Big Tobacco Wins Landmark Battle

A federal judge has blocked new rules for graphic health warnings on cigarette packages, saying the required texts and images may violate tobacco companies’ free speech rights.

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U.S. District Judge Richard Leon said today in Washington that ordering tobacco companies to display images of diseased lungs and a cadaver with chest staples on an autopsy table may “unconstitutionally compel speech.” However, the judge only postponed the September 22, 2012 deadline for the regulations to take effect while he further reviews their constitutionality, after which he will make a more definitive ruling

“While the line between the constitutionally permissible dissemination of factual information and the impermissible expropriation of a company’s advertising space for government advocacy can be frustratingly blurry, here — where these emotion-provoking images are coupled with text extolling consumers to call the phone number ‘1-800-QUIT’ — the line seems quite clear,” said Leon.

Lorillard (NYSE:LO), R.J. Reynolds, Commonwealth Brands Inc., Liggett Group LLC, and Santa Fe Natural Tobacco Co. sued the U.S. Food and Drug Administration in August, claiming that its mandates for cigarette packages, cartons, and advertising violated their First Amendment right to free speech. The judge’s ruling is a win for the above companies, as well as Altria Group Inc. (NYSE:MO), Philip Morris International (NYSE:PM), and British America Tobacco (AMEX:BTI).

“We’re pleased with the judge’s ruling and look forward to the court’s final resolution of the case,” said Bryan Hatchell, a spokesman for Reynolds American Inc. (NYSE:RAI), R.J. Reynolds’s parent.

Matthew Myers, president of the Campaign for Tobacco-Free Kids, said the Justice Department should appeal Leon’s ruling, which he claims makes it “impossible to implement any effective” warning labels. “Given the overwhelming evidence of the need for these warnings and the tobacco industry’s own admission of the factual accuracy of the warning statements, we are confident that this decision will not be the last word on the new warnings,” said Myers.

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The FDA regulations would require textual warnings as well as certain images to be displayed on the top 50% of the front and back panels of every cigarette package manufactured and distributed in the U.S.