Lorillard Tobacco Co. v. Reilly

JUSTICE O'CONNOR delivered the opinion of the Court.

In January 1999, the Attorney General of Massachusetts promulgated comprehensive regulations governing the advertising and sale of cigarettes, smokeless tobacco, and cigars. 940 Code of Mass. Regs. Petitioners, a group of cigarette, smokeless tobacco, and cigar manufacturers and retailers, filed suit in Federal District Court claiming that the regulations violate federal law and the United States Constitution. In large measure, the District Court determined that the regulations are valid and enforceable. The United States Court of Appeals for the First Circuit affirmed in part and reversed in part, concluding that the regulations are not pre-empted by federal law and do not violate the First Amendment. The first question presented for our review is whether certain cigarette advertising regulations are pre-empted by the Federal Cigarette Labeling and Advertising Act (FCLAA).

I

In January 1999, pursuant to his authority to prevent unfair or deceptive practices in trade, the Massachusetts Attorney General promulgated regulations governing the sale and advertisement of cigarettes, smokeless tobacco, and cigars. The purpose of the cigarette and smokeless tobacco regulations is "to eliminate deception and unfairness in the way cigarettes and smokeless tobacco products are marketed, sold and distributed in Massachusetts in order to address the incidence of cigarette smoking and smokeless tobacco use by children under legal age ... [and] in order to prevent access to such products by underage consumers." The similar purpose of the cigar regulations is "to eliminate deception and unfairness in the way cigars and little cigars are packaged, marketed, sold and distributed in Massachusetts [so that] ... consumers may be adequately informed about the healthrisks associated with cigar smoking, its addictive properties, and the false perception that cigars are a safe alternative to cigarettes ... [and so that] the incidence of cigar use by children under legal age is addressed ... in order to prevent access to such products by underage consumers."

The cigarette and smokeless tobacco regulations being
challenged before this Court provide:
"(2) Retail Outlet Sales Practices. Except as otherwise provided shall be an unfair or deceptive act or practice for any person who sells or distributes cigarettes or smokeless tobacco products through a retail outlet located within Massachusetts to engage in any of the following retail outlet sales practices:
"(c) Using self-service displays of cigarettes or smokeless tobacco products;
"(d) Failing to place cigarettes and smokeless tobacco products out of the reach of all consumers, and in a location accessible only to outlet personnel."
"(5) Advertising Restrictions. Except as provided shall be an unfair or deceptive act or practice for any manufacturer, distributor or retailer to engage in any of the following practices:
"(a) Outdoor advertising, including advertising in enclosed stadiums and advertising from within a retail establishment that is directed toward or visible from the outside of the establishment, in any location that is within a 1,000 foot radius of any public playground, playground area in a public park, elementary school or secondary school;
"(b) Point-of-sale advertising of cigarettes or smokeless tobacco products any portion of which is placed lower than five feet from the floor of any retail establishment which is located within a one thousand foot radius of any public playground, playground area in a public park, elementary school or secondary school, and which is not an adult-only retail establishment."

II

Before reaching the First Amendment issues, we must decide to what extent federal law pre-empts the Attorney General's regulations. The cigarette petitioners contend that the FCLAA, pre-empts the Attorney General's cigarette advertising regulations.

A

In the FCLAA, Congress has crafted a comprehensive federal scheme governing the advertising and promotion of cigarettes. The FCLAA's pre-emption provision provides:
"(a) Additional statements
"No statement relating to smoking and health, other than the statement required by section 1333 of this title, shall be required on any cigarette package.
"(b) State regulations
"No requirement or prohibition based on smoking and health shall be imposed under State law with respect to the advertising or promotion of any cigarettes the packages of which are labeled in conformity with the provisions of this chapter."
The FCLAA's pre-emption provision does not cover smokeless tobacco or cigars.
In these cases, our task is to identify the domain expressly pre-empted, because "an express definition of the pre-emptive reach of a statute ... supports a reasonable inference ... that Congress did not intend to pre-empt other matters,". Congressional purpose is the "ultimate touchstone" of our inquiry. Because "federal law is said to bar state action in [a] fiel[d] of traditional state regulation," namely, advertising, we "wor[k] on the assumption that the historic police powers of the States [a]re not to be superseded by the Federal Act unless that [is] the clear and manifest purpose of Congress." Our analysis begins with the language of the statute.

In the pre-emption provision, Congress unequivocally precludes the requirement of any additional statements on cigarette packages beyond those provided in § 1333. Congress further precludes States or localities from imposing any requirement or prohibition based on smoking and health with respect to the advertising and promotion of cigarettes. Without question, the second clause is more expansive than the first; it employs far more sweeping language to describe the state action that is pre-empted. We must give meaning to each element of the pre-emption provision. We are aided in our interpretation by considering the predecessor pre-emption provision and the circumstances in which the current language was adopted.

In 1964, the groundbreaking Report of the Surgeon General's Advisory Committee on Smoking and Health concluded that "[c]igarette smoking is a health hazard of sufficient importance in the United States to warrant appropriate remedial action." In 1965, Congress enacted the FCLAA as a proactive measure in the face of impending regulation by federal agencies and the States. The purpose of the FCLAA was twofold: to inform the public adequately about the hazards of cigarette smoking, and to protect the national economy from interference due to diverse, nonuniform, and confusing cigarette labeling and advertising regulations with respect to the relationship between smoking and health. The FCLAA prescribed a label for cigarette packages: "Caution: Cigarette Smoking May Be Hazardous to Your Health." The FCLAA also required the Secretary of Health, Education, and Welfare (HEW) and the Federal Trade Commission (FTC) to report annually to Congress about the health consequences of smoking and the advertising and promotion of cigarettes.

Section 5 of the FCLAA included a pre-emption provision in which "Congress spoke precisely and narrowly." Subsection (a) prohibited any requirement of additional statements on cigarette packaging. Subsection (b) provided that "[n]o statement relating to smoking and health shall be required in the advertising of any cigarettes the packages of which are labeled in conformity with the provisions of this Act."

In 1969, House and Senate committees held hearings about the health effects of cigarette smoking and advertising by the cigarette industry. The bill that emerged from the House of Representatives strengthened the warning and maintained the pre-emption provision. The Senate amended that bill, adding the ban on radio and television advertising, and changing the pre-emption language to its present form.

The final result was the Public Health Cigarette Smoking Act of 1969, in which Congress, following the Senate's amendments, made three significant changes to the FCLAA.. First, Congress drafted a new label that read: "Warning: The Surgeon General Has Determined That Cigarette Smoking Is Dangerous to Your Health." Second, Congress declared it unlawful to advertise cigarettes on any medium of electronic communication subject to the jurisdiction of the FCC. Finally, Congress enacted the current pre-emption provision, which proscribes any "requirement or prohibition based on smoking and health ... imposed under State law with respect to the advertising or promotion" of cigarettes. The new subsection (b) did not pre-empt regulation by federal agencies, freeing the FTC to impose warning requirements in cigarette advertising. The new pre-emption provision, like its predecessor, only applied to cigarettes, and not other tobacco products.

In 1984, Congress again amended the FCLAA in the Comprehensive Smoking Education Act. The purpose of the Act was to "provide a new strategy for making Americans more aware of any adverse health effects of smoking, to assure the timely and widespread dissemination of research findings and to enable individuals to make informed decisions about smoking." The Act established a series of warnings to appear on a rotating basis on cigarette packages and in cigarette advertising, and directed the Health and Human Services Secretary to create and implement an educational program about the health effects of cigarette smoking.

The FTC has continued to report on trade practices in the cigarette industry. In 1999, the first year since the master settlement agreement, the FTC reported that the cigarette industry expended $8.24 billion on advertising and promotions, the largest expenditure ever. Substantial increases were found in point-of-sale promotions, payments made to retailers to facilitate sales, and retail offers such as buy one, get one free, or product giveaways. Substantial decreases, however, were reported for outdoor advertising and transit advertising. Congress and federal agencies continue to monitor advertising and promotion practices in the cigarette industry.

The scope and meaning of the current pre-emption provision become clearer once we consider the original preemption language and the amendments to the FCLAA. Without question, "the plain language of the pre-emption provision in the 1969 Act is much broader." Rather than preventing only "statements," the amended provision reaches all "requirement[s] or prohibition[s] ... imposed under State law." And, although the former statute reached only statements "in the advertising," the current provision governs "with respect to the advertising or promotion" of cigarettes. See ibid. Congress expanded the pre-emption provision with respect to the States, and at the same time, it allowed the FTC to regulate cigarette advertising. Congress also prohibited cigarette advertising in electronic media altogether. Viewed in light of the context in which the current pre-emption provision was adopted, we must determine whether the FCLAA preempts Massachusetts' regulations governing outdoor and point-of-sale advertising of cigarettes.

B
Turning first to the language in the pre-emption provision relied upon by the Court of Appeals, we reject the notion that the Attorney General's cigarette advertising regulations are not "with respect to" advertising and promotion. We disagree with the Court of Appeals' analogy to the Employee Retirement Income Security Act of 1974 (ERISA). In some cases concerning ERISA's pre-emption of state law, the Court has had to decide whether a particular state law "relates to" an employee benefit plan covered by ERISA even though the state law makes no express reference to such a plan. Here, however, there is no question about an indirect relationship between the regulations and cigarette advertising because the regulations expressly target cigarette advertising.

Before this Court, the Attorney General focuses on a different phrase in the pre-emption provision: "based on smoking and health." The Attorney General argues that the cigarette advertising regulations are not "based on smoking and health," because they do not involve health-related content in cigarette advertising but instead target youth exposure to cigarette advertising. To be sure, Members of this Court have debated the precise meaning of "based on smoking and health," but we cannot agree with the Attorney General's narrow construction of the phrase.

As Congress enacted the current pre-emption provision, Congress did not concern itself solely with health warnings for cigarettes. In the 1969 amendments, Congress not only enhanced its scheme to warn the public about the hazards of cigarette smoking, but also sought to protect the public, including youth, from being inundated with images of cigarette smoking in advertising. In pursuit of the latter goal, Congress banned electronic media advertising of cigarettes. And to the extent that Congress contemplated additional targeted regulation of cigarette advertising, it vested that authority in the FTC.

The Attorney General next claims that the State's outdoor and point-of-sale advertising regulations for cigarettes are not pre-empted because they govern the location, and not the content, of advertising. This is also JUSTICE STEVENS' main point with respect to pre-emption.

The content versus location distinction has some surface appeal. The pre-emption provision immediately follows the section of the FCLAA that prescribes warnings. The pre-emption provision itself refers to cigarettes "labeled in conformity with" the statute. But the content/location distinction cannot be squared with the language of the pre-emption provision, which reaches all "requirements" and "prohibitions" "imposed under State law." A distinction between the content of advertising and the location of advertising in the FCLAA also cannot be reconciled with Congress' own location-based restriction, which bans advertising in electronic media, but not elsewhere. We are not at liberty to pick and choose which provisions in the legislative scheme we will consider, but must examine the FCLAA as a whole.

JUSTICE STEVENS, maintains that Congress did not intend to displace state regulation of the location of cigarette advertising. There is a critical distinction, however, between generally applicable zoning regulations, and regulations targeting cigarette advertising. The latter type of regulation, which is inevitably motivated by concerns about smoking and health, squarely contradicts the FCLAA. The FCLAA's comprehensive warnings, advertising restrictions, and pre-emption provision would make little sense if a State or locality could simply target and ban all cigarette advertising.

JUSTICE STEVENS finds it ironic that we conclude that "federal law precludes States and localities from protecting children from dangerous products within 1,000 feet of a school," in light of our prior conclusion that the "Federal Government lacks the constitutional authority to impose a similarly motivated ban" in United States v. Lopez.

In sum, we fail to see how the FCLAA and its pre-emption provision permit a distinction between the specific concern about minors and cigarette advertising and the more general concern about smoking and health in cigarette advertising, especially in light of the fact that Congress crafted a legislative solution for those very concerns. We also conclude that a distinction between state regulation of the location as opposed to the content of cigarette advertising has no foundation in the text of the pre-emption provision. Congress pre-empted state cigarette advertising regulations like the Attorney General's because they would upset federal legislative choices to require specific warnings and to impose the ban on cigarette advertising in electronic media in order to address concerns about smoking and health. Accordingly, we hold that the Attorney General's outdoor and point-of-sale advertising regulations targeting cigarettes are preempted by the FCLAA.

JUSTICE STEVENS, with whom JUSTICE GINSBURG and JUSTICE BREYER join, and with whom JUSTICE SOUTER joins as to Part I, concurring in part, concurring in the judgment in part, and dissenting in part.

As the majority acknowledges, under prevailing principles, any examination of the scope of a preemption provision must" 'start with the assumption that the historic police powers of the States [are] not to be superseded by ... Federal Act unless that [is] the clear and manifest purpose of Congress.'" As the regulations at issue in this suit implicate two powers that lie at the heart of the States' traditional police power-the power to regulate land usage and the power to protect the health and safety of minors-our precedents require that the Court construe the pre-emption provision "narrow[ly]." If Congress' intent to pre-empt a particular category of regulation is ambiguous, such regulations are not pre-empted.

The text of the pre-emption provision must be viewed in context, with proper attention paid to the history, structure, and purpose of the regulatory scheme in which it appears. An assessment of the scope of a pre-emption provision must give effect to a "reasoned understanding of the way in which Congress intended the statute and its surrounding regulatory scheme to affect business, consumers, and the law."

This task, properly performed, leads inexorably to the conclusion that Congress did not intend to pre-empt state and local regulations of the location of cigarette advertising when it adopted the provision at issue in this suit. In both 1965 and 1969, Congress made clear the purposes of its regulatory endeavor, explaining with precision the federal policies motivating its actions. According to the Acts, Congress adopted a "comprehensive Federal Program to deal with cigarette labeling and advertising with respect to any relationship between smoking and health," for two reasons: (1) to inform the public that smoking may be hazardous to health and (2) to ensure that commerce and the interstate economy not be "impeded by diverse, nonuniform, and confusing cigarette labeling and advertising regulations with respect to any relationship between smoking and health."

In order to serve the second purpose it was necessary to pre-empt state regulation of the content of both cigarette labels and cigarette advertising. If one State required the inclusion of a particular warning on the package of cigarettes while another State demanded a different formulation, cigarette manufacturers would have been forced into the difficult and costly practice of producing different packaging for use in different States. To foreclose the waste of resources that would be entailed by such a patchwork regulatory system, Congress expressly precluded other regulators from requiring the placement on cigarette packaging of any "statement relating to smoking and health." Similar concerns applied to cigarette advertising. If different regulatory bodies required that different warnings or statements be used when cigarette manufacturers advertised their products, the text and layout of a company's ads would have had to differ from locale to locale. The resulting costs would have come with little or no health benefit. Moreover, given the nature of publishing, it might well have been the case that cigarette companies would not have been able to advertise in national publications without violating the laws of some jurisdictions. In response to these concerns, Congress adopted a parallel provision pre-empting state and local regulations requiring inclusion in cigarette advertising of any "statement relating to smoking and health."

There was, however, no need to interfere with state or local zoning laws or other regulations prescribing limitations on the location of signs or billboards. Laws prohibiting a cigarette company from hanging a billboard near a school in Boston in no way conflict with laws permitting the hanging of such a billboard in other jurisdictions. Nor would such laws even impose a significant administrative burden on would-be advertisers, as the great majority of localities impose general restrictions on signage, thus requiring advertisers to examine local law before posting signs whether or not cigarette-specific laws are pre-empted.

The legislative history of the provision also supports such a reading. The record does not contain any evidence that Congress intended to expand the scope of pre-emption beyond content restrictions.5 To the contrary, the Senate Report makes it clear that the changes merely "clarified" the scope of the original provision. Even as amended, Congress perceived the provision as "narrowly phrased" and emphasized that its purpose is to "avoid the chaos created by a multiplicity of conflicting regulations." According to the Senate Report, the changes "in no way affect the power of any state or political subdivision of any state with respect to ... the sale of cigarettes to minors ... or similar police regulations." .

I am firmly convinced that, when Congress amended the pre-emption provision in 1969, it did not intend to expand the application of the provision beyond content regulations. I, therefore, find the conclusion inescapable that the zoning regulation at issue in this suit is not a "requirement or prohibition ... with respect to ... advertising" within the meaning of the 1969 Act. Even if I were not so convinced, however, I would still dissent from the Court's conclusion with regard to pre-emption, because the provision is, at the very least, ambiguous. The historical record simply does not reflect that it was Congress' "'clear and manifest purpose,'" to pre-empt attempts by States to utilize their traditional zoning authority to protect the health and welfare of minors. Absent such a manifest purpose, Massachusetts and its sister States retain their traditional police powers.