case 1:09-cv-00117-jhm-erg document 99 filed 12/14/2009

Case 1:09-cv-00117-JHM-ERG Document 99 Filed 12/14/2009 of 51001270

UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF KENTUCKY

BOWLING GREEN DIVISION

COMMONWEALTH BRANDS, INC.;

CONWOOD COMPANY, LLC; DISCOUNT

TOBACCO CITY & LOTTERY, INC.;

LORILLARD TOBACCO COMPANY;

NATIONAL TOBACCO COMPANY, L.P.;and

R. J. REYNOLDS TOBACCO COMPANY,

Plaintiffs,

v.

UNITED STATES OF AMERICA; UNITED

STATES FOOD AND DRUG

ADMINISTRATION; MARGARET

HAMBURG, Commissioner of the United StatesFood and Drug Administration; and KATHLEENSEBEL1US, Secretary of the United StatesDepartment of Health and Human Services,

Defendants.

CIVIL ACTION

NO. l:09-cv-0117-M

(Electronically Filed)

MEMORANDUM IN OPPOSITION TO DEFENDANTS' MOTION FOR SUMMARY

JUDGMENT FOR PLAINTIFFS COMMONWEALTH BRANDS, INC., CONWOODCOMPANY, LLC, DISCOUNT TOBACCO CITY & LOTTERY, INC., LORILLARD

TOBACCO COMPANY, NATIONAL TOBACCO COMPANY, L.P.,

AND R..I. REYNOLDS TOBACCO COMPANY


TABLE OF CONTENTS

TABLE OF AUTHORITIES ii

TABLE OF ABBREVIATIONS vii

I. THE GOVERNMENT CANNOT EVADE ITS BURDEN OF PROOF 3

A. The Turner Standard Does Not Apply In Commercial Speech Cases 4

B. The Government Fails To Meet Even The Turner Standard 6

II. THE ACT'S MYRIAD COMMERCIAL SPEECH PROHIBITIONS

INDIVIDUALLY AND COLLECTIVELY VIOLATE THE FIRST AMENDMENT 7

A. The Government's Evidence Fails To Satisfy The Central Hudson Test 8

1. Numerous And Obvious Non-Speech-Restrictive Alternatives 8

2. Careful Calculation Of The Costs And Benefits 11

a. "Noninformationai" Speech 12

b. Practices That Appeal To Youth 15

c. Related To Unlawful Activity 16

3. Directly and Materially Reduce Youth Tobacco Use 18

B. Sampling, Continuity Programs, And Co-Marketing Are Protected Speech 20

1. These Bans Restrict Speech 20

2. At A Minimum, These Bans Restrict Expressive Conduct 21

C. The Challenge To The Outdoor Advertising Ban Is Ripe 23

D. The Government Does Not, And Could Not, Assert Any Interest SupportingThe Act's Speech Bans Other Than Reducing Youth Tobacco Use 25

III. THE ACT'S MANDATED WARNINGS ARE UNCONSTITUTIONAL 26

A. The Warnings Are Unjustified And Unduly Burdensome 27

B. The Warnings Compel Plaintiffs To Disseminate The Government's Anti-Tobacco Message 33-*ev

C. The Warnings Effect An Unconstitutional Taking 33

IV. THE ACT'S MRTP REQUIREMENT IS UNCONSTITUTIONAL 36

V. THE ACT'S BAN ON REFERENCES TO THE EFFICACY OF FDA

REGULATION IS UNCONSTITUTIONAL 38

VI. THE ACT'S AUTHORIZATION OF ADDITIONAL RESTRICTIONS IS AN

UNCONSTITUTIONAL DELEGATION OF LEGISLATIVE POWER 39

CONCLUSION 40


Cases

TABLE OF AUTHORITIES

Page

44 Lii/uormart, Inc. v. Rhode Island,517 U.S. 484(1996) 3,5, 19,20

Abbott Labs. v. Gardner,

387 U.S. 136(1967) 24,25

Areata v. Cloud Books, Inc.,

478 U.S. 697(1986) 20

Bailey v. Morales,

190 F.3d 320 (5th Cir. 1999) 22

Bates v. State Bar ofArizona,433 U.S. 350(1977) 13

Bd. ofTrs. ofSUNYv. Fox,492 U.S. 469(1989) 37,39

BellSouth Telecommunications, Inc. v. Farris,

542 F.3d 499 (6th Cir. 2008) 9, 10, 11

Blue Diamond Co. v. Sec. ofHealth & Human Servs.,79 F.3d 516 (6th Cir. 1996) 34

Central Hudson Gas & Elec. Corp. v. Public Sen'. Comm'n ofN.Y.,447 U.S. 557(1980) passim

City of Cincinnati v. Discovery Network, Inc.,507 U.S. 410(1993) .' 8

Coalition for Gov. Procurement v. Fed. Prison Indus., Inc.,365 K3d 435 (6th Cir. 2004) 34

Coldwell Banker Residential Real Estate Servs. of III., Inc. v. Clayton,475 N.H.2d 536 (111. 1985) ". ". 22

Coldwell Banker Residential Real Estate Servs., Inc. v. Bishop,498N.E.2d 1382 (Ohio Cl. App. 1985) 22

Dombrowski v. Pfister,380 U.S. 479(1965) 25

-ii-


Door Sys., Inc. v. Pro-Line Door Sys., Inc.,83 F.3d 169 (7th Cir. 1996) 35

E. Enters, v. Apfel,524 U.S. 498(1998) 34

Edenfield v. Fane,507 U.S. 761 (1993) 3, 18

Electro Source, LLC v. Brandess-Kalt-Aetna Group, Inc.,458 F.3d 931 (7th Cir. 2006) 35

Entertainment Software Ass'n v. Blagojevich,469F.3d641 (7th Cir. 2006) 31,33

Greater New Orleans Broadcasting Ass'n v. United States,527 U.S. 173(1999) 8, 18

Hamilton-Brown Shoe Co. v. WolfBros. & Co.,240 U.S. 251 (1916) 35

Ibanez v. Fl. Dep't ofBus. <& ProfI Reg.,512 U.S. 136(1994) ~ .' 27,30,32

///. Cereal Mills, Inc. v. Comm'r ofInternal Revenue,789 F.2d 1234 (7th Cir. 1986)' 35

Landmark Communications, Inc. v. Virginia,435 U.S. 829 (1978) 11

Lingle v. Chevron U.S.A. Inc.,544 U.S. 528 (2005) 33,35

Linmark Assocs. v. Twp. of Willingboro,431 U.S. 85(1977) 40

Loretto v. Teleprompter Manhattan CATV Corp.,458 U.S. 419(1982) 33,35

Lordlard Tobacco Co. v. Amouri's Grand Foods, Inc.,453 F.3d 377 (6th Cir. 2006) 35

Lorillard Tobacco Co. v. Reilly,533 U.S. 525 (2001) '. passim

Midwest Media Property, L.L.C. v. Symines Tp., Ohio,503 F.3d 456 (6th Cir. 2007) 3

-iii-


Minnesota State Board of Community Colleges v. Knight.465 U.S. 271 (1984) 24

Nat 'I Rifle Ass 'n v. Magaw,132 F.3d 272 (1997) 25

NLRB v. Bell Aerospace,416 U.S. 267(1974) 24

Norton v. Ashcroft,298 F.3d 547 (6th Cir. 2002) 25

Nutritional Health Alliance v. Shalala,144F.3d220(2dCir. 1998) 25

Penn Central Transp. Co. v. City ofNew York,438 U.S. 104(1978) 35

Philip Morris USA, Inc. v. City and County ofSan Francisco,No. 08-17649, 2009 WL 2873765 (9th Cir. Sept. 9, 2009) 23

Sable Communications of Cai, Inc. v. FCC,492 U.S. 115 (1989) 16

Se. Kansas Cmty. Action Prog., Inc. v. Lyng,967F.2d 1452 (10th Cir. 1992) '. 34

Speiser v. Randall,357 U.S. 513(1958) 24

Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg 7 Planning Agency.535 U.S. 302 (2002) '. 33, 34, 35

'{'electronics Pacing Sys., Inc. v. Ventrite.x, Inc.,982F.2d 1520 (Fed. Cir. 1992) 32

Texas v. Johnson,491 U.S. 397(1989) 21,22,23

Thompson v. W. States Med. Ctr.,535 U.S. 357 (2002) passim

Turner Broadcasting Sys., Inc. v. FCC,512 U.S. 622(1994) 4,6,7

'Turner Broadcasting Sys., Inc. v. FCC,520 U.S. 180(1997) passim

-iv-

Case 1:09-cv-00117-JHM-ERG Document 99 Filed 12/14/2009 Page6of51001275

United States v. Milstein,

481 F.3d 132 (2d Cir. 2007) 35

United States v. O'Brien,

391 U.S. 367(1968) 23

United States v. Phillip Morris USA, Inc.,449 F. Supp. 2d 1 (D.D.C. 2006) 17

United States v. Playboy Entertainment Group, Inc.,529 U.S. 803 (2000) 6, 18

Washington Legal Found, v. Friedman,13 F. Supp. 2d 51 (D.D.C. 1998) 32

Zauderer v. Office ofDisciplinary Counsel,471 U.S. 626 (1985) '. passim

Statutes

5 U.S.C. §554 24

Pub. L. No. 11 1-31, § 2(31) 11

Pub. L. No. 111-31, § 2(41) 37

Pub. L. No. 111-31, § 101(b)(3) (adding 21 U.S.C. § 387k) 36

Pub. L. No. 111-31, § 101(b)(3) (adding 21 U.S.C. § 387m) 12

Pub. L. No. I 11-31, § 101(b)(3) (adding 21 U.S.C. § 387s) 34

Pub. L. No. 111-31, § 101(b)(3) (adding 21 U.S.C. §§ 331(H)) 34, 36, 38

Pub. L. No. 111-31, § 201(a) 28

Pub. L. No. 111-31, § 201(d) 29

Pub. L. No. 111-31, § 204(a) 28

Pub. L. No. 111-31, § 205(a) 29

Other Authorities

61 Fed. Reg. 44396 21

155 Cong. Rec. H4310 (Apr. 1, 2009) 10


FTC Consent Order, Docket No. C-3952 (June 12, 2000), available athttp://www.ftc.gov/os/2000/06/santafe.do.htm 36

H.R. Rep. No. 111-58 (Mar. 26, 2009) 9, 20

-VI-


Term

Act

APA

CDC

FCLAA

FDA

FDCA

GAO

IOM

MRTP

MSA

NCI

SAMHSA

Secretary

TABLE OF ABBREVIATIONS

Description

Family Smoking Prevention and Tobacco Control Act, Public LawNo. Hl-31 (2009)

Administrative Procedures Act, 5 U.S.C. § 551 et seq.

Centers for Disease Control and Prevention

Federal Cigarette Labeling and Advertising Act, 15 U.S.C. §§ 1331et seq.

United States Food and Drug Administration

Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 301 et seq.

United States Government Accountability Office

Institute of Medicine

Modified Risk Tobacco Product

The November 1998 Master Settlement Agreement between certaintobacco companies and certain state Attorneys General

National Cancer Institute

Substance Abuse and Mental Health Services Administration

Secretary of Health and Human Services

-vn-


The Government's summary judgment brief reads as if this Court were presented with a

mere policy question. From its very first sentence, the overriding message is that this Court must

uphold the Act's sweeping restrictions on Plaintiffs' speech about tobacco products simply because

youth tobacco use is a serious public health concern. But the critical question here is not whether

the Government has an interest in regulating youth tobacco use—it clearly does. The question,

rather, is whether Congress's decision to regulate Plaintiffs' speech is narrowly tailored to directly

and materially advance that interest. And on that constitutional question, the Government presents

virtually no evidence or argument. Indeed, from reading the Government's brief, this Court would

have no idea that the Supreme Court has invalidated "unnecessarily broad suppression^] of speech

addressed to adultlj [tobacco consumers]," because, notwithstanding "the governmental interest in

protecting children from harmful materials," "the tobacco industry has a protected interest in

communicating information about its products [to] adult customers." Lorillard Tobacco Co. v.

Reilly, 533 U.S. 525, 564, 571 (2001). In short, the Supreme Court has emphatically rejected the

Government's basic position that its undisputed interest in preventing tobacco use by the under-18

population that consumes less than 2% of tobacco products in this country gives it carte blanche to

enact sweeping restrictions on Plaintiffs' speech to the adults who consume the remaining 98%.

Pltfs. S.J. Br. ("Plfts. Br.") at 1-3.

In fact, Congress made no meaningful effort to comply with its constitutional duty. Instead,

it simply cut-and-pasted the Act's speech restrictions from a regulatory initiative that the FDA

proposed almost fifteen years ago. Yet, even though the Government concedes that the FDA's goal

back then was to "cut adolescent use of tobacco products in half," Defts. S.J. Br. (Defts. Br.") at 7,

it does not contest that, despite the absence of these speech restrictions, the actual drop in youth

tobacco use has exceeded the FDA's goal in the intervening years. Nor does the Government

contest that overall tobacco use would drop another 25% by 2025 even if no further actions were

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taken. Reynolds DecI. H 8, 20, 23. And so the Government has not demonstrated, and cannot

demonstrate, that the sorts of non-speech-restrictive strategies that have already proven so

successful would not be at least as successful as the Act's unproven and unsupported restrictions on

speech in achieving further reductions in youth tobacco use.

Specifically, the Government's evidence (or, more precisely, the lack thereof) confirms that:

• There are literally dozens of widely accepted non-speech-restrictive alternatives that haveproven successful in reducing youth tobacco use since many of the Act's speech prohibitionswere first proposed by the FDA in 1995;

• The Act imposes sweepingly broad bans on Plaintiffs' marketing practices without anymeaningful attempt to tailor those bans either to focus on youth or to avoid undulyburdening Plaintiffs' protected speech to adults;

• The Act's specific speech bans will not achieve a significant reduction in youth tobacco usegiven their failure either to target the social factors directly linked to youth tobacco use or toaccount for the dramatically different circumstances that currently exist compared to whenthe FDA first proposed many of these bans in 1995; and

• The Act's new warnings are grossly disproportionate to any alleged (and in fact nonexistent) lack of information that the public has concerning the harms of tobacco use.

No doubt recognizing the inadequacy of its evidentiary proffer, the Government claims that

this Court should defer to Congress' supposedly reasonable judgment that the Act complies with the

First Amendment. Defts. Br. at 5. But, given the paucity of its evidence, the Government is in fact

urging an abdication of this Court's constitutional duty to exercise judicial review. On the record

here, the Government's proposed application of its putative standard of deference is tantamount to

rational basis review—which has never been employed in the First Amendment context—rather

than the searching scrutiny the Supreme Court and Sixth Circuit consistently have demanded when

commercial speech rights are at stake. This Court must therefore reject the Government's plea to

treat the Act as a constitutional fait accompli.

To reiterate, there is no dispute here that tobacco products carry serious health risks and

reducing youth tobacco use is a substantial governmental interest. But it is also beyond dispute that

. "> -


there is no "'vice' exception" to the First Amendment. 44 Liquormart, Inc. v. Rhode Island, 517

U.S. 484, 513-14 (1996) (plurality opinion). Instead, the Supreme Court's "decisions involving

commercial speech [are] grounded in the faith that the free flow of commercial information is

valuable enough to justify imposing on would-be regulators the costs of distinguishing the truthful

from the false, the helpful from the misleading, and the harmless from the harmful." Zauderer v.

Office of Disciplinary Counsel, 471 U.S. 626, 646 (1985). In short, the First Amendment denies

Congress an open-ended license to suppress speech based on speculation and convenience, and that

is particularly true when the law under review is the most sweeping restraint on the speech of a

lawful industry in American history.

In light of these established principles and the evidentiary record before this Court, the

Government is not even arguably entitled to summary judgment, which, after all, is proper only "if

the pleadings, depositions, answers to interrogatories, and admissions on file, together with the

affidavits, if any, show that there is no genuine issue as to any material fact and that the moving

party is entitled to a judgment as a matter of law." Midwest Media Property, L.L.C. v. Symmes Tp.,

Ohio, 503 F.3d 456, 469 (6th Cir. 2007). To the contrary, given the Government's failure to proffer

evidence on the critical legal questions at issue. Plaintiffs' Motion for Summary Judgment on

Counts 1-12 and 14 of their Amended Complaint should be granted.

I. THE GOVERNMENT CANNOT EVADE ITS BURDEN OF PROOF

"It is well established that the party seeking to uphold a restriction on commercial speech

carries the burden of justifying it." Edenfield v. Fane, 507 U.S. 761, 770 (1993) (internal quotation

marks omitted). The Government, however, tries to evade its burden, by arguing that this Court

must defer to Congress' judgment about the reasonableness and effectiveness of the Act's speech

restrictions since that judgment allegedly was "reasonabl[y[" supported by "substantial evidence."

Defts. Br. at 5 (citing Turner Broadcasting Sys., Inc. v. FCC, 520 U.S. 180 (1997) {"Turner ID);


see also Turner Broadcasting Sys., Inc. v. FCC, 512 U.S. 622 (1994) ("Turner /"). The

Government is doubly wrong. The substantial evidence standard is inapplicable in commercial

speech cases, and, in any event, the Government plainly has not satisfied that standard here because

it has produced little or no evidence on the critical elements of the relevant First Amendment tests.

A. The Turner Standard Does Not Apply In Commercial Speech Cases

The Government cites the Turner decisions in support of its proposed standard of deference.

But the Turner decisions were not commercial speech cases, and neither the Supreme Court nor the

Sixth Circuit has ever applied the Turner standard in a commercial speech case. To the contrary, in

the commercial speech context, the Supreme Court has expressly rejected the type of deferential

standard for which the Government argues here.

The Turner cases involved the constitutionality of a federal law that, in order "to prevent

cable operators from exploiting their economic power" and "to ensure that all Americans ... ha[d[

access to free television programming." required cable operators to devote a portion of their

channels to local broadcasting. Turner II, 520 U.S. at 185-86; see also id. at 227 (Breyer, J.,

concurring in part) (emphasizing the "important First Amendment interests on both sides of the

equation"). Justice Kennedy, writing for the Court in Turner II and drawing upon his plurality

opinion in Turner I, held that the Court would "accord substantial deference to the predictive

judgments of Congress" and thus would sustain "reasonable inferences based on substantial

evidence" when reviewing the cable "must-carry" law. Id. at 195 (quoting Turner I, 512 U.S. at

665, 666). But what the Government fails to note is that the law in 'Turner was a "content-neutral

restriction!] on speech." Id. at 185. Indeed, Justice Stevens, one of the necessary votes supporting

Justice Kennedy's opinion in Turner II, wrote a separate concurrence solely "to emphasize th[e]

important point" that, whereas "the policy judgments made by Congress" concerning that content-

neutral law "|werej entitled to substantial deference," the Court's "task would be quite different"


"[i|f this statute regulated the content of speech rather than the structure of the market." Id. at 225.

Unlike in the Turner cases, the Act's regulation of commercial speech is indisputably

content-based. The Act singles out specific types of speech by specific participants in a specific

industry and subjects that speech, based on the purported effect of its content on youth, to

unprecedented restrictions. Pltfs. Br. at 3-13. Thus, as Justice Stevens explained, this Court's "task

[is] quite different." TurnerII, 520 U.S. at 225. Indeed, the "different task" required in commercial

speech cases was saliently illustrated by Justice Stevens himself in 44 Liquormart, where his

plurality opinion, which Justice Kennedyjoined, expressly refused to apply Turner-Wkc deference to

the commercial speech ban at issue. 517 U.S. at 508-09 (plurality opinion). There, "Rhode Island

... argue|d| that, because expert opinions as to the effectiveness of [its alcohol] price advertising

ban 'go both ways," ... the ban constituted a 'reasonable choice' by the legislature" that the District

Court should not have rejected based upon its independent findings concerning the efficacy

evidence. Id. at 508; see also id. at 493 (opinion for the Court) (noting that "Itjhe parties disagreed

... about the impact of the ban on the promotion of temperance ... [and] the District Court heard

conflicting expert testimony and reviewed a number of studies"). But the plurality held that,

notwithstanding the state's contested expert evidence, the state was not entitled to the "degree of

deference" it requested. Id. at 508-09; see also id. at 531 (O'Connor, J., concurring in the

judgment) (similarly refusing to "accept[j as reasonable" a legislative judgment concerning

commercial speech without "examin[ing] |it| searchingly").

Indeed, the Government does not cite a single commercial speech case according the type of

deference to Congress set forth in the Turner decisions. To the contrary, in Thompson v. W. States

Med. Cir., 535 U.S. 357 (2002), the Supreme Court invalidated an Act of Congress based upon its

independent assessment that the Government had failed to "offer[j any reason why [various non-

speech-restrictive] possibilities [the Court had identified], alone or in combination, would be


insufficient" to achieve its interest. Id. at 373. Notably, it so held even though none of the law's

challengers had "suggested that these 'alternatives,' alone or in combination, would prove

sufficient" and the FDA had "specifically warned that these Ivery] alternatives alone were

insufficient." Id. at 1513-14 (Breyer, J., dissenting); see also United States v. Playboy

Entertainment Group, Inc., 529 U.S. 803, 816-27 (2000) (relying upon several commercial speech

cases in holding that the "[tjhe District Court employed the proper approach" when invalidating a

"content-based speech restriction" after a full trial in which the Government had failed to meet its

burden of proving that less-speech-restrictive alternatives did not exist). Accordingly, Turner

deference simply does not apply where, as here, the speech restriction at issue "regulatels] the

content of speech." Turner II, 520 U.S. at 225 (Stevens, J., concurring).1

B. The Government Fails To Meet Even The Turner Standard

In any event, the Turner standard provides no help to the Government on this record. The

Supreme Court made clear that the fact "UJhat Congress' predictive judgments are entitled to

substantial deference does not mean ... that they are insulated from meaningful judicial review

altogether." Turner I, 512 U.S. at 666 (plurality opinion). To the contrary, the judiciary has the

"obligation to exercise independent judgment when First Amendment rights are implicated." Id.

Thus, in Turner I, the Court held that the district court erred in granting summary judgment in favor

of the Government, emphasizing that: (1) the Government had not provided either "substantial

elaboration in the [district [cjourt of the predictive or historical evidence upon which Congress

relied, or ... some additional evidence to establish" that the "must-carry" law would solve a real

harm; (2) the record "lack[ed] ... any findings concerning the actual effects of must-carry on the

speech of cable operators and cable programmers[,] ... Iwhich was] critical to ... narrow tailoring";

Because Turner deference is inapplicable, this Court must independently determine whether the Government has metits burden under the First Amendment. Yet the Government appears to rely primarily on hearsay materials(i.e., reports,articles, and judicial findings of fact) that are inadmissible and, accordingly, cannot be relied upon to meet that burden.

Case 1;09-cv-00117-JHM-ERG Document 99 Filed 12/14/2009 Page15of51001284

and (3) "the record fail[ed] to provide any judicial findings concerning the availability and efficacy

of constitutionally acceptable less restrictive means of achieving the Government's asserted

interests." Id. at 667-68 (internal quotation marks omitted). And, in Turner II, the Court affirmed

the grant of summary judgment for the Government only after those issues were further developed

through "18 months of factual development on remand [that] yield[ed| a record of tens of thousands

of pages of evidence, comprised of materials acquired during Congress' three years of preenactment

hearings, as well as additional expert submissions, sworn declarations and testimony, and industry

documents obtained on remand." 520 U.S. at 187 (internal citations and quotation marks omitted).

Here, in stark contrast, as Plaintiffs have demonstrated and show further below, the

Government offers no evidence capable of meeting its burden of proving that the Act's speech

restrictions are narrowly tailored to directly and materially reduce youth tobacco use.

II. THE ACT'S MYRIAD COMMERCIAL SPEECH PROHIBITIONS INDIVIDUALLY

AND COLLECTIVELY VIOLATE THE FIRST AMENDMENT

Regardless of what standard this Court applies in assessing whether the Government has met

its evidentiary burden, the Government's silence on numerous critical issues vividly confirms that

the Act's various commercial speech prohibitions—the bans on color or graphics in advertising.

outdoor advertising within 1,000 feet of a school or public playground area, brand-name

sponsorships or merchandise, tobacco sampling and continuity programs, co-marketing of tobacco

products in combination with other FDA-regulated products, references to the efficacy of FDA

regulation, and the authorization of even stricter speech bans by federal agencies, state and local

governments, and Indian tribes—cannot survive scrutiny under Central Hudson Gas & Elec. Corp.

v. Public Serv. Comm'n of N.Y., 447 U.S. 557 (1980). Each of these restrictions individually

violates the First Amendment and, collectively, they close down all meaningful avenues of

communication with adult tobacco consumers. Nowhere in the Government's lengthy brief does it

produce any evidence, substantial or otherwise, that the Act's speech bans are narrowly tailored to

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directly and materially advance the Government's purported interest in reducing youth tobacco use.

Indeed, as discussed below, even the Government's lone expert, Dr. Krugman, was unwilling to

opine that these bans will reduce, let alone significantly reduce, youth tobacco use, and none of the

reports the Government cites contends that further reductions in youth tobacco use cannot be

accomplished in the absence of these bans. Accordingly, Plaintiffs are entitled to summary

judgment and, at an absolute minimum, the Government is not.

A. The Government's Evidence Fails To Satisfy The Central Hudson Test

Plaintiffs previously detailed, at length, how Congress failed: (I) to consider the availability

of "numerous and obvious less-burdensome alternatives to the restriction on commercial speech,"

City of Cincinnati v. Discovery Network, Inc., 507 U.S. 410, 417 n.13 (1993); (2) to "carefully

calculate the costs and benefits associated with the burden on speech imposed," Lorillard, 533 U.S.

at 561; and (3) to demonstrate that the Act's commercial speech bans will "directly and materially

advancelj the asserted government interest" of reducing youth tobacco use, Greater New Orleans

Broadcasting Ass'n v. United States, 527 U.S. 173, 188 (1999) ("GNOBA"). Pltfs. Br. at 16-42.

The Government's brief, like Congress before it, ignores these critical elements of the analysis.

1. Numerous And Obvious Non-Speech-Restrictive Alternatives

Tellingly, the Government's brief fails to address the question whether the Act's interest in

reducing youth tobacco use could have been accomplished through obvious non-speech-restrictive

alternatives, despite the fact that the Supreme Court and the Sixth Circuit have invalidated no less

than four commercial speech restrictions in the last fifteen years due to this precise defect. Pltfs. Br.

at 16-19. Indeed, in W. States Med. Ctr., the Supreme Court invalidated an Act of Congress based

upon the Government's failure to "offer[] any reason why [various non-speech-restrictive]

possibilities, alone or in combination, would be insufficient" to achieve its interest, 535 U.S. at 373,

notwithstanding the FDA's "specific[J warn[ing] that these [very] alternatives alone were

-8-


insufficient to successfully" achieve that interest, id. at 1513-14 (Breyer, J., dissenting). Likewise,

in BellSouth Telecommunications, Inc. v. Farris, 542 F.3d 499 (6th Cir. 2008), the Sixth Circuit

held that a commercial speech restriction was not narrowly tailored solely because the state failed to

prove that numerous and obvious non-speech-restrictive alternatives could not have achieved its

interest, thus betraying the mandate that, "[i]f the First Amendment means anything, it means that

regulating speech must be a last—not first—resort." Id. at 508.

Here, since the FDA first proposed many of the Act's speech bans in 1995, the tobacco

industry, the public health community, the states, and the federal government have employed a

variety of non-speech-restrictive strategies that have succeeded in dramatically reducing youth

tobacco use. Pltfs. Br. at 19-25. The Government ignores this critical history. Indeed, while the

FDA initially proposed most of these speech bans in 1995 in the hope that they would "cut

adolescent use of tobacco products in half," Defts. Br. at 7, that goal has largely been met, and often

exceeded, in the actual reductions in measures of youth tobacco use—reductions to all-time lows

that have occurred, it warrants emphasis, in the absence of the Act's speech bans. Reynolds H 20.

23. This history establishes that significant reductions in youth tobacco use can be achieved

without the Act's speech bans. Nor has the Government adduced any evidence, substantial or

otherwise, that "these possibl[e] [strategies], alone or in combination, would be insufficient to"

further reduce youth tobacco use. W. States Med. Ctr., 535 U.S. at 373.

For example, Dr. Reynolds' expert affidavit, which the Government received two weeks

before it filed its motion, discusses:

• Illegal Retail Sales: The Synar Amendment, which requires states to enact and enforcelaws prohibiting tobacco sales to youth and to achieve a retail violation rate of less than20%, has proved extraordinarily effective since the FDA's proposal of the Act's speech bansin 1995. Pltfs. Br. at 19-20. Congress was specifically urged to "'strengthen! I the SynarAmendment" to improve upon those gains rather than "impos[ej clearly unconstitutionalrestrictions of First Amendment rights."" H.R. Rep. No. 111-58. at 130 (Mar. 26, 2009)(dissenting views); see also Pltfs. Br. at 20-21.


• MSA Funds: Both the CDC and the Government's own amici here declared with one voice

that requiring the states to increase the allocation of MSA funds earmarked to youth tobaccoprevention from the meager 3.5% recently employed to the still-modest CDC-recommended15% would be effective in reducing youth tobacco use. Reynolds Decl. H 54-60. Membersof Congress implored that such an approach would "protectl] our children ... whileprotecting our Constitution." 155 Cong. Rec. H4310, H4312 (Apr. 1, 2009); see also Pltfs.Br. at 22-23.

• Programs That Target Youth Behavior: There are literally dozens of non-speech-restrictivecomprehensive tobacco reduction strategies that the Government's own agencies, such as theCDC and SAMHSA, as well as the broader public health community, have concluded wouldbe effective in achieving the Government's interest in reducing youth tobacco use becausethey address the social factors that directly influence youth tobacco use, see Pltfs. Br. at 23-25; Reynolds Decl. ffl 54, 57 (discussing CDC's 2007 Best Practices report), such as:

• Raising the legal age of purchase to 19-years-old, which would remove legal-agetobacco users from high schools;

• Increasing the price of tobacco products;

• Increasing penalties for underage tobacco use, including adopting penalties that will bemotivational for adolescents, such as the loss of their drivers' licenses;

• Focused interventions that address the social factors that influence youth tobacco use,such as the 37 programs that SAMHSA has concluded are scientifically proven toreduce youth tobacco use; and

• Mass media campaigns that address the social factors that cause youth tobacco use.

Pltfs. Br. at 23-25. The Government puts forward no evidence showing that these numerous

proven, non-speech-restrictive strategies would be ineffective in reducing youth tobacco use in the

absence of the Act's untested speech bans. To the contrary, even the (inadmissible) reports upon

which the Government most heavily relies (i.e., the 2007 lOM report, the 2007 report from the

President's Cancer Panel, and the 2008 NCI monograph) promote precisely these sorts of strategies

as an effective means of reducing youth tobacco use and, more importantly, never contend that

youth tobacco use cannot effectively be reduced without the Act's speech bans.

In sum, the Government has not even begun to demonstrate that Congress' cut-and-paste of

the FDA's fourteen-year-old speech bans was necessary because the sorts of obvious non-speech-

restrictive alternatives discussed above "could not do the trick." BellSouth, 542 F.3d at 508.

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Instead, the only support the Government can point to for its unsubstantiated assertion that the Act's

speech bans are "narrowly tailored," Defts. Br. at 40, is the Act's equally unsubstantiated finding

that "[ljess restrictive ... approaches have not [been] and will not be effective," § 2(31). But it is

clear that there is no support for Congress' self-serving finding and, at a minimum, it is "incumbent

upon [courts] to go behind" a mere "legislative declaration" unsupported by any meaningful

evidence, lest "the scope of freedom of speech and of the press ... be subject to legislative

definition and the function of the First Amendment as a check on legislative power ... be nullified."

Landmark Communications, Inc. v. Virginia, 435 U.S. 829. 843-44 (1978). This Court therefore

must invalidate the Act's speech bans, because Congress left untapped a "full arsenal of options

short of restricting speech" and instead banned speech as "the first strategy" rather than the "last ...

resort." BellSouth, 542 F.3d at 508.

2. Careful Calculation Of The Costs And Benefits

Another critical element of Central Hudson's narrow tailoring prong is that "uniformly

broad" laws will frequently "demonstrate[J a lack of tailoring" because of their overinclusive

coverage of an "unduly broad" "range of communications" and/or their imposition of "onerous

burdens on speech." Lorillard, 533 U.S. at 561-65; see also BellSouth, 542 F.3d at 508 (prong

"guards against overinclusive laws (those that do too much)"). And here, as with the numerous and

obvious non-speech-restrictive alternatives, the Government's brief ignores the overinclusive and

unduly burdensome scope of the Act's sweeping speech bans, which, among other things, cover:

• color or graphics in advertising in 100% of direct mail sent to age-verified adult tobaccousers, 99% of magazines, and 99% of retail point-of-sale locations, including in tobacco-specialty shops that completely exclude youth, Pltfs. Br. at 6;

• all brand name sponsorships and merchandise, including at private events held in adult-onlyvenues, id. at 11-12;

• any marketing through the distribution of product samples (save for an impracticableexception for smokeless products), including in bars and nightclubs that prohibit entry byindividuals under 18-years-old, id. at 12;

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• all continuity programs, including those limited to age-verified adult tobacco users, id.; and

• (at least) any co-marketing where receipt of a discount on an FDA-regulated product is madecontingent upon the purchase of a tobacco product, including those provided solely to age-verified adult tobacco users, id. at 12 & n.4.

These defects are just as fatal here as they were to the outdoor advertising ban invalidated in

Lorillard. Pltfs. Br. at 27-37. But, rather than addressing these defects, the Government advances

three flawed arguments designed to obscure the Act's patent overinclusiveness and the severe

burdens imposed on Plaintiffs' protected interest in communicating with adult consumers.2

a. "Noninformational" Speech

The Government's primary contention is that the Act's speech prohibitions—and

particularly the bans on color or graphics in advertising and on brand name sponsorships and

merchandise—encompass only so-called "noninformational aspects of tobacco advertising ...

without restricting the communication of information about tobacco products." Defts. Br. at 34.

The Government's argument appears to be that even sweeping bans on such "noninformational"

speech are not cause for constitutional concern under Central Hudson, because the reason

commercial speech is constitutionally protected "is based on the informational function of

advertising," namely, to "inform[J the public of the availability, nature, and prices of products and

services." Id. at 38-39 (citations omitted). This unprecedented argument fails at every level.

' The Government also tries to evade a merits determination on the provision of the Act that inexplicably bars tobacco-specialty shops from invoking the adult-only facility exception to the ban on color-or-graphic advertising, Pltfs. Br. at 6,erroneously asserting that Plaintiffs' challenge suffers from standing and ripeness defects, Defts. Br. at 39 n.20. As forstanding, PlaintiffDiscount Tobaccois precisely the sortof tobacco-specialty shop that this provision categorically barsfrom even attempting to take advantage of the adult-only exemption, Hinton Decl. f 5; in addition, Plaintiffscollectively compose a substantial portion of the tobacco product market (Plaintiffs Reynolds, Lorillard, andCommonwealth Brands, for example, are the second, third, and fourth largest tobacco manufacturers in the UnitedStates), and therefore indisputably engage in advertising that would be barred from the tobacco-specialty shops that arcthe direct target of this provision, Dunham Decl. f 1; Lindsley Aff. %5; Jones Decl. 1 4. As for ripeness, whatever"contours" the Secretary eventually establishes "through implementing regulations," Defts. Br. at 39 n.20, cannotpossibly evade the unambiguous textof the tobacco-specialty-shop provision, which prohibits such shops from invokingthe Act's adult-only exemption by imposing upon them "any advertising restrictions applicable to retail establishmentsaccessible to individuals under theage of 18," § 101(b)(3)(adding 21 U.S.C. § 387m) (emphases added).

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First, and most fundamentally, the Government's argument is squarely foreclosed by

Zauderer. There, the Supreme Court held that "[tjhe use of illustrations or pictures in

advertisements serves important communicative functions: it attracts the attention of the audience

to the advertiser's message, and it may also serve to impart information directly." 471 U.S. at 647

(emphases added). Far from treating aspects of advertising that do not "impart information

directly" as undeserving of full protection under Central Hudson, the Court made the common-

sense observation that it is an "important communicative function[]" to "attract[] the attention of the

audience to the advertiser's message," id., because the "informational" aspects of advertising are

useless if the audience never notices that information in the first place.

The evidence here validates the Zauderer Court's observation, revealing how color and

graphics are essential tools in making Plaintiffs' advertising sufficiently distinct and engaging to

break through the informational clutter and capture the attention of consumers, Pltfs. Br. at 6-9, 30-

31, and how brand name sponsorships and merchandise are important tools for reaffirming brand

awareness and loyalty, especially given the otherwise limited avenues to do so possessed by

Plaintiffs, id. at 33-34; see also Faber Decl. f\[ 43, 45. Indeed, the Government's denigration of the

communicative importance of color and imagery in advertising is belied by its defense of the Act's

newly mandated color-graphic cigarette warnings, where the Government extols a study claiming

"there is no more efficient method of reaching smokers than through the use of graphic and highly

visible warning labels." Defts. Br. at 24 (emphasis added). Accordingly, the Government's attempt

to belittle the communicative importance of color and imagery cannot be taken seriously.

Second, although the Government pejoratively characterizes as "noninformational" the

"positive" themes used in tobacco advertising, id. at 36-37, such themes and symbols are an

important aspect of the "nature" of Plaintiffs' brands that are used to differentiate their products

from their competitors, Bates v. State Bar ofArizona, 433 U.S. 350, 364 (1977). The Government

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cannot truly believe that the result in Zauderer would have been any different if, instead of

depicting "a defective medical device" that informed "readers ... which device was at issue" in the

litigation, Defts. Br. at 39, the attorney advertisement subject to the categorical ban on illustrations

instead had depicted the firm's clients engaged in relaxing leisure activities secure in the knowledge

that their legal troubles were in good hands. Indeed, although the Government cites Plaintiffs'

expert, Dr. Faber, for the proposition that tobacco products are "a product category ... in which

most brands have similar features," id. at 39 (quoting Faber Decl. \ 27), it omits Dr. Faber's

explanation that "[tjhe use of images and symbolic appeals are particularly important when there

are few functional attributes to distinguish different brands," Faber Decl. 1 36 (emphasis added); see

also Lindsley Aff. 1 5 (describing the success of Newport's "spontaneous and lifestyle-relevant"

advertising). In short, although the Government criticizes Plaintiffs* advertising and brand name

sponsorships for striving to create "positive associations" with certain "lifestyles and experiences,"

Defts. Br. at 36-40, it is not only proper, but essential, for Plaintiffs competing to win adult market

share in a highly competitive industry with relatively low levels of product differentiation to create

such "positive associations" among the adults that consume over 98% of all tobacco products.

Finally, notwithstanding the Government's claims, the Act encompasses "informational"

advertising even under the Government's impoverished understanding of that category of speech.

Most fundamentally, the Act inexplicably bars Plaintiffs' advertising from depicting images of

Plaintiffs' own trademarks and packaging, even though such images serve to inform consumers

what the product is, who makes it, and how it will look in a crowded retail store. Pltfs. Br. at 8. In

addition, Reynolds' Camel Crush advertisement simultaneously uses the color green to inform

consumers that the product contains menthol and uses graphics to inform them how the flavor pellet

in the filter operates, Dunham Decl. 1 19; see also Lindsley Aff. 1 6 (Newport's development of an

association between its menthol cigarettes and the color green), while Conwood's Levi Garrett

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brand of chewing tobacco uses an image of its original tobacco factory to inform consumers of the

product's unique and rich heritage, Jennette Decl. 121. And when Plaintiffs sponsor events for, or

give merchandise away to, adult consumers of tobacco products. Plaintiffs' brand names inform

those consumers about whom to reward with brand loyalty. Faber Decl. H 43, 45.

b. Practices That Appeal To Youth

Although the Government does not contest that the Act bans all, or virtually all, color or

graphics in advertising, brand-name sponsorships and merchandise, sampling, continuity programs,

and contingent discount co-marketing, see supra at 11-12, it nonetheless asserts that the Act's

speech bans are "narrowly tailored" because they focus on "particular advertising and promotion

practices that appeal to youth." Defts. Br. at 34. Once again, this contention is unavailing.

First, given that the Government does not so much as mention whether the speech practices

at issue are important for marketing to adults, the Government's position appears to be that a speech

ban is sufficiently tailored so long as it prohibits marketing that youth might see and be influenced

by. See id. at 35-37, 40-42, 43-44, 47-51. But the Supreme Court has repeatedly rejected this

position. Most relevant here, Lorillard reaffirmed that "'[tjhe level of discourse reaching a mailbox

simply cannot be limited to that which would be suitable for a sandbox'" and that "the adult

population" cannot be "reduceldj ... to reading only what is fit for children." 533 U.S. at 564

(citations omitted). Indeed, Lorillard so held in a case where the state, by targeting speech near

schools and playgrounds, at least had made some attempt—however inadequate—to tailor the

substantive scope of the restriction to speech that was primarily seen by youth. Id. at 561-62, 564.

Here, in contrast, whether or not color or graphics, brand names, or promotions have an effect, or

even a disproportionate effect, on youth, it is beyond dispute that these practices are also used in

marketing to adults and yet the Act bans them virtually across the board. See supra at 11-12; Pltfs.

Br. at 3-6, 11-12. And so, especially in light of the fact that over 98% of all tobacco products in this

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country are consumed by adults, Reynolds Decl. 1 5, the Act is the paradigmatic case of "burn[ing]

the house to roast the pig." Sable Communications ofCal, Inc. v. FCC, 492 U.S. 115, 127 (1989).

Second, compounding its flaws, the Act is also patently overinclusive because it

indisputably reaches countless forms of speech that could not even possibly affect youth:

• Color or graphics in advertising: This ban, in addition to prohibiting Plaintiffs fromdepicting their own packaging in their advertising, unnecessarily sweeps in, for example:tobacco-specialty shops that restrict or prohibit youth access; simple brand symbols such asNational's Beech-Nut chewing tobacco insignia; direct mail restricted to age-verifiedexisting adult consumers; and publications such as The Arkansas Trooper whose subject-matter has no conceivable interest to youth and. for that very reason, lack formal surveyevidence confirming their obvious lack of youth readership. Pltfs. Br. at 4-6, 28-30.

• BrandName Merchandise AndSponsorships: Although the Government expresses concernthat youth attend brand-name sponsorship events and manage to obtain brand-namemerchandise, Defts. Br. at 40-45, the Act prohibits brand-name promotions where thatcannot possibly be the case, such as Lorillard's Newport Pleasure Draw blackjacktournament that is "restricted to adult smokers" and held in an "adult-only facility" intowhich "minors are not allowed to enter," Lindsley Aff. H 60-63, and Reynolds' use ofbrand-name merchandise to identify its own employees and agents at events held at adult-only facilities, Dunham Decl. 1 37. And, to the extent that the Act's concern was with youthattending brand-name sponsorship events or seeing such events advertised on television,Defts. Br. at 40-41, the Government has no explanation for why the Act indiscriminatelybanned all sponsorships, regardless of whether youth attend or the event is broadcast.

• Sampling, Continuity Programs, and Co-Marketing: Because the Government erroneouslycontends that these prohibitions regulate conduct rather than speech, Defts. Br. at 47-51;infra at § II.B, it does not even attempt to dispute that the bans extend to promotions that arestrictly limited to adults, Pltfs. Br. at 12, 32-33. Moreover, to the extent the Government isconcerned that youth are able to circumvent the age restrictions and participate in thesepromotions, Defts. Br. at 47, 49-50, it offers no explanation why that problem could not beaddressed by strengthening enforcement of the age restrictions, rather than banning thesecore communicative practices across the board.

In sum, the Act's sweeping and onerous restrictions, which prohibit not only general

advertising intended for adults, but indeed, advertising practices that are exclusively restricted to

existing adult consumers, go well beyond any valid interest in reducing youth tobacco use.

c. Related To Unlawful Activity

Finally, the Government half-heartedly suggests that, because Plaintiffs allegedly employ

color-or-image advertising in order to "lure adolescents into beginning tobacco use," the Act's

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prohibition on all such advertising therefore "relates to unlawful activity." Defts. Br. at 34. Of

course, if the Government's theory were correct, then Plaintiffs' advertising would not be protected

by the First Amendment at all. Central Hudson, 447 U.S. at 563-64. The Government is unwilling

to forthrightly advance that position, and for good reason. It rests, at bottom, on the assertion that

any general advertising for an age-restricted product necessarily is an attempt to "lure" underage

individuals to use that product. That, however, would mean that Congress could prohibit all beer

advertising because underage individuals cannot drink and all car advertisements because underage

individuals cannot drive. Needless to say, this is foreclosed by established First Amendment

jurisprudence. As the Supreme Court repeatedly has held, "so long as the sale and use of tobacco is

lawful for adults, the tobacco industry has a protected interest in communicating information about

its products [to] adult consumers," Lorillard, 533 U.S. at 571, and "the governmental interest in

protecting children from harmful materials ... does not justify an unnecessarily broad suppression

of speech addressed to adults," id. at 564.

In any event, the Government's accusations of unlawful youth targeting are unfounded. The

Government's primary basis is the findings of fact made by the district court in United States v.

Phillip Morris USA, Inc., 449 F. Supp. 2d 1 (D.D.C. 2006). But, even setting aside both that those

findings have no application whatsoever to the numerous Plaintiffs in this case who were not

defendants there and that review by the appellate courts is not yet concluded in that case, the most

glaring defect in the Government's invocation of those findings is that the district court in Philip

Morris "defin[edj the term 'youth' to include those twenty-one and under," id. at 561, and so any

finding of targeting of such so-called "youth" in that case obviously cannot support a finding of

unlawful advertising here. Likewise, the Government's repeated reliance on quarter-century-old

internal documents from individual companies, Defts. Br. at 15-16, 36, cannot possibly justify the

conclusion that the entire industry is currently targeting youth unlawfully. Nor does the

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Government have any evidence of such current malfeasance. For example, while the Government

cites Newport's 2009 advertisement in TV Guide as a "recent example of tobacco companies' image

based advertising in youth magazines," Defts. Br. at 37 (citing Krugman Aff. at 10), in reality. Prof.

Krugman characterized TV Guide as a youth magazine under the Act's criteria only as of 2002,

Krugman Aff. at 8, and, in fact, TV Guide satisfied the Act's criteria for an adult publication in both

2008 and 2009, when Lorillard placed the advertisement in compliance with its print placement

policy that uses the same criteria, Lindsley Aff. H 21-23. Similarly, although the Government cites

the unsubstantiated and wildly inaccurate speculation of a single Senator that certain Reynolds

products have been designed to enable youth tobacco use, Defts. Br. at 18, the Supreme Court

repeatedly has deemed irrelevant the "conclusory statement[sj" of "[o]ne of [a law'sj sponsors."

Playboy, 529 U.S. at 822. In a nutshell, the Government's accusation that Plaintiffs are currently

targeting youth unlawfully with their marketing has no basis whatsoever.

3. Directly and Materially Reduce Youth Tobacco Use

Plaintiffs demonstrated in their summary judgment brief that the Act also fails Central

Hudson because the Government has not met its evidentiary "burden" to demonstrate, based upon

more than "mere speculation or conjecture," Edenfield, 507 U.S. at 770-71, that the Act's speech

bans will "directly and materially advance[J the asserted government interest" of reducing youth

tobacco use, GNOBA, 527 U.S. at 188. Congress mostly adopted these speech bans verbatim from a

rule that the FDA first proposed in 1995, even though that rule was proposed at a time when youth

tobacco use rates were much higher and increasing, whereas, today, they are at an all-time low and

decreasing. Pltfs. Br. at 38-39. And it is uncontested that this stark reversal is due in large part to

the fact that comprehensive tobacco intervention programs have correctly focused on the social

factors that stronglycorrelate with youth tobacco use, rather than limiting tobacco advertising in the

unsubstantiated hope that youth behavior would somehow be indirectly affected. Id. at 39-42.

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Here, the Government's brief recites no evidence that any of the Act's speech bans, either

alone or in combination, will directly reduce youth tobacco use at all. That is because, as Plaintiffs'

experts explain without contradiction, there is no empirical evidence assessing the efficacy of these

specific speech prohibitions. Id. at 41. Instead, the Government relies almost exclusively upon the

2008 NCI monograph, which claims simply that "the evidence base indicates a causal relationship

between tobacco advertising and increased levels of tobacco initiation and continued consumption."

Defts. Br. at 16 (internal quotation marks omitted). But this generalized and abstract assessment—

even if it were true, but see Reynolds Decl. H 34-36, 45-48; Faber Decl. H 57-64—could not

possibly satisfy the Government's burden of proving that the Act's speech bans would directly

advance the Government's interest in reducing youth tobacco use. Instead, the most that can be said

is that, in the words of the Surgeon General's 1994 Report, advertising is only a "distal or indirect'"'

factor among dozens of risk factors for youth tobacco use. Reynolds Decl. 1 31 (emphasis added);

see also Krugman Aff. at 7 (opining only that advertising is "a needless environment[alJ risk to

people under the age of 18").

More importantly, the Government has not come close to showing that the Act's speech bans

will materially reduce youth tobacco use. Indeed, the Government cites almost no evidence about

the magnitude of the relationship between advertising and youth tobacco use in general, and none

with respect to the specific marketing practices proscribed by the Act. Thus, while observing that

the FDA's speech bans originally hoped "to cut adolescent use of tobacco products in half," Defts.

Br. at 7, the Government provides no reason—much less empirical evidence—why these bans will

be successful in achieving significant reductions in the current, already-halved rates of youth

tobacco use. The Government's failure of evidence is fatal because, as the plurality explained in 44

Liquormart, the fact that "the record suggests that [anj advertising ban may have some impact" is

legally insufficient in the absence of "evidence to suggest that [the] speech prohibition will

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significantly reduce Ithe relevant target group's] marketwide consumption." 517 U.S. at506.3

Consequently, the Government's lack of relevant evidence requires the entry of summary

judgment for Plaintiffs on this prong of Central Hudson as well. At an absolute minimum, the

Government's paltry and abstract showing is far too insubstantial to entitle it to summary judgment

under any standard of review in the face of the multitude of evidence proffered by Plaintiffs that the

specific speech bans in the Act will be ineffective. Pltfs. Br. at 38-41.

B. Sampling, Continuity Programs. And Co-Marketing Are Protected Speech

The Government, no doubt realizing the impossibility of meeting the Central Hudson test,

argues that sampling, continuity programs, and co-marketing are "commercial conduct with no

'significant expressive element'" such that the Act's nearly absolute bans on those marketing

practices "do not implicate the First Amendment." Defts. Br. at 47 (quoting Arcara v. Cloud Books,

Inc., 478 U.S. 697, 706-07 (1986)). This is clearly wrong. These practices are common tools of

communication that are protected under Central Hudson.

1. These Bans Restrict Speech

Tobacco marketing typically communicates two messages. It "reinforclesj brand loyalty of

... existing adult consumers" and/or "encourag[esJ the adult consumers of ... competitor's brands to

choose [the advertiser's] brand instead." Dunham Decl. 1 10. These twin messages—increasing

brand loyally and enticing switching—are especially critical in industries like tobacco, where "most

adult ... consumers in this country regularly choose" a competitor's brand. Id.; see also Jennette

Decl. 1 10; Terry Decl. ff 6-7; Jones Decl. 1 9; Faber Decl. 1 26.

The challenged bans restrict Plaintiffs' ability to spread these critical messages:

The Government commendably does not invoke the Congressional Budget Office's estimate that the Act would reduceyouth tobacco use by 11% by 2019, because it rightly recognizes that that estimate was ba.sed on the projectedeffect ofthe Act as a whole, including, for example, higher prices caused by the Act. See H.R. Rep. No. 111-58, at 20 (Mar. 26,2009). It is well established that higher prices cause substantial decreases in youth tobacco use. Viscusi Decl. 11 48-53.And, as discussed above, there is in fact no empirical evidence that the Act's specific speech restrictions would causeany decrease in youth tobacco use.

-20-


• Sampling: Sampling is "one of the most effective means of communicating to [a] consumer... superior qualities in order to convince that consumer to switch brands." Dunham Decl. 144; see also Terry Decl. 1 33; Jennette Decl. 1 35; Lindsley Aff. 1 83; Faber Decl. 1 48. Itmay, in fact, "be the only" means, Jones Decl. 1 39, because, without a free sample, anotherwise satisfied consumer may not want to try a new product, no matter how appealingthe other advertising. Dunham Decl. 148.

• Continuity Programs: Continuity programs communicate to consumers the idea that brandloyalty has benefits. In markets like air travel and tobacco, where switching among brandsis common, continuity programs are a common strategy, because they help "reinforce brandloyalty by giving consumers a reward for their continued patronage." Id. 1 39; see alsoJennette Decl. 1 54; Lindsley Aff. 1 53; Faber Decl. 1 22.

• Co-Marketing: Co-marketing is fundamentally an advertising message that includesinformation about another seller's product along with the tobacco brand being advertised.For Plaintiffs like Reynolds, co-marketing frequently communicates discounts for tobaccoproducts, as well as for non-tobacco goods, such as coffee, of participating retailers.Dunham Decl. H 52-53. Thus, in addition to promoting both key roles of advertising, FaberDecl. 1 54; Jennette Decl. 1 60, these programs communicate to consumers the ability tosave both time and money by shopping for tobacco and other products at the same store.

In short, it is quite clear that each of these three marketing practices is commercial speech

that the Act seeks to silence. Indeed, in 1996, even the FDA characterized the proposed ban on

continuity programs as a speech restriction governed by Central Hudson. 61 Fed. Reg. 44396,

44469-70, 44522-27 (discussing the proposed ban on continuity programs as an advertising

restriction subject to First Amendment scrutiny). The Government does not attempt to explain its

change of position between 1996 and 2009, and what was speech in 1996 surely remains so today.

2. At A Minimum, These Bans Restrict Expressive Conduct

In any event, describing these bans as "conduct" regulations does not end the First

Amendment analysis. Instead, a two-part test governs "whether particular conduct possesses

sufficient communicative elements to bring the First Amendment into play." Texas v. Johnson. 491

U.S. 397, 404 (1989). First, courts must ask "whether an intent to convey a particular message was

present." Second, courts must determine "whether the likelihood was great that the message would

be understood by those who viewed it." Id. (internal quotation marks omitted). If a message is

intended and likely to be understood by the recipient, the activity is, at a minimum, protected by

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intermediate scrutiny. See, e.g., Bailey v. Morales, 190 F.3d 320, 321, 325 (5thCir. 1999).4

Bailey is a particularly apposite application of the two-part Johnson test in the context of

promotional distributions such as are involved here. One of the restrictions at issue in that case

criminalized "innocent marketing techniques," such as when a chiropractor, "with intent to obtain

an economic benefit[,J pays, gives, or advances or offers to pay, give, or advance to a prospective

client money or anything of value to obtain employment as a professional from the prospective

client." Id. at 325 (quotation omitted). The ban thus included the distribution of "promotional gifts

and items." Id. at 321. The Fifth Circuit squarely held that, under Johnson, such distributions were

expressive conduct protected by the First Amendment. It reasoned that chiropractors "engage in

such conduct with an intent to convey &particularized message: hire me, try my service." Id. at 325

(emphasis added). And "those who receive the money or anything of value are likely to understand

the message because rebates, free samples and risk-free trials of products are common marketing

tools." Id. (emphasis added). With each prong of Johnson satisfied, the court concluded that the

law "regulates speech" and then invalidated it under Central Hudson. Id.

Here, just like the promotional giveaways in Bailey, the sampling, continuity programs, and

co-marketing prohibited by the Act are plainly (at least) expressive conduct. First, they are

intended to communicate either of two particularized marketing messages—(1) "switch from a

competitor's brand" and/or (2) "stay loyal to our brand." See supra at 20-21. Second, no one can

seriously doubt that a recipient of a free sample, continuity reward, or co-marketing publication is

likely to understand—indeed fully understands—the message Plaintiffs intend to communicate.

After all, each of these three practices are "common marketing tools." Bailey, 190 F.3d at 325.

4See also Coldwell Banker Residential Real Estate Sen's, ofIII., Inc. v. Clayton, 475 N.E.2d 536, 540 (111. 1985) ("Byprohibiting the use of prizes, money, free gifts or other valuable consideration as inducements ..., the flaw] is, in effect,an advertising regulation." (internal quotation omitted)); Coldwell Banker Residential Real Estate Sen's., Inc. v. Bishop,498 N.E.2d 1382, 1388 n.l (Ohio Ct. App. 1985) (explaining that an inducement presupposes communication).

i-> .


Indeed, that each represents one of the most effective facets of Plaintiffs' advertising, see supra at

20-21, speaks volumes about consumers' ability to understand the intended message. Under

Johnson, therefore, Plaintiffs' "conduct" is plainly expressive.

Nor is there any merit to the Government's attempt to evade this directly relevant case law

by attempting to equate these marketing prohibitions with pricing regulations unprotected under the

First Amendment. Defts. Br. at 48. Price alone contains no inherently communicative element—an

across-the-board limit on tobacco prices, for example, neither induces brand switching nor promotes

brand loyalty. In contrast, it is precisely those core commercial marketing messages that are the

very purpose of sampling, continuity programs, and co-marketing. And because those messages

require communication, the prohibitions on sampling, continuity programs, and co-marketing

simply cannot be equated with price regulation.

Accordingly, at the very least, the Act regulates expressive commercial conduct, the

prohibition of which is governed by Central Hudson when, as here, the ban is "[Jrelated to

expression." Lorillard, 533 U.S. at 567. And, as explained above, see supra at 8-20, these

sweeping bans cannot possibly satisfy Central Hudson, nor does the Government argue otherwise.

C. The Challenge To The Outdoor Advertising Ban Is Ripe

The Government does not dispute that the Supreme Court's decision in Lorillard squarely

holds that the Act's ban on outdoor advertising within 1,000 feet of a school or playground is

5The Government's reliance on Philip Morris USA, Inc. v. City andCounty of San Francisco, No. 08-17649, 2009WL2873765 (9th Cir. Sept. 9, 2009), is likewise misplaced. That case did not involve a ban on advertising, but on cigarettesales in pharmacies, which the court concluded was non-expressive conduct. Id. at *1.

6Even if the Government's interest in banning theseexpressive marketing programs were"unrelated to the suppressionof free expression," they still would be protected by the intermediate scrutiny standard articulated by the Supreme Courtin United States v. O'Brien, 391 U.S. 367, 377 (1968). See Lorillard, 533 U.S. at 569 (applying O'Brien to regulationsof expressive conduct that were "unrelated to the communication of ideas"). And because the O'Brien and CentralHudson standards are similar insofar as is relevant here, compare Central Hudson, 447 U.S. at 566, with O'Brien, 391U.S. at 377, these bans are unconstitutional under O'Brien for the same reasons they fail Central Hudson. O'Brien alsoforecloses the Government's assertion that the bans are "at most incidental" to the speech, Defts. Br. at 48-49, sinceO'Brien, by its terms, applies to "incidental limitations on First Amendment freedoms," 391 U.S. at 376.

-23-


unconstitutional. The Government's only defense is that this challenge is "unripe" because the

Secretary has not decided if or how she will revise the ban. Defts. Br. at 45^-6. This is incorrect.

The Act, today, puts Plaintiffs to a concrete and unconstitutional Hobson's choice. Under

the Act, the Secretary must either promulgate the plainly unconstitutional 1,000-foot rule or modify

it, unfettered by the constraints of the APA, with a new rule that takes effect just three months later.

Pltfs. Br. at 31. If the FDA chooses the first course, it violates Lorillard. If it chooses the second.

Plaintiffs will lack sufficient notice to adjust their outdoor advertising activities in time to comply.

Id. Plaintiffs therefore must either immediately abandon all outdoor advertising within 1,000 feet

of a school or playground and thereby relinquish their First Amendment rights as guaranteed by the

Supreme Court in Lorillard, or, alternatively, risk almost certain non-compliance due to the lack of

constitutionally sufficient notice and procedural safeguards concerning the regulation the Secretary

ultimately issues. Id. at 31-32. This so-called "choice" plainly presents a concrete, here-and-now

justiciable controversy that Plaintiffs are entitled to have resolved immediately. See Abbott Labs. v.

Gardner, 387 U.S. 136, 151 (1967). Indeed, the Supreme Court has long held that the First

Amendment prohibits laws, like this one, that coerce a party into relinquishing its free speech rights.

See, e.g., Speiser v. Randall, 357 U.S. 513 (1958).7

Nor can the Government render this case unripe by asserting that it may not issue any

outdoor advertising ban at all. See Defts. Br. at 45. To date, the Secretary has not formally

7The cases cited by Government are not to the contrary. Defts. Br. at 46. In Minnesota State Board ofCommunityColleges v. Knight, 465 U.S. 271 (1984), the plaintiffs merely asserted a right to be heard by the public body, but didnot challenge the policy promulgated by the body itself, much less contend that it deprived them "of life, liberty, orproperty without due process." Id. at 287 n.9. Here, in contrast, Plaintiffs assert more than a mere right to be heard, bychallenging the effect of the lack of process—i.e., they contend that the outdoor advertising ban will infringe their FirstAmendment liberties without due process if it is promulgated in the mannerdirected by the Act. Likewise, although afederal agency may announce new principles applicable to an industry in the course of adjudication, NLRB v. BellAerospace, 416 U.S. 267, 294 (1974), that is so only because administrative adjudication is replete with the proceduralprotections that are the hallmark of due process, see, e.g.. 5 U.S.C. § 554 (requiring that agency adjudications bedetermined on the record after notice and an opportunity to be heard for all interested parties). Here, in contrast, thereare no procedural protections that mitigate the untenablechoice that the Act forces Plaintiffs to make today.

-24-


disavowed any intention to enforce this provision and so that unlikely possibility is no basis at all to

deprive this Court of jurisdiction. See Abbott Labs., 387 U.S. at 154 (concluding that the

"subsequent representation! sJ of the [GovernmentJ" in litigation that it would not criminally enforce

the challenged regulation did "not suffice to defeat" the ripeness of the plaintiffs' challenge).

Were there any remaining question whether Plaintiffs' challenge is ripe, it would be

resolved by the fact that the ripeness inquiry is "relaxed in the First Amendment context." Norton

v. Ashcroft, 298 F.3d 547, 554 (6th Cir. 2002). Because freedom of speech is "of transcendent

value to all society," Dombrowski v. Pfister, 380 U.S. 479, 486 (1965), parties "not yet affected by

the actual enforcement of [aj statute are allowed to challenge actions under the First Amendment in

order to ensure that an overbroad statute does not act to 'chill' the exercise of free speech and

expression," Nat'I Rifle Ass'n v. Magaw, 132 F.3d 272, 285 (1997). Thus, even where the issue is

not otherwise fit for judicial decision, a pre-enforcement First Amendment challenge is ripe "if the

challenged action creates a direct and immediate hardship for the parties." Nutritional Health

Alliance v. Shalala, 144 F.3d 220, 226 & n.12 (2d Cir. 1998). And here, the Act plainly is exerting

"direct and immediate hardship" on Plaintiffs, since they must, today, decide whether to abandon

their rights under Lorillard or face the almost certain prospect of being unable to comply in a timely

fashion with any new regulations the Secretary promulgates in violation of their due process rights.

D. The Government Does Not. And Could Not. Assert Any Interest Supporting

The Act's Speech Bans Other Than Reducing Youth Tobacco Use

Finally, it warrants emphasis that the only interest the Government has put forward for the

Act's speech prohibitions is the reduction of youth tobacco use. Defts. Br. at 3, 34-51.

The Government does not, and could not, assert (as it has for the Act's provisions dealing

with warnings, the MR IP requirement, and references to the efficacy of FDA regulation) that these

bans are intended to prevent consumer confusion, because "broad prophylactic" bans on speech

"may not be ... lightly justified" by an assertion that the speech "may, under some circumstances.

-25-


be deceptive or manipulative." Zauderer, 471 U.S. at 649. Instead, the Government bears the

burden "of distinguishing the truthful from the false, the helpful from the misleading, and the

harmless from the harmful." Id. at 646; see also Pltfs. Br. at 42-44.

Likewise, the Government does not, and could not, assert that these bans are intended to

reduce adult tobacco use, because the Supreme Court repeatedly has "rejected the notion that the

Government has an interest in preventing the dissemination of truthful commercial information in

order to prevent members of the public from making bad decisions with the information." W. States

Med. Ctr., 535 U.S. at 374. As the Court held in Virginia Board of Pharmacy vs. Virginia Citizens

Consumer Council, Inc., 425 U.S. 748 (1976), the Constitution rejects such a "highly paternalistic

approach" in favor of one that "assumelsj that . . . information is not in itself harmful, that people

will perceive their own best interests if only they are well enough informed, and that the best means

to that end is to open the channels of communication rather than to close them." Id. at 770.

Thus, because the Act's speech bans are not narrowly tailored to directly and materially

advance the Government's interest in reducing youth tobacco use, they are unconstitutional.

III. THE ACT'S MANDATED WARNINGS ARE UNCONSTITUTIONAL

The Government's defense of the Act's so-called warnings suffers from the same basic flaws

identified above. First, the Government has not produced any evidence to refute Plaintiffs'

contention that the overall warnings that Congress selected are both "unjustified" and "unduly

burdensome" under Zauderer. Pltfs. Br. at 44-49. Second, the Government ignores that these

warnings, rather than being factual and non-controversial disclosures, unconstitutionally compel

Plaintiffs to disseminate a Government exhortation not to use tobacco products. Id. at 49-51.

Finally, the Government likewise ignores the central thrust of Plaintiffs' takings claim—that the

Act effects aper se taking, id. at 51-52—and also raises an unavailingjurisdictional objection.

26


A. The Warnings Are Unjustified And Unduly Burdensome

The Government asserts that Plaintiffs "provide no doctrinal or factual basis" for attacking

the Act's new warnings. Defts. Br. at 25. But as the Supreme Court held in Zauderer, and

reiterated in Ibanez v. Fl. Dep't of Bus. & ProfI Reg., 512 U.S. 136 (1994), the Government must

prove, at a minimum, that those warnings are neither "unjustified" nor "unduly burdensome."

Zauderer, 411 U.S. at 651; see also Ibanez, 512 U.S. at 146-47 (invalidating a disclaimer that failed

both prongs of Zauderer). The Government fails on both counts.

First, the warnings are "unjustified" because they purport to address an informational deficit

that the Government's own brief proves does not exist. The Government concedes that the only

conceivable justification for the warnings is "dissipat|ingj the possibility of consumer confusion or

deception," Defts. Br. at 19, and that it would be unjustified for the Government instead to use them

as a means of browbeating fully informed consumers to stop taking health risks that the

Government believes are imprudent, Viscusi Decl. I 71. The Government, however, does not

produce any evidence that the Act's new warnings—including oversized text, occupation of 30-50%

of two sides of all packaging and 20% of all advertisements, and (for cigarettes) shocking color

graphics—are a justified tool for eliminating consumer confusion, because it essentially concedes

that consumers are not confused about the health effects of tobacco use at all. Nor does the

Government even begin to make the case why the significantly increased size, location, and format

of the warnings is necessary to accomplish the Government's goals. Hven were it the case that

consumers are not fully informed, the Government does not demonstrate—as it must—that more

modest warnings would be insufficient to convey the necessary information to tobacco users.

Instead, the Government's principal explanation for the Act's new warnings is that the

existing warnings are "ineffective" because they are "given little attention or consideration by

viewers." Defts. Br. at 20; see also id. at 20-21. But whether or not consumers focus on the text of

-27-


warnings is utterly irrelevant to their efficacy in preventing consumer confusion if—as is the case

here—consumers are already fully aware of the information contained therein. Indeed, as any

frequent airline passenger knows, it is natural and unsurprising that consumers who are well aware

of safety information "give[J little attention or consideration" to warnings reiterating that

information. And here, the Government does not dispute the showing of Plaintiffs' expert, Dr.

Viscusi, that the American public—adults and youth alike—is in fact well aware of the health risks

of tobacco use and, indeed, substantially overestimates those risks. Pltfs. Br. at 45-47. To the

contrary, the Government agrees that youth, for example, "overestimate certain smoking risks (such

as the degree to which smoking causes cancer)." Defts. Br. at 14.

The Government's only response is that, "lejven when adolescents have a general

understanding that smoking is harmful, they minimize the likelihood that these harms will befall

them," because "they greatly underestimate the power of nicotine addiction." Id. But, in addition

to the facially dubious support the Government provides for that assertion,8 the Act's warnings

plainly are not a "justified" means of curing that asserted information deficit. To be sure, a generic

warning that tobacco products are addictive is one of the numerous rotating warnings that the Act

mandates. §§ 201(a), 204(a). But even the Government acknowledges that youth are generally

aware of the fact that nicotine is addictive and so the Act's banal reiteration of that fact, without any

mention of the degree of nicotine's addictivcness, cannot possibly cure the alleged youth

"undereslimat|ion[ [of| the power of nicotine addiction." Defts. Br. at 14. More problematic still,

the Act goes well beyond eliminating any alleged lack of knowledge on the part of youth

8For example, the very 2007 IOM report that the Government cites for the proposition that youth are "much less awareof the addictive nature of smoking," Defts. Br. at 15, cited a study concluding, "fo]n the basis of data from twonationwide surveys, ... that most (96 percent) smokers, both youth and adults, agreed that the longer you smoke, theharder it is to quit," Defts. Br. at Attachment B, Vol. 13, Tab 16 (p. 91). Likewise, with respect to the longitudinalstudyconcerning youthprediction of their future tobaccouse that is referenced in the 2007 IOM report, Defts. Br. at 14-15, there is no discussion of what reason was given by the youth who were still smoking beyond the period that theyhad predicted they would stop. Either the IOM failed to analyze the study's survey responses on that obviously criticalquestion, or the authorsof the study neglected for some reasoneither to ask that questionor to report the answers.

-28-


concerning the addictiveness of nicotine, because its main thrust is a massive increase in the size

and nature of the warnings about the health consequences of tobacco use—the very health

consequences that the Government concedes youth already know and overestimate. Most notably,

the shocking color graphics that the Act mandates for cigarettes and authorizes for smokeless

products have nothing to do with addictiveness, but rather require the depiction of "the negative

health consequences of smoking." §§ 201(d), 205(a). Thus, since the Government's own theory is

that youth have a "general understanding" of (and indeed overestimate) these consequences yet

simply "minimize the likelihood that these harms will befall them" because they "greatly

underestimate the power of nicotine addiction," Defts. Br. at 14, the Government all but concedes

that these new warnings are unnecessary to inform youth and prevent consumer confusion.

This is precisely why, in 1994, the Surgeon General's report expressly rejected the

'"assumption ... [that] young people had a deficit of information that could be addressed by

presenting them with health messages in a manner that caught their attention and provided them

with sufficient justification not to smoke,'" explaining that '"comprehensive reviews [hadj

concluded that smoking-prevention programs based on the information deficit approach were not

effective.'" Viscusi Decl. •)[ 34. And it is also why the Government can cite no evidence to

contradict Dr. Viscusi's conclusion that "UJhe Act's mandated health messages are configured to

'shout' at tobacco consumers, so to speak, but there is no empirical evidence that 'shouting' works

in lowering prevalence in this context." Id. "fl 71 (emphasis added).

Indeed, the conclusions of the Surgeon General and Dr. Viscusi are vividly confirmed by the

Canadian experience, which the Government inexplicably invokes in its favor. For the reasons

given above, it is both unsurprising and irrelevant that, as the 2007 IOM report cited by the

Government discusses, consumers are more likely to read and recall the novel oversized text-and-

graphic Canadian warnings. Defts. Br. at 24-25. The true test of a tobacco warning's effectiveness

-29-


is not whether consumers can recall the text, but whether the warning alleviates a material

informational deficit and thereby causes a reduction in tobacco use. And, in Canada, the evidence

contradicts the existence of such an effect. As Dr. Viscusi demonstrated—and the Government

does not dispute—smoking prevalence sharply increased in Canada when the warnings were

introduced, and the warnings have achieved no reduction at all in smoking prevalence over the

course of nearly a decade. Viscusi Decl. f\[ 76-77.

Lacking any empirical evidence that these warnings will prevent consumer confusion by

providing missing information, the Government is thus left to invoke the so-called "international

consensus reflected in the World Health Organization's Framework Convention on Tobacco

Control." Defts. Br. at 23. But neither the WHO nor the other nations that have adopted the

convention were required by the First Amendment to carefully consider whether these so-called

warnings are a "justified" impairment, Ibanez, 512 U.S. at 146, of "the tobacco industry['sj ...

protected interest in communicating information about its products [to] adult consumers," Lorillard,

533 U.S. at 571. Congress, however, was obligated to do so, and the Government has failed to

prove that this constitutional mandate was satisfied.

Second, the Government likewise has failed to introduce any relevant evidence that the

drastically more onerous scope and nature of the Act's warnings is not "unduly burdensome."

Zauderer, 471 U.S. at 651; Ibanez, 512 U.S. at 146-47. Although the Government self-servingly

asserts that the Act "leav|es| ample room for commercial speech," Defts. Br. at 26, it does not even

acknowledge, let alone refute with contrary evidence, the numerous ways in which Plaintiffs have

demonstrated that these warnings, particularly in conjunction with the Act's black-and-white text

requirement in advertising, will severely impair the efficacy of their commercial messages on their

advertising and packaging, Pltfs. Br. at 9-11, 48-49. Most notably, in almost all of Plaintiffs'

advertisements, the black-and-white-text commercial message will be dominated by the Act's new

-30-


warnings, including (for cigarettes) shocking color graphics. And in one of the few remaining

places where color and imagery may be used to catch consumers' attention and convey commercial

information—packaging—anywhere from 30-50%' of that packaging will be commandeered for the

Government's warning. Id. The Government does not offer any evidence that a less burdensome

warning—e.g., a smaller or less graphic one, or one that was on just a single side of the packaging

rather than on both sides—would not adequately address any asserted informational deficit.

The Government's failure to grapple with the effect of the warnings no doubt reflects its

impoverished understanding of the function and importance of commercial speech. See supra at 12-

18. It likewise reflects the Government's reliance on the views of the IOM, the WHO, and

likeminded foreigners who bear no constitutional duty—as Congress does—to consider the impact

of these warnings on Plaintiffs' "protected interest in communicating information about its products

[to| adult consumers." Lorillard, 533 U.S. at 571. But it does not reflect American constitutional

law, which "Icjertainly ... would not condone a health department's requirement that half of the

space on a restaurant menu be consumed by the raw shellfish warning," Entertainment Software

Ass'n v. Blagojevich, 469 F.3d 641, 652 (7th Cir. 2006), and equally does not condone the Act's

intrusive and unnecessary warnings. Indeed, if the Act's new warnings are not "unduly

burdensome" under Zauderer, then it is difficult to imagine what types of warnings would be.

The Government cannot evade this conclusion by invoking the disclosure requirements

imposed on prescription and over-the-counter drugs, Defts. Br. at 26-28, for the nature and effect of

those requirements differ from the Act's warnings in numerous respects. Most notably, drug

warnings are often extensive because consumers purchase drugs for their health benefits but even

the most common drugs bear myriad little-known health risks. For example, while consumers are

well aware of the health benefits of aspirin, few of them are likely aware of the apparent risk of

"Reyes syndrome." Id. at 27. In contrast, consumers do not purchase tobacco products for health

-31 -


benefits and it is undisputed that the health risks of tobacco use covered by the Act's warnings are

universally known. See supra at 28-29. Thus, the practical reality that drug disclosures must

occupy a fairly significant amount of space due to the large amounts of information conveyed about

important but largely unknown risks, see, e.g., Viscusi Decl. 1 79, provides no support for the Act's

over-sized reiteration of a handful of well-known facts. To the contrary, it undermines the propriety

of the burden imposed by the Act, since, even in the drug regime, the disclosures appear in small

font, are not duplicative, do not use shocking color graphics, and are generally located on package

inserts. Id. f|[ 79-81.

Nor is there any evidence that restrictions on advertising and packaging are as burdensome

in the drug industry as Plaintiffs demonstrated them to be in the highly competitive tobacco

industry. Numerous drugs face no meaningful interbrand competition due to patent protection. See,

e.g., Telectronics Pacing Sys., Inc. v. Ventritex, Inc., 982 F.2d 1520, 1524-25 (Fed. Cir. 1992).

Moreover, those drug manufacturers that do compete do so primarily by influencing the prescribing

decisions of doctors and pharmacists, not by appealing to consumers directly. See, e.g., Washington

Legal Found, v. Friedman, 13 F. Supp. 2d 51, 57-58 (D.D.C. 1998), vacated in part as moot sub

nam. Washington Legal Found, v. Henney, 202 F.3d 331 (D.C. Cir. 2000). That obviously is not

true of tobacco products or consumer products generally, for which advertising and packaging is an

extraordinarily important component of interbrand competition. See Pltfs. Br. at 6-11.

These flaws in the Government's attempted analogy to the drug context salienlly illustrate

the wisdom of the Supreme Court's admonition that the "degree" of the burden on speech imposed

"under a particular regulatory scheme tends to be case specific." Lorillard, 533 U.S. at 563. And

for the reasons explained, the Government has failed to prove that the Act's warnings on tobacco

products satisfy the mandate of Zauderer and Ibanez that disclosures, at a minimum, not be

"unjustified" or "unduly burdensome." Zauderer, 471 U.S. at 651; Ibanez, 512 U.S. at 146-47.

-32-


B. The Warnings Compel Plaintiffs To Disseminate The Government's Anti-

Tobacco Message

In any event, the Government is simply wrong in its assumption that it need only satisfy

Zauderer s relatively deferential standard. Defts. Br. at 19. 24. While Zauderer applies to

disclosures of "purely factual and uncontroversial infonnation," 471 U.S. at 651, courts have

applied strict scrutiny to disclosures that, like the Act's warnings here, "communicate!j •••

subjective and highly controversial message[sj," Entertainment Software Ass'n, 469 F.3d at 652.

The Government has not even disputed, let alone introduced evidence to refute, Dr. Viscusi's expert

opinion that, "[gjiven that the new mandated warnings are conveying infonnation that is already

well known, it would appear that they are really no more than a generalized anti-tobacco message:

'don't buy this product."' Viscusi Decl. 1 68. The Government also has not contended that such an

anti-tobacco message is any less "subjective and highly controversial" than the requirement at issue

in Entertainment Software Ass'n that certain video game packages contain a four square-inch sticker

stating "18," which the Seventh Circuit subjected to strict scrutiny because, according to the court,

it compelled the speaker to implicitly disseminate the state's view of what was "sexually explicit."

469 F.3d at 652. Nor has the Government even tried to argue that the Act's compulsion of Plaintiffs

to disseminate the Government's anti-tobacco message survives strict scrutiny. Pltfs. Br. at 50-51.

C. The Warnings Effect An Unconstitutional Taking

As Plaintiffs explained, the Act's new warnings effect a per se taking under Loretto v.

Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982), because they are "[aj permanent

physical invasion" of Plaintiffs' packaging and advertising, Lingle v. Chevron U.S.A. Inc., 544 U.S.

528, 537 (2005), perpetrated to disseminate an anti-tobacco message "for [the Government's! own

use," Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg'I Planning Agency, 535 U.S. 302, 324 (2002).

See Pltfs. Br. at 51-52. This "classic taking" is no different than if the Government had confiscated

nearly half of every billboard in America for a government message on any other issue of public

- 33 -


concern. Tahoe-Sierra. 533 U.S. at 324.

The Government's primary response is not that Plaintiffs' per se takings argument is wrong,

but rather that this Court lacks jurisdiction because Plaintiffs were required to bring this claim "in

the Court of Federal Claims under the Tucker Act." Defts. Br. at 51-52. This argument, however,

is incorrect for two independent reasons. First, Plaintiffs seek an injunction and declaratory relief.

These requests for equitable relief are not within the jurisdiction of the Court of Federal Claims

under the Tucker Act, and, accordingly, this Court has jurisdiction to entertain Plaintiffs' takings

claim.9 Second, even the cases cited by the Government confinn that the "presumption of Tucker

Act availability must be reversed," such that federal district courts, rather than the Court of Federal

Claims, have jurisdiction over takings claims for equitable relief, where "Congress could not have

contemplated that the Treasury would compensate" Plaintiffs for the taking because the challenged

law "requires a direct transfer of funds" and so "a claim for compensation would entail an utterly

pointless set of activities." E. Enters, v. Apfel, 524 U.S. 498, 521 (1998) (plurality opinion)

(internal quotation marks omitted); Coalition for Gov. Procurement v. Fed. Prison Indus., Inc., 365

F.3d 435, 479 n.57 (6th Cir. 2004) (same). Here, not only does the Act fail to provide any

compensation for the Government's appropriation of Plaintiffs' property, but the Act requires

Plaintiffs to pay to the Government statutorily scheduled monetary "user fees." § 101(b)(3) (adding

21 U.S.C. § 387s). Thus, just as in E. Enters, and Coalition for Gov. Procurement, jurisdiction lies

in this Court because Congress could not have contemplated that the Treasury would compensate

Plaintiffs for the taking perpetrated by the Act when that would simply off-set the Act's schedule

9See e.g., E. Enters, v. Apfel, 524 U.S. 498, 520 (1998) (plurality opinion) (noting that a "requestf] [for] a declaratoryjudgment that fa law] violates the Constitution and a corresponding injunction" is "equitable relief ... arguably notwithin the jurisdiction of the Court of Federal Claims under the Tucker Act"); Blue Diamond Co. v. Sec. of Health &Human Servs., 79 F.3d 516, 520 (6th Cir. 1996) (reviewing a takings claim for equitable relieO, abrogated on othergrounds byE. Enters, v. Apfel, 524 U.S. 498 (1998);Se. Kansas Cmty. Action Prog., Inc. v. Lyng, 967 F.2d 1452, 1456-57 (10thCir. 1992)(holding thatjurisdictionvests in the district courts wherethe relief sought is "equitablein nature").

-34-


for "user fees" that Plaintiffs must pay the Secretary.

To the extent that the Government addresses the takings issue on the merits, Defts. Br. at 52-

53, it simply ignores the central thrust of Plaintiffs' per se takings claim under Loretto. First, the

Government does not contest that Plaintiffs' packaging and advertising are property—a point it

must concede unless it believes it could seize half of every billboard, consumer good container, and

magazine back cover in this country for use in a propaganda campaign without implicating the

Takings Clause. See III. Cereal Mills, Inc. v. Comm'r ofInternalRevenue, 789 F.2d 1234, 1236 n. I

(7th Cir. 1986) (collecting cases holding that advertising signs are "property").10 Second, the

Government does not contest that "|aj permanent physical invasion" of property for use by the

Government, "however minimal the economic cost it entails," is a per se taking actionable under the

Fifth Amendment. Chevron, 544 U.S. at 537; see also Loretto, 458 U.S. at 433^0. Third, the

Government does not contest that the Act's warnings effect such a permanent physical invasion

because they "directly appropriate[j" up to 50% of Plaintiffs' packaging and advertising "for [the

Government'sj own use" in proselytizing against tobacco products. Tahoe-Sierra, 535 U.S. at 324.

Thus, this Court should enter summary judgment for Plaintiffs on their Takings claim.

10 Although the Government does assert that Plaintiffs' "fg]eneric references to ... 'packagingf]' and 'advertising' donot suffice" to "identify a[] ••• specific property interest," Defts. Br. at 52, that is frivolous. Unlike in the types ofregulatory takings cases that the Government cites, id. (citing Penn Central Transp. Co. v. Cityof New York, 438 U.S.104, 125 (1978)), the "specific, concrete property interest that has been invaded" is perfectly clear in Loretto-aly\c perse takings cases: here, it is the specific portion of Plaintiffs' packaging and advertising that the Act mandates bepermanently physically occupied by the Act's anti-tobacco message masquerading as a warning.

" The Act's commandeering of Plaintiffs' packaging and advertising is sufficient to constitute a violation of theTakings Clause, but Plaintiffs note that the Government is incorrect in claiming that Plaintiffs' trademarks are notproperty. Defts. Br. at 52-53. Although the case cited by the Government, Door Sys., Inc. v. Pro-Line Door Sys., Inc.,83 F.3d 169 (7th Cir. 1996), suggests that the Lanham Act does not create a property interest in a trademark, id. at 173,that is in conflict with binding precedentof the Supreme Court and Sixth Circuit, as well as other circuit court decisions,including in the Seventh Circuit. See Hamilton-Brown Shoe Co. v. Wolf Bros. & Co., 240 U.S. 251, 259 (1916) ('Theright to use a trademark is recognized as a kind of property."); Lorillard Tobacco Co. v. Amouri's Grand Foods, Inc.,453 F.3d 377, 383 (6th Cir. 2006) (holding that one of the "fundamental purposes of trademark law" is "protecting thetrademark holder's property interest in the mark"); United States v. Milstein, 481 F.3d 132, 137 (2d Cir. 2007) ("It iswell settled that trademarks are a form of property."); Electro Source, LLC v. Brandess-Kalt-Aetna Group, Inc., 458F.3d 931, 939-41 & n.7 (7th Cir. 2006) (same).

-35-


IV. THE ACT'S MRTP REQUIREMENT IS UNCONSTITUTIONAL

The Government's brief confirms that now that this issue is before the Court on summary

judgment, the MRTP requirement is plainly unconstitutional. Rather than rehashing the myriad

defects with the MRTP requirement, Pltfs. Br. at 52-55; PI Reply Brief I-14; PI Brief at 22-29;

including, but not limited to, the lack of a legally binding "reasonable time limit" that this Court

itself recognized was necessary, Pltfs. Br. at 52-53, Plaintiffs will focus here on how the

Government's own analysis now confirms these defects.

First, although the Government continues to assert that the MRTP prior restraint scheme is

solely intended to prevent the occurrence of speech that "'may be absolutely true and still be

misleading,'" Defts. Br. at 30 (quoting PI Order at 15), its primary example belies that claim and

demonstrates instead how the scheme, on its face and by design, prohibits truthful and non-

misleading speech. The Government contends that Santa Fe Natural Tobacco Co.'s truthful

characterization of Natural American Spirit cigarettes as "'100% Free of Chemical Additives'" is an

example of a statement that "may be true" but "misleading if it implies that the cigarettes pose a

reduced health risk." Defts. Br. at 30-31. But the FTC, in the very consent order the Government

cites, concluded that any risk of consumer confusion would be fully and adequately addressed by a

disclaimer. Id. at 31 (citing FTC Consent Order, Docket No. C-3952 (June 12, 2000), available at

http://www.flc.gov/os/2000/06/santafe.do.htm). Yet, even with that disclaimer, the Government's

position, although unclear, appears to be that the MRTP requirement still bans the truthful and F'TC-

certifted non-misleading statement about Natural American Spirit's lack of chemical additives,

because Santa Fe Natural truthfully states that the product is, in the words of the MRTP

requirement, "free of a substance," but does not even purport to claim (indeed, expressly disclaims)

that the product will "significantly reduce harm ... to individual tobacco users." § 101(b)(3)

(adding 21 U.S.C. § 387k(b)(2)(A)(iii), (g)( 1)(A)). The Government's apparent interpretation is yet

- 36 -


another illustration of how, just like the "benefit the health of the population as a whole"

requirement that Plaintiffs previously analyzed in detail, Pltfs. Br. at 53-54, the MRTP requirement,

on its face and by design, bans speech that is not misleading.

Second, although the Government also continues to invoke the Act's unsubstantiated

statutory finding that the FTC has found disclaimers to be ineffective, Defts. Br. at 30 (citing PI

Order at 18-19 (citing § 2(41))), its own brief belies that claim as well. Again, with respect to

Natural American Spirit cigarettes, the FTC concluded that any risk of consumer confusion about

the relative health risks of that product would be fully and adequately addressed by a disclaimer.

This directly relevant decision thus conclusively refutes the Act's statutory finding that, in some

unspecified context—the Act does not even say whether that context involved tobacco products—

the FTC found disclaimers to be ineffective.

Third, the Government continues to take the position that any "[sjtatements directed to

consumers with respect to a product are commercial speech," regardless of context or content.

Defts. Br. at 33-34 (citing PI Order at 11-12, 19). Notably, the Government neither disputes that its

formulation would cover Reynolds' participation in a 60 Minutes interview concerning the public

health debate over tobacco harm reduction, Howard Decl. 1 2, nor disavows the position that such

participation would be only commercial speech. See Defts. Br. at 28-34. But it is simply beyond

dispute that an appearance by Reynolds on 60 Minutes is core political speech subject to the utmost

constitutional protection. Pltfs. Br. at 54. This underscores the critical importance of the distinction

the Supreme Court repeatedly has drawn between a company's "direct comments on public issues,"

where "the full panoply of [First AmendmentJ protections [arej available," Zauderer, 471 U.S. at

637 n.7, and "speech that proposes a commercial transaction, which is what defines commercial

speech," Bd. of'Trs. ofSUNY v. Fox, 492 U.S. 469, 482 (1989).

Finally, the foregoing analysis belies the Government's claim that Plaintiffs are bringing

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only a facial challenge. Defts. Br. at 4. Although Plaintiffs do challenge the MRTP requirement on

its face, they have also put forth numerous concrete examples of how specific applications of the

MRTP requirement to their speech—such as the 60 Minutes interview discussed above, their

statements on their websites about the public debate over tobacco harm reduction, and the various

other statements identified in Plaintiffs' declarations, testimony, and briefs—are unconstitutional.

Thus, Plaintiffs' challenge to the MRTP requirement, like their challenge to all of the other speech

restrictions in the Act, is not just facial, but also as-applied.

V. THE ACT'S BAN ON REFERENCES TO THE EFFICACY OF FDA REGULATIONIS UNCONSTITUTIONAL

As Plaintiffs explained, the Act even goes so far as to ban virtually any statement about FDA

regulations that, on their face, are designed to make tobacco products less harmful. Pltfs. Br. at 34-

35. The Government claims this ban "is intended to prevent consumer confusion about the role of

the FDA with respect to tobacco products." Defts. Br. at 33. But that interest is fully met by the

Act's separate provisions banning any statement that a product is "approved by the [FDAJ," that

"the IFDAJ deems the product to be safe for use by consumers," and that the product is "endorsed

by the [FDAJ for use by consumers," § 103(b) (adding 21 U.S.C. §§ 331(tt)(I)-(3))—provisions, it

bears emphasis, that Plaintiffs are not challenging here. The Government can provide no

justification for why the Act additionally bans any "representation"—no matter how truthful or non-

misleading—"directed to consumers" "through the media or advertising" that tobacco products are

"less harmful" as a result of the FDA's regulations. § 103(b) (adding 21 U.S.C. §§ 331(H)(4)).

Thus, in addition to the Act's "tobacco product standards," which Plaintiffs have discussed at

length, Pltfs. Br. at 34, the Government also provides no reason why it is appropriate for this

provision to ban virtually any reference to FDA regulation of those reduced-risk tobacco products

that have been authorized under the MRTP prior restraint scheme, since such references will

necessarily have been found to be non-misleading. Compare Defts. Br. at 33 (suggesting that the

-38-


provision prevents circumvention of the MRTP process, but ignoring its application to statements

about products that have been approved pursuant to that process). The Government is silent

because no such reason exists, given the Supreme Court's repeated admonition that the Government

may not "suppress!J ... truthful and nondeceptive advertising simply to spare itself the trouble of

distinguishing such advertising from false or deceptive advertising." Zauderer, 471 U.S. at 646.

Likewise, for the reasons discussed above, the Government errs in characterizing any speech

"directed to consumers with respect to a product," Defts. Br. at 33-34, as commercial speech,

regardless of context or content. See supra at 37. And that is particularly true here, because, unlike

the MRTP requirement, this ban applies even to speech by parlies other than tobacco manufacturers

and retailers, such as journalists, doctors, scientists, and politicians, who, no less so than Plaintiffs,

are capable of making statements "directed to consumers with respect to a tobacco product," as the

Government does not dispute. But the Act broadly and unconstitutionally prohibits their speech as

well, which facially invalidates this provision even //this Court deems Plaintiffs' own speech to be

commercial. Fox, 492 U.S. at 481-82.

VI. THE ACT'S AUTHORIZATION OF ADDITIONAL RESTRICTIONS IS AN

UNCONSTITUTIONAL DELEGATION OF LEGISLATIVE POWER

Finally, the Government does not dispute that if the Act were to provide authorization for

federal agencies, state and local governments, and Indian tribes to enact "more stringent"

regulations, this would be an unconstitutional delegation of legislative power. Defts. Br. at 46-47.

The Government instead merely contends that the Act is not such an authorization. Id. But, for the

reasons Plaintiffs have already explained, this contention is inconsistent with the language of the

Act. Pltfs. Br. at 13, 55; Amended Complaint f 96. Moreover, even if these provisions merely

limited the scope of federal preemption, they still would be unconstitutional. "[Tjhe degree to

which ... alternative avenues for speech remain available" is an important part of the cost-benefit

calculation required under the narrow tailoring analysis, and a regime that leaves a speaker with no

-39-


realistic alternatives for disseminating its message is unconstitutional. Lorillard, 533 U.S. at 563;

see also Linmark Assocs. v. Twp. of Willingboro, 431 U.S. 85, 93 (1977) (striking down restrictions

on speech that left some alternatives for speech "in theory" but not "in practice"). Thus, when

Congress enacted the sweeping restrictions on Plaintiffs' speech contained in the Act, it was at a

minimum required to protect Plaintiffs' other avenues of speech from encroachment by other

regulators. The Act, however, does the opposite by, at a minimum, granting these other regulators

virtually carte blanche to impose yetfurther restrictions on Plaintiffs' commercial speech.

CONCLUSION

For the foregoing reasons, this Court should deny the Government's Motion for Summary

Judgment, grant Plaintiffs' Motion for Summary Judgment on Counts 1-12 and 14 of the Amended

Complaint, and enter the declaratory and injunctive relief requested therein.

40

Case 1:09-cv-00117-JHM-ERG Document 99 Filed 12/14/2009 of 5100131E

ENGLISH, LUCAS, PRIEST & OWSLEY LLP

1101 College Street. P.O. Box 770Bowling Green, K.Y 42102-0770Telephone: (270)781-6500Fax: (270)782-7782

Email: [email protected]

/s/Charles E. Enslish

CHARLES E. ENGLISH

CHARLES E. ENGLISH, JR.

D. GAINES PENN

E. KENLY AMES

ATTORNEYS FOR PLAINTIFFS

- and -

Robert F. McDermotl, Jr. (pro hoc vice)Donald B. Ayer (pro hoc vice)Geoffrey K. Beach (pro hac vice)Noel J. Francisco (pro hac vice)JONES DAY

51 Louisiana Avenue, NW

Washington, D.C. 20001-2113Telephone: (202) 879-3939

- and -

Leon F. DeJulius, Jr. (pro hac vice)JONES DAY

500 Grant St., Suite 4500

Pittsburgh, PA 15219Telephone: (412)391-3939

ATTORNEYS FOR PLAINTIFFS CONWOOD

COMPANY, LLC AND R.J. REYNOLDSTOBACCO COMPANY

- and -

Floyd Abrams (pro hac vice)Joel Kurtzberg (pro hac vice)Kayvan Sadeghi (pro hac vice)CAH1LL GORDON & REINDEL LLP

80 Pine Street

New York, NY 10005-1702Telephone: (212)701-3000

ATTORNEYS FOR PLAINTIFF LORILLARD

TOBACCO COMPANY


- and -

Philip J. Perry (pro hac vice)LATHAM & WATK1NS LLP

555 11th Street, NW, Suite 1000Washington DC 20004-1304Telephone: (202) 637-2200

ATTORNEYS FOR PLAINTIFF

COMMONWEALTH BRANDS, INC.

- and -

LeAnne Moore (pro hac vice)NATIONAL TOBACCO COMPANY, LP.

3029 W. Muhammad Ali Boulevard

Louisville, KY 40212

Telephone: (731) 364-5419, ext. 4155E-mail: [email protected]

ATTORNEYS FOR PLAINTIFF

NATIONAL TOBACCO COMPANY, LP.

Case1:09-cv-00117-JHM-ERG Document 99 Filed 12/14/2009 of 51001320

CERTIFICATE OF SERVICE

I hereby certify that on December 14, 2009, I electronically filed the foregoing documentwith the clerk of the court by using the CM/ECF system, which will send a notice of electronicfiling to the following:

Andrew E. Clark - [email protected]

Michael D. Ekman - [email protected]

William F. Campbell - [email protected]

Alisa B. Klein - [email protected]

Samantha L. Chaifetz - [email protected]

Daniel Tenny - [email protected]

Nicholas J. Bagley - [email protected]

Sarang V. Damle - [email protected]

Daniel K. Crane-Hirsch - [email protected]

James T. Nelson [email protected]

Jessica R. Gunder [email protected]

Joel D. Schwartz [email protected]

Benjamin S. Kingsley - [email protected]

Eugene M. Thirolf- [email protected]

Mark B. Stern - [email protected]

Mark R. Freeman - [email protected]

Karen Schifter - [email protected]

Jennifer A. Moore - [email protected]

Allison M. Zieve - [email protected]

Joe B. Campbell - [email protected]

Robert Corn-Revere - [email protected]

Ronald G. London - [email protected]

Aaron J. Silletto - [email protected]

A/ E. Kenly Ames

E. KENLY AMES

Case 1:09-cv-00117-JHM-ERG Document 99-2 Filed 12/14/2009 Page 1 of 1001321

UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF KENTUCKY

BOWLING GREEN DIVISION

COMMONWEALTH BRANDS, INC.;

CONWOOD COMPANY, LLC; DISCOUNT

TOBACCO CITY & LOTTERY, INC.;LORILLARD TOBACCO COMPANY;

NATIONAL TOBACCO COMPANY, L.P.;

R. J. REYNOLDS TOBACCO COMPANY;

Plaintiffs,

v.

UNITED STATES OF AMERICA; UNITED *

STATES FOOD AND DRUG *

ADMINISTRATION; MARGARET HAMBURG. *

Commissioner of the United States Food and Drug *Administration; AND KATHLEEN SEBELIUS, *Secretary of the United States Department of Health*and Human Services; *

*

Defendants. *

CIVIL ACTION

NO. l:09-cv-0H7-M

(Electronically Filed)

ORDER

This matter having come before the Court on the Motion for Summary Judgment of

Defendants United States of America; United States Food and Drug Administration; Margaret

Hamburg, Commissioner of the United States Food and Drug Administration; and Kathleen

Sebelius, Secretary of the United Slates Department of Health and Human Services (collectively,

the "Defendants"), the Court having considered the record and being sufficiently advised,

it is hereby ORDERED that the Defendants' Motion for Summary Judgment is

DENIED.

case 1:09-cv-00117-jhm-erg document 99 filed 12/14/2009

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