Thomas Briant, executive director of the National Association of Tobacco Outlets (NATO), discussed the future of cigarette retailing in convenience stores.
By John Lofstock, Editor.
While cigarettes have long been a staple at U.S. convenience stores, accounting for millions in pack and cartons sales and boosting the profits from the average smoker’s market basket, it remains a category under attack at the federal and state levels.
The U.S. Food and Drug Administration (FDA) is fighting back after a three judge panel with the U.S. Circuit Court of Appeals for the District of Columbia, on Aug. 24, barred the FDA’s implementation of graphic cigarette warnings, the National Association of Tobacco Outlets (NATO) reported.
The FDA filed a petition, on Oct. 9, with the same appeals court requesting a rehearing ‘en banc.’ An ‘en banc’ hearing is a hearing before all eight judges that serve on the U.S. Circuit Court of Appeals for the District of Columbia. The U.S. Circuit Court judges have the discretion to decide whether or not to grant a request for an en banc hearing.
In its rehearing petition, the FDA argued that the graphic health warning images have a primary goal of communicating the negative health consequences of smoking and that the federal government has an interest in effectively conveying this kind of health information.
Thomas Briant, executive director of the National Association of Tobacco Outlets (NATO), sat down with Convenience Store Decisions to help clarify the threat tobacco retailers are facing against the industry’s top in-store category,
CSD: What is the current status of the two federal lawsuits involving the FDA’s graphic cigarette health warnings?
TB: There are currently two federal lawsuits challenging the FDA’s graphic cigarette health warning labels. Both lawsuits were appealed to different U.S. Circuit Courts of Appeal with the Sixth Circuit Court upholding the graphic warning labels as being constitutional and the District of Columbia Circuit Court ruling that the graphic warnings are unconstitutional. In short, we have what is known as a ‘conflict between the circuits’ with two different U.S. Circuit Courts of Appeal making seemingly contradictory rulings on the same issue.
CSD: What legal actions took place that led us to this current conflict in appeals court decisions?
TB: The current legal scenario surrounding the graphic cigarette health warnings had its origins in two separate lawsuits seeking to declare the graphic cigarette warnings unconstitutional.
The first lawsuit was filed in August of 2009 against the FDA by NATO retail member Discount Tobacco City, Reynolds Tobacco Co., Lorillard Tobacco Co., National Tobacco Co., Commonwealth Brands Inc. (now Commonwealth Altadis Inc.), and American Snuff Co. This initial lawsuit included a First Amendment challenge that cigarette manufacturers reserve the top half of the front and back of cigarette packages and 20% of the top of cigarette advertisements for graphic warning labels.
Since the FDA had not yet decided upon nor issued the actual color graphic warning labels, this lawsuit challenged the size of the graphic cigarette warnings as being unconstitutional.
The second lawsuit was filed two years later in August 2011, after the FDA chose nine specific graphic images each with its own next text warning and the cessation hotline number 1-800-QUIT-NOW. R.J. Reynolds Tobacco Co., Lorillard Tobacco Co., Commonwealth Brands (now Commonwealth Altadis, Inc.), Liggett Group and Santa Fe Natural Tobacco Co., filed this second lawsuit against the FDA.
The only issue in this second lawsuit was whether the nine graphic warning images along with the corresponding text warnings and the 1-800-QUIT-NOW hotline number violated the First Amendment protection of commercial free speech.
CSD: How does the First Amendment to the U.S. Constitution protect advertisements and product packaging?
TB: It is important to understand that the First Amendment protects the right of free speech and the U.S. Supreme Court has extended this protection to commercial speech, which includes product advertising and packaging. In fact, the right of free speech includes both the right to speak and the right not to speak at all.
In this regard, if government action compels a person or a company to express certain views, which the individual or company would not otherwise make if given a choice, then this action is known as compelled speech and is strictly limited by the First Amendment and precedent setting Supreme Court decisions interpreting the right of free speech.
CSD: Why should convenience store retailers be concerned about these graphic cigarette warnings and ‘compelled speech’?
TB: As I indicated earlier, the First Amendment protections include the right not to speak at all. However, the graphic images and text warnings are essentially informing adult consumers not to buy cigarettes.
That is, if the courts uphold the graphic warning labels, retailers will, in effect, be required to ‘speak’ to their customers through the graphic warnings on cigarette advertisements and packaging, which tell them not to buy cigarettes. If they had a choice, retailers would not voluntarily make such statements when it means not selling one of the highest volume in-store products.
CSD: Where do the two lawsuits stand now?
TB: Regarding the first lawsuit, the tobacco industry plaintiffs have filed a Petition for Writ of Certiorari with the U.S. Supreme Court asking the court to review the Sixth Circuit Court of Appeals decision.
This Petition for Writ of Certiorari is a document, which losing parties file with the U.S. Supreme Court asking the court to accept an appeal of the case and the reasons why the court should ‘grant cert’ to accept the appeal of the case. The U.S. Supreme Court has the discretion to accept a case for appeal or decline to grant a request for an appeal. So it can go either way at this point.
In terms of the second lawsuit, the FDA filed a petition with the District of Columbia Circuit Court of Appeals to request a rehearing en banc.
An ‘en banc’ hearing is held before the full panel of the District of Columbia appeals court, not just the three judges that initially decided the case. However, this request for an en banc hearing was denied and the FDA now needs to decide if it will file a Petition for Writ of Certiorari with the U.S. Supreme Court on this second case. If the FDA does file this petition, the U.S. Supreme Court can either accept the case for a hearing or decline to accept the appeal.
CSD: Will the Supreme Court accept these cases on appeal and if so, when do you think the case would be heard?
TB: As a lawyer myself, I generally do not predict what a court will or will not do. While conflicting decisions between Circuit Courts of Appeal makes it more likely that the Supreme Court would grant cert to hear one or both cases, the decision to do so rests with the Supreme Court justices and we will have to wait to see if they accept or reject the cases for appeal. At this point, I’m not really sure when we could expect to learn more.