Federal Court Upholds Providence, R.I., Bans on Coupons, Promotional Pricing and Flavored Tobacco Sales

Thomas A. Briant, NATO Executive Director

This week, the U.S. Circuit Court of Appeals for the First Circuit issued a ruling that upholds two Providence, R.I., ordinances that prohibit retailers from (1) redeeming coupons to obtain a tobacco product free of charge or for less than the listed or non-discounted price, (2) selling tobacco products to adult consumers through any promotional multi-pack discounts such as buy-two, get-one free packages, and (3) selling flavored tobacco products, other than cigarettes, except in a smoking bar. Click here for a copy of the U.S. Circuit Court of Appeals decision.

When the Providence City Council adopted the two tobacco ordinances on Jan 5, 2012, NATO, the Cigar Association of America, Lorillard Tobacco Co., R.J. Reynolds Tobacco Co., American Snuff Co., Philip Morris USA Inc., U.S. Smokeless Tobacco Manufacturing Co. LLC, U.S. Smokeless Brands Inc., and John Middleton Co. filed a federal lawsuit against the City of Providence seeking to overturn the two ordinances. When the federal district court judge upheld both Providence ordinances, NATO and the other plaintiffs appealed the case to the U.S. Circuit Court of Appeals.

First Amendment Issue: One of the main arguments advanced in the case by NATO and the other plaintiffs was that the ordinance banning coupon redemption and promotional multi-pack pricing violated the First Amendment of the U.S. Constitution, which protects commercial speech that includes advertising and promotional practices. The U.S. Supreme Court has ruled previously that pricing information for lawful transactions is protected commercial speech. 

However, in its decision, the U.S. Circuit Court of Appeals held that the Providence ordinance “does not restrict the dissemination of pricing information generally” and only “restricts the ability of retailers to engage in certain pricing practices, name accepting or redeeming coupons for tobacco purchases, and selling tobacco products by way of multi-pack discounting….” Specifically, the appeals court decision states “price regulations designed to discourage consumption do not violate the First Amendment.” 

Furthermore, the U.S. Circuit Court of Appeals relied on the Supreme Court decision in United States v. Williams which held that offers to engage in illegal activity are denied First Amendment protection. The U.S. Circuit Court of Appeals reasoned that since the Providence City Council adopted an ordinance making illegal what had been legal, namely redeeming or offering to redeem tobacco product coupons, then First Amendment protections are no longer applicable for accepting and redeeming coupons.

Preemption Issue: The second major argument advanced to overturn the two Providence ordinances was that federal law pre-empted these restrictions. The Federal Cigarette Labeling and Advertising Act (FLCAA) prohibits a state or city from adopting a law that contains restrictions or prohibitions on cigarette advertising or promotion based on smoking and health. Several U.S. Circuit Courts have ruled previously that under the FCLAA, the term “promotion” as used in the federal law includes discounting and couponing. 

The U.S. Circuit Court of Appeals for the First Circuit expressly agreed in its opinion with these other circuit courts that coupon redemption constitutes “promotion” under the FCLAA and would be pre-empted. However, the First Circuit judges relied on the Family Smoking Prevention and Tobacco Control Act, the law that granted the FDA the authority to regulate tobacco products, to hold that states and cities can adopt laws that regulate the “time, place and manner” of tobacco advertising and promotions, but not the content of the ads or promotions. The First Circuit court’s ruling found that banning coupon redemption and promotional pricing are regulations that constitute a restriction on the “manner” of promotion and, for that reason, are legally allowable.

Finally, the plaintiffs argued that the ban on the sale of most flavored tobacco products violated the Family Smoking Prevention and Tobacco Control Act.  However, the First Circuit appeals court held that since flavored tobacco products can still be sold in “smoking bars” in Providence, then the restriction is not a blanket prohibition and is a regulation allowed under the Family Smoking Prevention and Tobacco Control Act.