On June 26, 2012, the New York Association of Convenience Stores and major tobacco manufacturers, including Phillip Morris, R.J. Reynolds and Lorillard, filed suit against the Village of Haverstraw, New York in federal district court regarding the Village’s recent ordinance banning the display of tobacco products and pricing information in retail outlets.

Specifically, Local Law #5 of 2012 (the “Ordinance”), prohibits tobacco retailers from displaying any “tobacco product” in a manner that allows a customer to view the product prior to purchase. A “tobacco product” covered under the Ordinance includes essentially any product containing nicotine or tobacco. The ban on the display of tobacco products does not apply to situations in which “age-verified customers” wish to handle a tobacco product to inspect its quality and freshness prior to making a purchase. Additionally, the ban does not penalize retailers for temporarily displaying tobacco products while restocking their inventories, nor does it include “Adult-Only Establishments” (those in which only individuals over the minimum legal age to purchase tobacco products are permitted to enter). The Ordinance further prohibits retailers from displaying any signage that lists more than one tobacco product for sale and those products’ prices. Rather, retailers may only maintain a “Tobacco Menu” listing the tobacco products available for purchase at the retail outlet. Menus may not be posted in the retail outlet, but must be handed directly to the potential, age-verified customer. After the customer makes a selection from the menu, the customer must immediately return the menu.

Tobacco manufacturers and retailers are challenging the Ordinance on claims that it is an unconstitutional restriction on commercial speech. In other words, the Ordinance restricts the primary way that manufacturers communicate to their customers. The plaintiffs specifically contend that the Ordinance fails to meet the US Supreme Court’s test, as set forth in Central Hudson Gas & Electric Corp. v. Public Service Commission, which prohibits the government from restraining lawful, truthful commercial speech unless it can prove that the restraint on speech directly and materially advances a substantial government interest and is not more extensive than necessary. Haverstraw officials have stated that the Village has a substantial interest in reducing the number of individuals of all ages who use cigarettes and other tobacco products, and a particular interest in protecting adolescents from tobacco dependence.

The plaintiffs first contend that Haverstraw has no legitimate interest preventing adults from having access to truthful information related to the use of tobacco products. Second, the plaintiffs argue that the Ordinance’s display ban does not directly and materially advance the Village’s objective of reducing the incidence of underage tobacco use, since existing state and local laws, which have a non-compliance rate of only 3.6% in Haverstraw, prohibit the sale of tobacco products to minors. In addition, the law does not meet Central Hudson’s “narrowly tailored” requirement because the Ordinance is over-inclusive and other less speech-restrictive alternatives are available. For example, the plaintiffs contend that Haverstraw officials could increase enforcement of existing laws prohibiting under-age access to tobacco products or officials could embark on a counter-marketing campaign regarding tobacco use.

The plaintiffs also contend that the Ordinance is preempted by the Federal Cigarette Labeling and Advertising Act, which has governed the advertising and promotion of cigarettes for over four decades.

In March of this year, a Massachusetts federal district court declared a similar Worcester, Massachusetts ban on tobacco advertising as an unconstitutional restriction on commercial speech. It is yet to be seen whether the federal New York court will ultimately reach the same result as the Massachusetts court. We will post updates as they become available.

Contributor: Craig Elkins

For questions and/or comments, please contact Bryan Haynes, at 804.697.1420 or by email.