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FTC v. BROWN & WILLIAMSON TOBACCO CORP.

October 14, 1983

FEDERAL TRADE COMMISSION, Plaintiff,
v.
BROWN & WILLIAMSON TOBACCO CORPORATION, Defendant



The opinion of the court was delivered by: GESELL

 This is an enforcement proceeding brought by the Federal Trade Commission ("FTC") pursuant to section 13(b) of the Federal Trade Commission Act, 15 U.S.C. § 53(b), to enjoin Brown & Williamson Tobacco Corporation ("B & W") from deceptively advertising the tar content of the Barclay king-size cigarette, which B & W advertises as "1 mg. tar" and "99% tar free." *fn1" The FTC charges that Barclay advertising violates Section 5(a) of the FTC Act, which prohibits unfair methods of competition and unfair or deceptive acts or practices in commerce. 15 U.S.C. § 45(a). *fn2" After receiving numerous affidavits, hearing the testimony of six witnesses, and considering the briefs and arguments of counsel, the case is now before the Court for final judgment on the merits. *fn3" The Court's findings of fact and conclusions of law follow.

 The FTC periodically publishes reports which rate the amount of tar and nicotine of each cigarette sold in the United States. *fn4" These official figures, reported in milligrams, are determined by the FTC using a smoking machine which measures the amount of tar and nicotine the cigarette delivers. The FTC smoking machine does not and is not intended to duplicate actual smoking behavior. Rather, it smokes each cigarette in an identical way, using a standard set of "puff parameters." *fn5" Since no smoker can or would smoke exactly like the machine, *fn6" this test method does not measure how much tar and nicotine a smoker would actually take into his mouth were he to smoke a given cigarette. It does purport, however, to tell a smoker the relative amounts of tar and nicotine he would receive in his mouth if he smoked two cigarettes in the same manner. Thus, if a smoker smoked a "10 mg. tar" cigarette in the identical manner as a "5 mg. tar" cigarette, he would get approximately twice as much tar in his mouth from the former as he would from the latter.

 For over ten years cigarette companies have publicized these official FTC ratings in advertising and on some cigarette packages pursuant to a voluntary agreement with the Commission. *fn7" Many cigarette smokers note and rely on these FTC ratings in making their decision to purchase a particular brand. Cigarettes with low tar and nicotine ratings are generally considered by smokers to be relatively less risky to health and cigarette companies emphasize low ratings to promote certain brands. *fn8" B & W undertook a major promotional campaign when it introduced its new Barclay cigarette in 1981, emphasizing its then official FTC rating of 1 mg. of tar and claiming that Barclay was "99% tar free." The cigarette was widely accepted by consumers. *fn9"

 Most "low tar" cigarettes obtain their low ratings in part by diluting the smoke which the smoker takes in through the tobacco rod with outside air. *fn10" Typically this is accomplished by vents or perforations near the point where the tobacco rod meets the cigarette filter, so that the smoke drawn through the rod and the outside air drawn through the vents or perforations are mixed together as they pass through the filter before entering the smoker's mouth. The Barclay cigarette, however, uses a different dilution process based on a unique design. The outside air is channeled through the filter tip separately from the smoke by means of four separate, sealed longitudinal vents in the filter itself. This causes the outside air to be drawn directly into the smoker's mouth before it mingles with the smoke drawn through the cigarette. Because of this design, the exit holes for the outside air vents are placed in close proximity to the smoker's lips. *fn11"

 In the December, 1981, FTC Report the Barclay cigarette received an official FTC rating of 1 mg. tar based on the standard test using the FTC smoking machine. *fn12" Following Barclay's successful introduction into the market, however, R. J. Reynolds and Philip Morris, the industry's two largest companies, complained that in actual smoking the Barclay vents were being "crushed" by lip pressure and/or blocked by lip "drapage" so that dilution with outside air was being reduced and the tar delivered by the Barclay cigarette to the mouth of the smoker was thus substantially greater than the amount the FTC machine tests reflected. Thereafter the FTC commenced an extensive investigation, soliciting and examining studies prepared by B & W and by its competitors, and sending these studies to several recognized outside experts for review. *fn13"

 In response to the FTC's action, B & W has deleted from its advertising any direct reference to an FTC rating and its advertisements now state that Barclay is 1 mg. tar "by a recognized method used by B & W and supported by independent laboratories." *fn16" While conceding the literal truth of this advertising claim, the FTC asserts that the Barclay claim is still deceptive because it falsely suggests to consumers that Barclay is officially rated 1 mg. by the FTC and because it leads consumers to believe, incorrectly, that Barclay's tar delivery is comparable to that of other cigarettes rated 1 mg. by the FTC. Moreover, while also conceding the literal truth of Barclay's "99% tar free" slogan, the FTC asserts that this claim is also misleading because it falsely suggests that Barclay is "virtually free of tar."

 In opposing the injunction B & W has vigorously presented a number of defenses. Despite the long-standing acceptance of the FTC rating system by B & W and other major U.S. cigarette companies, B & W contends that recent scientific evidence demonstrates that the FTC system is so flawed that it is itself deceptive. Accordingly, B & W urges that the FTC cannot ask for equitable relief even if its factual assertions are true. As a second major defense, B & W argues that the FTC has failed to carry its burden of showing that consumers perceive Barclay ads in the manner the FTC contends. Finally, B & W argues that even if consumers do perceive B & W to be making the claim that Barclay delivers the same amount of tar as other cigarettes rated 1 mg., such a claim cannot be deceptive because it is in fact true.

 A. The FTC Rating System.

 The FTC rating system has enjoyed almost universal acceptance for over a decade. Recently, however, the system has been subjected to criticism, largely but not entirely in connection with the Barclay controversy. Seeking to defeat the present suit by demonstrating that the entire FTC rating system is itself misleading, B & W has presented to the Court several "cotinine" studies. Such studies measure by indirect means the amount of nicotine a smoker actually ingests. *fn17" The principal studies upon which B & W relies are an "800-person" study conducted by Dr. Gio Gori, a B & W consultant, and a study by Dr. Neal Benowitz. *fn18"

 The Gori and Benowitz studies undoubtedly suggest that small differences in FTC ratings may not be as significant as many would believe. The Gori study found that between cigarettes whose FTC nicotine ratings differed by a factor of seven, differences in smokers' blood cotinine levels averaged only 30-40%. *fn19" The principal explanation offered for this effect is that many smokers "compensate" -- they change their smoking habits to receive more tar and nicotine from low-rated cigarettes and less tar and nicotine from high-rated cigarettes than the FTC ratings would suggest. *fn20"

 This evidence, however, is not sufficient to lead the Court to hold that the FTC system is meaningless or deceptive. First, the Gori study does in fact validate the FTC system at least to a certain extent by demonstrating that a positive relationship exists between nominal FTC ratings and blood levels of nicotine. *fn21" Even if the levels of tar and nicotine differ by only 30-40%, this difference has significant health implications, as Dr. Gori acknowledged in his testimony. *fn22" Exactly how small a difference is of significance is impossible to determine given the current state of scientific knowledge, *fn23" and it is possible that even very small differences might account for a significant number of early deaths across the nation. *fn24" Furthermore, because the relatively small difference in nicotine levels between the high and low FTC-rated cigarettes is due in part to the manner in which they are smoked -- the "compensation" effect -- a smoker who avoids engaging in compensatory behavior would still receive tar and nicotine into his mouth in rough proportion to the FTC numbers. Even accepting Dr. Gori's results, his study thus fails to discredit the FTC system.

 A second reason exists for finding that B & W has failed to demonstrate that the FTC system is not of value to consumers. The FTC system attempts only to determine how much relative tar and nicotine a smoker would get in his mouth were he to smoke two cigarettes in the same manner. B & W has utterly failed to show that the system does not do this. Nor has it shown that a better method for determining the relative health hazards of the many different varieties of cigarettes on the market is currently feasible. Dr. Gori, while arguing for the use of cotinine studies rather than the current rating system, estimated it would take a study using 40,000 people to test properly the brands of cigarettes now rated by the FTC. *fn25" Moreover, even such a massive and expensive study would leave unanswered questions. The cotinine method measures only the amount of nicotine a smoker ingests. The major health danger to smokers comes not from the ingestion of nicotine, however, but from the ingestion and retention of tar in the body. *fn26" Because actual tar ingestion cannot be directly measured by any known process, *fn27" in order to ...


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