In R.J. Reynolds Tobacco Co. v. U.S. Food and Drug Administration, the District Court for the District of Columbia has blocked for the time being the FDA’s strenuous campaign to issue stringent health warnings on cigarette packaging and advertisements. The 2009 Family Smoking Prevention and Tobacco Control Act gives the FDA the power to “issue regulations that require color graphics depicting the negative health consequences of smoking.” Pursuant to that authority, the FDA had published regulations that required all tobacco companies to place a set of pictorial and written textual warnings on the packages of all cigarettes sold in the United States, effective in September 2012.
The FDA’s proposed new warnings are graphic and make it appear as if the inhalation of tobacco is tantamount to the inhalation of hydrogen cyanide with its certain and lethal fate. For those who have the stomach to look at these warnings, they are prominently displayed on the FDA website. In one, we see the ghastly image of a male smoker with smoke coming through a hole in his trachea and the anti-climactic words, “Cigarettes are addictive.” Another choice image compares two pink and healthy lungs with two discolored and pitted lungs over the caption “Cigarettes cause fatal lung disease.” The FDA has ordered tobacco companies to place these various warnings on cigarettes packages, where they must cover over 50 percent of the space. To put it mildly, these second-generation warnings amount to a steep upgrade over the current set of tame written warnings, which in one form or another have been a staple of cigarette packages since 1965.
The severity of these warnings prompted most of the tobacco companies to engage the services of the notable First Amendment lawyer, Floyd Abrams, to mount the successful challenge before Judge Richard J. Leon of D.C.’s District Court. (Atria, which owns Philip Morris, did not participate.) The case thus presents a useful opportunity to look at the history of tobacco regulation in the United States with its various missteps, of which the FDA’s graphic images are only the most recent.
Tobacco is a very old product with a very controversial history. Long before the current course of litigation, cigarettes were called “coffin nails,” a term suggesting the dangers that tobacco posed to health and possibly to morals. That appellation stuck in large part because it hit the essential point. There are many ways that tobacco companies seek to distinguish their own product from those of their competitors, like by the use of distinctive additives and flavorings. But the one constant in all tobacco products is, well, tobacco. It is precisely tobacco’s universal nature that makes it easy to communicate the dangers that are associated with its use.
This point was brought home to me in 1952, as a youngster of nine years of age. After months of nagging, my family was able to persuade my physician father (a radiologist, no less) to quit smoking. It was also the year in which Reader’s Digest published its hugely influential expose of tobacco under the powerful title “Cancer by the Carton,” which summarized recent medical research that had helped establish the conclusive causal link between tobacco and cancer.
Tobacco is a very old product with a very controversial history.
The policy question, however, is which way does this revelation cut. The common view is that once the danger is established, the case for tough government regulation is clinched. My inclination is the opposite. Regulation is expensive, as will become quickly apparent with the FDA’s latest venture. The widespread knowledge of the risks of tobacco makes it an obvious risk of which consumers are already warned before they purchase their first package of cigarettes. Just in case they have missed the message, publications like Reader’s Digest are eager to spread the news, while the familiar web of family, friends, and physicians harp on the recalcitrant smokers, like my father, to cut back, or better, to quit. It was just this combination of forces that led thousands either to quit smoking, or at least swap out their Old Golds for a filtered Winston or Marlboro, in response to the rising tide of information.
This legal regime had no use for either government regulation or private lawsuits, which, at the time, were controlled by the principle that anyone who voluntarily encountered a risk that was open and obvious—or with generic products, a matter of common knowledge—could not sue the supplier of tobacco for their losses. That position was seemingly adopted in the influential 1965 Restatement (Second) of the Law of Torts, which generally expanded the liability for unreasonably dangerous products. But tobacco was made subject to this caveat: “Good tobacco is not unreasonably dangerous merely because the effects of smoking may be harmful; but tobacco containing something like marijuana may be unreasonably dangerous.” At that time, the phrase “good tobacco” was not regarded as an oxymoron, but as an accurate description of a product for which manufacturers bore no legal responsibility.
This early simplicity did not last in the face of tobacco’s evident danger. To be sure, the government never banned tobacco, which it might have done under its general police powers to protect the health and safety of the public. Instead, the path taken involved the use of warnings to convey information to the public at large. In response to the 1964 report of the Surgeon General, Congress passed the first of many statutes that required ever more stringent warnings to be placed on cigarette packages.
Ironically, many observers thought that the use of these warnings strengthened the position of the tobacco industry with respect to tort litigation in two ways. The first is that the warnings made it harder for a smoker to deny that he or she knew of the dangers of tobacco. The second was that the presence of the federal statute might well “preempt” or block state product liability actions. Both barriers were overrun during the 1990s. On the tort front, it continued to be the case that individual smokers could not win direct lawsuits against manufacturers for the evidence on assumption of risk, both personal and public, blocked the lawsuits. During that period, I worked as a legal consultant for Philip Morris and helped prepare what was, and should have been, a winning two-prong defensive strategy.
The first part of the strategy was to give a careful explication of what it meant for cigarettes to “cause cancer.” The correct analysis notes that “causation” does not mean that smokers always get cancer as a result of tobacco smoke. In fact, the correct causation analysis stresses instead that smoking is a risk factor, such that those who smoke more are more likely to suffer from cancer down the road.
Tobacco does not cause cancer. It is, rather, a risk factor for cancer.
Putting the proposition in this fashion transforms the overall analysis in two ways. First, it makes clear that the added risk of cancer now depends on a wide range of circumstances: what kind of cigarettes are smoked, in what frequency, for how long, during what years of life, in what kind of environment, etc. A person who smokes heavily throughout his life, while working with asbestos or living in polluted environments, is far more likely to get cancer than the occasional smoker who quits while he or she is still young.
Once those points are established, the assumption of risk defense to damage claims becomes far more credible. Tobacco has its appeal as well as its dangers. It is therefore credible to assume that some people will choose to smoke in a rational fashion if their taste for tobacco is strong and if their perceived sense of risk is limited. All of a sudden, the assumption of risk defense is compelling, especially in the face of conflicting evidence on addiction, which no longer looks like an inescapable fact of life given that so many people have been able to quit smoking.
This position was overwhelmed by two separate events. The first was the ability of ingenious plaintiff’s lawyers to switch from individual lawsuits to litigation brought by states to recover the expenses the states incurred under Medicaid. These lawsuits are unsound at their core. The correct rule of law treats the state Medicaid claim as derived from the original tort claim, and thus subject to the identical assumption of risk defense that proves so powerful against the smoker. But the plaintiffs were able to persuade courts to treat these claims as “independent” causes of action whose validity did not depend on the existence of a smoker’s own claim.
The smoker disappeared from the case, and the floodgates opened. A massive omnibus settlement was entered into between the state Medicaid plaintiffs and the tobacco companies, which guaranteed a stream of payments from the tobacco companies to states that in effect became part-owners of the tobacco companies. The so-called Tobacco Master Settlement Agreement then protected both the states and the tobacco companies from competition by new tobacco companies offering an array of different products. That legal protection was achieved by an elaborate set of public-private compacts that unfortunately have survived multiple judicial challenges. Kathleen Sullivan (former Dean of Stanford Law School) and I joined in a brief prepared by Alan Morrison of George Washington Law School that failed to persuade the Supreme Court to review that agreement after it had been sustained by lower courts.
A pity. The current position first imposes improper liabilities on the tobacco companies whom it then shields from anti-trust challenge. Two wrongs don’t make a right. They also invite a third blunder. Under the leadership of then-FDA Commissioner David Kessler, the FDA insisted for the first time ever that it indeed had the power to regulate tobacco on the ground that it was a “drug” under the FDA’s statutory definition of a drug that, literally stated, extends to "articles (other than food) intended to affect the structure or any function of the body." He never bothered to mention what ailment tobacco was supposed to treat. In FDA v. Brown & Williamson (2000), by a narrow 5 to 4 vote, Justice Sandra Day O’Connor rejected Kessler’s improbable argument by noting that the definition given only made sense in its statutory context if the manufacturer claimed that the product sold had a “therapeutic benefit,” which no tobacco manufacturer ever had the nerve to claim. The industry’s narrow victory in 2000 was in turn undone by the 2009 legislation that gave the FDA its general powers—powers that were recently challenged in R.J. Reynolds Tobacco Co. v. U.S. Food and Drug Administration.
The government shelled out $200 million in tobacco subsidies in 2010.
Given what was said above, Judge Leon made the right decision under the First Amendment. The first point to note about the government warnings is that they are deliberately false. As was made clear in the opinion, the images used were either wholly fictive (smoke blowing out of the trachea) or doctored (the besotted lung). But even if those pictures were dead accurate representations, the warnings still are a palpable falsehood because they consciously overstate the strength of the causal tie between smoking and baleful conditions that tobacco sometimes creates down the road. Recall that on the key causal issue, what is at stake is an increased risk or hazard from smoking, not doomsday itself. The extent of the damage caused by smoking is surely exaggerated by the constant government assertion that smoking causes 400,000 deaths each year. The government does not bother to say whether smoking accelerates death by a day or a decade, or somewhere in between.
The use of these false statements is not, moreover, justified by the purported health advantages from not smoking. Smoking has its pleasures as well as its pains. The ideal role for the government, if it has any role at all, is to convey true and accurate information to all persons so that they could decide whether and when to smoke, and in what quantities. The government’s scare tactics negate the standard objective of all warnings. In some cases, they might stop suspect teenagers from smoking. But in other cases, their nauseating hyperbole could easily lead people to ignore the warnings altogether, which is too bad considering that a more accurate warning could lead them to cut down or stop smoking sooner. Judge Leon’s argument is, I think, sufficient to conclude that the government should not be able to put those warnings out on public billboards even at its own expense.
Ironically, the insistence that these warnings appear on the company’s own package adds the element of confiscation to the basic claim of misrepresentation. This point is not far-fetched, given the strong legal tradition against coerced speech by the government. In its most vivid form, West Virginia State Board v. Barnette held that the states could not, under the First Amendment, require a Jehovah’s Witness to say the pledge of allegiance to the United States. But the prohibition goes further than that, and makes it clear that a public utility company cannot be required to include in its billing packet written messages from private advocacy groups critical of the utility. It seems a very short step to conclude that the government cannot just commandeer cigarette packets in order to promote its own anti-smoking message in a context where it can make no credible claim of being an arbiter between two private parties.
Striking down these forced advertisement laws need not stop constructive government action on smoking. The government, as the plaintiffs conceded, could still keep its current modest warnings, which are in line with the truth. There are other steps the government could take. The United States should promptly cut to zero the near $200 million in tobacco subsidies that it shelled out in 2010. In addition, it should take smoking into account in determining premiums for Medicare, and make it perfectly clear that all insurance companies are entitled to charge extra fees, if they so choose, to tobacco smokers. The correct regime here, as in so many other cases, is to remove both the undeserved subsidies along with the excessive regulations and tort liability. As a nation, we would have been a lot better off in dealing with the dangers of tobacco by adopting a minimalist four-part program: no tort liability; no Master Settlement Agreement; no FDA regulatory barrage, coupled, perhaps, with the set of tobacco warnings first adopted in the 1960s.
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).