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Case number 18-5195, Cigar Association of America et al.

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Appellants versus United States Food and Drug Administration et al.

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Mr. Etty for the appellants, Ms.

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Powell for the appellees.

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I'll just hold on a second while they finish there.

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Okay.

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You bet.

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No, you can stand there.

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It'll be easier to hear once everybody finishes.

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All right.

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Thank you.

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Thank you, Chief Judge Garland.

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May it please the Court, I'd like to reserve three minutes for rebuttal.

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The FDA warnings must cover 30% of the two main sides of every cigar and pipe tobacco box and 20% of every cigar and pipe tobacco advertisement.

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They come in a stark black on white format that makes the government the most prominent speaker on each medium.

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The law has developed to make clear that these warnings violate the First Amendment.

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The Supreme Court's decision in the National Institute of Family Life Institutes versus Becerra in June of 2019

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held that compelled commercial disclosures must first remedy a problem that is real and not purely hypothetical, and two, must extend no broader than is reasonably necessary.

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And the burden is on the government to so prove.

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Doesn't this, for all of the long lined up about

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Central Hudson and Zodder and everything else, doesn't this case just come down to the government's selection of an area, 30%, as opposed to a smaller warning that you can see would be permissible?

[00:02:10] Speaker 05:
Yes, Your Honor, this case, this part of the Segura Association case is about the size of the warnings, not their content.

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The content is being challenged below, but in this posture, the only issue is the size.

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If that's all that's at issue, doesn't the government get a certain amount of leeway in saying,

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30 as opposed to 25, as opposed to 20, as opposed to whatever?

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The government has some discretion in this area, but it also has a constitutional burden to satisfy, and that burden is to show that the warnings extend no broader than is reasonably necessary.

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I mean, I understand that, but I'm thinking of

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Burson versus Freeman, which is a First Amendment case applying strict scrutiny.

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And the question was, within how many feet of a polling area can a certain restriction be imposed?

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And the Supreme Court said, if you're just picking that number, the government has a lot of latitude.

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And we're not going to sort of apply strict scrutiny to the question of 30 versus 29.

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Well, Your Honor, I think in this particular case we have a different situation because for the last 18 years there has been a warning scheme in place for cigars imposed by the Federal Trade Commission.

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That scheme covers somewhere between 10 and 14 percent of one panel of each cigar box and 4 to 8 percent of every cigar advertisement.

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It covers

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today, more than 80 percent of the industry at the time that the FTC warnings were promulgated, covered 95 percent of the cigars sold in the United States.

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And the agency did not properly deal with shifting from that widespread system to this broader warning.

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In those circumstances, we think that the burden is on the government to show that that

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less restrictive alternative would be adequate to serve the government's interest, whatever that interest may be.

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We can talk about that in a moment.

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Yeah, I mean, if it's a unitary choice between the old FTC regime, four to eight percent, or the current regime, 30 percent, your argument has a lot of force.

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I mean, this is a much greater speech burden than the prior regime.

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But if it's just, they have, let's assume the agency has good reason for wanting to expand the size of the warning.

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And then back to my first question, at that point are we just back to they're picking a number and we're on a spectrum and how is anyone going to assess whether 30 is the right balance as opposed to

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I do agree with Your Honor that it would be a different case if the agency were choosing the scope and size of the cigar warnings for the first time, if there were not an existing regime that was available for study.

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But that's not this case.

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Here we had a scheme that was in place for most of the industry that most of the industry already complies with, for which there would be no conversion costs for most of the industry.

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And the agency said that we need to go in a different direction and expand these warnings to cover 30 percent.

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And Congress, in the family prevention statute,

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Excuse me.

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It made findings and stated a purpose.

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One of the findings was that the FDA has the expertise to evaluate the impact of labels on consumer behavior.

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And the purpose section of the statute says because of that expertise, we're giving the FDA the primary regulatory authority.

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And I understand your argument to be

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that the FDA never exercised that expertise to evaluate labels and their effect on consumer behavior.

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That's exactly right, Your Honor, and as the discourse decision in R.J.

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Reynolds versus the Food and Drug Administration pointed out, the principal focus of the Family Smoking Prevention and Tobacco Control Act was on how labels would reduce the use of tobacco.

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As a result, this Court identified that as the key purpose, and the opinion moored that right in the statute, citing that very finding that when

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When the Congress was channeling that expertise through the agency, it was focused on its ability to look directly at how these labels would reduce tobacco use, and that didn't happen here.

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There was an argument in R.J.

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Reynolds' fallback position that said, well, the government interest, the purpose here is just to inform consumers.

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That was rejected.

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That's just a means.

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The objective was, and the interest of the government was, reducing the use of tobacco, in that case cigarettes.

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That portion of R.J.

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Reynolds, I take it your argument is, was never overruled by American meat.

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That's still circuit law.

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Absolutely not.

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It was not overruled.

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And you're exactly right, Your Honor.

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The R.J.

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Reynolds Court noted that the agency wasn't

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leaning on that issue hard, but also rejected the interest in effectively communicating the health risks of cigarettes in that case as a freestanding substantial interest that can justify a compulsion of speech.

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Can I ask you about that?

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Yes, Your Honor.

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So that's from the part of R.J.

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Reynolds which declined to apply Zauder and instead applied Central Hudson, right?

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Yes, Your Honor.

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And you don't have any dispute that Zauder, as interpreted by the Supreme Court's most recent opinion, is the one that governs this part of the rule, correct?

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Well, we do contend that insofar as the warnings were expanded from 10% to 14% to 30% on packages and the similar amount.

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I had understood that was part of your claim of the undue burden.

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which is part of the Supreme Court's explanation of what Zadar requires and what we previously said Zadar also applies.

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There's no suggestion that Central Hudson applies to this kind of warning, is there?

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We do contend that the expansion of the warnings has a restrictive effect on our speech, and that quantum needs to be evaluated.

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It's your position, as I understand it.

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No matter whether you apply Central Hudson, or you apply Baccarat, or you apply Zadar, you still have to identify what the government interest is.

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You can't do that.

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You can't apply Baccarat and determine whether something's reasonably necessary unless you find out what it's necessary to accomplish.

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So it doesn't matter one way or the other whether you apply Zauderer or Sankron or somebody else.

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Has any decision of our court said that under Zauderer, the interest of the government in ensuring that consumers know whether a

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a product will harm them is insufficient for Zauder.

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Not whether providing that information will make them stop, simply the interest in making sure that they know that it will harm them.

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Yes, I'll turn to your question and then to Judge Randolph's question.

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This court in American Meat held open the question of whether Zodder requires a substantial state interest, the type of interest that would qualify under, to qualify under Central Hudson.

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But the interest that was in American Meat is not different than the interest here.

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The interest there was providing consumers with information about where they got it.

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There was a suggestion that it might cause people to buy more American meat, but there was no evidence in the record at all on that subject, as Judge Randolph pointed out in a subsequent opinion, National Association of Manufacturers.

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So the en banc position of this court is that you don't have to show, you don't have to have as the purpose stopping smoking.

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Is your allegation that you have to have the purpose

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Stopping smoking?

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Yes, it is.

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If that's the case, then your position is no warnings are permissible.

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Not just the large warnings, but no warnings.

[00:11:36] Speaker 05:
No, that's not our position at all, Your Honor.

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We think a case absolutely could be made for a warning scheme that would have the effect of reducing smoking cases, just not the case that was made by the agency here.

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A small warning would be effective in reducing smoking, but not a large one?

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It is quite possible that the agency could

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could build a case that a warning of some sort was needed to reduce smoking rates, but that case wasn't built here.

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Again, the agency made the strategic decision not to build a case that this warning scheme would reduce the use of cigars.

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It disclaimed that interest.

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If you could assume for the moment, contrary to your view, but assume for purposes of the argument, that it is a permissible purpose for the government under Zauder, substantial enough, whatever that means,

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to provide information to the consumers about the dangers of the hazardous product, that that alone is sufficient.

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Now, the government cites evidence that since 2001, notwithstanding the

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warnings of FTC size that people still don't understand the dangers of cigars.

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Is that right?

[00:13:06] Speaker 05:
No, I don't believe that is right, Your Honor.

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That is what the agency argues in this brief before this Court, but I do not think that there is evidence in the administrative record of that.

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In that regard, the agency claims that consumers misperceived the risks of cigar use, but they relied on data

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entirely collected in the 1990s before the Federal Trade Commission.

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You submitted the PATH study, didn't you?

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We did, Your Honor.

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And the PATH study is after 2001, right?

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Certain waves of the PATH study are after 2001, yes.

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And the supplemental Table B shows that substantially more than 50 percent of cigar smokers think that cigars might be less harmful than cigarettes.

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that I will say that that's not a study on which the agency relied.

[00:13:54] Speaker 03:
But it's one you pushed in the district court, right?

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It is one.

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Do you want to renounce the study?

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Isn't that true?

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I mean, that's not a misconception.

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that smoking cigars is less risky than smoking cigarettes because of the way cigars are used and the number of, you know, there's some evidence that the premium cigars are only smoked 1.7 times a month.

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So that's true, isn't it?

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That's absolutely right, Your Honor.

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If you look at the way cigars are used by most people who use them, in particular premium cigars, and your honor was right to point out that the past study demonstrates that the median premium cigar consumer uses this product 1.7 days per month, that pattern of usage clearly is less dangerous than the normal pattern of usage of cigarettes, which is 29 days per month.

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Can I leave aside this dispute about premium cigars?

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You agree, and maybe I'm confused,

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I understood that you agreed that the warning labels are true and accurate.

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Is that correct?

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For leaving us out the size, you are not disputing the truth of the warning labels.

[00:15:07] Speaker 05:
At this stage of the litigation, the parties are not disputing the truth of the warning labels.

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They are being disputed below in their application.

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But as far as we're concerned today, they're true, correct?

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Yes.

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Warning label three, cigars are not a safe alternative to cigarettes, correct?

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That's what it says?

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Yes, that is what it says.

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All right.

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So if people still believe since 2001, and notwithstanding the FTC warning label, that cigars are a safe alternative to cigarettes, that suggests that the warning label hasn't done its job.

[00:15:46] Speaker 05:
Respectfully, we believe that the agency hasn't built a record for that.

[00:15:50] Speaker 03:
Well, I'm just looking at your submission, Supplemental Table B Path Study,

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I'll be happy to leave out the premium cigars.

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Non-premium cigars.

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27.1% smokers of non-premium cigars said they might be less harmful than cigarettes.

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24.5% of cigarillo smokers and 27.7% of filtered cigar smokers all think the opposite of what you are conceding is true for purposes of this appellate argument.

[00:16:24] Speaker 05:
Your Honor,

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That is precisely why this rule needs to be remanded back to the agency, because this is a study which the agency did not undertake.

[00:16:35] Speaker 01:
They never... I don't think you're answering Judge Garland's question.

[00:16:42] Speaker 01:
To say that cigars are a safe alternative to cigarettes is not the same thing as saying cigars are less risky than cigarettes.

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Cigars are dangerous.

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The question that Judge Garland is posing, are they as just as dangerous because of the method of usage, whether premium or otherwise, as smoking cigarettes?

[00:17:07] Speaker 01:
And the answer to that, where's the evidence that they're just as dangerous?

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I don't see any evidence to that effect.

[00:17:17] Speaker 05:
Your Honor, you're correct that warning number three does not match the data that Judge Garland is citing.

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They're going after two separate propositions, and nor does the data on which the agency relies, because again, the agency did not study misperceptions of cigars before the FTC warnings and after.

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All the evidence on which it relies is before.

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The afterwards evidence shows something quite different.

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For example, at page 535 and 537 of the Joy Dependents, one of their major studies, a study of college students showed that 93% of college students did not think smoking cigars was less dangerous than smoking cigarettes.

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So again, this is one of these, this is the inquiry that the agency failed to undertake at page 29, 066.

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of the final rule, it dealt with the format of the Federal Trade Commission warnings in less than a sentence, and it should have engaged in a differential study.

[00:18:19] Speaker 06:
Doesn't this part of your argument put at risk all sorts of health and safety warnings?

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Your position on the government interest point is that a warning is

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unconstitutional except to the extent the government can prove that it is effective in changing consumer behavior.

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That seems like a pretty revolutionary proposition.

[00:18:48] Speaker 05:
Respectfully, Your Honor, I don't think it does put at risk most health and safety warnings.

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Why?

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This is a particular situation where we've had warnings in place for quite some time, and we're looking to change the scope and size of those warnings.

[00:19:04] Speaker 05:
We're saying in those circumstances,

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As in the R.J.

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Reynolds case, the substantial interest that needs to be driven is reducing tobacco use.

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Also, it's more than the statute, as the R.J.

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Reynolds opinion pointed out, and as Your Honor pointed out.

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But the agency time and time again asked the agency to exercise its expertise about how labels would reduce tobacco use.

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Section 9061 of the statute required the agency to take into account how restriction on marketing would reduce tobacco use.

[00:19:35] Speaker 06:
What about a perfectly humdrum nutrition label?

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The government is indifferent about how much

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I don't know, red meat or someone is consuming, but they just want consumers to know that it has X percent fat and Y calories and whatever.

[00:19:56] Speaker 05:
Well, with respect, we think that nutritional labels and drug labels, which the government points to in their brief, are a very different case.

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First of all, they're much less intrusive than these.

[00:20:08] Speaker 06:
No, but just focus on the government interest.

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Is it a sufficient interest to

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convey fully accurate, non-ideological information within the meaning of zodder, or does the government have to defend the further interest of changing behavior as a result of the warning?

[00:20:36] Speaker 05:
Your Honor, we do not believe it is sufficient

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that the government has a purely informational interest that can drive the constitutional analysis.

[00:20:43] Speaker 05:
That puts at risk all of these other warnings.

[00:20:45] Speaker 05:
Well, it also puts at risk any meaningful limits on the government's ability to compel speech, because a larger… Well, maybe not.

[00:20:52] Speaker 06:
Maybe we take care of that problem in the undue burden analysis.

[00:20:57] Speaker 05:
You're right, Your Honor, and I'm encouraging

[00:21:00] Speaker 05:
that as well, because again, as Becerra tells us, and Becerra, the second part of Becerra was all about the size and scope of the warnings.

[00:21:09] Speaker 05:
Becerra tells us that they can be no broader than the reasonably necessary, and the ensuing analysis of the American Beverage Court in the Ninth Circuit was

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you know, are these things too big?

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Will a lesser disclaimer or a smaller disclaimer suffice?

[00:21:24] Speaker 05:
And the government needs to prove that it doesn't.

[00:21:25] Speaker 01:
It doesn't do that.

[00:21:26] Speaker 01:
For every slippery slope, there's usually an opposing slippery slope.

[00:21:31] Speaker 01:
And the opposing slippery slope here is that if you allow the government to mandate disclosures for the purpose of educating consumers, then why not require, then it would be constitutional for the government to require

[00:21:47] Speaker 01:
that every cigar box contained a label showing where the particular strain of tobacco was raised and harvested, and what the strain is, and where it was rolled, and where it was packaged, and how long that particular cigar will last after being lighted.

[00:22:12] Speaker 01:
And it's endless.

[00:22:14] Speaker 01:
So that can't be either.

[00:22:16] Speaker 01:
And at least in R.J.

[00:22:18] Speaker 01:
Reynolds, there was a stopping point.

[00:22:20] Speaker 01:
The stopping point was why are you putting this information on a label?

[00:22:25] Speaker 01:
And the answer was to try to prevent people from smoking.

[00:22:28] Speaker 01:
If you don't have evidence that it's going to do that, then you can't require that label.

[00:22:33] Speaker 05:
You're right, Your Honor.

[00:22:34] Speaker 05:
There's always going to be an opposing slippery slope.

[00:22:36] Speaker 05:
And it's what you identified.

[00:22:38] Speaker 05:
It's also the fact that bigger will always be better.

[00:22:41] Speaker 05:
Does it stop at 30 or 50 or 70?

[00:22:43] Speaker 05:
They will always be better noticed if they are bigger.

[00:22:47] Speaker 05:
Identifying the reducing tobacco use interest puts a stop to that.

[00:22:51] Speaker 05:
But to answer your question more directly with regard to nutritional labels, I suspect if nutritional labels were challenged before this Court,

[00:23:00] Speaker 05:
The government, and they really haven't been, the government would be defending them on more traditional za'atar grounds, which is that they are made in order to prevent consumer deception.

[00:23:13] Speaker 05:
In the food industry and the over-the-counter drug industry, manufacturers all the time are making comparative nutritional claims about what's better for you to eat than other things.

[00:23:23] Speaker 01:
Yeah, there's a case, I don't know if you're familiar with it, that's cited in za'atar.

[00:23:27] Speaker 01:
where in the Seventh Circuit the FTC got an injunction against the American Egg Institute because it was advertising that eggs are good for you.

[00:23:36] Speaker 01:
And the Department of Agriculture said, no, they're not.

[00:23:40] Speaker 01:
They cause cholesterol.

[00:23:42] Speaker 01:
The government, I think about five years ago, said we were wrong.

[00:23:46] Speaker 01:
and the injunction, I guess, was still in effect had to be lifted, that ingesting cholesterol-rich eggs doesn't cause cholesterol in the blood at all.

[00:23:56] Speaker 01:
So for 20 years or more, the American public was not permitted to know that eggs have beneficial value, at least through advertisements by the Egg Institute.

[00:24:09] Speaker 05:
Yes, I remember that footnote in Zadar and it was right next to another footnote that said that nothing about Zadar was dealing about how we deal with the scope or size of the warnings, it's just the existence of it.

[00:24:21] Speaker 05:
And I would say to your honor that that's what American Meat was about.

[00:24:26] Speaker 05:
I would direct your honor to page 329 of the Joint Appendix where we see the American Meat warning.

[00:24:34] Speaker 05:
on a meat package.

[00:24:36] Speaker 05:
It's almost impossible to see.

[00:24:38] Speaker 05:
The American meat was not about the size of warnings.

[00:24:40] Speaker 05:
It was about the existence of them.

[00:24:42] Speaker 01:
But to go back to your question... In order to enable American consumers to buy American... Yes.

[00:24:50] Speaker 01:
Yes.

[00:24:51] Speaker 01:
And you know what happened to that?

[00:24:53] Speaker 01:
The World Trade Organization

[00:24:55] Speaker 01:
held that that was a treaty violation by the United States after the American meat case came down and authorized a trade war by Canada.

[00:25:06] Speaker 01:
And you know what happened next?

[00:25:07] Speaker 01:
Congress repealed the warnings that that American meat upheld.

[00:25:13] Speaker 01:
So they're no longer in effect.

[00:25:15] Speaker 05:
And this court was explicitly skeptical that the government wasn't revealing its true interest.

[00:25:21] Speaker 05:
in the warning.

[00:25:23] Speaker 03:
That's correct, except the court said nonetheless the fact it didn't matter whether the government was revealing its true interest.

[00:25:31] Speaker 03:
First it said deception is not required, right?

[00:25:34] Speaker 03:
It overruled RJR to the extent that it said that the interest had to be in preventing deception, correct?

[00:25:42] Speaker 03:
the en banc court overruled that provision of RJR, correct?

[00:25:45] Speaker 03:
Yes.

[00:25:46] Speaker 03:
And second, it looked not only at what the government said its interest was, providing information, but also what the statute talked about, which may have been preferring Americans meet.

[00:26:01] Speaker 03:
In this case, statute is a bit like that as well.

[00:26:05] Speaker 03:
Certainly clear from the statutory purpose that there's an element of keeping people from

[00:26:10] Speaker 03:
allowing people to choose American meat.

[00:26:14] Speaker 03:
And third, there was never no argument in American meat that you had to prove that putting on the label would have people choose American meat.

[00:26:25] Speaker 03:
That's what you're arguing here.

[00:26:27] Speaker 03:
The problem here is not what the purpose is.

[00:26:31] Speaker 03:
Your claim is the government can't prove it will reduce the amount of smoking.

[00:26:36] Speaker 03:
But we never required that before.

[00:26:38] Speaker 05:
Well, let me take each of those points in turn.

[00:26:41] Speaker 05:
First of all, the on-bond court in American Meat was very explicit about what it was overruling in R.J.

[00:26:48] Speaker 05:
Reynolds, and it was only this assertion that Zorder only applies in situations of preventing consumer deception.

[00:26:57] Speaker 05:
Second, when

[00:26:59] Speaker 05:
The American meat en banc court talked about the interest in question.

[00:27:02] Speaker 05:
It always tied it back in to what the consumer was doing.

[00:27:07] Speaker 05:
It talked about the interest in consumers knowing where a product came from in the event of a food borne illness outbreak in a certain country.

[00:27:15] Speaker 05:
Why?

[00:27:16] Speaker 05:
Because obviously people would shy away from that product in such circumstances.

[00:27:20] Speaker 03:
Well, no.

[00:27:21] Speaker 03:
It provided them with information.

[00:27:24] Speaker 03:
from which they could make a consumer choice.

[00:27:27] Speaker 03:
This is the classic conservative position that disclosures provide the opportunity for choice.

[00:27:35] Speaker 03:
They don't force anybody to do anything.

[00:27:37] Speaker 03:
They provide the opportunity for choice.

[00:27:40] Speaker 03:
That's why Zauder was established, was issued, because Zauder said it is far less to simply require disclosure than to restrict in the first place.

[00:27:52] Speaker 03:
Isn't that right?

[00:27:54] Speaker 05:
But Your Honor, in these circumstances, it drew from extensive findings in the statute about the preferences of consumers for American meat.

[00:28:04] Speaker 01:
Judge Williams, in his opinion, identified the governmental interest as enabling, despite the government's disclaimer, as enabling American consumers to buy American meat.

[00:28:17] Speaker 01:
Right?

[00:28:18] Speaker 01:
Yes.

[00:28:18] Speaker 01:
And as far as the proof is concerned, I think that our American media acknowledged the Supreme Court at Edentfeld v. Fain required evidence to support whatever the government interest is.

[00:28:33] Speaker 01:
Right?

[00:28:33] Speaker 01:
And Judge Williams, for the in-bank court, said it's self-evident here that if we tell them the product, the whatever

[00:28:45] Speaker 01:
the beef was born, raised, and slaughtered in the United States, that'll enable the American consumer to buy American, and it's self-evident.

[00:28:56] Speaker 01:
So he didn't need the proof.

[00:28:58] Speaker 01:
Question, is it self-evident that 30% labeling on a pack of cigars is going to reduce smoking by cigar smokers?

[00:29:08] Speaker 05:
No, and especially not on this record, where the agency says in its final regulatory impact analysis,

[00:29:14] Speaker 05:
that there is no credible evidence that the warnings will reduce the use of tobacco.

[00:29:19] Speaker 05:
It's not apparent on this record where the agency disclaims studying any of those interests.

[00:29:25] Speaker 05:
It's not apparent on this record after IJR where it actually studied a 50% warning on cigarettes and found after an extensive study that it would only reduce use by 0.088%, a number that was indistinguishable from zero.

[00:29:40] Speaker 05:
So it is not apparent here, and Your Honor,

[00:29:43] Speaker 05:
when Your Honor took up the American Meat case in a subsequent panel opinion, which remains binding the National Association of Manufacturers case versus the SEC.

[00:29:52] Speaker 05:
There, the ability of the disclaimer to affect the result that was being sought by the government was challenged.

[00:29:58] Speaker 05:
And this court correctly pointed out, relying on Ed and Field versus Fane, that the government has the burden of proving that the disclaimer will alleviate the identified harm by material degree, and it can't rely exclusively on conjecture and speculation.

[00:30:17] Speaker 05:
Sorry, was NAM post-American?

[00:30:20] Speaker 05:
It was.

[00:30:21] Speaker 05:
It was, Your Honor.

[00:30:21] Speaker 03:
But it didn't apply to Zauder, right?

[00:30:23] Speaker 05:
It did.

[00:30:24] Speaker 05:
And I think Judge Randolph knows it particularly well, having written it.

[00:30:28] Speaker 03:
Well, he may have written it, but I'm reading it right now.

[00:30:31] Speaker 03:
It says, in answer to the SEC's open question, we therefore hold that Zauder has no application to this case.

[00:30:41] Speaker 03:
So that is not, Zauder was not what was applied in National Association of Medicine.

[00:30:46] Speaker 05:
But we have to continue reading, because what happened

[00:30:50] Speaker 05:
in the ensuing paragraphs, and I'm afraid I don't have the page committed to memory, was that the court said that there's a lot of dispute about where and how Zauterer applies.

[00:31:00] Speaker 05:
So we're going to take this issue off the table.

[00:31:02] Speaker 05:
We're going to rest our holding on applying Zauterer to the record in this case in a full-throated manner, and then win on for

[00:31:10] Speaker 05:
for four pages of the federal reports to explain how the SEC conflict mineral disclosure did not satisfy this auditor test on its own terms.

[00:31:23] Speaker 05:
And I'll keep in mind that the first line of defense there for the court was that it did not drive the government's result, that there wasn't enough evidence that would alleviate the harm to a material degree.

[00:31:35] Speaker 05:
It was only after that that it said, oh, by the way, if we have to reach this, there are questions about whether this particular disclaimer is purely factual and uncontroversial.

[00:31:43] Speaker 05:
So this National Association of Manufacturers versus the SEC is the post-American meat case that deals with the situation where the efficacy of the warning is challenged.

[00:31:55] Speaker 05:
And I would take the court to go back to Your Honor's question a few series ago.

[00:32:03] Speaker 05:
There was an argument, very much so in American meat, that we should not have a purely informational interest.

[00:32:09] Speaker 05:
And that argument was made by Judge

[00:32:13] Speaker 05:
now Justice Kavanaugh and his concurrence.

[00:32:16] Speaker 03:
His was a separate opinion.

[00:32:17] Speaker 05:
Yeah, it was a separate opinion.

[00:32:18] Speaker 05:
But the majority, what Judge Kavanaugh said was that he was thankful that the majority opinion wasn't relying on purely informational interest.

[00:32:29] Speaker 05:
And certainly the Anban Court had an opportunity to clarify that.

[00:32:34] Speaker 06:
I found that opinion pretty persuasive, but I think it cuts against you on this one point.

[00:32:41] Speaker 06:
because he says he is very concerned with Judge Randolph's counter slippery slope.

[00:32:49] Speaker 06:
But the way he draws the line is he says traditional health and safety warnings are okay and other kinds of more novel

[00:33:01] Speaker 06:
edgier, more ideological warnings, right?

[00:33:06] Speaker 06:
Like, was the product made by illegals or did the doctor perform abortions?

[00:33:11] Speaker 06:
That's on the other side of the line.

[00:33:14] Speaker 06:
The health and safety warnings are okay.

[00:33:18] Speaker 06:
If that's the line, this part of your argument about government interest fails.

[00:33:23] Speaker 05:
No, I don't think that was the line, Your Honor.

[00:33:27] Speaker 05:
I think Judge Kavanaugh was

[00:33:31] Speaker 05:
talking about the dangers, especially in terms of the scope of warnings, of recognizing an interest in purely improving information.

[00:33:42] Speaker 05:
And if that interest were recognized, it would lead to what he called a circular analysis where

[00:33:48] Speaker 05:
where any warning would provide more information and if it were spoken more loudly it would provide more information and better information and there would be no meaningful First Amendment limit to the compulsion of speech and that was intolerable.

[00:34:01] Speaker 05:
He also observed that many health and safety warnings would satisfy this inquiry and would survive it and we think that many health and safety warnings would.

[00:34:13] Speaker 06:
But in this case... He says the government has long required commercial disclosures to prevent consumer deception or to ensure consumer health or safety.

[00:34:26] Speaker 06:
His interests explain and justify the compelled commercial disclosures that are common and familiar to American consumers, such as nutrition labels and health warnings.

[00:34:37] Speaker 05:
Yes, to ensure consumer health and safety.

[00:34:41] Speaker 05:
Being better informed does not by itself ensure consumer health and safety.

[00:34:47] Speaker 05:
The outcome that ensures consumer health and safety is stopping the use of tobacco or not abusing it.

[00:34:55] Speaker 05:
And that is why the court in RJR required the FDA to demonstrate an interest

[00:35:06] Speaker 05:
in reducing tobacco use.

[00:35:11] Speaker 06:
Yeah, I might not have gone to the best language on this point, but I mean he also upheld a requirement that seemed to be formulated in terms of conveying information without a separate focus on the question whether consumers would shift to American meat.

[00:35:37] Speaker 05:
I don't know what passage you're referring to, but I'll take a look at it during the hiatus.

[00:35:49] Speaker 05:
If there are any further questions, I would just like to close this segment by saying the following.

[00:35:58] Speaker 05:
This is not a situation where the First Amendment issues have to be decided in the abstract.

[00:36:04] Speaker 05:
We have a regime in place where there are warnings on nearly all cigar products that have been in place for a long time.

[00:36:12] Speaker 05:
We are arguing for the modest proposition that they should be studied before moving to a larger, more intrusive regime, and we believe that's worth to be proud of.

[00:36:20] Speaker 03:
I'm glad you raised that point, and therefore, suddenly I realize I'm surprised.

[00:36:24] Speaker 03:
You skipped the arbitrary and capricious argument altogether.

[00:36:27] Speaker 03:
Now, I assume you would agree that we have to first conclude that this is not arbitrary and capricious and vacated on that ground before we would move on to the First Amendment.

[00:36:39] Speaker 05:
Ordinarily, the courts do try to resolve non-constitutional grounds.

[00:36:45] Speaker 03:
That's more than ordinarily.

[00:36:46] Speaker 03:
We're not supposed to reach constitutional questions if we can resolve the matter.

[00:36:50] Speaker 03:
on a non-constitutional ground, isn't that right?

[00:36:53] Speaker 05:
That's right.

[00:36:54] Speaker 05:
It's not what the court did in R.J.

[00:36:55] Speaker 05:
Reynolds, but it is the ordinary course.

[00:36:58] Speaker 05:
And we do believe that it is arbitrary and capricious.

[00:37:01] Speaker 05:
And specifically, we believe that the FTC scheme constituted a significant regulatory alternative that needed to be studied

[00:37:13] Speaker 05:
with some meaningfulness before it was dismissed.

[00:37:16] Speaker 01:
It was one that was raised in the comments, urged upon the agency.

[00:37:26] Speaker 01:
FDA did not comply with D1?

[00:37:28] Speaker 05:
Is that it?

[00:37:30] Speaker 05:
Well, that's another argument.

[00:37:32] Speaker 05:
I mean, one that I was just articulating was that the FTC scheme, no matter how you think about it, given the fact that it was in place and available for study, was a significant regulatory alternative that needed to be meaningfully dealt with under this Court's Delaware Department of Natural Resources.

[00:37:49] Speaker 03:
So you thought both that it's arbitrary and capricious for failure to consider alternatives?

[00:37:53] Speaker 03:
arbitrary and capricious for not making the determinations required by the statute, right?

[00:37:58] Speaker 03:
Yes.

[00:37:59] Speaker 03:
And I assume arbitrary and capricious because there wasn't substantial evidence supporting the government's claims, right?

[00:38:05] Speaker 05:
And it didn't deal with the comment.

[00:38:07] Speaker 05:
Right.

[00:38:08] Speaker 05:
To go to both of your questions, we also contend that the agency did not deal with a significant aspect of the problem by not going through the 906D1 analysis.

[00:38:20] Speaker 05:
Here we don't need to conclude that under any regime that reducing tobacco use is the only qualifying interest, because Congress told us what the interest is.

[00:38:30] Speaker 05:
It told us that under the specific section of this act that the agency invoked to put the warnings in place.

[00:38:36] Speaker 05:
under 9061 and said that the agency needed to take in the labeling changes, propensity to reduce tobacco use and here the agency punted on it.

[00:38:45] Speaker 05:
It stayed away from it like it was a hot potato and it did that because of its negative experience when studying the issue that came out of R.J.

[00:38:55] Speaker 05:
Reynolds.

[00:38:55] Speaker 05:
We respectfully contend that in doing so the agency did not deal with a significant aspect of the problem.

[00:39:02] Speaker 05:
And it violated its responsibilities under 9061 and the case should be, the rule should be vacated and remanded to the city.

[00:39:09] Speaker 03:
I was surprised to hear you say that RJR violated the usual rule and went right to the First Amendment.

[00:39:15] Speaker 03:
But as I read RJR, it says that the challenge was the First Amendment challenge.

[00:39:21] Speaker 03:
Did you say anything about an arbitrary and capricious challenge?

[00:39:23] Speaker 05:
So there was, there were both.

[00:39:26] Speaker 05:
There was an arbitrary and capricious challenge and the First Amendment challenge below in the district court.

[00:39:30] Speaker 05:
Judge Leon and the district court proceeded directly to the constitutional issues, bypassing the arbitrary and capricious question, and then the court only reviewed the constitutional question when it came up on appeal.

[00:39:42] Speaker 05:
But both issues were presented for the court on appeal.

[00:39:45] Speaker 03:
Do you have any argument for how we could or why we should consider a constitutional question if you are right that it's arbitrary and capricious under the APA and the statute?

[00:39:56] Speaker 03:
Any argument for giving an advisory opinion on the Constitution?

[00:40:00] Speaker 05:
Well, Your Honor, what I'm urging the Court to do is to vacate the rule and remand it to the agency to do the proper analysis.

[00:40:09] Speaker 05:
And if this Court reaches that conclusion through the analysis of the Administrative Procedure Act or the Family Smoking Prevention and Dependent Control Act, we would have no question with that.

[00:40:19] Speaker 05:
We absolutely would not

[00:40:21] Speaker 05:
be criticizing the court for that.

[00:40:23] Speaker 05:
The result that we think is warranted under the APA, under the statute, under the First Amendment, is that the rule be vacated and remanded to the agency.

[00:40:32] Speaker 03:
Thank you.

[00:40:33] Speaker 03:
Thank you.

[00:40:44] Speaker 00:
May it please the court, Lindsay Powell for FDA.

[00:40:47] Speaker 00:
Starting with the constitutional question, I think it helps to sort of reset and remember what is conceded in this case.

[00:40:55] Speaker 00:
First, there's no question that the warnings at issue are factual and uncontroversial in the way the doubter contemplates.

[00:41:02] Speaker 00:
Plaintiffs don't dispute that.

[00:41:04] Speaker 00:
They agree that cigars in general, setting aside the specific issue of premium cigars, can be required to bear the warnings, the particular textual warnings that are required by FDA here.

[00:41:14] Speaker 00:
Their only dispute is with respect to the particular size chosen by FDA.

[00:41:19] Speaker 00:
And even there with respect to size, plaintiffs say in their opening brief that a larger disclosure would improve the communication of the government's message.

[00:41:25] Speaker 01:
Did the warnings apply to the boxes, the cigar boxes?

[00:41:32] Speaker 00:
Yes, Your Honor, so I think it's very helpful here to be aware of the very broad universe of products we're talking about.

[00:41:37] Speaker 00:
So people often think of premium cigars, but in fact, many cigars are sold in smaller boxes that look just like cigarettes.

[00:41:44] Speaker 01:
So we're talking about- Cigarillos or whatever.

[00:41:46] Speaker 00:
Exactly, Your Honor, yes.

[00:41:47] Speaker 00:
So that's a very large share of the market.

[00:41:49] Speaker 00:
Premium cigars by volume make up only 10% of the market, and those can be sold in the larger boxes or individually.

[00:41:55] Speaker 01:
And it also applies to app.

[00:41:57] Speaker 01:
Does the, I forget, did the FDA define advertising?

[00:42:03] Speaker 00:
Yes, advertising is defined.

[00:42:06] Speaker 01:
What's the definition?

[00:42:07] Speaker 00:
I don't have it at the ready because it hasn't been put at issue here, but it would cover communications in or outside of stores, for example.

[00:42:16] Speaker 01:
Communications about?

[00:42:18] Speaker 00:
About a particular brand of cigar, for example, or a particular brand of cigar.

[00:42:21] Speaker 01:
There's a magazine called Cigar Aficionado.

[00:42:24] Speaker 01:
Let's assume that the magazine typically monthly has 100 pages, and it's all advocating cigar use.

[00:42:33] Speaker 01:
Does that mean 30 of those 100 pages have to have big

[00:42:37] Speaker 01:
big black letters and pure black borders.

[00:42:43] Speaker 01:
So that question doesn't bear on the way plaintiffs are bringing their facial challenge to this scheme here, certainly in a publication about... It is a facial challenge, but there's a doctrine under the First Amendment that if it's unconstitutional in some of its applications, then you strike the, whatever the statute of the regulation, down.

[00:43:06] Speaker 00:
I don't think it's some of its applications, Your Honor.

[00:43:08] Speaker 00:
I think it has to be a substantial number of applications.

[00:43:11] Speaker 01:
That's Broderick versus Oklahoma.

[00:43:13] Speaker 01:
Yeah.

[00:43:13] Speaker 00:
Right.

[00:43:14] Speaker 00:
But so it's a substantial number.

[00:43:16] Speaker 01:
And what about advertising on the radio?

[00:43:20] Speaker 01:
If you have a 30-second ad, does that mean you have to have nine seconds of telling people how awful cigar smoking is?

[00:43:29] Speaker 00:
It does mean that you need to have a warning that's on average 12 words, which is substantially less than the length of the warnings that are required for many drugs.

[00:43:38] Speaker 00:
And those advertisements persist on the radio and on television, nevertheless.

[00:43:42] Speaker 00:
I would also note that Congress, through separate legislation that is not challenged here, has actually prohibited the advertising on the radio and on television of certain tobacco products, including little cigars.

[00:43:53] Speaker 01:
All tobacco products?

[00:43:53] Speaker 00:
of certain tobacco products, including little cigars.

[00:43:56] Speaker 00:
So it does cover some of the universe we're dealing with here.

[00:44:00] Speaker 00:
But with respect to, again, plaintiffs do suggest in passing that radio advertisements could be burdened by this.

[00:44:08] Speaker 00:
Again, assuming that's true, it's not enough to sustain a facial challenge.

[00:44:12] Speaker 00:
And they don't explain how it can be true, that 12 words could be so burdensome as to overwhelm the rest of the message, particularly when we have other examples out there of products for which more burdensome warnings have long persisted, and manufacturers have nevertheless figured out how to convey their messages alongside them.

[00:44:34] Speaker 00:
And when we're talking about the 30% warnings for the packages and the 20% for ads, the example of smokeless tobacco is very helpful here.

[00:44:42] Speaker 00:
Congress put that requirement in place over a decade ago, or a decade ago, through the Tobacco Control Act.

[00:44:50] Speaker 00:
And it has been in effect for that duration.

[00:44:52] Speaker 00:
The Sixth Circuit upheld it against the First Amendment challenge in the discount tobacco case.

[00:44:57] Speaker 00:
We know from that experience that manufacturers have not been put in the position that Zauder contemplates where they're no longer able to undertake their own speech.

[00:45:07] Speaker 01:
Well, when they do smoke tobacco, smoke less tobacco on those tins, the message is on the tin, is that it?

[00:45:13] Speaker 00:
The message has to occupy 30 percent of that top panel of the tin.

[00:45:17] Speaker 01:
If somebody goes to a tobacco shop and buys a single cigar, where's the message?

[00:45:24] Speaker 00:
It depends on how the cigar is packaged.

[00:45:26] Speaker 00:
So some individual cigars are wrapped in cellophane or come in a tube.

[00:45:29] Speaker 00:
Right, with a band around them, right?

[00:45:32] Speaker 00:
Yes, so if there is, this can get complicated, if there is space on the tube or on the cellophane, the warning goes on there.

[00:45:38] Speaker 00:
If not, it goes on the broader product package in which the individual cigars.

[00:45:42] Speaker 01:
That could be behind the counter, hasn't it?

[00:45:44] Speaker 01:
I'm just trying to understand how the consumer, I go into a tobacco shop and I order an Upton Churchill cigar.

[00:45:52] Speaker 01:
I think there is such a thing.

[00:45:54] Speaker 01:
I don't smoke.

[00:45:55] Speaker 01:
But anyway, and I get it cost me $25 and now I have it and how have I gotten a warning?

[00:46:05] Speaker 00:
So again, it depends on the particular cigar and the way that it's being sold in the store, but it can be on the packaging that goes around that individual cigar, or it can appear, if that's not an option, it can appear on a standard letter size paper posted at the point of sale at the cash register at the store.

[00:46:26] Speaker 00:
You will see it at some point during that purchase.

[00:46:28] Speaker 00:
If it's on the package, it has the added benefit of you will then see it too before you consume it.

[00:46:32] Speaker 01:
So the store owners have to provide this, not the manufacturers?

[00:46:38] Speaker 00:
The store owner does have to display the paper at the point of sale if they choose to sell individual cigars that don't carry the warning.

[00:46:47] Speaker 00:
on the product package.

[00:46:50] Speaker 00:
But again, some of these harder questions only come up when we're talking about premium cigars, which again, is 10% of the market by volumes.

[00:46:57] Speaker 00:
That's a small fraction of the universe of covered products that we're talking about here.

[00:47:02] Speaker 00:
And most of the questions that Plane has raised simply don't apply to the other products.

[00:47:08] Speaker 01:
These are questions that will be addressed in the subsequent rulemaking, is that?

[00:47:14] Speaker 00:
Potentially, Your Honor, so there is an ANPRM to which I believe Your Honor is referring, soliciting further information about premium cigars.

[00:47:23] Speaker 00:
FDA in that ANPRM did reiterate its findings from this rulemaking, which is that on the current state of the evidence did not support different treatment for cigars, that it didn't find that either inherent risks, the inherent characteristics of those products or patterns of use.

[00:47:38] Speaker 00:
made these warning statements untrue with respect to cigars or obviated the need to provide them.

[00:47:45] Speaker 00:
But FDA is soliciting additional information and considering comments, and if further regulatory action is appropriate, it will take it.

[00:47:52] Speaker 00:
And that's always the case.

[00:47:53] Speaker 00:
I mean, agencies retain their ability to reconsider questions as appropriate, but it doesn't call into doubt the prior regulation to any extent.

[00:48:03] Speaker 06:
Can I ask you about how solder works in this context?

[00:48:07] Speaker 06:
So assume I agree with you, Sauter applies, and you have a sufficiently important interest in disseminating truthful, non-ideological health warnings.

[00:48:22] Speaker 06:
There's still the question of fit and tailoring, and there are at least three different strands of that reasoning that run through the cases.

[00:48:34] Speaker 06:
But one thing that's perfectly clear after NIFLA is that one element of that inquiry is about whether the regulation is unduly burdensome, and it's equally clear post-NIFLA that the government bears the burden of proof on that question.

[00:48:58] Speaker 00:
Fair?

[00:48:58] Speaker 06:
Agreed?

[00:48:59] Speaker 06:
Yes, Your Honor.

[00:48:59] Speaker 06:
So how have you satisfied

[00:49:02] Speaker 06:
your burden of proof on the question whether 30% is too burdensome or not, 30% and 20% is too burdensome or not, particularly in the face of affidavits where advertisers say, no, look, if I have to do this, if I have to put this disclaimer in my ads, I will forego certain

[00:49:30] Speaker 06:
entire categories of advertising.

[00:49:33] Speaker 00:
Yes, Your Honor.

[00:49:33] Speaker 00:
So I think it helps to begin with unpacking a little bit what the unduly burdensome standard has referred to in these cases, including in NIFLA.

[00:49:41] Speaker 00:
And in almost each one, when a court has found an advertisement or disclosure, excuse me, to be unduly burdensome, it's been because it sounds that it effectively rules out the manufacturer's speech, that it will effectively preclude the manufacturer or the service provider from undertaking that speech altogether.

[00:49:59] Speaker 06:
Chills.

[00:50:01] Speaker 00:
The cases do sometimes use the word chill as well, but in fact, in NIFLA, when they were, the one example where they discussed unduly burdensome.

[00:50:09] Speaker 06:
Is the billboard.

[00:50:09] Speaker 00:
is the billboard and found that at least as the court went through that reasoning, it was premised on the conclusion that providers wanting to engage in the choose.

[00:50:20] Speaker 06:
The pro-life pregnancy counselor can't realistically put up the billboard that says choose life if they need the whatever it was.

[00:50:29] Speaker 06:
That 20 word disclaimer in 13 different lengths.

[00:50:32] Speaker 00:
Precisely, Your Honor, so it effectively precludes the billboard altogether and you see that.

[00:50:36] Speaker 06:
And why isn't that analogous to the situation here where the advertiser says radio time is very expensive and if I'm buying 30 seconds and I only get 20 because it takes me 10 seconds to say those 12 words, I won't buy those ads.

[00:50:58] Speaker 00:
Right, so I think it's very helpful to look to the existing universe of information, including drug ads.

[00:51:04] Speaker 00:
So we know from our own experiences that drug ads are very extensive.

[00:51:07] Speaker 00:
We see them all the time on television.

[00:51:09] Speaker 00:
We hear them on the radio.

[00:51:10] Speaker 00:
They are required to say many more than 12 words in those ads.

[00:51:13] Speaker 00:
And yet those ads persist.

[00:51:15] Speaker 00:
Manufacturers have made the assessment that it is still worth it to communicate, and they are still able to get their words in there.

[00:51:22] Speaker 00:
It's not as though

[00:51:23] Speaker 00:
it's eating up a majority, much less the entirety of the message.

[00:51:28] Speaker 00:
So the idea that it makes it somewhat less appealing, sure, it's less appealing for a manufacturer to have to let people know in noticeable products are likely going to do bad things to you, but the fact that it may not be preferred.

[00:51:40] Speaker 06:
I'm thinking of package warnings in that context.

[00:51:46] Speaker 06:
It's a lot more than 12 words, but it's usually an insert, right?

[00:51:52] Speaker 00:
I think many over-the-counter drugs certainly have a great deal of that text on the package, and I think a great deal as a percentage matter.

[00:52:00] Speaker 00:
And we do note that in the brief.

[00:52:03] Speaker 00:
But at 30% or 20%, it's much less than half.

[00:52:08] Speaker 00:
And the 30% too, I should note, is 30% of the two principal display panels.

[00:52:12] Speaker 00:
So actually, there's a number of other display panels too.

[00:52:15] Speaker 00:
So it's actually greater than the 70% that the 30 number suggests.

[00:52:19] Speaker 00:
But there's been no explanation here as to how

[00:52:23] Speaker 00:
the remaining space will be inadequate for the brand information or instructions or any of that.

[00:52:28] Speaker 00:
And the Sixth Circuit found that it was adequate.

[00:52:32] Speaker 06:
Yeah, but pre-NIFLA sort of equating Sauter to almost rational basis review, which is not realistic anymore.

[00:52:42] Speaker 06:
But there's some examples in the brief of

[00:52:52] Speaker 06:
ads or packages where the 30% warning is obtrusively stamped as a rectangle in the middle of the ad.

[00:53:04] Speaker 06:
And the overall effect is it has a feel of someone is trying to speak in the background and the government is literally stamping out the speech.

[00:53:14] Speaker 06:
So my question is, would it be permissible under these regs for the advertiser to

[00:53:23] Speaker 06:
place the warning in, let's say, the bottom 30% of the ad and we, the speaker, take the top 70% and then put the warning all at the bottom?

[00:53:35] Speaker 00:
Would that be permissible?

[00:53:36] Speaker 00:
I think with respect to packages, that's permissible.

[00:53:38] Speaker 00:
How about ads?

[00:53:39] Speaker 00:
I believe for the advertisements, it does refer to the top.

[00:53:42] Speaker 06:
I think it says in the top half.

[00:53:43] Speaker 00:
It says in the top half, but what it doesn't say, and I think this is a very important point, what it doesn't say is design your ad, design your packaging, and then place this warning

[00:53:52] Speaker 00:
right in the middle of it.

[00:53:53] Speaker 00:
So those, the images that your honor is referring to, are mock-ups produced by plaintiffs that are emphatically not what they need to look like.

[00:54:00] Speaker 06:
So your point, I mean, your point has a lot of force with regard to the packages, but with regard to the ads,

[00:54:08] Speaker 00:
Well, it's still just a question of location.

[00:54:10] Speaker 00:
I mean, you can still design around it.

[00:54:12] Speaker 00:
So it does need to be in the upper area, but it doesn't mean it goes on top of the manufacturer's own message.

[00:54:19] Speaker 00:
So I don't think any of the precedents out there suggest that something like the location is what makes the constitutional difference.

[00:54:27] Speaker 00:
And again, sort of bringing it back to the core of what we're talking about, I mean, this is the type of

[00:54:35] Speaker 00:
uncontroversial standard product safety warning that NIFLO reaffirmed that it wasn't calling into doubt.

[00:54:40] Speaker 06:
Well, I understand, but there's still the undue burden inquiry.

[00:54:43] Speaker 00:
There is still the undue burden inquiry, but this is very different from, you know, for example, the Third Circuit case where in order to excerpt part of a Supreme Court opinion in your legal advertising, you had to include the text of the entire opinion, which just made it impossible.

[00:54:58] Speaker 00:
It's very different from Ibanez.

[00:55:00] Speaker 00:
where, you know, to include all the required disclosures or disclaimers would truly preclude you from using the credentials on a business card or a letterhead.

[00:55:09] Speaker 06:
Maybe so, but let's take another data point, which is much more highly analogous, which is American beverage.

[00:55:17] Speaker 06:
Ninth Circuit, InBank, Post-Nifla, I forget the exact number, it's a 20% or 30% warning about sugary drinks.

[00:55:29] Speaker 06:
and they say government loses because they failed to prove that you need 20% as opposed to 10%.

[00:55:39] Speaker 06:
And they were unanimous.

[00:55:42] Speaker 06:
They split on the reasoning, but 11 judges on the Ninth Circuit unanimously thought that that doesn't survive the post-NIFLA version of Sauter review.

[00:55:55] Speaker 00:
Right.

[00:55:55] Speaker 00:
They made clear, however, that it was very specific to the record in that case and took pains to say that they were not suggesting that

[00:56:01] Speaker 00:
by any means that other comparably sized disclosures would raise the same issues.

[00:56:07] Speaker 00:
So there the government's own evidence supported the contention that a 10% warning instead of the 20% warning would effectively convey the message that it was the government's interest to provide.

[00:56:20] Speaker 00:
And on that record, there was no justification for the larger size.

[00:56:25] Speaker 00:
Here, there's ample evidence in plaintiff's own concession

[00:56:29] Speaker 00:
that in the context of tobacco products, that a larger warning helps consumers better understand and appreciate these undisputed risks.

[00:56:37] Speaker 00:
So there is no question here.

[00:56:39] Speaker 00:
There's no American beverage problem about whether 30% will really do more than 10%.

[00:56:44] Speaker 00:
That is just clear on this record.

[00:56:48] Speaker 06:
The First Amendment analysis is supposed to balance speaker burdens against government interest.

[00:56:58] Speaker 06:
The government's articulation on the First Amendment point really only addresses half of that equation.

[00:57:06] Speaker 06:
The government's theory, bigger is better, right?

[00:57:09] Speaker 06:
The bigger the warning, the more likely it will make an impression on the consumer.

[00:57:16] Speaker 06:
And that's perfectly fine as far as it goes.

[00:57:19] Speaker 06:
It strikes me as at least plausible, but it's only half the equation.

[00:57:25] Speaker 06:
Well, I think... Where does the government balance, you know, bigger is better for purposes of the government interest against...

[00:57:34] Speaker 06:
bigger is worse from the perspective of the advertiser.

[00:57:37] Speaker 00:
I do think it's worth bearing in mind that when we're talking about Zauderer, that the First Amendment interest is largely on the part of the consumers receiving the information.

[00:57:47] Speaker 00:
So it's of course true that manufacturers also have a protected right in the speech, but the Zauderer doctrine is premised on the notion that the main value of commercial speech

[00:57:57] Speaker 00:
is in providing information to consumers.

[00:57:59] Speaker 06:
And so the interest of consumers... It's premised on the notion that there's minimal interest in suppressing the warning, but then there's a separate concern about chilling the affirmative, protected commercial speech.

[00:58:11] Speaker 00:
Yes, Your Honor.

[00:58:11] Speaker 00:
That is, of course, it, too.

[00:58:13] Speaker 00:
But if, you know, in flagging the acknowledgement that bigger will communicate better, I don't mean to suggest that that was the entire motivating principle here.

[00:58:21] Speaker 00:
If that's what FDA was going for, it wouldn't have stopped at 30%.

[00:58:24] Speaker 00:
That's not the biggest you can do.

[00:58:25] Speaker 06:
But that's all I found.

[00:58:27] Speaker 06:
In the sections of the final rule where they explain the warning, that's their rationale.

[00:58:38] Speaker 06:
Bigger is better.

[00:58:39] Speaker 06:
It'll make a better impression on consumers.

[00:58:42] Speaker 06:
This is what Congress has done with regard to smokeless.

[00:58:46] Speaker 06:
And this is what is done in Europe under that treaty and EU regulations.

[00:58:51] Speaker 00:
Yes, Your Honor.

[00:58:51] Speaker 00:
So I think the question is, what is big enough

[00:58:54] Speaker 00:
to effectively communicate to help consumers better understand and appreciate this information.

[00:59:01] Speaker 00:
And so that was the way FDA approached this.

[00:59:03] Speaker 00:
How big do these need to be for that message to get through?

[00:59:07] Speaker 00:
And when they got to 30%, based on all of the information that your honor has identified, which is a substantial record,

[00:59:14] Speaker 00:
supporting the need for them to be at least that big, it stopped there.

[00:59:17] Speaker 00:
It didn't say, well, if 30 is great, let's double that for good measure.

[00:59:20] Speaker 00:
It said they need to be at least this big to further the very important public health interest that we're getting at here, and then stopped at that number, consistent with the past practice, both here and abroad, the findings of Congress, the Institute of Medicine.

[00:59:36] Speaker 01:
Since you've mentioned abroad and the treaty,

[00:59:40] Speaker 01:
On what basis does the government think it's proper to rely on what the World Health Organization, which is an arm of the UN, says?

[00:59:50] Speaker 01:
That's a political party.

[00:59:53] Speaker 01:
And the treaty was never ratified by the United States.

[00:59:58] Speaker 00:
The United States did.

[00:59:59] Speaker 01:
Would it have been self-implementing if it had been?

[01:00:02] Speaker 00:
It did.

[01:00:03] Speaker 00:
The United States was a signatory, and that in any event is not the exclusive data point for the 30 percent finding.

[01:00:12] Speaker 00:
So Congress, well before FDA got to this rulemaking itself, undertook findings of fact and selected a 30 percent

[01:00:19] Speaker 00:
a warning requirement for smokeless tobacco packages.

[01:00:22] Speaker 00:
And again, those have been in effect for a decade with no observable detriment to the industry.

[01:00:28] Speaker 00:
Manufacturers of smokeless tobacco continue to market their products.

[01:00:31] Speaker 00:
They have designed their packaging around those warnings.

[01:00:35] Speaker 00:
And so FDA recently relied on Congress's findings.

[01:00:38] Speaker 01:
The district court relied on the World Health Organization as well.

[01:00:42] Speaker 00:
Right, and we cite that.

[01:00:42] Speaker 00:
I mean, an international consensus does not, to us, seem irrelevant, but to the extent Your Honor is concerned about that, it's not necessary to carry the burden here.

[01:00:50] Speaker 01:
How many of those countries that did ratify and sign the treaty have a First Amendment?

[01:00:55] Speaker 01:
I don't know the answer to that, Your Honor.

[01:00:56] Speaker 01:
None?

[01:00:57] Speaker 00:
I don't know the answer.

[01:00:59] Speaker 03:
I take it the Institute of Medicine, which is an American federal government,

[01:01:03] Speaker 03:
premier science agency said the same thing.

[01:01:06] Speaker 03:
It did say the same thing, Your Honor.

[01:01:07] Speaker 03:
And on the question that Judge Katz was asking about whether the agency weighed the burden on the cigar retailers and manufacturers, the Federal Register notice says that they did weigh that and they say that

[01:01:30] Speaker 03:
Although it will occupy at least 30% of the packaging, there will remain sufficient space for additional warnings, manufacturers, instructions, and branding.

[01:01:39] Speaker 03:
And in that regard, they say it's consistent with the First Amendment.

[01:01:41] Speaker 03:
So I take it they did weigh the other side.

[01:01:43] Speaker 00:
Yes, Your Honor, they did.

[01:01:45] Speaker 03:
I don't know how you weigh these kind of things, but they gave the reasons on both sides.

[01:01:48] Speaker 00:
Yes, Your Honor, they did.

[01:01:49] Speaker 00:
And again, that's consistent with the Sixth Circuit's finding in discount tobacco.

[01:01:54] Speaker 00:
That was the analysis undertaken by that court in considering whether the smokeless tobacco and cigarette warnings would be unduly burdensome within this outer framework.

[01:02:04] Speaker 01:
What kind of information would the First Amendment prevent the government from requiring with respect to just cigars?

[01:02:14] Speaker 01:
I mean, if something crossed the line from being factual and uncomfortable... You've conceded that the information that these warnings provide will not have an effect on people that now smoke cigars or may take up the habit in the future.

[01:02:35] Speaker 00:
We do not concede that.

[01:02:37] Speaker 00:
That's simply not the... We're not relying on an interest in... You have no evidence to that.

[01:02:42] Speaker 00:
that we cannot dispositively prove or have not endeavored to dispositively prove here.

[01:02:48] Speaker 01:
Can you prove anything about usage?

[01:02:51] Speaker 00:
That's not in the record here, but that fact does not amount to a concession.

[01:02:55] Speaker 01:
It's not in the record, and that's all we have.

[01:02:57] Speaker 01:
It's the administrative record, right?

[01:03:00] Speaker 01:
So what information is it that the government could not require manufacturers and retailers to provide with respect to seagulls?

[01:03:10] Speaker 00:
But again, anything that crossed the line from the factual and uncontroversial would take it outside of the Souter doctrine, and it would be subject to heightened scrutiny.

[01:03:19] Speaker 01:
So anything about how the product was farmed, raised, species rolled, transported, how long it will stay lit, all that the government can provide.

[01:03:35] Speaker 01:
And it can do it under the heading, this gives information

[01:03:40] Speaker 01:
to consumers, and we don't have to prove what effect that information will have on the consumer.

[01:03:47] Speaker 00:
And that's consistent with American meat.

[01:03:48] Speaker 00:
Some of the examples given in that case included fabric content, care of clothing, disclosures about basic product characteristics that could be material to consumers.

[01:04:00] Speaker 00:
using or choosing whether to use those products.

[01:04:02] Speaker 00:
So yes, those sorts of informational interests are relevant.

[01:04:05] Speaker 00:
They cannot be so burdensome.

[01:04:07] Speaker 00:
Is there any stopping point?

[01:04:08] Speaker 00:
The undue burden is a stopping point.

[01:04:11] Speaker 02:
Well, I suppose one stopping point would be they couldn't put on a label saying it's from a conflict zone.

[01:04:16] Speaker 00:
For example, Your Honor.

[01:04:19] Speaker 00:
But right, so if it crosses the burden to being controversial or if it just takes up so much space that the manufacturers can't speak, those outer cases say that that's too much.

[01:04:30] Speaker 00:
At that point, you may be talking about a restriction and subject to scrutiny under central Hudson.

[01:04:35] Speaker 00:
But at 30%, we don't have that here.

[01:04:38] Speaker 00:
There's ample space on the packaging for their branding, for their images, for their instructions.

[01:04:43] Speaker 00:
And we know that from the smokeless tobacco process.

[01:04:45] Speaker 01:
In the Becara case, Justice Thomas writing for the court said that there were alternatives to the notice that the clinics had to provide.

[01:04:56] Speaker 01:
And one of them was that the California government itself can speak.

[01:05:02] Speaker 01:
And it can put on advertisements, programs, clinics, brochures, pamphlets, whatever to inform women of what their choices were.

[01:05:13] Speaker 01:
Is the FDA doing, does the FDA have a budget that enables it to advertise?

[01:05:19] Speaker 00:
Two things, Your Honor.

[01:05:20] Speaker 00:
So in that discussion, I regarded the license notice, the notice required for license facilities, and the court observed there that the notice didn't have to do with

[01:05:29] Speaker 00:
the services being provided by the facilities themselves.

[01:05:32] Speaker 00:
It was just a requirement to let people know about what the government was doing.

[01:05:35] Speaker 00:
And so for that reason, it lacked the requisite nexus between the services or goods at issue that's required for those out there.

[01:05:41] Speaker 00:
Here, the disclosures have everything to do with the products that are being sold.

[01:05:44] Speaker 00:
They discuss the inherent traits of the product.

[01:05:47] Speaker 00:
So that part of NUFLA is distinguishable on that basis.

[01:05:50] Speaker 00:
FDA also explained in this rule that it's very important to have the warnings on the product packages because consumers have noticed them at the two most important points of time, which is when they're choosing whether to purchase the product and when they're choosing whether to use the product.

[01:06:05] Speaker 00:
And an informational campaign where the government wouldn't convey the same information at the same moments in time, and FDA found that very relevant.

[01:06:17] Speaker 06:
Could I just ask you about the statute for a minute?

[01:06:20] Speaker 06:
We've talked a lot about whether, for First Amendment purposes, the government interest in conveying information is sufficient.

[01:06:29] Speaker 06:
But this statute requires the government at least to consider impacts of the warning labels on smoking behavior.

[01:06:43] Speaker 06:
How many smokers are likely to quit and how many nonsmokers will

[01:06:51] Speaker 06:
refrain from smoking because of the warning.

[01:06:53] Speaker 00:
Right, so the statutory provision as a whole, the finding that Congress is required to make is whether a provision is appropriate for the protection of the public health, and that must take into account, as your honor said.

[01:07:03] Speaker 06:
And I didn't see anything, I haven't read every word in the order, but I did look at everything the district court cited and everything my law clerk found, and I didn't see anything

[01:07:18] Speaker 06:
in the agency's justification that spoke about impact on smoking behavior as opposed to this other interest in just disseminating information.

[01:07:31] Speaker 00:
So, I mean, FDA has certainly considered

[01:07:35] Speaker 00:
the benefits that the rule could have, requiring these warnings could have, for the different populations mentioned in this provision, and considered any issues raised in the comments about possible detriments for those populations.

[01:07:46] Speaker 00:
For example, some commenters raised the possibility that larger warnings could cause people to go numb to the message of the warnings, and FDA considered that, found that that was not a substantiated risk, that it was unlikely that they would backfire.

[01:07:58] Speaker 06:
But every time they specifically addressed warnings,

[01:08:02] Speaker 06:
They framed their analysis in terms of the effectiveness of the warning, not in changing smoking behavior, but in conveying information.

[01:08:15] Speaker 06:
And that's not enough under this statute.

[01:08:18] Speaker 00:
It is enough under this statute.

[01:08:20] Speaker 00:
The statute doesn't require.

[01:08:21] Speaker 00:
So this statute broadly applies.

[01:08:23] Speaker 00:
This is FDA's authority for many different types of regulations.

[01:08:27] Speaker 00:
Sure.

[01:08:27] Speaker 06:
Appropriate for the protection of public health, which is a very broad criterion.

[01:08:31] Speaker 00:
And it would be extraordinary to read.

[01:08:33] Speaker 06:
But it goes on to say that criterion shall be determined taking into account

[01:08:41] Speaker 06:
two factors and they are the impact on smoking behavior.

[01:08:45] Speaker 00:
Right, so to read this provision in the way plaintiffs suggest would be to conclude that Congress intended to tie FDA's hands so that it cannot regulate tobacco products unless it has concluded that there are measurable behavioral effects and that is clearly not what Congress intended to do.

[01:09:00] Speaker 06:
Another reading of it would be that at a minimum the agency has to take that into account, which is

[01:09:07] Speaker 06:
the words of the statute.

[01:09:08] Speaker 06:
Yes, and I don't see where the agency did that.

[01:09:11] Speaker 00:
I think further, Your Honor, take into account available evidence concerning these issues.

[01:09:16] Speaker 00:
Nothing in here suggests that FDA must go forth and create new studies where none exists.

[01:09:21] Speaker 01:
Finding number 41.

[01:09:24] Speaker 01:
Congress made said exactly that, that the FDA has the expertise to conduct studies to determine the impact on consumer behavior of labels.

[01:09:35] Speaker 01:
That's what Congress found that

[01:09:38] Speaker 01:
And you say now that you don't have to do any studies.

[01:09:42] Speaker 00:
I say that this statutory provision, nothing in the text here, ties FDA's hands so that it cannot regulate tobacco products without, in each case, undertaking a finding that can dispositively show how behaviors in the world will change.

[01:09:56] Speaker 00:
It's a very difficult thing to prove.

[01:09:57] Speaker 00:
There are an incredible number of things to control for when you're talking about addictive products of this type.

[01:10:02] Speaker 00:
And nothing in here commands that reading.

[01:10:05] Speaker 06:
Suppose I think that the agency at least needs to take into account impact on smoking behavior.

[01:10:14] Speaker 06:
What's your best site or two in this long final rule for where they did that?

[01:10:23] Speaker 00:
I would need to follow up with the site.

[01:10:25] Speaker 00:
I do think you can reason from effectively providing information to people, to putting them in a position

[01:10:34] Speaker 00:
to change their behaviors.

[01:10:36] Speaker 00:
So that's, again, behavioral change is not the interest on which the agency relied, but it's not as though it was indifferent as to that result.

[01:10:43] Speaker 06:
It would be able to help the... No, but I mean, the legal background, the statute isn't passed in a vacuum.

[01:10:50] Speaker 06:
It's passed against the background of R.J.

[01:10:53] Speaker 06:
Reynolds, and we've been talking at great length about this question of what interests qualify.

[01:11:02] Speaker 06:
And Congress says at least

[01:11:04] Speaker 06:
consider the, I don't know if it's narrow or broader, but at least consider the interest that was asserted in RJR about smoking behavior.

[01:11:16] Speaker 00:
Well, it certainly wasn't referring to RJR, and I think what

[01:11:22] Speaker 00:
is sufficient as an informational interest or a government interest generally for the purposes of the First Amendment inquiry is different from what you might think about a statutory requirement.

[01:11:37] Speaker 06:
But... If the order had said, in the face of this statute, if the order had said explicitly, we do not know and take no position on whether

[01:11:52] Speaker 06:
warnings would have any impact at all on smoking behavior, but we think they're important in order to convey information to facilitate consumer choice.

[01:12:05] Speaker 06:
Would that explanation survive under the statute and the APA?

[01:12:12] Speaker 00:
tweak this a little bit, I can answer the hypothetical directly if you determine that would be more helpful, but I think in the absence of available evidence measuring behavioral change in the world, which again is exceedingly hard to do, what the statute is trying to get at is taking into account increased or decreased risk

[01:12:33] Speaker 00:
to different populations.

[01:12:34] Speaker 00:
So in parsing out these populations, it's looking at effects on current smokers and effects on people who don't yet smoke.

[01:12:40] Speaker 00:
And so there may be certain regulatory measures that could benefit one of those groups while creating a harm for others.

[01:12:47] Speaker 00:
And so what this requires is that FDA take into risks and benefits for both those groups and satisfy itself that it's not going to increase overall smoking use as a result of this.

[01:12:57] Speaker 00:
And there's no risk of that here.

[01:12:59] Speaker 00:
There's no suggestion anywhere that

[01:13:03] Speaker 00:
requirement for larger warnings is going to increase anyone's risk of use.

[01:13:07] Speaker 06:
You're fighting the hypo a little bit.

[01:13:10] Speaker 06:
So the hypo I gave you is they explicitly disclaim any knowledge or opinion on smoking behavior.

[01:13:17] Speaker 06:
You're positing a second hypo where they say they consider smoking behavior and they say, gosh, it's really hard to assess, but we think warnings are important nonetheless.

[01:13:30] Speaker 06:
Put that one aside and answer mine.

[01:13:34] Speaker 00:
So if the agency has concluded that there is no evidence with respect to smoking behavior... That's just agnostic.

[01:13:42] Speaker 06:
You just say we don't want to get into it.

[01:13:43] Speaker 06:
We got into that in RJR.

[01:13:45] Speaker 06:
We went down a rabbit hole.

[01:13:46] Speaker 06:
It's hard.

[01:13:48] Speaker 06:
We have now come up with an independent theory, legal theory, that doesn't require us to get into that.

[01:13:53] Speaker 06:
So we're not going to.

[01:13:55] Speaker 00:
Well, I think there may be other ways for the agency to express that it has satisfied this weighing of risks for different populations and that it has reached a conclusion that it's appropriate for the public health insofar as it will only

[01:14:10] Speaker 00:
benefit these different groups, that there is no risk of increased smoking as a result, which is what this gets at, but I also want to be clear that that's not what we have here.

[01:14:16] Speaker 00:
The FDA did say, concluded in its regulatory impact analysis, that these risks are very hard to quantify for many reasons that are explained in that analysis, and so it did not, was not able to produce that type of quantification, but that's not to say that it didn't consider the different ways in which

[01:14:35] Speaker 00:
the warnings would benefit different populations of users and non-users.

[01:14:40] Speaker 00:
And it also considered, as I mentioned, the suggestion that it could actually be harmful to require larger warnings because of this numbing effect, and it concluded that there was actually no such risk.

[01:14:51] Speaker 00:
So we have on the record here only ways that these warnings can provide a public health benefit.

[01:14:56] Speaker 00:
They provide more information that people can better understand

[01:15:00] Speaker 00:
And with that information, people can make choices.

[01:15:03] Speaker 00:
There is certainly a hope that people make choices that benefit their health.

[01:15:06] Speaker 00:
But the statute does not require that FDA, in each instance, before it can begin regulating, make a very difficult dispositive finding about measurable behavioral changes in the world.

[01:15:16] Speaker 00:
That's not what Congress said here.

[01:15:18] Speaker 03:
And it would really do harm to... Can I ask whether what... I'm trying to figure out exactly what you mean by this.

[01:15:29] Speaker 03:
So is this, just to take an example, vaping electronic cigarettes.

[01:15:34] Speaker 03:
Is the idea here, is what you think the idea of this provision is, too much restriction on vaping might lead to people smoking more.

[01:15:46] Speaker 03:
Too much restriction on advertising about cigars may lead to people using chewing tobacco instead.

[01:15:55] Speaker 03:
too much restriction on certain kinds of things may lead to youth smoking.

[01:16:01] Speaker 03:
Is that what they're talking about, rather than the question of whether the warnings will effectively reduce smoking?

[01:16:08] Speaker 00:
Yes, Your Honor.

[01:16:09] Speaker 00:
So precisely as your example suggests, there are conceivable regulations that although they might benefit one group, as for example, by helping someone

[01:16:19] Speaker 00:
switch to a product farther down the risk continuum.

[01:16:22] Speaker 00:
That product also appeals to youth in a particular way and presents a risk of increasing youth use of tobacco products.

[01:16:30] Speaker 00:
That's the type of analysis that this statute contemplates.

[01:16:34] Speaker 00:
It does not say anything about requiring studies or findings showing measurable behavioral change as a result of each and every regulation that FDA has authorized by the statute that Congress through the Tobacco Control Act was empowering FDA to regulate tobacco, not trying to tie its hands.

[01:16:52] Speaker 01:
There are, aren't there countless studies about the effect of warnings, labels, disclaimers, whatever, on consumer behavior?

[01:17:02] Speaker 01:
Not in the record here, Your Honor.

[01:17:03] Speaker 01:
Oh, not in the record, but in the Library of Congress.

[01:17:06] Speaker 01:
There are... I mean, there are just tons of studies about that.

[01:17:10] Speaker 01:
I've read some of them.

[01:17:12] Speaker 01:
People have endeavored to study that.

[01:17:13] Speaker 01:
It's very difficult.

[01:17:16] Speaker 01:
But the agency just doesn't rely on any of them.

[01:17:20] Speaker 01:
Not in the record, as you said.

[01:17:22] Speaker 00:
Not in the record, no.

[01:17:24] Speaker 00:
And the agency has in other contexts discussed

[01:17:27] Speaker 00:
the problems with many of those studies and the problems with trying to quantify behavioral effects, which is why they are not quantified here and the statute does not require them to be quantified.

[01:17:39] Speaker 00:
FDA very comprehensively considered the advantages and arguable risks of these marginally larger warnings at 30% of the package and 20% of the advertisements to bring cigars and pipe tobacco warnings in line with

[01:17:57] Speaker 00:
smokeless tobacco.

[01:17:59] Speaker 01:
Many social scientists have in fact quantified the effect of the label.

[01:18:05] Speaker 01:
I think Kahneman and Tversky did all kinds of studies on that.

[01:18:11] Speaker 00:
I'm not aware.

[01:18:11] Speaker 01:
You say you can't be dispositive, but plenty of the economists and social scientists are dispositive about the effect.

[01:18:22] Speaker 00:
It's not what the statute requires.

[01:18:23] Speaker 00:
The text of the statute doesn't require that an FDA appropriately considered whether these warnings would benefit both users and non-users of the product.

[01:18:31] Speaker 00:
And so no reason to expect that this would do anything but improve the public health, making it appropriate within the meaning of the statute.

[01:18:40] Speaker 03:
OK.

[01:18:40] Speaker 03:
Thank you.

[01:18:41] Speaker 03:
We've let both of you go over time by almost exactly the same amount.

[01:18:45] Speaker 03:
We'll give you a couple extra minutes to wrap up.

[01:18:52] Speaker 05:
Thank you, Your Honor, just a few points.

[01:18:55] Speaker 05:
First, all of the findings in the final rule and the proposed rule focused on this interest in effective communication of information.

[01:19:06] Speaker 05:
There was nothing specific to warnings on tobacco use.

[01:19:10] Speaker 05:
The only time where reducing tobacco use is mentioned is with regard to findings with regard to the whole rule, which doesn't really address the 9061 question.

[01:19:20] Speaker 05:
9061 only applies to the marketing restriction.

[01:19:23] Speaker 05:
not the effect of the whole rule.

[01:19:25] Speaker 05:
And there, even there, the analysis was very light and conclusory.

[01:19:30] Speaker 05:
Respectfully, we think that the agency's avoidance of any serious analysis, much less study of the issue of whether these weren't introduced tobacco use, was a strategic attempt to avoid

[01:19:41] Speaker 05:
the result of the RJR study, which raises serious questions about whether larger warnings can reduce tobacco use after all.

[01:19:49] Speaker 06:
I'm sorry, 906 is 21 USC 387F?

[01:19:54] Speaker 06:
That's right, Your Honor.

[01:19:55] Speaker 05:
Yeah, 906D1 of the original act codified.

[01:19:58] Speaker 06:
And that says the Secretary made by regulation require restrictions.

[01:20:04] Speaker 06:
Yes.

[01:20:04] Speaker 06:
Are those restrictions ones

[01:20:08] Speaker 06:
Do those restrictions include ones that arise from the deeming or are they just the separate ones, the youth, the prohibition on selling to youth and the warnings here?

[01:20:22] Speaker 05:
So there was a bunch of stuff going on in the deeming rule.

[01:20:24] Speaker 05:
One thing that happened is... And the deeming rule triggers a whole separate set of consequences.

[01:20:29] Speaker 05:
Exactly.

[01:20:29] Speaker 05:
So there's section 901 authority that allowed the agency to deem products subject to the act that

[01:20:35] Speaker 05:
triggered a series of consequences that aren't before the court now, and then there were additional provisions that were put on through 906, that was age restriction on sale, and the warnings.

[01:20:47] Speaker 05:
So, 906 is the grounding for the warnings requirement, and our view is that the warning requirement specifically needed to be studied over 906.

[01:20:55] Speaker 05:
And what's the basis for that?

[01:20:58] Speaker 06:
The statute seems to me crystal clear

[01:21:01] Speaker 06:
that there has to be consideration of impacts on smoking.

[01:21:06] Speaker 06:
Yes.

[01:21:07] Speaker 06:
But I'm not sure it's crystal clear that they have to disentangle the impacts from the warning piece of this regulatory initiative from the other pieces, including the youth marketing prohibition or the youth sale prohibition

[01:21:26] Speaker 06:
as to which the impact would be self-evident.

[01:21:29] Speaker 05:
I understand your question, Your Honor.

[01:21:30] Speaker 05:
The omnibus finding that I'm talking about, and I can get you a citation for it, referred to the effect of the final rule on reducing tobacco use.

[01:21:42] Speaker 05:
Which did not disentangle warnings.

[01:21:46] Speaker 05:
It didn't disentangle warnings or any of the marketing restrictions.

[01:21:50] Speaker 06:
Why did they have to?

[01:21:52] Speaker 06:
It just talks about such regulation.

[01:21:54] Speaker 05:
It's a little ambiguous.

[01:21:55] Speaker 05:
Yes, I understand.

[01:21:56] Speaker 05:
So at a minimum, we believe 906 requires the agency to focus on the restrictions that are being imposed through 906.

[01:22:07] Speaker 05:
So perhaps if the agency had

[01:22:11] Speaker 05:
had a finding that said, well, between the age restrictions and the warning requirements, the 906 restrictions will reduce tobacco use.

[01:22:19] Speaker 05:
That would be a different case.

[01:22:21] Speaker 05:
The agency didn't make that finding.

[01:22:22] Speaker 05:
The agency said the whole final rule will reduce tobacco use.

[01:22:26] Speaker 05:
And the weight of the final rule is all these automatic provisions that occur through the deeming decision under Section 901 of the act.

[01:22:35] Speaker 06:
So... I thought it was the set of things that

[01:22:39] Speaker 06:
from the exercise of regulatory authority.

[01:22:42] Speaker 06:
Not the whole rule, including deeming, just the advertising restrictions.

[01:22:50] Speaker 06:
the restriction on sale to minors, and there's one more.

[01:22:53] Speaker 06:
I think it's vending machines.

[01:22:55] Speaker 05:
Exactly, Your Honor.

[01:22:57] Speaker 05:
It refers to the final rule and the... In total?

[01:23:01] Speaker 05:
And the exercise of the deeming authority under 901 was an exercise of regulatory authority.

[01:23:06] Speaker 05:
It wasn't required.

[01:23:08] Speaker 05:
The agency had to justify that decision as well.

[01:23:11] Speaker 05:
So it never looked at these particular issues.

[01:23:15] Speaker 05:
Even putting that omnibus finding aside, we don't think that's sufficient

[01:23:19] Speaker 05:
to really have the meaningful taking of account of issues that the statute requires.

[01:23:26] Speaker 05:
I mean, you can't just conclude that you need to explain it, and at a minimum, there should have been an explanation for why the warning requirements drove this reduction in tobacco use.

[01:23:38] Speaker 05:
Of course, patience with me is probably running out, but I would just conclude with the fact that I think what we heard from the government...

[01:23:48] Speaker 05:
You're providing information.

[01:23:50] Speaker 05:
That's your job.

[01:23:52] Speaker 06:
Help us make an informed decision.

[01:23:55] Speaker 03:
Informed decision, yes.

[01:23:57] Speaker 03:
May not influence the result, but it does give us information.

[01:24:03] Speaker 05:
It all ties into what we're talking about, doesn't it?

[01:24:07] Speaker 05:
I think the government's argument in this brief and at the podium today is really urging on the court an extremely light touch when it comes to this auditor and its analysis of the size of the warnings.

[01:24:18] Speaker 05:
A light touch that puts the burden on the speaker to show that there's a chilling effect on its speech.

[01:24:25] Speaker 05:
And I would refer the court to page 28,988 of the final rule that's in volume 81 of the Federal Register.

[01:24:34] Speaker 05:
where the agency explicitly puts the burden on the commenters to demonstrate that the 70 percent that's left on packages, the 80 percent that's left on advertisements isn't enough.

[01:24:46] Speaker 05:
And I think if we were to adopt the government's position on the level of scrutiny that's required on Desautere and kind of defer to the government on how big is enough, we would be breaking both from American meat

[01:24:59] Speaker 05:
I'm sorry, American beverage out in the Ninth Circuit, which required a demonstration by the government that smaller warnings would not suffice, but we'd also be breaking from a series.

[01:25:10] Speaker 03:
But he's posing counsel's right that that case rested explicitly on the fact that the defendant's own expert reached the conclusion.

[01:25:18] Speaker 03:
It's amazing who they choose as an expert, but an expert said that that size wasn't necessary, right?

[01:25:26] Speaker 05:
Well, remember, they were coming from zero, right?

[01:25:29] Speaker 05:
And so their expert got up and said, listen, warnings could actually get people better informed about sugar-added beverages.

[01:25:38] Speaker 03:
But it did.

[01:25:39] Speaker 03:
It rested on a defendant's own expert finding the opposite of what the

[01:25:46] Speaker 05:
done a focus group on a 10 percent warning.

[01:25:50] Speaker 05:
But I don't think that the FDA should be rewarded for not examining the prevailing scheme in place right now and seeing whether that's effective to accomplish whatever interest it thinks is appropriate, whether it's effectively communicating cigar health risks or whether it's reducing tobacco use.

[01:26:07] Speaker 05:
I think the American

[01:26:10] Speaker 05:
Beverage court is very clear that the burden is on the government to show that lesser intrusions will not suffice.

[01:26:17] Speaker 05:
And I think that's absolutely consistent.

[01:26:20] Speaker 03:
Has to be least restrictive alternative?

[01:26:22] Speaker 03:
No, no, no, absolutely not.

[01:26:24] Speaker 03:
But as you get to each lesser one, then you have to address the next lesser one.

[01:26:29] Speaker 05:
Well, fortunately in this case, we're not left with this kind of infinite series of alternatives.

[01:26:37] Speaker 05:
And that issue has been addressed in various cases before the Supreme Court and this court to say, listen, we can't just go on forever and ever and suppose that 25% or 18% or 17%.

[01:26:49] Speaker 05:
I mean, here we had

[01:26:52] Speaker 05:
Absolutely no study of the prevailing warning scheme that was in place for the last 17 years, that was fully implemented in the United States, that was available for study and analysis.

[01:27:04] Speaker 05:
That sounds like you're arguing it's arbitrary and capricious.

[01:27:07] Speaker 05:
Well, I think it is arbitrary and capricious.

[01:27:09] Speaker 05:
I also think it violates the First Amendment.

[01:27:12] Speaker 01:
If there's no less restrictive test, then it must be that the government has the discretion to impose the most restrictive

[01:27:23] Speaker 01:
labeling requirement, and that can't be right.

[01:27:25] Speaker 05:
That's right, and I think we go back to central Hudson.

[01:27:29] Speaker 05:
There's this debate about whether central Hudson is the least restrictive means or something else.

[01:27:36] Speaker 05:
What the cases have consensus on is that the government has the burden to show that less restrictive alternatives, alternatives that are less intrusive on first amendment rights, will fail.

[01:27:48] Speaker 01:
I notice on the government's brief you argue

[01:27:50] Speaker 01:
And they quote that you argue for a less restrictive option.

[01:27:55] Speaker 01:
Shouldn't be alternative, which is only a choice between two, but an option, a less restrictive option.

[01:28:01] Speaker 01:
And the government comes back and says that the law is not that it has to be the least restrictive, which is not what your argument is.

[01:28:09] Speaker 05:
It's not what our argument is.

[01:28:11] Speaker 05:
We could confront that in a different case.

[01:28:13] Speaker 05:
Here, we think that the government had to engage in some analysis of why the FTC option would fail, would fail to accomplish the government's objectives.

[01:28:25] Speaker 05:
direct the court to page 29, 066 of the final rule.

[01:28:29] Speaker 05:
Therein, the agency deals with the FTC formatting requirements in a sentence.

[01:28:35] Speaker 05:
And this is not what the First Amendment can tolerate, and frankly, I don't think it's what the Administrative Procedure Act can tolerate.

[01:28:43] Speaker 05:
as well.

[01:28:44] Speaker 05:
Instead, what the agency did is it turned to international consensus, and, Your Honor, Judge Randolph, you correctly pointed out that that convention hasn't been ratified by the United States.

[01:28:54] Speaker 05:
And as a matter of fact, before the United States signed it, it objected to the formatting requirements of the warning labels for tobacco because they might violate our First Amendment.

[01:29:06] Speaker 05:
And I suspect that if that treaty had ever been ratified, it would have been accompanied by a reservation from the United States.

[01:29:14] Speaker 05:
And I don't think one part of the executive branch can come urge the Court to say, this is the way we should go, and it's consistent with First Amendment principles.

[01:29:23] Speaker 05:
And another part of the executive branch, our State Department, take a different position.

[01:29:27] Speaker 03:
All right.

[01:29:27] Speaker 03:
Any questions?

[01:29:29] Speaker 03:
Thank you very much.

[01:29:30] Speaker 05:
Thank you, Your Honor.

[01:29:30] Speaker 03:
Very informative on both sides.

[01:29:31] Speaker 03:
We'll take this into consideration.