'Corrective Statements' From a Retail Perspective

Decision on retail sign requirement expected soon

Thomas A. Briant, NATO Executive Director

Gladys Kessler

Gladys Kessler

The issue of “corrective statements” is an important one for retailers that sell cigarettes, and one that has not been in the news lately. This issue first arose in 1999, when the U.S. Department of Justice brought a lawsuit against several cigarette manufacturers regarding statements made by the companies about cigarettes and smoking. Then, in August 2006, Federal District Court Judge Gladys Kessler issued what is called a "remedial order" which, in part, required manufacturers to develop "corrective statements" about cigarettes and smoking.  

Besides requiring the manufacturers to air television ads and print newspaper ads with the corrective statements, Judge Kessler's order also required each manufacturer to place a countertop sign measuring 18 inches wide by 30 inches high with the corrective statements on the store counter in every checkout line of each retailer that had a retail merchandising contract with the manufacturer. In addition, the manufacturers would also need to place a corrective statement sign equivalent in size to a display case header sign on cigarette display cases.  

Both the countertop signs and the header display signs would need to be displayed for a two-year period. If a retailer refused to display the signs, the manufacturer would be required to suspend that retailer's merchandising contract for one year.

This remedial order was appealed and the U.S. Circuit Court of Appeals issued an order which, in part, remanded or sent the case back to Judge Kessler to evaluate the impact of the corrective statement countertop signs and header displays on the rights of innocent retailers and either abandon this part of the original remedial order requiring the point of sale signs or craft a new version which takes into account the rights of retailers. The U.S. Circuit Court of Appeals issued this order because retailers were never a party to the lawsuit. This means that retailers did not have an opportunity to be heard in court or present evidence on the impact of requiring the countertop and header display signs.  

Three years ago in May 2011, NATO filed a legal brief with Judge Kessler arguing why the First Amendment to the U.S. Constitution protects innocent retailers from being compelled to place these corrective statement signs in their stores and explaining how the placement of the signs will create security issues for store employees as the signs will likely block the clerk’s view of the store and customers in the store. At that time, the National Association of Convenience Stores (NACS) also filed a brief on these same issues.

On May 2, 2014, Judge Kessler issued a follow-up order allowing NATO and NACS to file supplemental briefs on the issue of corrective statement point of sale signs. NATO has filed its supplemental brief with the federal district court and argued that: (1) the implementation of a point of sale sign requirement is a virtual impossibility due to the numerous different kinds of retailers that sell cigarettes and the various layouts of checkout counters, (2) the displacement of sellable merchandise will reduce sales due to the loss of valuable countertop space taken up by an 18 inches wide by 30 inches corrective statement sign at each register, (3) the store personnel will be unable to clearly monitor the store and customers in the store due to the placement of corrective statement signs on store counters, (4) an in-store security risk will arise since the signs will also block a full view of the store by security camera systems, (5) the distribution of small brochures, called “onserts,” with the same corrective statements will be affixed to cigarette packs and cartons by the manufacturers during six time periods over the next two years and will make the placement of the 18x30 inch countertop signs and display case header signs redundant, and (6) the First Amendment protects the right of an innocent, private party from being compelled to distribute a government mandated message.

A final decision on whether the point of sale corrective statements sign requirement for retail stores should be issued by the federal district court in the near future.