The First Circuit has held that two ordinances promulgated by the City of Providence regulating the sales of tobacco products do not violate the First Amendment and are not preempted by federal or state laws.
One ordinance restricts the City's tobacco retailers from reducing prices on tobacco products by means of coupons and multi-pack discounts (the "Price Ordinance"). The other ordinance restricts sales of certain flavored tobacco products other than cigarettes (the "Flavor Ordinance") except by certain retailers, i.e., "smoking bar[s]." Plaintiff argued that the Price Ordinance violates the First Amendment and that both Ordinances are preempted by federal and state statutes. The federal district court had disagreed and upheld the Ordinances. Nat'l Ass'n of Tobacco Outlets, Inc. v. City of Providence, No. 12-96ML, 2012 WL 6128707 (D.R.I. Dec. 10, 2012).
The City argued that the Price Ordinance does not prohibit commercial speech, it merely regulates pricing. The First Circuit said that the Ordinance does not prohibit the dissemination of pricing information, it regulates pricing itself. The Supreme Court has made clear that governments can maintain higher prices through regulation. Moreover, the First Circuit said that offers to engage in illegal transactions, i.e., sales of tobacco in violation of the Price Ordinance, are not protected by the First Amendment.
The Court rejected plaintiff's arguments that the Ordinances were preempted by federal or state statutes, including the Federal Cigarette Advertising and Labeling Act (the "Labeling Act"), the federal Family Smoking Prevention and Tobacco Control Act ("FSPTCA"), or state statutes. The Court also rejected the argument that the City lacked the authority under the state constitution to enact such ordinances.
The First Circuit noted that the Labeling Act states its purpose is to "establish a comprehensive Federal program to deal with cigarette labeling and advertising." Its preemption provision says: "[n]o requirement or prohibition based on smoking and health shall be imposed under State law with respect to the advertising or promotion of cigarettes...the packages of which are labeled in conformity with [the Labeling Act]. In 2009, Congress enacted an exception to the preemption provision that provides: "...a state or locality may enact statues and promulgate regulations...imposing specific bans or restrictions on the time, place, and manner, but not content, of the advertising or promotion of cigarettes."
The Court said "the Price Ordinance merely regulates certain types of price discounting and offers to engage in such price discounting." It does not regulate the substantive content of health claims or warnings. Accordingly, it said the Ordinance was content neutral and that pricing restrictions regulate only the manner of promotion and are not preempted.
With respect to whether the FSPTCA preempted the Flavor Ordinance, the Court first commented that the act only pertained to cigarettes whereas the Ordinance applied to non-cigarette products. Moreover, the FSPTCA expressly preempts only "...any requirement which is different from....the provisions of this subchapter relating to tobacco product standards...[and]... good manufacturing standards..." The Court said the Flavor Ordinance was not a blanket prohibition on the sale of flavored tobacco products, just a requirement that they be sold in "smoking bars."
Finally, the First Circuit held under Rhode Island law that state statutes did not preempt the Ordinances.
It appears that the First Circuit's decision may be inconsistent to some degree with recent decisions by the Sixth and Second Circuits. See Discount Tobacco City & Lottery, Inc. v. United States, 674 F.3d 509 (6th Cir. 2012) (holding that some aspects of federal statute regulating tobacco violated commercial speech rights); U.S. Smokeless Tobacco Manufacturing Co. v. City of New York, 708 F.3d 428 (2nd Cir. 2013) (upholding ordinance but suggesting that, under some circumstances, a sales regulation may be an effective regulation on manufacturing); 23-34 94th St. Grocery Corp., 685 F.3d 174 (2nd Cir. 2012) (federal law preempts ordinance mandating display of tobacco health warning and cessation information). Accordingly, the issues may be headed to the Supreme Court.
National Association of Tobacco Outlets, Inc. v. City of Providence, Rhode Island, No. 13-1053, 2013 WL 5422308 (1st Cir. 2013)
For information on our business and commercial litigation practice, please see: /Practice-Areas/Business-Commercial-Litigation.shtml