Tobacco: Selected Legal Issues

Tobacco: Selected Legal Issues
Updated September 3, 2008
Vanessa K. Burrows
Legislative Attorney
American Law Division

Tobacco: Selected Legal Issues
Summary
Over the past decade, the courts and the Congress have been grappling with
tobacco-related issues. Among these issues are the Food and Drug Administration’s
(FDA) attempt to regulate certain tobacco products under the Federal Food, Drug,
and Cosmetic Act (FDCA); the Master Settlement Agreement (MSA) that resulted
from lawsuits brought by states attorneys general against tobacco companies; federal,
private party, and foreign lawsuits against tobacco companies; limits on tobacco
advertising; and restrictions on selling and distributing tobacco to minors. During
the 110th Congress, legislators have introduced several bills that address some of the
above issues, including H.R. 1108, H.R. 2633, H.R. 3043, S. 625, S. 1162, S. 1342,
S. 1834, S. 2685, and S.Con.Res. 21. This report does not address tax-related issues.
The FDCA gives the FDA authority to regulate food, drugs, devices, and
cosmetics. In 1996, the FDA promulgated a final rule stating that, under the FDCA,
it could regulate cigarettes and smokeless tobacco. In 2000, however, the U.S.
Supreme Court found that Congress had not given the FDA regulatory power over
tobacco and overturned the final rule in FDA v. Brown & Williamson Tobacco Corp.
In the 1990s, states attorneys general brought lawsuits for reimbursement of
their states’ tobacco-related medical expenses. They reached a settlement with
tobacco companies in 1997, but the settlement did not garner the congressional
approval needed for implementation. In 1998, 46 states, the District of Columbia,
five U.S. territories, and the tobacco industry signed the MSA, worth $206 billion
over 26 years.
In 1999, the Clinton Administration filed a lawsuit against major tobacco
companies and industry trade groups to recoup federal tobacco-related medical costs.
In 2006, a district court held that the tobacco companies violated two Racketeer
Influenced and Corrupt Organization Act (RICO) claims and, among other remedies,
ordered them to remove descriptors such as light, low tar, natural, mild, and ultra
light from their packaging. The case is being appealed.
Since the U.S. Supreme Court’s 1992 decision in Cipollone v. Liggett Group
Inc., individual and class action lawsuits have been brought against tobacco
companies under theories such as fraudulent representation, conspiracy, breach of
express warranty, and failure to warn. The private party suit section of this report
discusses selected state class actions. Suits brought in federal courts by foreign
governments for medical care costs resulting from tobacco-related illnesses have not
been successful.
Tobacco advertising is restricted at the federal, state, and local levels. The
Federal Cigarette Labeling and Advertising Act (FCLAA), state laws and the MSA,
and local ordinances limit tobacco advertising in ways such as prohibiting radio and
television advertisements, compelling the use of health warning labels, banning the
use of cartoons, and requiring individuals to have contact with a sales person before
purchasing tobacco products. Additionally, federal law plays a role in enforcing laws
that prohibit tobacco sales to minors.

Contents
In troduction ..................................................1
The FDA’s Ability to Regulate Tobacco Products....................1
State Suits and the Master Settlement Agreement.....................5
The Federal Lawsuit............................................6
Private Party Suits.............................................9
Foreign Suits in U.S. Federal Courts..............................13
Tobacco Advertising: Federal Regulations, MSA Restrictions,
and Local Ordinances......................................14
Restrictions on Selling and Distributing Tobacco to Minors............17
Synar Amendment........................................17
Rowe v. New Hampshire Motor Transport Association...........17

Tobacco: Selected Legal Issues
Introduction
Over the past decade, the courts and the Congress have been grappling with
tobacco-related issues. Among these issues are the Food and Drug Administration’s
attempt to regulate tobacco under the Federal Food, Drug, and Cosmetic Act; the
Master Settlement Agreement that resulted from lawsuits by states attorneys general
against tobacco companies; federal, private party, and foreign lawsuits against
tobacco companies; limits on tobacco advertising; and restrictions on selling and
distributing tobacco to minors. During the 110th Congress, legislators have
introduced several bills that address some of the above issues, including H.R. 1108,
H.R. 2633, H.R. 3043, S. 625, S. 1162, S. 1342, S. 1834, and S.Con.Res. 21.
The FDA’s Ability to Regulate Tobacco Products
Congress passed the Federal Food, Drug, and Cosmetic Act¹ (FDCA) in 1938
in response to a tragedy in which 100 people died after taking a drug containing a
highly toxic substance. The statute increased the Food and Drug Administration’s
(FDA) enforcement power, gave the FDA jurisdiction over previously unregulated
cosmetics and devices, and instituted safety measures such as requiring instruction
labels on drugs and a pre-market approval process for new drugs.² Since 1938, the
law has been amended numerous times.³
The FDCA is organized into chapters that address drugs, devices, food, and
cosmetics, as well as statutory definitions, actions prohibited by the FDCA, the
FDA’s general authorities, imports and exports, and other miscellaneous issues. In
order to understand how the FDA attempted to regulate tobacco, one must first
understand the definitions of “drug” and “device.” Under the FDCA, “drugs” fall
into three categories or an inclusive fourth category comprised of articles intended
to become a component of any of the other three categories. These three categories
are (1) “articles recognized in the official United States Pharmacopoeia” or a similar
standard-setting body for prescriptions and over-the-counter medications;
(2) “articles intended for use in the diagnosis, cure, mitigation, treatment, or
prevention of disease in man or other animals”; and (3) “articles (other than food)

¹ 21 U.S.C. § 301 et seq.
² James T. O’Reilly, Food and Drug Administration, § 3.4 (2005).
³ Amendments to the FDCA have included a broad range of topics such as food and color
additives, animal drugs, drug abuse control, infant formula, saccharin labeling, orphan
drugs, nutrition information and food allergen labeling, prescription drug marketing and
importation, safe medical devices, and dietary supplements.

intended to affect the structure or any function of the body of man or other animals.”⁴
When determining whether an article is a drug under the second or third categories,
the agency takes the intent of the vendor into account. However, even if a vendor
does not intend to sell an item as a drug, the FDA can still govern it as a drug.⁵ The
term “drug” does not include food or dietary supplements.⁶
The FDCA defines “device” as:
an instrument, apparatus, implement, machine, contrivance, implant, in vitro
reagent, or other similar or related article, including any component, part, or
accessory . . . which does not achieve its primary intended purposes through
chemical action within or on the body of man or other animals and which is not
dependent upon being metabolized for the achievement of its primary intended
purposes.⁷
In addition, in order to be a “device” under the FDCA, an item must fall within one
of three categories that are nearly identical to those the FDCA uses to define a “drug”
(see above). In classifying an item as a device, the FDA takes into account the
manufacturer’s intent as to whether it is a device. This intent may be “indicated in
the product’s labeling” and by how the manufacturer promotes, distributes, and sells
the product.⁸
Combinations of drugs and devices are also regulated by the FDA. A drug-
device combination product is defined to include, among other things, a product that
contains a drug and a device that “are physically, chemically, or otherwise combined
or mixed and produced as a single entity.”⁹ Examples of this type of drug-device
combination product include insulin injector pens, metered dose inhalers, transdermal
patches, and catheters with antimicrobial coating.¹⁰
Under the theory that cigarettes and smokeless tobacco are “a combination of
a drug, device, or biologic product,”¹¹ the FDA issued a final rule¹² in 1996 that

⁴ 21 U.S.C. § 321(g)(1).
⁵ O’Reilly, § 13.3. Sunscreen is one example of such a product. Id.
⁶ 21 U.S.C. § 321(g)(1)(D).
⁷ 21 U.S.C. § 321(h).
⁸ O’Reilly, § 18.2.
⁹ 21 CFR § 3.2(e)(1).
¹⁰ FDA, Frequently Asked Questions, [http://www.fda.gov/oc/combination/faqs.html#_
Toc88444656].
¹¹ 21 U.S.C. § 353; FDCA § 503(g).
¹² Regulations Restricting the Sale and Distribution of Cigarettes and Smokeless Tobacco
to Protect Children and Adolescents, 61 Fed. Reg. 44396 (1996). For a detailed description
of the FDA’s 1996 final rule that would have restricted the sale of tobacco products,
advertising, and labels, as well as the federal district and court of appeals cases leading up
to the Supreme Court’s decision in FDA v. Brown & Williamson Tobacco Corp., see CRS
(continued...)

would have given the agency jurisdiction over these tobacco products as drugs,
devices, or both drugs and devices.¹³ The agency’s rule concentrated on cigarettes
and smokeless tobacco because the FDA did not have “sufficient evidence that
[cigars] are drug delivery devices” and “because young people predominantly use
cigarettes and smokeless tobacco products.”¹⁴ The FDA found that nicotine was a
drug under the above statutory definition providing that a drug is an article that
“affect[s] the structure or any function of the body.”¹⁵ This was because nicotine
“causes addiction and other significant pharmacological effects on the human
body.”¹⁶ The FDA further concluded that cigarettes and smokeless tobacco have
“device components that deliver nicotine to the body” and are “intended” by tobacco
manufacturers to do so.¹⁷ In the case of cigarettes, the FDA said that the device that
delivers the drug nicotine has “components [that] work together upon combustion
outside the body to form a nicotine-containing aerosol, which then delivers nicotine
to the body when inhaled by the smoker.”¹⁸ With smokeless tobacco, the device is
a component that provides “nicotine to the consumer in a form that is palatable and
absorbable by the buccal mucosa,” which is the lining inside the cheeks and lips.¹⁹
Implementation of the final rule would have enabled the FDA to regulate
cigarettes and smokeless tobacco, including their access by minors, labeling, and
advertising, under the “device” portion of the FDCA.²⁰ In order to reach tobacco
advertising and youth access to these tobacco products, the FDA rule relied on the
agency’s already-established authority to restrict the sale, use, and distribution of a
potentially harmful device or a device that requires “collateral measures necessary
for its use [if] the Secretary determines that there cannot otherwise be reasonable

¹² (...continued)
Report RL32619, FDA Regulation of Tobacco Products: A Historical, Policy, and Legal
Analysis, by C. Stephen Redhead and Vanessa K. Burrows.
¹³ 61 Fed. Reg. 44400.
¹⁴ 61 Fed. Reg. 44422 (quoting Regulations Restricting the Sale and Distribution of
Cigarettes and Smokeless Tobacco Products to Protect Children and Adolescents, 60 Fed.
Reg. 41314, 41322 (to be codified at 21 C.F.R. pts. 801, 803, 804, 897) (proposed August

11, 1995)).

¹⁵ 21 U.S.C. § 321(g)(1).
¹⁶ Annex to the Final Rule, Nicotine in Cigarettes and Smokeless Tobacco is a Drug and
These Products are Nicotine Delivery Devices Under the Federal Food, Drug, and Cosmetic
Act: Jurisdictional Determination, 61 Fed. Reg. 44619, 44628-29 (1996).
¹⁷ 61 Fed. Reg. 44628-29; 21 U.S.C. § 321(h).
¹⁸ 61 Fed. Reg. 44649-50.
¹⁹ 61 Fed. Reg. 44650.
²⁰ Regulations Restricting the Sale and Distribution of Cigarettes and Smokeless Tobacco
to Protect Children and Adolescents, 61 Fed. Reg. 44396, 44400 (1996). The agency
asserted that in order “to provide the most effective protection to the public health,” it had
discretion in choosing whether to regulate combination products as drugs or devices, and
it chose to regulate cigarettes and smokeless tobacco as devices. Id. at 44400.

assurance of its safety and effectiveness.”²¹ Under the FDA’s interpretation of the
FDCA in the 1996 rule, the FDA could have issued rules on recordkeeping and
manufacturing as well as reporting requirements in the event of contamination or
“serious adverse events that are not well-known . . . in the scientific community.”²²
With the 1996 rule in place, the FDCA also would have allowed the FDA to place
cigarettes in one of three classes of devices ranging from devices that present
minimal harm to users to devices requiring FDA approval because of the risk for
illness and the need for regulatory control.
However, before the FDA could implement its final rule or issue any further
regulations, the tobacco industry challenged the final rule. The industry argued that
the FDCA did not permit the FDA to regulate tobacco, that the FDA could not
regulate tobacco products because such items did not claim to provide health
benefits, and that the FDA’s advertising restrictions violated commercial speech
protections guaranteed by the First Amendment. In FDA v. Brown & Williamson
Tobacco Corp., the U.S. Supreme Court held that the FDA did not have the statutory
authority under the FDCA to regulate tobacco products as drug-delivery devices, and
therefore did not reach the First Amendment issue.²³ The Court used the test it had
articulated in Chevron U.S.A., Inc. v. Natural Resources Defense Council,²⁴ which
addresses congressional intent and agency discretion:
When a court reviews an agency’s construction of the statute which it
administers, it is confronted with two questions. First, always, is the question
whether Congress has directly spoken to the precise question at issue. If the
intent of Congress is clear, that is the end of the matter; for the court, as well as
the agency, must give effect to the unambiguously expressed intent of Congress.
If, however, the court determines Congress has not directly addressed the precise
question at issue, the court does not simply impose its own construction on the
statute ... Rather, if the statute is silent or ambiguous with respect to the specific
issue, the question for the court is whether the agency’s answer is based on a²⁵
permissible construction of the statute.
The Court found that Congress had spoken on the issue of the FDA’s authority
to regulate tobacco products under the FDCA by passing laws — not administered
by the FDA — that dealt with marketing, labeling, and education regarding tobacco
products. Specifically, the Court held that the FDA’s interpretation of the FDCA, in
its 1996 final rule, was contrary to Congress’s intent “expressed in the FDCA’s
overall regulatory scheme and in tobacco-specific legislation that [Congress] has
enacted.”²⁶ According to the Court, if the FDA had regulatory authority over tobacco

²¹ 21 U.S.C. § 360j(e); FDCA § 502(e).
²² 61 Fed. Reg. 44615-18.
²³ FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 142-43 (2000).
²⁴ 467 U.S. 837 (1984).
²⁵ Id. at 842-43.
²⁶ FDA, 529 U.S. at 126.

under the FDCA, then tobacco companies could not market their products, and
tobacco products would have to be banned because they are not safe or effective.²⁷
State Suits and the Master Settlement Agreement²⁸
Beginning in 1994, 41 states and Puerto Rico began filing lawsuits against
tobacco companies for reimbursement of tobacco-related medical expenses,
particularly Medicaid expenditures. These lawsuits eventually culminated in the
1998 Master Settlement Agreement (MSA), but initially they resulted in a June 1997
settlement between states attorneys general and tobacco manufacturers. The 1997
settlement incorporated all the provisions of the FDA’s 1996 tobacco rule, discussed
above. The 1997 proposal included changes to the FDCA and other federal statutes,
and required congressional legislative action in order to take effect. The 1997
agreement, however, never took effect because Congress did not approve legislation
implementing the settlement. Attempts by the 105th Congress to pass such
legislation — comprised of the settlement and additional measures such as financial
penalties if targets for reducing underage tobacco use were not met — ended when
Senator John McCain’s bill was defeated on two procedural votes on June 17, 1998,
after an extended floor debate.²⁹ The negotiated agreement would have resulted in
tobacco-related medical reimbursement payments to states of $368.5 billion for 25
years and then $15 billion per year after the first 25 years. Additionally, tobacco
companies would have paid for programs to reduce adolescent tobacco use. This
settlement would also have granted immunity to tobacco manufacturers from future
lawsuits and ended existing class action lawsuits filed by smokers and their relatives,
as well as nicotine addiction claims.
After the defeat of Senator McCain’s bill, the major cigarette companies
resumed contractual negotiations with the states to settle the lawsuits. In November

1998, attorneys general from 46 states, the District of Columbia, and five U.S.

territories signed the MSA with the major tobacco companies. Four states —
Mississippi, Florida, Texas, and Minnesota — did not join the MSA, but instead
settled individually with the tobacco companies. The MSA did not settle individual,
union, private health care, or class action suits. Through the MSA, states will receive
annual payments of $206 billion over 26 years. Each state needed to and did obtain
its trial court’s approval to receive the MSA funds. The MSA also prohibited certain
advertising, marketing, and promotion of tobacco products (see the Tobacco
Advertising section below).
Of the $61 million paid to the states by tobacco companies to date, states have
spent less than 8% on anti-smoking endeavors, according to a March 2007 article by

²⁷ Id. at 135-37.
²⁸ For detailed explanations of the proposed 1997 National Tobacco Settlement and the 1998
Master Settlement Agreement, see CRS Report RL32619, FDA Regulation of Tobacco
Products: A Historical, Policy, and Legal Analysis, by C. Stephen Redhead and Vanessa K.
Burrows.
²⁹ National Tobacco Policy and Youth Smoking Reduction Act, S. 1415, 105th Cong.
(1998). See, e.g., 144 Cong. Rec. S5494-5511 (June 1, 1998); 144 Cong. Rec. S5737-62
(June 9, 1998); 144 Cong. Rec. S6275-89 (June 12, 1998).

the American Bar Association Journal.³⁰ Government Accountability Office figures
indicate that states have spent even less on tobacco control, which it defines as efforts
to include prevention, education, enforcement, and cessation services.³¹ States have
allocated 30% of their MSA payments to health care, including Medicaid, health
insurance, and hospitals; 22.9% towards budget shortfalls; 7.1% to general purposes;
6% towards infrastructure; 5.5% to education; 5.4% to debt service on securitized
funds; 3.5% on tobacco control; and 7.8% to other projects.³² The states have not
allocated 11.9% of their MSA payments.³³
As noted, the MSA grew out of lawsuits by the states seeking reimbursement
for their medical expenses on behalf of tobacco users. If a third party, such as a
tobacco company, causes an illness or injury to someone, and a state provides
medical care for that illness or injury, as, for example, out of Medicaid funds, then
the state may sue the third party for reimbursement of such funds. Because the
federal government pays for at least 50% of each state’s Medicaid costs, by law the
federal government is entitled to its share of any reimbursements of Medicaid funds
that a state receives from a third party that caused an illness or injury on which
Medicaid funds were expended.³⁴ With respect to the MSA, however, Congress
enacted P.L. 106-31 (2000), which authorizes the states to keep reimbursements they
receive from third parties.³⁵
The Federal Lawsuit
The federal lawsuit against major tobacco companies and industry trade groups
began under the Clinton Administration in 1999 as a way for the U.S. government
to recover tobacco-related medical costs paid by federal health care programs. The
Department of Justice (DOJ) was seeking (1) restitution for money paid by the
federal government’s health care programs for treatment and care of persons with
tobacco-related diseases, (2) a disgorgement of the profits that the tobacco industry
allegedly earned by violating the Racketeer Influenced and Corrupt Organizations
Act (RICO), and (3) orders preventing fraud and future violations of the law, such
as racketeering or making false, deceptive, or misleading statements about cigarettes;
as well as orders that the defendants take certain actions, such as issuing corrective

³⁰ Mark Curriden, Up in Smoke, A.B.A. Journal, March 2007, at 27.
³¹ Lisa Shames, Acting Director, Natural Resources and Environment, GAO, Testimony
Before the Committee on Health, Education, labor, and Pensions, U.S. Senate (Feb. 27,
2007), Tobacco Settlement: States’ Allocations of Payments from Tobacco Companies for
Fiscal Years 2000 through 2005, at 14.
³² Shames, supra note 32. Section 10908 of the Farm Security and Rural Investment Act of
2002 mandates that GAO report on “all programs and activities that States have carried out
using funds received under all phases of the Master Settlement Agreement of 1997.^”P.L.

107-171.

³³ Shames, supra note 32.
³⁴ 42 U.S.C. § 1396b(d)(2)(B).
³⁵ FY1999 Emergency Supplemental Appropriations Act (P.L. 106-31), § 3031.

statements, disclosing research, and funding smoking cessation programs.³⁶ In 2000,
the U.S. District Court for the District of Columbia dismissed two claims by the
government that would have provided for recovery under the Medical Care Recovery
Act as well as under the Medicare Secondary Payer Act provisions of the Social
Security Act.³⁷ The suit then proceeded under two RICO claims, 18 U.S.C. § 1962(c)
and (d).³⁸ Section 1962(c) criminalizes the association of persons, including
corporations, with enterprises that conduct their affairs through “a pattern of
racketeering activity,” which means that they commit two or more specified crimes
within ten years. Section 1962(d) outlaws conspiracies to violate § 1962(c) or related
provisions regarding racketeering activities. The government alleged that a pattern
of racketeering activity existed because the defendants defrauded “individual
smokers of their property (i.e., the money they spent on cigarettes).”³⁹
During the trial, the defendants appealed the U.S. District Court for the District
of Columbia’s opinion allowing the remedy of disgorgement — the giving up of the
tobacco industry’s past profits gained by its deceptive practices — to the U.S. Court
of Appeals for the D.C. Circuit. In 2005, the court of appeals overturned the district
court’s opinion, thus limiting the remedial measures that the district court could
impose if it found that the defendants had violated RICO.⁴⁰ Because the court of
appeals allowed only forward-looking injunctive relief, the DOJ could not recover
the $280 billion disgorgement that had been sought for tobacco profits earned since
1971 for marketing to youth.⁴¹ The court of appeals stated that injunctive relief under
RICO⁴² must focus on preventing future wrongdoing rather than on punishing past
conduct. Noting that Congress explicitly crafted a set of remedial measures in the
RICO statute and likely did not intend to provide other remedies, the court of appeals
was “reluctant” to infer an additional remedy such as disgorgement.⁴³
In August 2006, the U.S. District Court for the District of Columbia ruled that
the defendants had violated RICO. The court found that the tobacco companies and
trade industry organizations had conspired “to deceive the American public about the
health effects of smoking and environmental tobacco smoke, the addictiveness of

³⁶ United States v. Philip Morris Inc., No. 99-2496, 1-2, 91-92 (D.D.C. filed Feb. 2001)
(DOJ First Amended Complaint).
³⁷ For a detailed explanation of the government’s claims under the Medical Care Recovery
Act and the Medicare Secondary Payer Act, see CRS Report RS20091, The Federal Lawsuit
Against Tobacco Companies to Recover Health Care Costs, by Henry Cohen. This report
has been archived and is available from the author.
³⁸ For additional information on RICO, see CRS Report 96-950, RICO: A Brief Sketch, by
Charles Doyle.
³⁹ United States v. Philip Morris Inc., et al., No. 99-2496, 48 (D.D.C. 2000).
⁴⁰ United States v. Philip Morris Inc., 396 F.3d 1190 (D.C. Cir. 2005), cert. denied 546 U.S.

960 (2005).

⁴¹ Anthony J. Sebok, The Federal Government’s RICO Suit Against Big Tobacco,
Findlaw.com, Oct. 4, 2004, available at [http://writ.lp.findlaw.com/sebok/20041004.html].
⁴² 18 U.S.C. § 1964(a).
⁴³ Philip Morris, 396 F.3d at 1200.

nicotine, the health benefits from low tar, ‘light’ cigarettes, and their manipulation
of the design and composition of cigarettes in order to sustain nicotine addiction.”⁴⁴
Although, as mentioned above, the U.S. Court of Appeals prevented the district court
from imposing the remedy of disgorgement, the district court ordered the defendants
to pay DOJ’s legal costs, which totaled approximately $1.93 million.⁴⁵ The district
court also enjoined the defendants from using descriptors such as low tar, light, mild,
and natural on their cigarette packaging and advertisements; ordered the defendants
to place “onserts” or stickers with corrective statements on their packaging and to
issue statements in newspapers and on television and retail displays; and extended
the length of time that tobacco companies must make documents produced in
litigation available to the public, a requirement that originated in the MSA.
Both the tobacco companies and the DOJ have filed notices of appeal with the
U.S. Court of Appeals for the D.C. Circuit.⁴⁶ Neither of these notices states the
parties’ particular objections to the lower court decision, but rather enables the
parties to appeal any and all parts of the judgment. In addition, pending the outcome
of their appeal, the defendants moved to stay the district court’s order banning them
from using descriptors such as light or low tar. In September 2006, the district court
denied the defendants’ request for a stay, concluding that “loss of market share, if it
results from imposing an appropriate remedy to prevent and restrain past violations
of the law, may well be the price Defendants have to pay for violations of RICO.”⁴⁷
The defendants therefore filed a motion with the U.S. Court of Appeals for the D.C.
Circuit requesting an emergency stay of the district court order pending appeal.⁴⁸ The
court of appeals granted the stay in October 2006, enabling the tobacco companies
to continue using descriptors such as ultra light or natural until the court rules on the
appeal.⁴⁹ Oral argument is scheduled for October 2008.⁵⁰
In March 2007, the U.S. District Court for the District of Columbia responded
to a motion by certain defendants for clarification of the court’s August 2006 order
restricting the defendant’s use of marketing descriptors such as natural and ultra light.

⁴⁴ United States v. Philip Morris U.S.A., Inc., No. 99-2496, 1 (D.D.C. Sept. 8, 2006)
(amended memorandum opinion).
⁴⁵ United States v. Philip Morris U.S.A., Inc., No. 99-2496 (D.D.C. filed Oct. 2, 2006) (bill
of costs).
⁴⁶ United States v. Philip Morris U.S.A., Inc., No. 99-2496 (D.D.C. Sept. 11, 2006) (Philip
Morris U.S.A. Inc., Altria Group, Inc., British American Tobacco Ltd., R.J. Reynolds
Tobacco Co., Brown & Williamson Corp., and Lorillard Tobacco Co. Notices of Appeal);
United States v. Philip Morris U.S.A., Inc., No. 99-2496 (D.D.C. Oct. 16, 2006) (DOJ
Notice of Appeal).
⁴⁷ United States v. Philip Morris U.S.A., Inc., No. 99-2496, 1 (D.D.C. Sept. 28, 2006)
(memorandum opinion on stay appeal).
⁴⁸ United States v. Philip Morris U.S.A., Inc., Nos. 06-5267 - 06-5272 (D.C. Cir. Oct. 2,

2006) (defendants’ emergency motion to stay the judgment).

⁴⁹ Appeals Court Puts Ruling Against Big Tobacco on Hold, Wash. Post, Nov. 1, 2006, at
A9.
⁵⁰ United States v. Philip Morris U.S.A., Inc., No. 06-5267 (D.C. Cir. June 11, 2008) (clerk’s
order).

Noting that RICO provisions have effect outside the United States if the illegal
activity abroad “causes a ‘substantial effect’ within the United States,” the court
concluded that the defendants were prohibited from using such marketing descriptors
and express or implied health messages internationally as well as in the United
States.⁵¹ Several countries, including Australia, Brazil, and European Union
members, currently prohibit marketing descriptors such as light and low-tar.⁵² The
district court order banning the use of marketing descriptors domestically and
internationally will not take effect immediately because of the appellate court’s stay
of the district court order and the pending appeal. Defendants Philip Morris U.S.A.,
Inc., Altria, R.J. Reynolds, Brown & Williamson, Lorillard, and BATCo. may be
affected in differing degrees by the international application of the order due to the
level of their international sales.
Private Party Suits
Prior to 1992, tobacco lawsuits were typically individual product liability and
negligence suits brought by smokers or their relatives seeking damages for smoking-
related illnesses. The tobacco industry generally prevailed in these cases by arguing
that the Federal Cigarette Labeling and Advertising Act (FCLAA),⁵³ which required
warning labels, preempted plaintiffs’ claims that the tobacco companies had a duty
to warn consumers.⁵⁴ In some cases, however, tobacco manufacturers prevailed by
arguing that smokers assumed the risks of smoking.⁵⁵ Then, in 1992, in Cipollone
v. Liggett Group, Inc., the U.S. Supreme Court made it more feasible for smokers to
recover. Although the Court held that federal laws requiring warning labels⁵⁶
precluded states from imposing additional requirements on cigarette advertising and
labeling, and therefore precluded lawsuits alleging that the federally required warning
labels were inadequate, the Court stated that federal law did not preclude “state-law
damages actions.” Examples of state-law damages actions include failure-to-warn
lawsuits based on tobacco companies’ “testing or research practices or other actions
unrelated to advertising or promotion,” or claims of breach of express warranty,
fraudulent representation, and conspiracy.⁵⁷
This section now examines selected recent suits brought by private parties after
Cipollone. In addition to the class action and individual suits discussed below,
tobacco companies have been sued by their own shareholders for decreased stock
prices due to deceptive practices, and by insurance companies for medical expenses

⁵¹ United States v. Philip Morris U.S.A., Inc., No. 99-2496, 6, 8 (D.D.C. Mar. 16, 2007)
(memorandum opinion accompanying Order #1028).
⁵² Judge Extends ‘Light’ Cigarette Ban Overseas, CNNMoney.com, Mar. 16, 2007.
⁵³ 15 U.S.C. § 1331-41.
⁵⁴ See, e.g., Pennington v. Vistron Corp., 876 F.2d 414 (5th Cir. 1989); Forster v. R.J.
Reynolds Tobacco Co., 437 N.W.2d 655, 660 (Minn. 1989).
⁵⁵ See Brief for Petitioner at 13-14, n.3, Philip Morris U.S.A., Inc. v. Williams, 549 U.S. __
(filed July 2006) (No. 05-1256) (and cases cited therein).
⁵⁶ 15 U.S.C. §§ 1331-41, 4402.
⁵⁷ Cipollone v. Liggett Group Inc., 505 U.S. 504, 520, 524-25, 530-31 (1992).

resulting from fraud, conspiracy, racketeering, misrepresentation, and antitrust
violations. Cigarette manufacturers have also been sued for under legal theories that
include negligence, strict liability, defective design, public nuisance, antitrust laws,
and unfair trade practices.⁵⁸
Long-term Marlboro smokers filed a class action suit, Caronia v. Philip Morris
U.S.A., Inc., seeking to have the manufacturer provide low dose CT scans for lung
cancer on an annual basis or more frequently if the scan shows signs of cancer.⁵⁹ The
plaintiffs allege that Philip Morris’s “wrongful design, manufacturing, and
marketing” places them at a higher risk for lung cancer.⁶⁰ Philip Morris expects the
court to dismiss the case because “most states don’t recognize medical monitoring
as a remedy or cause of action.”⁶¹ Previous lawsuits asking for medical monitoring
as relief have not been successful.⁶² Additionally, the utility of CT scans for lung
cancer is a subject of debate.⁶³
In the federal class action lawsuit Schwab v. Philip Morris U.S.A., Inc., lead
plaintiff Barbara Schwab sued six tobacco companies in the U.S. District Court for
the Eastern District of New York, alleging that the tobacco industry committed fraud
and misled customers by marketing light cigarettes as less dangerous than regular
cigarettes.⁶⁴ The Schwab case became the first light cigarettes, or “lights,” case to
receive class certification from any federal court. The class included individuals who
purchased light cigarettes since the first light cigarette was introduced in 1971. The
class could have been extended to include individuals who bought low-tar
cigarettes.⁶⁵ The district court found that the MSA does not preclude the suit
because, in the MSA, the states, not individual smokers, were compensated. On
appeal, the U.S. Court of Appeals for the Second Circuit decertified the class action
lawsuit, finding that the “class action suffers from an insurmountable deficit of
collective legal or factual questions” and therefore did not meet a requirement under
Rule 23 of the Federal Rules of Civil Procedure that “questions of law or fact

⁵⁸ Reynolds American, Inc., Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the quarterly period ended March 31, 2008, at 13
[http://reynoldsamerica n -i n c . c o m/ c o mmo n / V i e w P D F D i s c l a i mer.aspx?postID=1275&dis
claimer=10q].
⁵⁹ Caronia v. Philip Morris U.S.A., Inc., No. 06-224 (E.D.N.Y. Jan. 19, 2006).
⁶⁰ Sean Wajert, Medical Monitoring Claim Pursued in New York State, Washington Legal
Foundation Legal Opinion Letter, Vol. 16, No. 15 (June 2, 2006).
⁶¹ Peter Geier, Smokers Sue Tobacco Company for Lung Scans, Nat’l L. J., Nov. 21, 2006.
⁶² Id.
⁶³ Gina Kolata, Researchers Dispute Benefits of CT Scans for Lung Cancer, N.Y. Times,
Mar. 7, 2007.
⁶⁴ Schwab v. Philip Morris U.S.A., Inc., No. 04-CV-1945 (E.D.N.Y. Sept. 25, 2006)
(memorandum and order), available at [http://www.nyed.uscourts.gov/pub/rulings/cv/2004/
04cv1945mo.pdf]. The defendant tobacco companies in the Schwab case are R.J. Reynolds
Tobacco Co., Brown & Williamson Tobacco Corp., British American Tobacco Ltd.,
Lorillard Tobacco Co., Liggett Group Inc., and Philip Morris U.S.A., Inc.
⁶⁵ Id. at 540.

common to class members predominate over any questions affecting only individual
members.”⁶⁶
In most states, courts reportedly have denied class action status to plaintiffs for
private lawsuits against tobacco companies.⁶⁷ However, in Florida, class action
status was granted by the Circuit Court of Miami-Dade County in Engle v. Liggett
Group, a case against tobacco companies and industry trade groups in which a jury
awarded $145 billion in punitive damages. After the jury verdict, however, the class
of up to 700,000 Florida smokers was de-certified by Florida’s Third District Court
of Appeal.⁶⁸ On July 6, 2006, the Florida Supreme Court upheld the decision to de-
certify the class.⁶⁹ The court stated that causation and the proportion of the
defendants’ fault was too individualized to be litigated as a class action suit.⁷⁰ In
particular, the Florida Supreme Court found that issues specific to individual
plaintiffs predominated over issues that the plaintiffs had in common. Such issues
included whether cigarettes, or some other factor, caused the plaintiff’s illness, and
the percentage of fault that should be attributed to each defendant tobacco company
if a plaintiff smoked multiple brands. The court did uphold smaller individual
damage awards of $2,850,000 and $4,023,000 for two Florida cancer patients. The
U.S. Supreme Court denied certiorari in the Engle case.⁷¹
The Florida Supreme Court decision did not prevent individual smokers (or
families of deceased smokers) from filing individual lawsuits instead of a class
action. The court upheld most of the jury’s findings that cigarettes are addictive,
defective, and unreasonably dangerous products that cause diseases.⁷² This aspect
of the court’s decision gives plaintiffs an advantage in any individual lawsuits they
may file because the individuals will not have to prove these findings again — that
cigarettes are addictive, defective, and unreasonably dangerous. According to one
tobacco company’s filing with the Securities and Exchange Commission, “[a]s of
April 11, 2008, RJR Tobacco had been served in 1,931 Engle Progeny Cases in both
state and federal courts in Florida. These cases include approximately 8,178
plaintiffs.”⁷³ The company also stated that “[t]he number of cases will increase due
to a delay in the processing of cases in the Florida court system.”⁷⁴

⁶⁶ McLaughlin v. Am. Tobacco Co., 522 F.3d 215, 219, 222 (2d Cir. 2008).
⁶⁷ Anthony Sebok, The Federal Government’s RICO Suit Against Big Tobacco,
Findlaw.com, Oct. 4, 2004, available at [http://writ.lp.findlaw.com/sebok/20041004.html].
⁶⁸ Liggett Group, Inc. v. Engle, 853 So. 2d 434 (Fla. Dist. Ct. App. 2003).
⁶⁹ Engle v. Liggett Group, Inc., 2006 Fla. LEXIS 1480; 31 Fla. L. Weekly S 464 (Fla. 2006).
⁷⁰ Engle, 2006 Fla. LEXIS 1480, at *5.
⁷¹ R.J. Reynolds Tobacco Co. v. Engle, 128 S. Ct. 96 (2007).
⁷² Engle, 2006 Fla. LEXIS 1480, at *7-*8.
⁷³ Reynolds American, Inc., Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the quarterly period ended March 31, 2008, at 18
[http://reynoldsamerican-inc.com/common/ViewPDFDisclaimer.aspx?postID=1275&dis
claimer=10q].
⁷⁴ Id.

On December 15, 2005, the Supreme Court of Illinois overturned a verdict of
$7.1 billion in compensatory damages and $3 billion in punitive damages in the
consumer-fraud and deceptive trade practices class action of Price v. Philip Morris
U.S.A., Inc.⁷⁵ An Illinois circuit court had certified a class that consisted of 1.14
million plaintiffs who bought Cambridge Lights and Marlboro Lights in Illinois from
the time that the cigarettes were first placed on the market until February 2001. The
plaintiffs in Price alleged that tobacco companies committed fraud by advertising
light cigarettes as having lower tar and nicotine levels and leading consumers to think
that such cigarettes were safer to smoke than full flavor cigarettes.⁷⁶ The court held
that the Federal Trade Commission had authorized light and low-tar labeling and
therefore that Philip Morris U.S.A., Inc. could not be held liable as long as the
company complied with Federal Trade Commission requirements, even if the terms
were false or misleading. The U.S. Supreme Court denied certiorari on November

27, 2006.⁷⁷

In August 2002, the California Supreme Court enabled individuals to sue
tobacco companies by holding that a statute⁷⁸ granting tobacco manufacturers
immunity from products liability suits applied only from the date of the statute’s
enactment on January 1, 1988, until the statute’s repeal effective January 1, 1998.
The court found that general tort principles applied to conduct before and after the
ten-year immunity period.⁷⁹ In a separate case decided on the same day, the court
also found that the immunity statute did not prohibit lawsuits alleging that tobacco
additives create an unreasonably dangerous product “that exposed smokers to dangers
beyond those commonly known to be associated with cigarette smoking.”⁸⁰ In a
more recent ruling, Grisham v. Philip Morris, the California Supreme Court held that
the state’s two year statute of limitations for filing a physical injury claim starts to
run after a “smoker is diagnosed with a disease caused by the cigarettes.”⁸¹ The

⁷⁵ 2005 Ill. LEXIS 2071 (Ill. 2005). The Illinois Supreme Court denied the class’s motion
for rehearing on May 5, 2006.
⁷⁶ Melanie Warner, Big Award on Tobacco is Rejected by Court, N.Y. Times, July 7, 2006,
at C1.
⁷⁷ The United States submitted an amicus brief in a separate U.S. Supreme Court case,
Watson v. Philip Morris U.S.A., Inc., which argued that “the FTC has never adopted any
official regulatory definitions of the terms ‘light,’ or ‘low tar’; and . . . the FTC has neither
requested nor required tobacco companies to describe or advertise their cigarettes using
those or any other descriptors.” Brief for the United States as Amicus Curiae, Watson v.
Philip Morris Companies, Inc., 551 U.S. __ (2007) (No. 05-1284), 2005 U.S. Briefs 1284,
at *21. After this submission was made, an Illinois circuit court judge questioned whether
he would have jurisdiction to hear a postjudgment motion seeking to “vacate or withhold
final judgment” in the Price case due to the federal government’s position in its Watson
amicus brief. The Illinois Supreme Court instructed the judge “to enter an order dismissing
plaintiffs’ motion.” Philip Morris USA, Inc. v. Bryon, 876 N.E.2d 645 (Ill. 2007).
⁷⁸ Cal. Civ. Code § 1714.45, repealed by 1997 Cal. Stat. ch. 570, § 1.
⁷⁹ Myers v. Philip Morris Cos., Inc., 28 Cal. 4th 828 (Cal. 2002).
⁸⁰ Naegele v. R.J. Reynolds Tobacco Co., 28 Cal. 4th 856 (Cal. 2002).
⁸¹ Millie Lapidario, Tobacco Claims Will Start Smoking Again, Thanks to Calif. Ruling, The
(continued...)

ruling did not address whether the statute of limitations would have run if an
individual was diagnosed with more than one illness, “[f]or example, if a smoker
were diagnosed with emphysema five years ago and then lung cancer last month —
but only files suit after the lung cancer diagnosis — the statute of limitations may
have run.”⁸² Defendant tobacco companies had argued that the statute of limitations
should begin when smokers discover they are addicted to cigarettes.⁸³
Foreign Suits in U.S. Federal Courts
The Governments of Guatemala, Nicaragua, and Ukraine sued major American
tobacco companies in the U.S. District Court for the District of Columbia for money
they had spent on medical care for their citizens’ tobacco-related illnesses. The
Government of Guatemala alleged that the tobacco companies misrepresented the
dangers of cigarette smoking, and as a result, the Guatemalan government waited
before making efforts to shrink its smoking population.⁸⁴ Reasoning that “the injury
that [the nations] purportedly suffered occurred only as a consequence of the harm
to individual smokers,” the district court dismissed the lawsuit.⁸⁵
The U.S. Court of Appeals for the D.C. Circuit affirmed the dismissal, noting
that it concurred with seven circuits “that the alleged injuries of the third-party payors
are too remote to have been proximately caused by the defendants’ alleged
conduct.”⁸⁶ The court also held that the foreign governments did not have standing
“unless there is a clear indication by the Supreme Court or one of the two coordinate
branches of government to grant such standing” to foreign nations to sue in the U.S.
on behalf of their foreign citizens.⁸⁷ The foreign governments had argued that they
were suing on behalf of their people and were “seeking to protect their governments’
treasuries.”⁸⁸ On October 29, 2001, the U.S. Supreme Court denied certiorari.

⁸¹ (...continued)
Recorder, Feb. 20, 2007.
⁸² Id.
⁸³ Id.
⁸⁴ Saundra Torry, Cigarette Firms Sued by Foreign Governments, Wash. Post, Jan. 17, 1999,
at A12.
⁸⁵ Guatemala v. Tobacco Inst., Inc., 83 F. Supp. 2d 125, 129 (D.D.C. 1999).
⁸⁶ Guatemala v. Tobacco Inst., Inc., 249 F. 3d 1068, 1069 (D.C. Cir. 2001), cert. denied, 534
U.S. 994 (2001).
⁸⁷ Id. at 1073.
⁸⁸ See id. at 1072.

Tobacco Advertising: Federal Regulations,
MSA Restrictions, and Local Ordinances⁸⁹
The Federal Cigarette Labeling and Advertising Act (FCLAA) limits advertising
of tobacco products.⁹⁰ The act prevents advertising of cigarettes, little cigars, and
smokeless tobacco via electronic communications under the jurisdiction of the
Federal Communication Commission, such as radio and wire communications, as
well as broadcast, satellite, and cable television. In combination with other federal
statutes, the act requires health warning labels on cigarette and smokeless tobacco⁹¹
packaging, as well as on all cigarette and most smokeless tobacco advertisements.
The health warnings must be rotated several times per year according to a⁹²
manufacturer-submitted plan approved by the Federal Trade Commission. Cigars
are not subjected to similar advertising and warning restrictions. Because of the
FCLAA’s preemption provision, states cannot impose their own health warning
labels on cigarettes.⁹³
The FCLAA’s preemption provisions do not apply to the MSA because the
states and tobacco manufacturers voluntarily agreed to waive “any and all claims that
the provisions of this Agreement violate the state or federal constitutions.”⁹⁴ The
MSA restricted tobacco advertising in several ways, although it did not restrict
certain forms of advertising, such as print and online advertisements or marketing⁹⁵
inside retail locations. The MSA banned cartoons; tobacco advertising on public
transportation; sponsorship of certain team and league sports; stadium naming rights;
gifts to minors of non-tobacco merchandise in exchange for proofs of purchase of
tobacco products; free samples of tobacco products in places other than adult-only
facilities; signs outside stores larger than 14 square feet; and billboards in arenas,
stadiums, malls, and arcades. However, the MSA allows advertisements that are⁹⁶
located within and not visible outside of adult-only facilities. Within MSA
limitations, tobacco companies may still sponsor certain musical, sporting, and
cultural events. The MSA also bans the sale and distribution of merchandise with

⁸⁹ For information on federal advertising laws related to alcohol, tobacco, mail (including
junk mail), telephone, commercial email (spam), and the Federal Trade Commission Act,
see CRS Report RL32177, Federal Advertising Law: An Overview, by Henry Cohen.
⁹⁰ 15 U.S.C. § 1331-41.
⁹¹ 15 U.S.C. §§ 1331-41, 4402. Federal law does not require warning labels on outdoor
billboards that advertise smokeless tobacco. 15 U.S.C. § 4402(a)(2).
⁹² 15 U.S.C. §§ 1333(c)(1), 4402(c); 16 C.F.R. Part 307.
⁹³ 15 U.S.C. § 1334(b); Cipollone v. Liggett Group Inc., 505 U.S. 504 (1992).
⁹⁴ Master Settlement Agreement, p. 99, available at [http://www.naag.org/backpages/naag/
tobacco/msa/msa-pdf/1109185724_1032468605_cigms a.pdf].
⁹⁵ Since the 1998 MSA, the tobacco industry has increased its spending on marketing in
ways that comply with the MSA, such as paying “bonuses to retailers who meet sales targets
and post in-store signs.” Tobacco manufacturers also offer “direct-mail coupons good for
a free pack for each purchase of two.” Myron Levin, Tobacco Deal Yet to Clear the Air, LA
Times, Nov. 27, 2003.
⁹⁶ Master Settlement Agreement, p. 18.

tobacco product brand names, except for at brand-name sponsored events. The MSA
prohibits payments to the media for the promotion, mention, or use of tobacco
products, except for adult-only media. Moreover, the MSA prohibits tobacco
companies from targeting or promoting tobacco to minors.⁹⁷
Though states attorneys general signed and trial courts ratified the MSA, several
states and cities created additional restrictions on tobacco advertising. For example,
Baltimore passed ordinances prohibiting tobacco and alcohol advertisements on
billboards, except for commercial and industrial zones of the city. The U.S. Court of
Appeals for the Fourth Circuit upheld Baltimore’s ordinances in two cases,⁹⁸ finding
that they do not violate the First Amendment.⁹⁹
In 1999, the Massachusetts Attorney General promulgated advertising
restrictions — on cigarettes, smokeless tobacco, little cigars, and cigars — that he
intended to fill the gaps left by the MSA. The regulations prohibited all sizes of
outdoor tobacco advertisements within 1,000 feet of playgrounds, schools, and parks,
including advertisements located within a store that were visible from the outside of
that store. The rules also imposed a similar 1,000-foot state ban on point-of-sale
retail displays if the displays were less than five feet tall and located in stores
accessible to youth.¹⁰⁰ Additionally, the attorney general restricted tobacco
promotions, samples, and cigar labels; banned self-service displays; and required
customers to have contact with a sales person before handling or purchasing tobacco
products.¹⁰¹ In 2001, however, the U.S. Supreme Court held in Lorillard Tobacco
Co. v. Reilly that the FCLAA preempted Massachusetts’ outdoor advertising and
point-of-sale restrictions for cigarettes, because the FCLAA preempts state
regulations of cigarette advertising and promotion.¹⁰² Therefore, the Court struck
down that portion of the regulations. The Court noted, however, that the FCLAA
preemption provisions do not apply to smokeless tobacco or cigars, or restrictions on
cigarette sales.¹⁰³
Therefore, the Court had to reach the issue of whether Massachusetts’ outdoor
and point-of-sale advertising regulations violated the First Amendment, which
guarantees freedom of speech.¹⁰⁴ Though Massachusetts had a compelling interest

⁹⁷ Id. at 14-21.
⁹⁸ Penn Advertising of Baltimore, Inc. v. Schmoke, 101 F.3d 332 (4th Cir. 1996), cert.
denied, 520 U.S. 1204 (1997); Anheuser-Busch v. Schmoke, 101 F.3d 325 (4th Cir. 1996),
cert. denied, 520 U.S. 1204 (1997).
⁹⁹ For further information on First Amendment issues raised by advertising laws, see CRS
Report 95-815, Freedom of Speech and Press: Exceptions to the First Amendment, by Henry
Cohen.
¹⁰⁰ Mass. Regs. Code tit. 940, §§ 21.04, 22.06.
¹⁰¹ Lorillard Tobacco Co. v. Reilly, 533 U.S. 525, 534-36 (2001).
¹⁰² Id. at 551-52.
¹⁰³ Id. at 553.
¹⁰⁴ The First Amendment applies to advertising, but the U.S. Supreme Court has held that
(continued...)

in protecting youth from tobacco products, the Court found that the restrictions on
outdoor advertising of cigars and smokeless tobacco were overbroad in that they
prohibited advertising “in a substantial portion of the major metropolitan areas of
Massachusetts,” included oral communications, and imposed burdens on retailers
with limited advertising budgets.¹⁰⁵ The Court also upheld challenges by smokeless
tobacco and cigar companies to the outdoor advertising restrictions on the grounds
that adults have a right to information and the tobacco industry has a right to
communicate truthful speech on legal products.¹⁰⁶ The Justices then struck down the
similar 1,000-foot state ban on point-of-sale retail displays for cigars and smokeless
tobacco under five feet tall in stores accessible to youth. They noted that the
prohibition did not advance the goal of preventing minors from using tobacco
products because some children are taller than five feet and others can look up at
their surroundings.¹⁰⁷ According to one source, at least 20 state and local laws have
been repealed as a result of Lorillard.¹⁰⁸
Finally, as to the question of Massachusetts’s regulation of cigarette, smokeless
tobacco, and cigar sales, the cigarette petitioners did not argue that the FCLAA
preempted Massachusetts law.¹⁰⁹ As a result, the Court evaluated arguments from
cigarette, smokeless tobacco, and cigar petitioners that certain sales restrictions
violated the First Amendment. The Court upheld restrictions banning self-service
displays and requiring customers to have contact with a sales person before handling
or purchasing tobacco products.¹¹⁰ According to the Justices, the state had a
substantial interest in preventing minors from accessing tobacco products, and the
regulation was narrowly tailored so as not to significantly affect adult access to
tobacco products.¹¹¹

¹⁰⁴ (...continued)
it “affords a lesser protection to commercial speech than to other constitutionally guaranteed
expression” and analyzes commercial speech differently from other forms of expression.
United States v. Edge Broadcasting Co., 509 U.S. 418, 426 (1993); see Central Hudson Gas
& Elec. Corp. v. Public Serv. Comm’n of N.Y., 447 U.S. 557, 566 (1980) (four-part test for
commercial speech analysis).
¹⁰⁵ Lorillard, 533 U.S. at 562, 564-65.
¹⁰⁶ Id. at 564. Additionally, the Court reasoned that the attorney general’s restriction on in-
store advertising that can be viewed from the outside “presents problems in establishments
like convenience stores, which have unique security concerns.” Id. at 565.
¹⁰⁷ Id. at 566.
¹⁰⁸ David L. Hudson Jr., Tobacco Ads, Speech topic - Advertising & First Amendment,
[ h t t p : / / www.f i r s t a me n d me n t c e n t e r . o r g/ s p eech/advertising/topic.aspx?topic=tobacco_alc
ohol].
¹⁰⁹ Lorillard, 533 U.S. at 566.
¹¹⁰ Id. at 567.
¹¹¹ Id. at 569.

Restrictions on Selling and Distributing Tobacco to Minors
Synar Amendment. All 50 states ban tobacco sales to individuals under age¹¹²
18, and federal law plays a role in this restriction. The Public Health Service Act
authorizes the Secretary of Health and Human Services (HHS) to “make an allotment
each fiscal year for each state” to be used for “activities to prevent and treat substance
abuse.”¹¹³ Under a 1992 amendment to this statute, sponsored by Representative
Michael Synar and known as the “Synar Amendment,” the Secretary may make such
grants “only if the State has in effect a law providing that it is unlawful for any
manufacturer, retailer, or distributor of tobacco products to sell or distribute such
product to any individual under the age of 18.”¹¹⁴
Under the Synar Amendment, states must enforce their bans through annual¹¹⁵
random, unannounced inspections. If a state fails to comply with the federal
enforcement provisions and reporting requirements on its enforcement activities, the
federal government may reduce that state’s federal funding for substance abuse
treatment.¹¹⁶ According to the HHS regulations, the goal of the Synar Amendment’s
random inspections requirement is to achieve 80% or higher compliance with laws
prohibiting tobacco sales and the distribution of tobacco products to individuals¹¹⁷
under 18.
Rowe v. New Hampshire Motor Transport Association.¹¹⁸ In 2003,
Maine passed two laws that instituted requirements for shipping and delivery sales
of tobacco products that attempted to end sales to minors. The state argued that such
laws helped the state “prevent minors from obtaining cigarettes.”¹¹⁹ Violators of¹²⁰
either provision could receive civil penalties. The first provision required tobacco
retailers to use delivery services that verify that, if the purchaser of the tobacco
products was under 27 years old, the purchaser had a valid government photo
identification that indicated the purchaser was of legal age to buy tobacco products.¹²¹
That provision also required the purchaser to be the addressee and to sign for the
products. The second provision provided that a person was “deemed to know” that

¹¹² Barnaby J. Feder, U.S. Imposes Rules on Tobacco Sales to Minors, NY Times, Jan. 19,

1996.

¹¹³ 42 U.S.C. § 300x-21.
¹¹⁴ 42 U.S.C. § 300x-26(a)(1). The Synar Amendment was enacted as § 1926 of the Alcohol,
Drug Abuse, and Mental Health Administration Reorganization Act, P.L. 102-321 (1992).
¹¹⁵ 42 U.S.C. § 300x-26(b)(2)(A).
¹¹⁶ Id. at § 300x-26(c).
¹¹⁷ 45 C.F.R. § 96-130(g).
¹¹⁸ 552 U.S. ___ (2008); No. 06-457, slip op. (Feb. 20, 2008). For additional information
on this case, see CRS Report RS22938, Rowe v. New Hampshire Motor Transport
Association: Federal Preemption of State Tobacco Shipment Laws, by Vanessa K. Burrows.
¹¹⁹ No. 06-457, slip op. at 7 (Feb. 20, 2008).
¹²⁰ No. 06-457, slip op. at 2-3 (Feb. 20, 2008).
¹²¹ Me. Rev. Stat. Ann. tit. 22, §§ 1555-C(3)(C).

a shipment contained tobacco products if the package was marked on the outside by
a tobacco retailer (1) “to indicate that the contents are tobacco products” and (2) with
the retailer’s name and Maine tobacco license number.¹²² A person, such as a delivery
service, was also “deemed to know” that the package contained tobacco if it came
“from a person listed as an unlicensed tobacco retailer.”¹²³ In other words, as the
Supreme Court stated, the second provision “imposes civil liability upon the carrier,
not simply for its knowing transport of (unlicensed) tobacco, but for the carrier’s
failure sufficiently to examine every package.”¹²⁴
In Rowe v. New Hampshire Motor Transport Association, the Supreme Court
held that the two Maine laws were preempted by the Federal Aviation Administration
Authorization Act of 1994 (FAAAA). That law prohibited states from “enact[ing]
or enforc[ing] a law . . . related to a price, route, or service of any motor carrier . . .
with respect to the transportation of property.” In finding that Maine’s mail-order
tobacco product delivery laws were preempted, the Court noted that federal law
preempted Maine’s laws because they had a “significant impact” on carrier rates,
routes, or services. The Court reasoned that Maine’s laws had the effect of
substituting “government commands for ‘competitive market forces’ in determining
. . . the services that motor carriers will provide.”¹²⁵ The Court also found that
Maine’s laws would be preempted regardless of whether, as Maine alleged, the
overturning of Maine’s laws would hurt its efforts to stop underage smoking.¹²⁶
Justice Ginsburg’s concurrence stated that a “large regulatory gap [was] left by an
application of the FAAAA[’s]” preemption provision, which affected state
enforcement strategies to prevent tobacco sales to minors.”¹²⁷

¹²² Me. Rev. Stat. Ann. tit. 22, §1555-C(3)(B); Me. Rev. Stat. Ann. tit. 22, §1555-D.
¹²³ Me. Rev. Stat. Ann. tit. 22, §1555-D.
¹²⁴ No. 06-457, slip op. at 6 (Feb. 20, 2008).
¹²⁵ Id. at 6-7.
¹²⁶ Id. at 10-11.
¹²⁷ 552 U.S. __ (2008) (Ginsburg, J. concurring).