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Price v. Philip Morris12/15/2005
expert averred that the FTC did not have an official policy which permitted cigarette companies to use these terms. Plaintiffs further maintained that the FTC had not had occasion to ever consider the terms at issue, "lowered tar and nicotine" and "lights" as those descriptors were used by PMUSA in this case, Finding that there were "significant disputes about several material facts which can only be decided at trial," the circuit court "reserved judgment" on the matter until trial.
At trial, as it was during the pretrial proceedings, it was PMUSA's position, established through testimony and exhibits, that its use of the terms "lights" and "lowered tar and nicotine" were in compliance with FTC policies. Dr. John Peterman testified as an expert on behalf of PMUSA with respect to the FTC's relationship to cigarette advertising. The FTC in 1955 established "Cigarette Manufacturing Guides," which set forth the FTC's policies on the disclosure of tar and nicotine yields in cigarettes. The Guidelines permitted a manufacturer to make claims regarding tar and nicotine yields only if the manufacturer could substantiate the claims "by competent and scientific proof." In the late 1950s, scientists began to discern a relationship between exposure to cigarette tar and tumors in laboratory animals. Cigarette manufacturers responded by testing the amount of tar produced by their cigarettes and advertising the results. Each manufacturer used different machines to measure the tar, and confusion ensued. According to Dr. Peterman, in response to the multiple testing systems being used, the FTC developed a uniform testing system for use throughout the country. Tar and nicotine measures could be advertised provided that they were measured according to the FTC's testing method. Under this testing methodology, a low tar cigarette is a cigarette which had a tar level of 15 milligrams or less. However, the FTC did not enact or adopt any trade regulation rule with respect to cigarette advertising. Indeed, the parties do not dispute the fact that there is not any industrywide formal rulemaking authorizing the use of the disputed descriptors at issue in this case, "lights" and "lowered in tar and nicotine." Nor do they dispute the fact that the FTC does not have any industrywide formal rule which authorizes or requires cigarette manufacturers to use the terms "light" or "low tar" or any variation thereof. Moreover, it is undisputed that the FTC views what it considers to be a "regulatory" scheme in this area as a "voluntary approach." See slip op. at 7.
Defendant's expert, Dr. Peterman, testified that the primary mission of the FTC is to enforce a variety of federal antitrust and consumer protection laws. The FTC is primarily a law enforcement agency, conferred with both investigative and enforcement powers. However, to the best of Dr. Peterman's knowledge, there was no bureau, section, or other subset of the FTC dedicated to, or even associated with, tobacco regulation. The two primary tools the FTC employs to enforce consumer protection laws are trade regulation rules and enforcement procedures. Trade regulation rules are promulgated though formal notice and comment rulemaking. FTC policy is adopted or approved by the FTC commissioners acting collectively as the commission. Dr. Peterman admitted that an individual FTC commissioner giving a speech discussing FTC policy is not, per se, FTC policy. An FTC staff member cannot create FTC policy.
Dr. Peterman, defendant's expert, testified that there has never been an FTC trade regulation rule governing cigarette advertising that has been put into effect. In 1964, the FTC formally promulgated a trade regulation rule declaring it an unfair and deceptive practice with
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