Buying Cigarettes
I came - I saw - I bought

Cigarettes, Money Market Funds, Basel Rule: Compliance

Tobacco companies defeated a U.S. law forcing cigarette packaging and advertisements to display images such as diseased lungs, persuading a federal appeals court that the requirements violate their free speech rights.

In a 2-1 decision, the U.S. Court of Appeals in Washington on Aug. 24 ruled that Food and Drug Administration regulations mandating visual-image warnings of smoking's health risks, along with the telephone number 1-800-QUIT-NOW, are "unabashed attempts to evoke emotion" and "browbeat consumers" to stop buying the companies' products.

"These inflammatory images and the provocatively named hotline cannot rationally be viewed as pure attempts to convey information to consumers," U.S. Circuit Judge Janice Rogers Brown wrote in her majority opinion.

Commonwealth Brands Inc., Liggett Group LLC and Santa Fe Natural Tobacco Co. sued the FDA last year, claiming the mandates for cigarette packages, cartons and advertising, passed as part of the Family Smoking Prevention and Control Act, violated the First Amendment.

The companies said in court papers that complying with the requirements would cost them a total of about $20 million. The mandate, scheduled to go into effect next month, was put on hold by a lower-court judge while the appeals court considered its legality.

The government argued in court papers that nine images selected by the agency to be placed on packages and advertisements are true depictions required by Congress in the law to show the negative health consequences of smoking.

The graphics were supposed to cover the top half of the front and back of cigarette packages and 20 percent of print advertisements. The FDA estimated the visual warnings would help lower the smoking rate by about 0.212 percentage points, according to the lower court judge who also ruled against the FDA.

Jennifer Haliski, an FDA spokeswoman, said the agency doesn't comment "on possible, pending or ongoing litigation."

The Campaign for Tobacco-Free Kids, an anti-smoking group, urged the government to appeal the ruling, noting that a federal appeals court Cincinnati upheld the packaging requirements in March.

"The split decisions make it likely the U.S. Supreme Court will settle the issue," the group said in an e-mailed statement.

In a dissent, U.S. Circuit Judge Judith Rogers said Brown's opinion applied the wrong level of First Amendment scrutiny and disregarded the tobacco companies' history of deceptive advertising.

Noel Francisco, a lawyer for R.J. Reynolds, a unit of Reynolds American Inc. (RAI), argued that "the purpose of the warnings is not to inform, but to scare consumers into adopting the government's course of action." He said during the February hearing that the government was using "threats and fear" to motivate people to stop using a lawful product.



Published: Monday, August 27, 2012

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