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Price v. Philip Morris12/15/2005
in the meaning of the FTC Act to fail to prominently disclose, in all cigarette advertising and packaging, that cigarette smoking is dangerous and may cause death from cancer or other diseases. Unfair or Deceptive Advertising and Labeling of Cigarettes in Relation to the Health Hazards of Smoking, 29 Fed. Reg. 8324, 8325 (1964). However, in 1965, Congress enacted the federal Labeling Act. This Act, inter alia, vacated the newly promulgated FTC cigarette health warning trade regulation rule. No FTC regulation, document, or official statement has ever regulated "low tar" and "lights" descriptors. Further, the FTC has disavowed any "official" definition of these terms as well as the term involved in this case, "lowered tar and nicotine." Rather, a cigarette company's decision to use descriptors such as "light," or "low tar," is voluntary; there is no FTC rule requiring or governing their use. A cigarette company could stop using those descriptors, and there is no FTC policy that would prohibit it.
Dr. Peterman did not offer an expert opinion that the FTC has a policy that prohibits states from regulating the term "lights" on cigarettes. Nor did he offer an expert opinion that the FTC has granted cigarette companies the right to use the "lights" and "low tar" descriptors and, thereby, immunize them from state regulation of those descriptors.
In 1970, the FTC proposed a formal trade regulation rule that would have required cigarette companies to disclose in their advertising FTC- measured tar and nicotine content of their cigarettes. See 35 Fed. Reg. 12,671 (proposed August 8, 1970). However, the FTC dropped this proposed order after eight cigarette companies entered into a voluntary trade agreement. Those signatories voluntarily agreed to provide the information on their cigarette packages. See 36 Fed. Reg. 784 (1971). The 1970 voluntary trade agreement was not all-inclusive; not every cigarette company signed the agreement. Those companies that did not sign the agreement have not included tar and nicotine rates in their cigarette advertising. Up to the time of trial, the FTC has taken no enforcement action against those companies.
In 1971, the FTC and a cigarette company, American Brands, Inc., reached an agreement that was memorialized in a consent order. In the 1971 consent order, the FTC charged that American Brands' advertisements of its cigarettes designated as "Pall Mall Gold" 100s, "Pall Mall Menthol" 100s and "Lucky Filters" was imprecise and misleading because the cigarettes were being described as "lower than the best selling filter king." In actual fact, however, the FTC found that these brands were higher in tar levels than many other brands. The FTC and American Brands agreed that American Brands' advertisements which stated that its cigarettes were low in tar must contain the tar and nicotine yield results as measured under the FTC testing methods (the advertisements challenged by the FTC in this action did not contain any tar and nicotine yield results). If American Brands' advertisements contained a comparison to another product, then the advertisement had to include the tar and nicotine yield of that product as well. In re American Brands, Inc., 79 F.T.C. 225 (1971).
During the direct examination of defendant's expert witness, Dr. Peterman, he stated that the 1971 consent order against American Brands, Inc., was "an official act of the FTC." Further, the order provided "industry guidance to [PMUSA] and others regarding the use of descriptors." This "guidance" was found in the terms of the order against American Brands. According to Dr. Peterman, nonparties to a consent order, even an entire industry, learn from the order how far it can and cannot go. Accordi
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