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Price v. Philip Morris12/15/2005
not define the descriptor "low tar," or establish a numerical standard for that term. Peterman testified that this form of "compliance" is a voluntary decision on the part of each cigarette company. It is not a trade regulation rule. Peterman acknowledged that 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.
Dr. Peterman also testified that the FTC intended to provide industrywide guidance with respect to issues addressed in the 1994 consent order against American Tobacco Company. However, as with the 1971 consent order, the 1994 consent order did not mention the descriptor "lights." Also, it did not define the descriptor "low tar," or establish a numerical standard for that term. Indeed, the two consent orders upon which PMUSA relies were not directed at it, but at other parties. This is the issue: whether PMUSA's conduct was "specifically authorized" by the two FTC consent orders directed at other parties: American Brands, Inc., and American Tobacco Company. See slip op. at 57. I observe that Dr. Peterman did not offer an expert opinion that the FTC has granted cigarette companies the right to use "light" or "low tar" descriptors and immunize them from state regulation of those descriptors.
Further proof as to the lack of regulatory action with respect to the disputed descriptors can be found in Dr. Peterman's testimony. The FTC, in 1997, asked for comments as to whether the use of the disputed descriptors "should be changed or in any way are potentially misleading." According to Peterman, "that investigation remained open as of the date of his testimony." Slip op. at 33. Given that the record evidence establishes that the FTC's position on the use of the descriptors "remained open," it is difficult to understand how the FTC's activities in this area can be deemed to be "specific authorization" of anything.
In light of the above, I believe the regulatory action present in this case is much less specific than the regulatory action taken by the Federal Reserve Board with respect to Regulation Z in Lanier. Lanier, therefore, is distinguishable from and, contrary to, not consistent with, the court's conclusion in this case. Jackson is likewise distinguishable from the court's holding in this case.
Unlike my colleagues in the majority, I do not believe that the Illinois General Assembly intended that such "implicit" and "uncertain" (see slip op. at 59) methods of agency action, such as consent orders, directed at other parties, constitute the "specific authorization" required in section 10b(1) to exempt conduct from the broad coverage of the Consumer Fraud Act. I note that the court refers to a 1964 FTC Statement that offers "ten reasons why a formal rulemaking proceeding may be preferable to an adjudicative proceeding, or a series of adjudicative proceedings." Slip op. at 58. While not condemning the use of agency adjudicative proceedings to establish agency policy, the court's own quotations clearly evince a FTC preference for formal rulemaking. Slip op. at 58-59. Given the agency's own preference for formal rulemaking, it is not unreasonable for our legislature to have likewise had this understanding of administrative law in mind in enacting section 10b(1) as an exception to the expansive reach of
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