United States v. Philip Morris USA, Inc.
907 F. Supp. 2d 1
D.D.C.2012Background
- U.S. filed a RICO suit against Philip Morris USA, Inc. and others in 1999, alleging a long-running deceptive campaign about smoking health risks.
- In 2006, the court entered an order requiring corrective statements on five topics (health risks, addictiveness, low tar/low risk claims, design manipulation, secondhand smoke).
- The court found extensive internal evidence of deception and a scheme to mislead consumers, including acknowledged addictiveness of nicotine and health risks of smoking and secondhand smoke.
- The Court of Appeals affirmed liability and key remedial provisions, including the corrective statements, and subsequent circuit opinions upheld the remedial framework.
- The court drafted corrective statements that are purely factual and uncontroversial, to prevent future RICO violations, and considered how to implement them across media.
- This opinion analyzes whether Zauderer or Central Hudson governs First Amendment review and concludes Zauderer applies, with the statements sustaining under that standard.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standard of review for corrective statements | Plaintiff argues Zauderer applies and allows factual disclosures. | Defendants contend different standards (Central Hudson) may apply due to speech scope. | Zauderer applies; statements pass scrutiny. |
| Are the statements purely factual and uncontroversial | Statements are grounded in court Findings of Fact and are factual. | Some preamble and phrasing could be seen as emotive or controversial. | Statements are purely factual and uncontroversial under Zauderer. |
| Are the statements reasonably related to preventing deception | Remedy aims to correct past deception and prevent future deception. | Remedy might be broader than necessary and chill speech. | Yes; the statements are reasonably related and properly tailored. |
| Are the statements unduly burdensome | Disclosures are targeted and narrowly tailored to consumer protection. | Disclosures may burden defendants more than needed. | Not unduly burdensome; within Zauderer bounds. |
| If Zauderer fails, do the statements survive under Central Hudson | Even if Zauderer didn’t apply, statements would satisfy Central Hudson. | Central Hudson scrutiny might not be met. | Central Hudson would be satisfied; however Zauderer applies and is satisfied. |
Key Cases Cited
- Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (1985) (disclosures must be purely factual and reasonably related to preventing deception)
- Central Hudson Gas & Electric Corp. v. Pub. Serv. Comm'n, 447 U.S. 557 (1980) (four-factor test for commercial speech regulation)
- Milavetz, Gallop & Milavetz, P.A. v. United States, 130 S. Ct. 1324 (2010) (Zauderer framework reaffirmed for deceptive disclosures)
- Reynolds v. FDA, 696 F.3d 1209 (D.C. Cir. 2012) (graphic warnings assessed; Zauderer applicability limited to purely factual disclosures)
- Warner-Lambert Co. v. FTC, 562 F.2d 749 (D.C. Cir. 1977) (corrective advertising as a permissible remedy to avoid deception)
- Novartis Corp. v. F.T.C., 223 F.3d 783 (D.C. Cir. 2000) (upholding corrective advertising where deception existed)
- Lorillard Tobacco Co. v. Reilly, 533 U.S. 525 (2001) (recognizes substantial government interest in truthful advertising)
- Affirmance Opinion (United States v. Philip Morris USA, Inc.), 566 F.3d 1095 (D.C. Cir. 2009) (endorses tailoring of corrective statements to prevent future violations)