Source: online.wsj.com
Author: David Kesmodel, Lauren Etter & Alicia Mundy

Reynolds American Inc., Lorillard Inc. and several other tobacco companies filed a lawsuit Monday seeking to block various provisions of a new federal tobacco law on the grounds that the provisions violate the companies’ First Amendment rights.

The tobacco companies said the recently enacted law, which placed the industry under the oversight of the Food and Drug Administration, sharply restricts the companies’ right to advertise their products to adult tobacco users.

The companies object to such provisions as a requirement that cigarette makers expand the size of warning labels so that they cover the top half of the front and back of cigarette packs, and include graphic images such as diseased lungs. This change, they say, would leave manufacturers with only a small and often-obscured portion of a cigarette pack to print their own messages.

The companies also challenged a rule that restricts their ability to publicize the relative health risks of certain products such as smokeless tobacco.

The suit was filed against the FDA in a federal district court in Bowling Green, Ky., the home of one of the plaintiffs, Commonwealth Brands Inc. An FDA spokeswoman said the agency doesn’t comment on lawsuits.

The FDA recently announced that its choice for its “tobacco czar” to run the new tobacco regulation center is Lawrence Deyton, who led antismoking efforts at the Department of Veterans Affairs. Many of the FDA regulations won’t take effect until next year and the years that follow.

Altria Group Inc., the maker of Marlboro cigarettes, is absent from the lawsuit. The largest U.S. cigarette maker by sales has expressed concerns in the past about how the bill might restrict free speech and advertising, even though it generally supported the overall FDA bill. A spokesman for Altria declined to comment on the lawsuit, but said that “our goal is to work constructively with the FDA around some of our concerns.”

In the lawsuit, the companies say they aren’t challenging the provisions of the law that directly address tobacco sales to minors. “The case will be about whether Congress has gone too far about preventing tobacco companies from communicating with adults, and keeping adults from receiving the information that tobacco companies want to send to them,” said Floyd Abrams, a First Amendment lawyer representing Lorillard, the maker of Newport cigarettes.

Mr. Abrams, of Cahill Gordon & Reindel LLP in New York, said so-called tombstone provisions requiring tobacco packages to show large images reflecting the long-term health risks associated with cigarette smoking violate First Amendment rights because cigarette makers would only be able to promote their products on the bottom half of each side of a package. That part of cigarette packs, he noted, is often obstructed from the view of a customer at a retailer.

Another major complaint by tobacco companies is that they are barred from making truthful statements about the relative health risks of tobacco products if the FDA determines that such statements wouldn’t benefit the health of the U.S. population as a whole. The issue could be of importance to companies such as Reynolds that make smokeless tobacco products, like Camel Snus, a type of spit-free smokeless tobacco. Some research has shown that such products are less harmful than cigarettes because they generally contain fewer carcinogens and don’t enter the lungs.

Advertisers are also rankled by a provision that requires sponsors of sports, cultural or musical events such as rock concerts to mention only the company’s corporate name in their promotions, not its tobacco products.

“The law contains provisions that severely restrict the few remaining channels we have to communicate with adult tobacco consumers,” Martin L. Holton III, general counsel for Reynolds, maker of Camel cigarettes, said in prepared remarks.

The plaintiffs include R.J. Reynolds Tobacco Co., Reynolds subsidiary Conwood Co., Lorillard, Commonwealth Brands, Discount Tobacco City & Lottery Inc. and National Tobacco Co.

President Barack Obama signed the new legislation into law in June. Last month, the FDA said it is forming a 12-person panel to advise the agency on certain areas of overseeing the industry, including the use of descriptions such as “light” on tobacco products and the impact of menthol in cigarettes.

The Association of National Advertisers, the Washington lobby for the advertising industry, said earlier this year that First Amendment issues would probably undo parts of the tobacco regulation bill by provoking suits that could delay the law’s implementation.

The advertising industry is watching the issue closely to see how any court ruling could impact not only the tobacco industry, but other industries as well. This case “is extremely significant,” said Dan Jaffe, executive vice president of the advertising lobby.