Implications of the new tobacco regulations for the advertising of adult businesses

1. The Family Smoking Prevention and Tobacco Control Act, (H.R. 1256)may be hazardous to your clients’ health. Implications of the new tobacco regulations for the advertising of adult businesses Allen Lichtenstein FALA Summer 2009 -- Vancouver

2. First -- The Good News • Carolina Pride, Inc. v. McMaster, 2009 WL 238206 (D.S.C.) • South Carolina statute prohibiting businesses providing sexually-oriented businesses from having any off-premises outdoor advertising within 1 mile of a public highway. • The court applied the four-part test from Central Hudson Gas & Elec. Co. v. Public Service Comm. of N.Y., 447 U.S. 557 (1980) in granting bookstore plaintiff a preliminary injunction against enforcement of the statute.

3. Four prong Central Hudson test • At the outset, we must determine whether the expression is protected by the First Amendment. For commercial speech to come within that provision, • [1] it at least must concern lawful activity and not be misleading. • [2] Next, we ask whether the asserted governmental interest is substantial. • [3] If both inquiries yield positive answers, we must determine whether the regulation directly advances the governmental interest asserted, and • [4] whether it is not more extensive than is necessary to serve that interest.

4. First and second prongs • For the first prong ( which is really two prongs) the court found that the advertising involved legal products, and signs just the name location and nature of the business and outline of the lion was not misleading. • For the second prong, the State argued several substantial interests: 1) to mitigate the adverse secondary effects of sexually oriented businesses, 2) to mitigate harms to minors, 3)to prevent distraction of drivers on the highway, and 4) to promote the prosperity economic well-being and general welfare of the state. -- The court accepted all as substantial interests without much analysis.

5. Third and fourth prongs • The statute failed on the third prong. The court ruled that the state did not create an adequate record to show that the statute in question would effectively advance a substantial governmental interest. • The court also ruled that the statute did not meet the fourth prong and that it was not narrowly tailored, largely because it was an outright ban.

6. Abilene Retail v. Six, 2009 WL 1850597 (D.Kan.) • This case was almost a carbon copy of Carolina Pride. • Bookstore plaintiff • 1000 foot from highway sign rule • The statute here, however, also put limits on on-premises signs within the thousand foot range.

7. first two prongs • First prong, despite argument by state court found in signs in question were not misleading and involved legal transactions. • Second prong, “The State clearly sets forth its asserted interests in the text of the statute: (1) to mitigate the adverse secondary effects of sexually-oriented businesses; (2) to improve traffic safety; (3) to limit harm to minors; and (4) to reduce prostitution, crime, juvenile delinquency, deterioration in property values and lethargy in neighborhood improvement efforts. In its response brief, the State asserts that it has a substantial interest in reducing illegal activity. The Court assumes for purposes of its analysis that the State can establish that these are substantial interests.” citing Abilene Retail # 30, Inc. v. Bd. of Commr's of Dickinson Cty., Kan., 492 F.3d 1164, 1170-71 (10th Cir.2007) (finding adverse secondary effects of sexually-oriented business is a constitutionally valid motivation for a zoning ordinance); Passions Video, Inc. v. Nixon, 458 F.3d 837, 843 (8th Cir.2006) (finding Missouri's stated interest in minimizing the secondary effects of sexually-oriented businesses substantial) • [Note – this case was very similar to Abilene Retail and Carolina Pride, except in Passions Video, the government unsuccessfully argued that it could ameliorate negative effects of adult businesses by limiting the customers for those businesses.]

8. Prongs three and four • Prong three. Although the State did produce some evidence, court ruled that: “the Court finds, based on the bare record before it, that plaintiff has a substantial likelihood of success on the merits with regard to the third prong of Central Hudson.” • Prong four. Both the total off premises ban and the on-premises sign limitations were not narrowly tailored.

9. Reliance on Lorillard Tobacco Co. v. Reilly, 533 U.S. 525 (2001) • These cases, Carolina Pride, Abilene Retail, Passions Video have several things in common. • Central Hudson analysis • Complete bans within a significant geographic area • Court acceptance of the government’s claims under the second prong • Governmental failure to provide an adequate record to satisfy the third and fourth prongs. • And a reliance on Lorillard for protection of commercial speech. • A rereading of Lorillard may make one somewhat less sanguine.

10. Brief review of Lorillard • Massachusetts regulations restricting advertising of tobacco products. • Most of the opinion concerned how state law regarding advertising of cigarettes is federally preempted. • Another part upheld a requirement that tobacco products be kept behind retail counters. • The major 1St Amendment question involved regulations prohibiting outdoor advertising of smokeless tobacco or cigars within 1,000 feet of school or playground. • The court ruled five to four that this regulation was unconstitutional. • Justice O’Connor wrote the opinion joined by Chief Justice Rehnquist. • Justice Thomas wrote a separate concurrence. Justice Kennedy also concurred joined by Justice Scalia. • Justices Stevens, Ginsburg, Breyer and Souter dissented from this part. • Justices O’Connor and Rehnquist and all four dissenters applied Central Hudson.

11. The Court split in Lorillard • The court only analyzed prongs three and four of the Central Hudson test, as it took as given that tobacco products were legal and that the government had a substantial interest in preventing underage tobacco use. • Similarly, O’Connor Rehnquist and the dissenters had no trouble finding ample evidence that prong three was satisfied based on evidence linking advertising to underage tobacco use. • Where they differed was on the fourth prong. O’Connor Rehnquist found the thousand foot buffer zone in urban areas to be too restrictive and therefore unconstitutional. • Stevens Ginsburg Breyer and Souter wanted to remand the case for further evidence concerning narrow tailoring. • Kennedy and Scalia voted to invalidate based on the fourth prong and expressed doubts concerning the third. They also expressed some doubt about the applicability of Central Hudson to content-based advertising restrictions. • Thomas wanted to invalidate Central Hudson and to apply strict scrutiny.

12. Lorillardredux?The Family Smoking Prevention and Tobacco Control Act, H.R. 1256 • Signed into law June 2009 • Gave Congressional support to 61 Fed. Reg 44398, August 28, 1996 –FDA rules re: advertising • In FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000) Supreme Court ruled FDA didn’t have authority to regulate tobacco without Congressional authorization. • (Pres. Bush vetoed similar attempt in 2002) • FDA rules created restrictions on tobacco advertising

13. 21 CFR § 897.30§897.30 Scope of permissible forms of labeling and advertising • (a)(1) A manufacturer, distributor, or retailer may, in accordance with this subpart D, disseminate or cause to be disseminated advertising or labeling which bears a cigarette or smokeless tobacco brand name (alone or in conjunction with any other word) or any other indicia of tobacco product identification, in newspapers; in magazines; in periodicals or other publications (whether periodic or limited distribution); on billboards, posters, and placards; in nonpoint-of-sale promotional material (including direct mail); in point-of-sale promotional material; and in audio or video formats delivered at a point-of-sale. • (2) A manufacturer, distributor, or retailer intending to disseminate, or to cause to be disseminated, advertising or labeling for cigarettes or smokeless tobacco in a medium that is not listed in paragraph (a)(1) of this section, shall notify the agency 30 days prior to the use of such medium. The notice shall describe the medium and discuss the extent to which the advertising or labeling may be seen by persons younger than 18 years of age. The manufacturer, distributor, or retailer shall send this notice to the Division of Drug Marketing, Advertising, and Communications, 5600 Fishers Lane (HFD-40), rm. 17B-20, Rockville, MD 20857. • (b) No outdoor advertising for cigarettes or smokeless tobacco, including billboards, posters, or placards, may be placed within 1,000 feet of the perimeter of any public playground or playground area in a public park (e.g., a public park with equipment such as swings and seesaws, baseball diamonds, or basketball courts), elementary school, or secondary school.

14. 21 CFR §897.32 Format and content requirements for labeling and advertising. • (a) Except as provided in paragraph (b) of this section, each manufacturer, distributor, and retailer advertising or causing to be advertised, disseminating or causing to be disseminated, any labeling or advertising for cigarettes or smokeless tobacco shall use only black text on a white background. This section does not apply to advertising:(1) In any facility where vending machines and self- service displays are permitted under this part, provided that the advertising is not visible from outside the facility and that it is affixed to a wall or fixture in the facility; or(2) Appearing in any publication (whether periodic or limited distribution) that the manufacturer, distributor, or retailer demonstrates is an adult publication. For the purposes of this section, an adult publication is a newspaper, magazine, periodical, or other publication:(i) Whose readers younger than 18 years of age constitute 15 percent or less of the total readership as measured by competent and reliable survey evidence; and(ii) That is read by fewer than 2 million persons younger than 18 years of age as measured by competent and reliable survey evidence.

15. (b) Labeling and advertising in an audio or video format shall be limited as follows: • (1) Audio format shall be limited to words only with no music or sound effects.(2) Video formats shall be limited to static black text only on a white background. Any audio with nethe video shall be limited to words only with no music or sound effects.(c) Each manufacturer, distributor, and retailer advertising or causing to be advertised, disseminating or causing to be disseminated, advertising permitted under this subpart D, shall include, as provided in section 502 of the act, the product's established name and a statement of its intended use as follows: "Cigarettes--A Nicotine-Delivery Device for Persons 18 or Older", "Cigarette Tobacco--A Nicotine-Delivery Device for Persons 18 or Older", or "Loose Leaf Chewing Tobacco", "Plug Chewing Tobacco", "Twist Chewing Tobacco", "Moist Snuff" or "Dry Snuff", whichever is appropriate for the product, followed by the words "A Nicotine-Delivery Device for Persons 18 or Older".

16. . • Sale and distribution of nontobacco items and services, -gifts, and sponsorship of events.(a) No manufacturer and no distributor of imported cigarettes or smokeless tobacco may market, license, distribute, sell, or cause to be marketed, licensed, distributed, or sold any item (other than cigarettes or smokeless tobacco) or service, which bears the brand name (alone or in conjunction with any other word), logo, symbol, motto, selling message, recognizable color or pattern of colors, or any other indicia of product identification identical or similar to, or identifiable with, those used for any brand of cigarettes or smokeless tobacco. • (b) No manufacturer, distributor, or retailer may offer or cause to be offered any gift or item (other then cigarettes or smokeless tobacco) to any person purchasing cigarettes or smokeless tobacco in consideration of the purchase thereof, or to any person in consideration of furnishing of furnishing evidence, such as credits proofs-of-purchase, or coupons, of such a purchase. • (c) No manufacturer, distributor, or retailer may sponsor or cause to be sponsored any athletic, musical, artistic, or other social or cultural event, or any entry or team in any event, in the brand name (alone or in conjunction with any other word), logo, symbol, motto, selling message, recognizable color or pattern of colors, or any other indicia of product identification identical or similar to, or identifiable with, those used for any brand of cigarettes or smokeless tobacco. Nothing in this paragraph prevents a manufacturer, distributor, or retailer from sponsoring or causing to be sponsored any athletic, musical, artistic, or other social or cultural event, or team or entry, in the name of the corporation which manufactures the tobacco product, provided that both the corporate name and the corporation were registered and in use in the United States prior to January 1, 1995, and that the corporate name does not include any brand name (alone or in conjunction with any other word), logo, symbol, motto, selling message, recognizable color or pattern of colors, or any other indicia of product identification identical or similar to, or identifiable with, those used for any brand of cigarettes or smokeless tobacco.

17. SEC. 2. FINDINGS. • The Congress finds the following: • (5) Tobacco advertising and marketing contribute significantly to the use of nicotine-containing tobacco products by adolescents. • (6) Because past efforts to restrict advertising and marketing of tobacco products have failed adequately to curb tobacco use by adolescents, comprehensive restrictions on the sale, promotion, and distribution of such products are needed. • (12) It is in the public interest for Congress to enact legislation that provides the Food and Drug Administration with the authority to regulate tobacco products and the advertising and promotion of such products. The benefits to the American people from enacting such legislation would be significant in human and economic terms. • (15) Advertising, marketing, and promotion of tobacco products have been especially directed to attract young persons to use tobacco products, and these efforts have resulted in increased use of such products by youth. Past efforts to oversee these activities have not been successful in adequately preventing such increased use. • (17) Tobacco product advertising often misleadingly portrays the use of tobacco as socially acceptable and healthful to minors.

18. (18) Tobacco product advertising is regularly seen by persons under the age of 18, and persons under the age of 18 are regularly exposed to tobacco product promotional efforts. • (19) Through advertisements during and sponsorship of sporting events, tobacco has become strongly associated with sports and has become portrayed as an integral part of sports and the healthy lifestyle associated with rigorous sporting activity. • (20) Children are exposed to substantial and unavoidable tobacco advertising that leads to favorable beliefs about tobacco use, plays a role in leading young people to overestimate the prevalence of tobacco use, and increases the number of young people who begin to use tobacco. • (21) The use of tobacco products in motion pictures and other mass media glamorizes its use for young people and encourages them to use tobacco products. • (22) Tobacco advertising expands the size of the tobacco market by increasing consumption of tobacco products including tobacco use by young people. • (23) Children are more influenced by tobacco marketing than adults: more than 80 percent of youth smoke three heavily marketed brands, while only 54 percent of adults, 26 and older, smoke these same brands. • (25) Comprehensive advertising restrictions will have a positive effect on the smoking rates of young people. • (26) Restrictions on advertising are necessary to prevent unrestricted tobacco advertising from undermining legislation prohibiting access to young people and providing for education about tobacco use.

19. (27) International experience shows that advertising regulations that are stringent and comprehensive have a greater impact on overall tobacco use and young people's use than weaker or less comprehensive ones. • (28) Text only requirements, although not as stringent as a ban, will help reduce underage use of tobacco products while preserving the informational function of advertising. • . • (30) The final regulations promulgated by the Secretary of Health and Human Services in the August 28, 1996, issue of the Federal Register (61 Fed. Reg. 44615-44618) for inclusion as part 897 of title 21, Code of Federal Regulations are consistent with the first amendment to the United States Constitution and with the standards set forth in the amendments made by this subtitle for the regulation of tobacco products by the Food and Drug Administration, and the restriction on the sale and distribution of, including access to and the advertising and promotion of, tobacco products contained in such regulations are substantially related to accomplishing the public health goals of this division. • (31) The regulations . . . will directly and materially advance the Federal Government's substantial interest in reducing the number of children and adolescents who use cigarettes and smokeless tobacco and in preventing the life-threatening health consequences associated with tobacco use. An overwhelming majority of Americans who use tobacco products begin using such products while they are minors and become addicted to the nicotine in those products before reaching the age of 18. Tobacco advertising and promotion play a crucial role in the decision of these minors to begin using tobacco products. Less restrictive and less comprehensive approaches have not and will not be effective in reducing the problems addressed by such regulations. The reasonable restrictions on the advertising and promotion of tobacco products contained in such regulations will lead to a significant decrease in the number of minors using and becoming addicted to those products. • (32) The regulations . . . impose no more extensive restrictions on communication by tobacco manufacturers and sellers than are necessary to reduce the number of children and adolescents who use cigarettes and smokeless tobacco and to prevent the life-threatening health consequences associated with tobacco use. Such regulations are narrowly tailored to restrict those advertising and promotional practices which are most likely to be seen or heard by youth and most likely to entice them into tobacco use, while affording tobacco manufacturers and sellers ample opportunity to convey information about their products to adult consumers. • (35) Tobacco products have been used to facilitate and finance criminal activities both domestically and internationally. Illicit trade of tobacco products has been linked to organized crime and terrorist groups.

20. SEC. 906. GENERAL PROVISIONS • (d) RESTRICTIONS.-- • "(1) IN GENERAL.--The Secretary may by regulation require restrictions on the sale and distribution of a tobacco product, including restrictions on the access to, and the advertising and promotion of, the tobacco product, if the Secretary determines that such regulation would be appropriate for the protection of the public health. The Secretary may by regulation impose restrictions on the advertising and promotion of a tobacco product consistent with and to full extent permitted by the first amendment to the Constitution. The finding as to whether such regulation would be appropriate for the protection of the public health shall be determined with respect to the risks and benefits to the population as a whole, including users and nonusers of the tobacco product, and taking into account-- • "(A) the increased or decreased likelihood that existing users of tobacco products will stop using such products; and • "(B) the increased or decreased likelihood that those who do not use tobacco products will start using such products.

21. SEC. 916. PRESERVATION OF STATE AND LOCAL AUTHORITY • "(a) IN GENERAL.-- • "(1) PRESERVATION.--Except as provided in paragraph (2)(A), nothing in this chapter, or rules promulgated under this chapter, shall be construed to limit the authority of a Federal agency (including the Armed Forces), a State or political subdivision of a State, or the government of an Indian tribe to enact, adopt, promulgate, and enforce any law, rule, regulation, or other measure with respect to tobacco products that is in addition to, or more stringent than, requirements established under this chapter, including a law, rule, regulation, or other measure relating to or prohibiting the sale, distribution, possession, exposure to, access to, advertising and promotion of, or use of tobacco products by individuals of any age, information reporting to the State, or measures relating to fire safety standards for tobacco products.

22. SEC. 203. STATE REGULATION OF CIGARETTE ADVERTISING AND PROMOTION. • Section 5 of the Federal Cigarette Labeling and Advertising Act (15 U.S.C. 1334) is amended by adding at the end the following: • "(c) EXCEPTION.--Notwithstanding subsection (b), a State or locality may enact statutes and promulgate regulations, based on smoking and health, that take effect after the effective date of the Family Smoking Prevention and Tobacco Control Act, imposing specific bans or restrictions on the time, place, and manner, but not content, of the advertising or promotion of any cigarettes.

23. SEC. 102. FINAL RULE • (a) CIGARETTES AND SMOKELESS TOBACCO.— • (1) IN GENERAL.--On the first day of publication of the Federal Register that is 180 days or more after the date of enactment of this Act, the Secretary of Health and Human Services shall publish in the Federal Register a final rule regarding cigarettes and smokeless tobacco, which-- • . . . (E) include such modifications to section 897.30(b), if any, that the Secretary determines are appropriate in light of governing First Amendment case law, including the decision of the Supreme Court of the United States in Lorillard Tobacco Co. v. Reilly (533 U.S. 525 (2001));

24. How would “Lorillard II” fare in the new Supreme Court? • O’Connor, Rehnquist and Souter are or will be gone. • Stevens and Ginsburg and Breyer might well uphold most provisions of a new law based on a more substantial record. • Thomas would likely maintain his position that commercial speech should be treated like noncommercial speech. • Roberts and Alito are obviously a mystery as are, to a lesser extent, Kennedy and Scalia.

25. Implications for adult business advertising • Assuming Central Hudson remains the standard a Supreme Court decision substantially upholding advertising restrictions on tobacco could have serious consequences. • For adult businesses, Central Hudson’s second prong has been pretty much conceded to the government. • This includes secondary effects, protection of children and other interests that have been cited in previous cases. • If content restrictions such as black-and-white tombstone ads become acceptable we can expect state and local governments to push the restrictions up to but not quite at total bans. • 1996 FDA Rules, now ratified by Congress do not address the Internet. • We might also find internet promotion restricted. While the Supreme Court in cases such as Renov. ACLU, 521 U.S. 844 (2007) and Ashcroft v. ACLU, 542 U.S. 656 (2004) rejected Internet limits based on appropriateness for children, analysis was under strict scrutiny. • Advertising restrictions would still come under the intermediate scrutiny of Central Hudson. Thus the analysis would be more like Renton and O’Brien – and we know how well that works for us. • Smart prosecutors and legislators may start creating pretextual records and evidence to avoid having their cases are out based on lack of an adequate record.

26. The Scalia Conundrum • It is not inconceivable and perhaps even likely in that Justice Scalia would vote to invalidate restrictions on tobacco advertising while approving similar ones for adult businesses. • While Scalia used tobacco products as legal he views adult content as unprotected and illegal under the pandering theory from Ginsburgv. U.S., 383 U.S. 463 (1966). • Thus, the adult material is unprotected because of the advertising – and the advertising is unprotected under the first prong of Central Hudson, because the material is illegal due to its advertising.

27. Nike v. Kasky, 539 U.S. 654 (2003) • • Beginning in 1996, Nike was besieged with a series of allegations that it was mistreating and underpaying workers at foreign facilities. See App. to Pet. for Cert. 3a. Nike responded to these charges in numerous ways, such as by sending out press releases, writing letters to the editors of various newspapers around the country, and mailing letters to university presidents and athletic directors. See id., at 3a-4a. In addition, in 1997, Nike commissioned a report by former Ambassador to the United Nations Andrew Young on the labor conditions at Nike production facilities. See id., at 67a. After visiting 12 factories, “Young issued a report that commented favorably on working conditions in the factories and found no evidence of widespread abuse or mistreatment of workers.” reversed and remanded for further proceedings. . . . The California Supreme Court held that “[b]ecausethe messages in question were directed by a commercial speaker to a commercial audience, and because they made representations of fact about the speaker's own business operations for the purpose of promoting sales of its products, ... [the] messages are commercial speech.” 27 Cal.4th 939, 946, 119 Cal.Rptr.2d 296, 45 P.3d 243, 247 (2002).