guys? After all, what they are doing is totally against democracy. There is also the small point that what they are doing is something you call ‘Anti-American’. You either live in a democracy over the pond, or you don’t. Americans are not known for their knuckling down to obey people with fascist ideas. Apparently not until now anyway.”

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12 Comments on “045: It Couldn’t Have Happened to a Nicer Industry

  1. One of my more conservative relatives shared a post pre-election trying to equate such advertising posters with the fact that you couldn’t trust science; e,g, was unable to understand the difference between marketing and science.

    One doesn’t have to be very smart to understand the difference. The catch is, they have to think about it a little. -rc

    Reply
  2. I can see the company’s argument that the state’s ads prejudice any potential jurors against the company and thus make it impossible for them to get a “fair & impartial” trial. But as far as I know (just from watching every Law&Order episode) the typical way to resolve that problem is a change of venue (i.e. move the trial to somewhere where a “fair & impartial” trial is possible). However given the decades long anti-smoking campaigns in many states, as well as the federally-mandated surgeon general’s warning on every pack of cigarettes, I wonder where in the US such a trial *could* be moved to allow them a “fair & impartial” trial? They’d probably prefer it be moved to their home states or a state that depends on the tobacco industry. (smh)

    Reply
    • 28 U.S. Code § 1404 limits a District Court’s power to change venue. According to the statute, it can only be done for the convenience of parties or witnesses, unless all parties consent to the change.

      I’m not aware of any appellate-level authority which holds that a District Court can grant a change of venue over a party’s objection on the grounds of inability to draw an unbiased jury within the originating district. Most of the cases you hear about in the media are either criminal cases, brought in state court, or are transferred to another division within the same federal district.

      I like the way you think though.

      Reply
  3. How does this American legal scenario affect the First Peoples’ shamanic practice which uses the original undoctored unmodified tobacco leaves?

    Interesting question, but I don’t think it does affect them: they’re not selling it as a commercial product. -rc

    Reply
  4. I don’t have a comment on the lawsuit, other than its ludicrous. But I loved Peter’s answer from the UK. I know that chap he’s talking about and I think we came dangerously close to a similar person maintaining power this election. Thanks for looking out for us!

    Reply
  5. I have to say that I’m kinda on Big Tobacco’s side here.

    I was a smoker for many years; I quit cold turkey the day before I married someone who was allergic to the smoke.

    There was not a single instant, before or during the time I was a smoker, when I wasn’t aware of the dangers of tobacco use. In fact, the danger was mostly why I started, in those rebellious years when a guy wants to show the world he’s a Man. So I don’t hold any grudge against the tobacco industry; they provided the product I wanted at the time I wanted it.

    It seems pretty unfair to tax a product, then use the proceeds of that tax to run ads discouraging use of the same product. The argument that my medical expenses are borne at least partially by everyone and therefore it’s in the Public Interest to discourage smoking only holds water because our healthcare system is (at least partially) socialized. The government should not be trying to protect me from myself.

    Instead, health insurance companies should just charge substantially more (they have teams of actuaries to tell them how much more) to cover injuries/illness from tobacco use. A healthy ex-smoker might not be able to get full coverage for under $15K/month, and if they develop lung cancer they might find that their policy only covers 5% of their treatment cost. Who pays the rest? That’s the ex-smoker’s problem. If you feel sympathy for them you’re welcome to donate to their inevitable Gofundme.

    Reply
    • I gather quite a number of health insurance carriers these days *do* give you a fairly substantial discount if you are a non-smoker, though I can’t produce specific examples; I remember being asked on a questionnaire, several times in the last decade.

      As for the overall impact of antismoking campaigns, it’s my understanding from several things I’ve read this year that overall numbers have fallen from 40% late 70s/early 80s to just under 20% this year, and that teen smoking is down to 5% (presumably “of teens”) (dunno what it used to be).

      Reply
      • My health insurance doesn’t give a discount, but there is a monthly premium you must pay if you smoke — $30 for the employee, another $30 for a spouse, and an additional $30 for any of your insured children. The only way to avoid the extra charge is to be enrolled in their smoking cessation program, and I think that has a time limit.

        Reply
    • Part of the rationale behind the California law is that smoking-related illnesses place a huge burden on Medi-Cal (Medicaid everywhere else). The tax is more or less the state’s way of accomplishing the same thing you suggest the health insurance companies do.

      To my mind, the tobacco industry’s other claims are spurious, since they aren’t being forced to do/refrain from doing anything. They don’t even pay the tax. The consumer pays it.

      Reply
    • It’s not ‘just you’ they’re protecting though, Gordon.

      Imagine your wife’s chronic medical bills due to the allergy if you had continued smoking. Kids growing up in smoking households have more related medical issues than those that don’t. How many houses (and neighboring homes/apartments) have burned down due to a smoker falling asleep holding a cigarette? How many forest/brush fires started by a careless discarding of a butt out a car window?

      Alcohol is also taxed, and dollars to donuts, some of those funds go to Anti-Drunk-Driving campaigns. Then there’s the sugar tax — likely helping fund healthy eating ads, fitness initiatives, and subsidies for healthier alternatives.

      Reply
  6. I find it particularly disturbing the assertion that, “the advertisements are government speech, which is entirely immune from First Amendment attack”. So while us lowly citizens are subject to the Constitution and Bill of Rights, the government is above it all? We find attacks against Big Tobacco, Big Oil, and Big business every day. Where’s the attack against Big Government? As my dad used to say, “they’ve gotten too big for their britches.”

    Where’s the attack against Big Government? I think that’s been the primary issue of the Republican Party for most of its history. -rc

    Reply
  7. I think that anybody that smoked a cigarette after the Surgeon General’s warning appeared on every pack of cigarettes should be unable to sue the tobacco companies. Once you know the risks of tobacco then you should be responsible for your health if you continue to use tobacco.

    Reply

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