Analysis: Tobacco warnings latest business free-speech case

By James Vicini

WASHINGTON (Reuters) - Tobacco companies are the latest of several corporate groups to assert a right to free speech in a high-profile legal battle that could end up in the U.S. Supreme Court.

Reynolds American Inc's <RAI.N> R.J. Reynolds unit, Lorillard Inc <LO.N>, Liggett Group LLC and Commonwealth Brands Inc, owned by Britain's Imperial Tobacco Group Plc <IMT.L> last week sued the Food and Drug Administration for requiring more graphic health warnings on packages and in advertising.

Last year the Supreme Court ruled corporations had a free-speech right to spend freely to support or oppose federal candidates. In June it struck down a law barring use of prescription drug records for marketing and ruled it infringed on commercial free-speech rights of data-mining companies.

The issue of corporate free-speech rights has also emerged in New York, where U.S. credit rating agencies have argued their ratings were opinions protected by the U.S. Constitution's First Amendment safeguarding free speech.

TOBACCO CASE AN EXCEPTION?

"This is not at all a new trend," said University of California, Los Angeles law professor Eugene Volokh, who teaches free-speech law. He cited rulings on constitutionally protected corporate free-speech rights dating back some 60 years.

"These kinds of claims have been made for decades and have been taken very seriously by courts and have often won in court," he said.

Still, courts may be reluctant to strike down as unconstitutional the new warnings mandated by a law adopted by Congress in 2009 and signed by President Barack Obama, especially in view of smoking's known health risks.

While other businesses have won free-speech claims, the tobacco case could be different because of long-standing government regulation of cigarette advertising, the approval by Congress of the new warnings and the government's interest in telling consumers about smoking's health dangers.

It could take months, if not years, before a federal judge and then an appeals court decide the case and it ends up at the Supreme Court.

"The courts, including the Supreme Court, are likely to uphold the new warning labels on tobacco products," said Erwin Chemerinsky, dean at the University of California, Irvine School of Law.

He said last year's Supreme Court ruling protected corporate speech, but only in the specific context of campaign spending. "I would not generalize from this a protection in areas such as commercial speech," he said.

In the first change for 25 years, the nine new warnings cover the top half of the front and back of cigarette packs and 20 percent of printed advertisements. They must contain color graphics depicting the harmful health consequences of smoking, including bodies, diseased lungs and rotting teeth.

U.S. District Judge Richard Leon on Tuesday scheduled a September 21 hearing on the request by the cigarette companies for a preliminary injunction to delay the regulations from taking effect in September 2012.

CONSTITUTIONALLY PROTECTED

The companies said in seeking the injunction that the warnings "drown out their constitutionally protected speech about their lawful products and replace it with the government's emotionally charged anti-smoking message."

The Obama administration will defend the regulations in court, but has yet to respond to the substance of the lawsuit.

Supporters of the law requiring the new graphic labels, such as Matthew Myers, president of the Campaign for Tobacco Free Kids, said the warnings were mandated by a large bipartisan majority in Congress.

"The new warnings are carefully crafted to be consistent with the First Amendment, strongly supported by the science and serve the compelling goal of reducing the death and disease caused by tobacco use, which kills more than 400,000 Americans and costs the nation $96 billion in healthcare expenditures each year," he said.

A federal judge in Kentucky last year upheld much of the law that for the first time gave the Food and Drug Administration broad powers over cigarette and tobacco products.

The decision has been appealed to a U.S. appeals court based in Cincinnati, Ohio, which heard arguments last month, but has yet to rule. That case is expected to end up in the Supreme Court.

(Additional Reporting by Jeremy Pelofsky and Anna Yukhananov; Editing by Howard Goller)