Corrective Statements: Final POS Retail Ruling Expected Soon

Thomas A. Briant, NATO Executive Director

In 1999, the Department of Justice brought a lawsuit in U.S. federal district court against three cigarette manufacturers regarding statements made by the companies. In August 2006, Federal District Court Judge Gladys Kessler issued what is called a "remedial order" which, in part, required these manufacturers to develop "corrective statements" about smoking and health, secondhand smoke, and nicotine and addiction and publish these statements in newspapers, on the manufacturers' websites, and on posters to be displayed on retail store counters as well as on or next to retail cigarette displays.

This remedial order was appealed by the manufacturers and the U.S. Circuit Court of Appeals issued an order which sent the case back to Judge Kessler directing her, among other things, to evaluate the impact of the retail corrective statement posters on the rights of innocent retailers and either abandon the retail corrective sign requirement or craft a new version which takes into account the rights of retailers. Since the original order issued by Judge Kessler could be interpreted to require up to three corrective statement posters 18-inches wide by 30-inches high in size on each store checkout counter, the corrective statement signs would take up a large portion of the counter space.

In response to this U.S. Circuit Court of Appeals ruling, NATO and other trade organizations submitted briefs in May 2011 to Kessler arguing that the corrective statement poster requirement in her order be deleted in its entirety. The arguments raised in NATO's brief included an infringement of retailers' First Amendment rights to refrain from posting such corrective statement posters in their stores, the fact that retailers are innocent third parties having never made the original statements nor been a party to the Department of Justice's lawsuit, and heightened security risks since the posters would obscure an employee's view of the store floor.

On Nov. 27, 2012, Kessler issued a final remedial order listing the actual text of the corrective statements that manufacturers must publish. In the memorandum accompanying the final order, Kessler included a footnote on pages 54 and 55 that reads:

"Defendants [the cigarette manufacturers] were also ordered to include the statements on Countertop Displays and Header Displays provided as part of their Retail Merchandising Programs. This part of the remedial order was vacated and remanded [by the U.S. Circuit Court of Appeals for the District of Columbia] for the district court to evaluate and make due provisions for the rights of innocent persons [i.e., retailers], either by abandoning this part of the remedial order or by crafting a new version reflecting the rights of third parties. This issue has been fully briefed, and will be resolved in the near future."

This footnote means that Kessler will issue a followup order and either eliminate the requirement for the manufacturers to place corrective statement posters in retail stores or change her order to take into account the rights of the innocent third parties, namely retailers.

The manufacturers are reviewing the Nov. 27 order issued by Kessler to determine if any further legal action will be taken. NATO will update retailers when Kessler issues an additional order on the corrective statement posters at retail.