In a blog post on January 26, 2013, we discussed a decision from the United States District Court for the District of Rhode Island where several tobacco companies challenged the constitutionality of two local ordinances.  The lawsuit sought to overturn two Providence, Rhode Island ordinances, which ban certain promotional discounts and severely restrict the sale of flavored tobacco products.

One ordinance prohibits any tobacco license holder from accepting discount coupons for the purchase of tobacco products. Additionally, the ordinance prohibits any tobacco license holder from offering bulk discounts or charging less than the non-discounted price. The other ordinance makes it unlawful to sell any “flavored tobacco product” to any consumer, except in a smoking bar (generally defined as businesses that derive more than 50% of their revenue from tobacco sales). The ordinance defines “flavored tobacco product” as “any tobacco product or any component part thereof that contains a constituent that imparts a characterizing flavor.”

The tobacco companies argued before the District Court that the ordinances violate their First Amendment right of free speech by restricting communication with adult tobacco consumers and by limiting public statements concerning tobacco products with characterizing flavor.  The tobacco companies also alleged that the Federal Labeling Act, as well as Rhode Island state laws, preempt the promotion ordinance and that the Family Smoking Prevention and Tobacco Control Act (“Tobacco Control Act”) preempts the flavor ordinance.

Ultimately, the District Court concluded that neither ordinance infringed upon the tobacco companies’ First Amendment rights. Rather, the District Court concluded that the ordinances banned the sale and distribution of certain tobacco products, which only limited the tobacco companies’ commercial activities, not their commercial speech.  In terms of the tobacco companies’ preemption arguments, the District Court concluded that: (1) the promotional ordinance did not conflict with the purpose of the Federal Labeling Act or Rhode Island state law because the legislature did not intend to preempt the regulation of tobacco product sales; and (2) the flavor ordinance did not conflict with the Tobacco Control Act’s ban on flavored cigarettes.

On appeal, the tobacco companies made similar arguments as before the trial court.  In evaluating the First Amendment challenge to the pricing ordinance, the First Circuit recognized that pricing information regarding lawful transactions has been determined to be protected speech by the Supreme Court.  However, the First Circuit concluded that the ordinance: (1) “restricts the ability of retailers to engage in certain pricing practices, namely accepting or redeeming coupons for tobacco purchases, and selling tobacco products by way of multipack discounting”; and (2) “bars retailers from offering to engage in these prohibited pricing practices,” neither of which is barred by the First Amendment.

In evaluating the federal preemption challenge to the pricing ordinance, the First Circuit noted that the Federal Labeling Act generally prohibits states or localities from passing laws about smoking and health with respect to advertising or promotions.  However, the Federal Labeling Act permits some restrictions by states and localities on promotional activities if the regulation is: (1) content-neutral; and (2) regulates the time, place or manner of the advertising or promotion.  The First Circuit determined that the pricing ordinance was content-neutral because it merely regulated types of price discounts and offerings rather than content pertaining to health claims or warnings.  The First Circuit also determined that the price regulations are regulations pertaining to the “manner” of promotion.  As a result, the First Circuit held that the pricing ordinance was not preempted by the Federal Labeling Act.  The First Circuit also held that the pricing ordinance was not preempted by state law, rejecting the tobacco companies’ argument that the ordinance is impliedly preempted because Rhode Island law comprehensively regulates the discounts and coupons for tobacco products.

In evaluating the federal preemption challenge to the flavor ordinance, the First Circuit relied on a clause from the Tobacco Control Act that allows regulations “relating to” the sale of tobacco products.  The tobacco companies argued that the “relating to” clause of the Tobacco Control Act cannot be read to allow regulations “prohibiting” the sale of tobacco products.  Therefore, because the flavor ban is a regulation “prohibiting” the sale of tobacco products, the tobacco companies argue it is preempted by the Tobacco Control Act.  The First Circuit disagreed because the flavor ordinance makes it unlawful “to sell or offer for sale” flavored tobacco products except in a smoking bar and such regulation “relates to” the sale of tobacco products.

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