In a 2-1 decision on August 24, 2012, the U.S. Court of Appeals for the District of Columbia upheld a federal district court’s decision to strike down FDA regulations promulgated under the Family Smoking Prevention Act (the “Act”), which would have required large graphic and textual warning labels on cigarette packaging.

The majority found that the Central Hudson test typically applied to laws regulating commercial speech should be applied in this case. The majority rejected the FDA’s argument that the standard in Zaurderer should apply – a test that permits the government to require purely factual and uncontroversial disclosures, provided that such disclosures are reasonably related to the state’s interest in preventing deception of consumers and are not unjustified and/or unduly burdensome. The court found that the graphic warnings were not necessary to prevent current cigarette packaging from misleading consumers, nor that the warnings imparted “purely factual, accurate, or uncontroversial information.”

The Central Hudson three-part test requires that the government prove that (1) its asserted interest is substantial; (2) the restriction directly and materially advances the interest; and (3) the restriction is narrowly tailored. The court accepted for the sake of its analysis that the government’s asserted interest in reducing smoking rates was substantial, but noted that it was “skeptical that the government can assert a substantial interest in discouraging consumers from purchasing a lawful product, even one that has been conclusively linked to adverse health consequences.” The court found, however, that under the second prong, the “FDA has not provided a shred of evidence – much less the ‘substantial evidence’… showing that the graphic warnings will ‘directly advance’ its interest in reducing the number of Americans who smoke,” and also rejected the FDA’s reliance on inconclusive studies from other countries.

Why This Matters:

Requiring disclosures – mandatory speech – is a controversial issue and has a major impact on advertisers. It is not limited only to tobacco advertising and this ruling is an important precedent for limitations on federal agencies relying on foreign studies and unsupported opinion. On the other hand, the decision may conflict with a decision by the 6th Circuit in March upholding the constitutionality of most of the provisions of the Family Smoking Prevention Act, including the requirement of graphic disclaimers. Only an appeal to the United States Supreme Court can resolve any such conflict. Until then, it remains unclear what is, and what is not, required. That creates a very unpredictable marketplace.