September 4, 2012

When Government Distorts the Truth

Is the state violating the First Amendment rights of tobacco companies?

The past several weeks have given rise to two First Amendment cases of great interest, each of which involves the extent to which the state can seek to control the messages that ordinary people and firms deliver to the public at large.

Epstein
Illustration by Barbara Kelley

The first of these is American Freedom Defense Initiative (AFDI) v. Metropolitan Transportation Authority. There, the question was whether the MTA could, consistent with the First Amendment, block the AFDI, a pro-Israel organization, from enforcing its “no demeaning” standard with respect to highly charged religious advertisements that the AFDI wanted to post, such as this advertisement:

Richard Epstein tobacco companies

In July of 2012, Judge Paul Engelmeyer temporarily urged the MTA to post that advertisement inside the MTA on the following ground: As a form of core political speech, it was entitled to the highest level of protection under the First Amendment’s guarantee of freedom of speech; after all, it was not “narrowly tailored” to serve a compelling government interest. Just this past week, the same judge ordered that the temporary injunction be made permanent.

In another recent pair of cases, the issue was whether the grotesque images that the FDA has required tobacco companies to put on their packages violates the First Amendment rights of the tobacco companies.

Richard Epstein tobacco companies

Two appeals courts split on the question, making it quite likely that the case will make its way up to the United States Supreme Court. The question is how best to think about these two cases in tandem, which, in turn, requires a return to first principles of constitutional interpretation. In both instances, these principles are sorely tested.

Government as Regulator vs. Government as Manager

There is a wicked maxim of American constitutional law that holds, quite properly, that the shorter the constitutional provision, the more devilish the problems of its interpretation. The original text for these two cases is short and snappy: “Congress shall make no law . . . abridging freedom of speech, or of the press.”

It has long been established, at least after the Civil War, that the prohibitions that attach to Congress also apply to the states. But that huge decision to apply the same strictures at both levels of government—federal and state—still leaves open an important question: Do the “laws” in question apply only to how Congress or the states regulate the conduct of ordinary individuals and corporations, or do they apply to how the government conducts its own business with its employees and customers.

The contrast is made vivid by a comparison of these two cases. In AFDI, the First Amendment claim is that the government cannot restrict the advertisements that are placed on its own public transportation facilities that are open to all.  In the tobacco cases, the issue is whether the First Amendment blocks the government from putting its graphic warning labels on packages owned by private corporations.

It should become clear, with a moment’s reflection, that the same strictures that work in the sphere of regulation do not work nearly as well for the government’s management of its own public facilities. Every private employer, shop owner, or landowner has the power to regulate the manner in which his workers or customers use the premises. Among the rules that may be promulgated are those that relate to all forms of speech-related activities that take place on the premises.

An employer can prevent his workers from talking politics, reading newspapers during working hours, or uttering abusive words to potential customers. A shop owner can prevent customers from setting up a jazz band in the lobby. A landlord need not tolerate tenants setting up a bookstall or voter registration drive in the lobby. Many of these regulations are indispensable for running an establishment, so when the state comes to the aid of the property owner, its involvement does not trigger any guarantee of freedom of speech. The enforcement of private rights is not regarded as a “law” that attracts First Amendment scrutiny.

The harder question is what set of rules applies when the proprietor is not a private party but is, as in AFDI, the MTA. This issue has been around for a long time: Even the smallest laissez-faire government runs military bases and post offices, which means that it acts as both owner and regulator.

One possible approach to these situations is to say that the state, as the owner of its public facilities, has the same degree of freedom as any private owner. Indeed, for some period of time, just that approach dominated Supreme Court decisions, allowing, by implication, the state to have plenary control over who demonstrates on public streets. Yet that cannot be the case. The state is not a private owner, but is best understood as an owner that is subject to various—for want of a better term—fiduciary duties that it owes to all of its citizens equally.

The key insight here is that the state government often has two features that give it exceptional powers that no private owner has. First, it can collect taxes from the public at large for running its operations. Second, it often runs the only game in town, given the tendency that the state has toward making itself a monopolist, especially in areas of public transportation. The state’s monopoly power makes it look like private common carriers that run railroads, electricity, and telecommunications.

These proprietors run, in the words of the classic Supreme Court case law, businesses “affected with the public interest,” which, in turn, means that they forfeited their absolute right to exclude, and provide a duty of reasonable and nondiscriminatory (RAND) service to all comers.

The MTA as Government Proprietor

Those obligations apply not only to the traditional area of rate regulation, but also to access to speech. The great fear here is that the state will use its power to silence speech altogether or to favor one group over another.

The RAND duties transfer over easily to the First Amendment context. The clear case of a violation would be a rule that stopped the AFDI from running its advertisements, while allowing anti-Israeli groups to run theirs. The MTA steered as far away from that predicament as possible by meeting the nondiscrimination policy. Its own view was that any political advertisement is likely to make some portion of the population uneasy, so that it is better to steer away from the advertisements altogether.

In my view, the correct approach to this question is to ask whether or not private property owners not constrained by common carrier duties would think it wise to impose similar RAND restrictions. If so, that is strong evidence that government officials should be allowed to do the same. I know that if I were to run any private business, I would want to control ads like the one that the AFDI wanted to run. I would, however, be uneasy about banning ordinary political advertisements that support Jones for City Council or Smith for United States Senator. 

The MTA tried to draw the line between these two classes of cases by banning only those ads that failed its “no demeaning” standard. What doomed its effort was the high standard of judicial review that Judge Engelmeyer invoked to decide this case. Under his exacting standard, he probably reached the right result, which only goes to show that in these cases of government-run operations, the proper First Amendment standard is one of more relaxed scrutiny so long as the basic law has no discriminatory features.

There is, in corporate law, a doctrine known as the “business judgment rule,” which gives management the nod when there are tough calls to be made about which course of action to pursue. That standard should apply in this case, because no matter how one tries to massage the English language, the next standard will have similar looseness. The high standard of constitutional scrutiny can too easily slip into a per se ban against regulation that makes good sense.

Cigarette Packaging & Government Falsehoods

The situation switches over quite sharply when the question is how the government should regulate private speech. In this instance, that question arises as a result of the packages that the cigarette companies place into circulation. These regulations are the final stage of the evolution of public responses to cigarettes in general.

The initial attitude on tobacco was the correct one. Its dangers are sufficiently obvious that people should be allowed to make up their own minds about smoking. Even before the publication of the famous 1952 Reader’s Digest “Cancer by the Carton” attack on tobacco, basic risks and benefits about cigarettes, aka “coffin nails,” were not some nasty trade secret within the exclusive knowledge of the tobacco groups.

Many private organizations like the American Cancer Society have been effective in denouncing tobacco use without conscripting the cigarette companies in that effort. The early versions of the Restatement (Second) of Torts in 1965 addresses the basic common approach to tobacco, providing that if the tobacco was not contaminated, the companies owed no further duty to warn.

About the same time, the early cigarette labeling acts required some warnings on cigarette packages, which, as a side-effect, helped the companies resist (implausible) claims that people were unaware. When the early tobacco suits were brought, I was both an ardent anti-smoker and a legal consultant to Philip Morris. My view was that I was not the only person in the United States who had a clear knowledge of the risks of smoking.  

The current FDA package labels take warnings to a new height of frenzy and commandeer the resources of the tobacco companies in doing so. In general, I think that there are serious First Amendment issues with government speech that seeks to dissuade people from smoking because of its adverse health effects. Taking sides is something that we won’t allow the MTA to do, so why allow the government to take money from smokers and nonsmokers alike to push its message?

Beyond that, the government messages, especially its graphic images, are not entirely truthful. The question here is not whether tobacco causes harm to smokers. It obviously does. The real question is how much, and when. In this regard, the key variables are the number of cigarettes smoked, their tar and nicotine content, the level of inhalation, and the age at which the smoking takes place. Other variable doubtless influence matters as well.

The government images and messages are just over the top, such as the warning in the image above: “Warning: Tobacco smoke causes fatal lung disease in nonsmokers.” No one doubts that this is true, at least to some extent. The way this is worded, however, makes it appear as though this risk is independent of the amount of smoke that is absorbed. The strong use of the word “causes” suggests that smoking has the same lethal effect on smokers as a falling brick that lands on the head of an innocent pedestrian.

But the increased risk of lung disease is small relative to the inflammatory message on the label, and any government warning that distorts the truth so egregiously should not be issued at all, anywhere. It follows that it is utterly beyond the pale to require these overheated warnings to be placed on cigarette cartons. It is not acceptable for government lawyers to say that any exaggeration of the harms is in itself harmless, so the package warnings should go forward.

No, as a determined nonsmoker, I made the decision at about age ten that whatever the pleasures of smoking were, they were not worth the risks. That case is easy for those, like me, who don’t see the gains to begin with. But in a free society, we should respect the differences in attitudes and tastes among citizens. If others find smoking pleasurable, they have the right to be sure that their government does not force tobacco companies to purvey false information that could alter their choice against their own interests.

True information can influence smoking levels (which are on the decline) without the government force-feeding falsehoods to the public. Paternalism is dangerous even for causes that I fully support.


Richard A. Epstein, Peter and Kirsten Bedford Senior Fellow at the Hoover Institution, Laurence A. Tisch Professor of Law at New York University, and senior lecturer at the University of Chicago, researches and writes on a broad range of constitutional, economic, historical, and philosophical subjects. He has taught administrative law, antitrust law, communications law, constitutional law, corporate law, criminal law, employment discrimination law, environmental law, food and drug law, health law, labor law, Roman law, real estate development and finance, and individual and corporate taxation. His publications cover an equally broad range of topics. His most recent book, published in 2013, is The Classical Liberal Constitution: The Uncertain Quest for Limited Government (2013). He is a past editor of the Journal of Legal Studies (1981–91) and the Journal of Law and Economics (1991–2001).


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