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Friday, February 1, 2013

Tobacco: Selected Legal Issues

Jane M. Smith
Legislative Attorney

Over the past couple of decades, the courts and Congress have been grappling with tobaccorelated issues, among them, the Food and Drug Administration’s (FDA’s) authority to regulate certain tobacco products under the Federal Food, Drug, and Cosmetic Act (FDCA); the Master Settlement Agreement (MSA) that resulted from lawsuits brought by states’ attorneys general against tobacco companies; federal, private party, and foreign lawsuits against tobacco companies; limits on tobacco advertising; restrictions on selling and distributing tobacco to minors; and the Federal Trade Commission’s rescission of its 1966 guidance document relating to tar and nicotine yields in cigarettes. This report addresses the above issues, with the exception of the FDA’s authority to regulate tobacco products. For information on that topic see CRS Report R41304, FDA Final Rule Restricting the Sale and Distribution of Cigarettes and Smokeless Tobacco, by C. Stephen Redhead and Jane M. Smith.

In the 1990s, states’ attorneys general brought lawsuits for reimbursement of their states’ tobaccorelated medical expenses. They reached a settlement with tobacco companies in 1997, but the settlement did not garner the congressional approval needed for implementation. In 1998, 46 states, the District of Columbia, five U.S. territories, and the tobacco industry signed the MSA, worth $206 billion over 26 years.

In 1999, the Clinton Administration filed a lawsuit against major tobacco companies and industry trade groups to recoup federal tobacco-related medical costs. In 2006, a federal district court held that the tobacco companies violated two provisions under the Racketeer Influenced and Corrupt Organization Act (RICO) by, among other things, making false statements about the health effects of smoking. Among other remedies, the court ordered them to remove descriptors such as light, low-tar, natural, mild, and ultra light from their packaging. In 2012, the court ordered them to issue factual statements to counter the false statements that were part of the RICO verdict.

Since the U.S. Supreme Court’s 1992 decision in Cipollone v. Liggett Group Inc., individual and class action lawsuits have been brought against tobacco companies under theories such as fraudulent representation, conspiracy, breach of express warranty, and failure to warn. The private party suit section of this report discusses selected state class actions. Suits brought in federal courts by foreign governments for medical care costs resulting from tobacco-related illnesses have not been successful.

Tobacco advertising is restricted at the federal, state, and local levels. The Federal Cigarette Labeling and Advertising Act (FCLAA), the Family Smoking Prevention and Tobacco Control Act (FSPTCA), state laws, the MSA, and local ordinances limit tobacco advertising in ways such as prohibiting radio and television advertisements, compelling the use of health warning labels, limiting the use of terms that imply decreased health risks, banning the use of cartoons, and requiring individuals to have contact with a sales person before purchasing tobacco products. Additionally, federal law plays a role in enforcing laws that prohibit tobacco sales and marketing to minors.

Date of Report: January 14, 2013
Number of Pages: 18
Order Number: RL33719
Price: $29.95

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