On August 24, 2012, the D.C. Circuit Court ruled that the FDA’s rule requiring textual warnings and graphic warnings on cigarette packages and advertisements violated the First Amendment.

The rule required (1) cigarette packages and advertisements to bear one of nine new warning statements, each with a component graphic image, (2) new warning labels to comprise the top 50% of the front and back panels of cigarette packages and 20% of cigarette advertisements, and (3) new warning labels to bear the phone number of the National Cancer Institute’s “Network of Tobacco Cessation Quitlines” —“1-800-QUIT-NOW.”

In response to the rule, five tobacco companies filed suit, arguing the rule violated the First Amendment.  The district court granted the companies a preliminary injunction and subsequently their motion for summary judgment.  The FDA appealed, arguing the district court incorrectly applied a strict scrutiny standard to its analysis rather than a rational basis standard.  The D.C. Circuit rejected the FDA’s argument and affirmed the decision of the district court.

The companies made clear that this case was not about whether or not the FDA has the ability to require health warnings on packages or whether the substance of the nine textual warnings was valid.  Rather, the issue was whether the rule violated the First Amendment, namely the right to refrain from speaking and, specifically, the scope of the government’s authority to compel manufacturers into making non-factual commercial disclosures against their own economic interests.

The D.C. Circuit determined that the rule sought to restrict commercial speech, and in following precedent in its own circuit, applied intermediate level scrutiny as established in Central Hudson. Before doing so, the court first rejected the FDA’s argument for a lower standard of scrutiny established in Zauderer, finding that Zauderer only applies to situations where an advertisement threatens to deceive consumers, and the warning labels in this case were not intended to remedy any misleading advertisements.  Instead, the court found that the rule simply reflected the government’s effort to discourage smoking.  Under Central Hudson, the FDA bore the burden of proving the rule “directly advances” it asserted governmental interest and that the rule is not “more extensive than is necessary to serve that interest.”  The court first determined that the governmental interest was to reduce smoking rates.  Next, the court analyzed whether the warning labels “directly advanced” the interest asserted.  The FDA argued, based upon studies conducted in Canada and Australia as well as its own analysis, that large graphic warnings are more effective than current textual warnings in discouraging smoking.  The court, however, found the studies only to suggest that graphic warning labels increase thoughts about quitting or that they may reduce smoking, and the FDA ultimately failed to meet its burden of proving the graphic warning labels actually result in reduced smoking. In its conclusion, the court highlighted the underlying First Amendment stance—“that the government finds expression too persuasive does not permit it to quiet the speech or to burden its messenger.”

Notably, the dissent opined that even though the district court erred in applying strict scrutiny, the rule survives both intermediate and rational-bases review. The dissent argued first that the lower, Zuaderer standard of review should have been applied, and second, the majority improperly dismissed the FDA’s alternative asserted interest—to effectively communicate the negative health consequences of smoking.

The key controversy seems to revolve around the appropriate level of scrutiny.  While the majority agreed with the companies, that the graphic warnings were “ideological” and not “informational,” since they were aimed at conveying a point of view, the dissent argued that the graphic warnings were factual in that they accurately depicted the effects of smoking.  Whether or not the graphic warnings qualify as informational is important because the First Amendment protects commercial speech, but permits factual disclosures reasonably related to the government’s interest in “preventing the deception of consumers.”  Despite the relatively lengthy and passionate dissent, it appears that, at least for now, government mandated disclosure requirements that weigh more towards effectuating a “government agenda” rather than clarifying potentially misleading advertisements, falls short of piercing First Amendment protection over commercial speech.  No doubt the Supreme Court will soon have its say—public health or free speech?