Appeals Court Issues Mixed Ruling on Cigarette Warnings--3rd Update

By Brent Kendall 

WASHINGTON--A federal appeals court on Friday issued a split ruling on what kinds of statements tobacco companies must make in product warnings after a judge found them in violation of federal law nearly a decade ago.

A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit said leading U.S. cigarette makers can be required to say they intentionally designed cigarettes to sustain addiction but can't be required to say they deliberately deceived the public about the dangers of smoking.

The appeals court resolved the case without having to address some potentially difficult First Amendment questions about government compulsion of speech by private parties.

At issue was the language of product warnings U.S. District Judge Gladys Kessler ordered for top tobacco companies in 2012 after an earlier 2006 opinion that concluded cigarette makers violated civil racketeering law. That ruling said tobacco companies participated in a decadeslong scheme to deceive consumers about the harms of smoking.

Judge Kessler required tobacco companies to make "corrective statements" revealing the truth about their products to prevent future deception. She ordered that the statements appear in newspaper and television ads, as well as on their websites and product packaging.

Defendants included Altria Group Inc. and its Philip Morris USA subsidiary, R.J. Reynolds Tobacco Co. and Lorillard Tobacco Co.

The companies have battled with the Justice Department and public-health advocates over the exact wording of the warning statements. Friday's ruling could further delay the date when any such warnings appear in public.

The D.C. Circuit ruled Judge Kessler couldn't force the tobacco companies to publish a "preamble" to the product warnings that would have said, "A federal court has ruled that Altria, R.J. Reynolds Tobacco, Lorillard, and Philip Morris USA deliberately deceived the American public about the health effects of smoking, and has ordered those companies to make this statement. Here is the truth."

The appeals court said Judge Kessler couldn't order such a statement because federal racketeering law allowed her to prevent and restrain only future deception by tobacco companies.

The D.C. Circuit, however, upheld Judge Kessler's order requiring several other statements on the product warnings, such as, "Cigarette companies intentionally designed cigarettes with enough nicotine to create and sustain addiction."

Another warning statement the court allowed says: "Cigarette companies control the impact and delivery of nicotine in many ways, including designing filters and selecting cigarette paper to maximize the ingestion of nicotine, adding ammonia to make the cigarette taste less harsh, and controlling the physical and chemical makeup of the tobacco blend."

The appeals court said the tobacco companies couldn't make free-speech arguments against some of the warning statements because they hadn't raised those challenges at earlier stages of the case.

Altria Group spokesman Brian May said the company was gratified the appeals court struck down the preamble to the corrective statements, "which was the critical part of the appeal. The court correctly found that the preamble violated federal law by focusing on past conduct, instead of the health consequences of cigarettes."

The case dates to a lawsuit the Justice Department filed in 1999 alleging cigarette makers conspired to deceive the public about the health consequences of smoking.

The Justice Department said it is considering its options and "is committed to continuing its efforts to hold accountable those who violate the law by deceiving the American public or endangering the health and safety of American consumers."

Reynolds declined to comment, citing ongoing litigation, and Lorillard didn't immediately respond to requests for comment.

Tripp Mickle contributed to this article.

Write to Brent Kendall at [e-mail]

Access Investor Kit for Altria Group, Inc.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US02209S1033

Access Investor Kit for Lorillard, Inc.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US5441471019

Access Investor Kit for Reynolds American, Inc.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US7617131062

Subscribe to WSJ: http://online.wsj.com?mod=djnwires