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Price v. Philip Morris12/15/2005
ng to Peterman, the 1971 consent order was exemplary of the FTC intending to provide industrywide guidance with respect to issues addressed in consent orders.
However, on cross-examination, Dr. Peterman qualified his direct examination testimony by admitting that the 1971 consent order did not mention the descriptor "lights." Also, the consent order did not define the descriptor "low tar," or establish a numerical standard for that term. This form of "compliance" is a voluntary decision on the part of each cigarette company. It is not a trade regulation rule. Further, PMUSA was never a party to the proceeding and never signed the consent order. Each cigarette company, including PMUSA, and the entire industry collectively, could simply stop using the disputed descriptors if they so chose. Peterman further acknowledged that the FTC has never taken any enforcement action against a cigarette manufacturer of these so-called "light" brands because that manufacturer did not use the word "light" in the brand name. There is no evidence in the record that PMUSA ever complied with this consent order.
In 1995, the FTC and another cigarette company, American Tobacco Company, reached an agreement that was memorialized in a consent order. In the 1995 consent order, the FTC and American Tobacco agreed that "presentation of the tar and/or nicotine ratings of any of respondent's brands of cigarettes and the tar and/or nicotine ratings of any other brand (with or without an express or implied representation that respondent's brand is `low,' `lower,' or `lowest' in tar and/or nicotine) shall not be deemed" to violate an existing ban on numerical comparisons. In re American Tobacco Co., 119 F.T.C. 3 (1995). Dr. Peterman testified that the FTC intended to provide industrywide guidance with respect to issues addressed in the 1995 consent order against American Tobacco Company.
At the conclusion of the trial, the circuit court denied PMUSA's affirmative defense based upon section 10b(1) of the Consumer Fraud Act. The court specifically found Dr. Peterman's testimony to be "unpersuasive" on PMUSA's claim that the issues in this case could potential cause a conflict between state and federal law. Moreover, the court found that Dr. Peterman did not have any "expertise in assessing FTC involvement in regulation of the issues" and that the plaintiffs' claims in this case did not conflict in any way with the federal Labeling Act or the regulations and policies of the FTC. With respect to the FTC, the court ruled:
"The false and misleading use of the descriptors `Lights' and `Lowered Tar and Nicotine' has never been specifically authorized by law. Philip Morris voluntarily chose to use these terms on its packages of Marlboro Lights and Cambridge Lights. No regulatory body has ever required (or even specifically approved) the use of these terms by Philip Morris. The court finds that Philip Morris has not established that its conduct is `specifically authorized' by law."
The circuit court further found plaintiffs had proven that PMUSA violated the Consumer Fraud Act through the deceptive act of misrepresenting its Cambridge Lights and Marlboro Lights products as "lights" and misrepresenting Marlboro Lights as "Lowered in Tar and Nicotine."
II. Section 10b(1) of the Consumer Fraud Act
Section 10b(1) of the Consumer Fraud Act exempts conduct "specifically authorized by laws administered by any regulatory body or officer acting under statutory authority of this State or the United States." 815 ILCS 505/10b(1) (West 1998). PMUSA contends that the FTC's policies regarding cigarette advertising falls within the scope of the phrase "specifically authorized by laws ad
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