Tobacco Master Settlement Agreement

-- By RyanGlover - 18 May 2015

Overview

On January 11, 1964, the United States Surgeon General released the first report on smoking and health. The Surgeon General found a “significant association between smoking…and lung cancer,” as well as smoking and Chronic Bronchitis (155). Since the report, over 800 private claims were filed against the Tobacco Industry for negligent manufacturing and advertisement, fraud, and state consumer protection violations. While the Tobacco Industry had great success in defending these suits, an increasing availability of medical evidence became a greater threat.

By the early 90’s, 46 States commenced litigation against the major tobacco manufacturers. These States sought monetary and equitable relief under consumer-protection and antitrust laws. The underlying issue in these lawsuits claimed that tobacco products produced and contributed to health problems, which in turn, resulted in higher costs for State public health systems. In response to these claims, Philip Morris, a major tobacco manufacturer, drafted an early version of the Master Settlement Agreement (“MSA”). The MSA was a bargaining strategy in which Philip Morris agreed to major advertising concessions in exchange for immunity from future personal injury lawsuits.

On November 23, 1998, the Attorney General’s in the 46 states entered into the MSA with four of the largest tobacco manufacturers. Generally, the provisions of the MSA are as follows: First, the MSA mandated that the four tobacco manufacturers would pay billions of dollars to the States. This fund was intended to establish programs that would counter youth tobacco use and educate consumers of health related tobacco-related diseases. Second, the MSA placed many restrictions on advertisement strategies, particularly prohibiting advertisements from directly or indirectly targeting youth. In exchange, tobacco manufacturers were exempted from all private tort liability, including those who sought redress from health problem caused by tobacco use.

The MSA, however, never included an official mandate that required the funds to be spent on the agreed upon expenditures. Instead, States spent their portion on projects unrelated to preventative tobacco measures. As a result, the Attorney General’s failed their objective in attempting to ensure that the MSA would change the smoking culture in America and alleviate the burden of tobacco-related health and addiction problems. A strong argument can be made that the real victories against the tobacco industry occurred from high cigarette taxes and public smoking bans.

Therefore, I contend that the MSA should be invalidated in order to further the progress that has been made against the Tobacco Industry.

Invalidation

The tobacco MSA violates two Constitutional provisions:

First, the MSA violates the First Amendment’s Right to Petition, which provides that “Congress shall make no law…abridging…the right of the people…to petition the Government from redress of grievances”. Laws that burden fundamental rights, such as the right to seek redress of grievances, are subject to strict scrutiny. As a result, only those laws that are necessary in achieving a compelling government interest will be upheld. Under this standard of review, it could be argued that since the purpose of the MSA failed to achieve its goals, it no longer serves as a legitimate government interest and therefore should be disband.

The purpose of the MSA is to protect children from tobacco advertisements as well as increase education on the damaging effects tobacco products have on one’s health. While I concede that the prohibition of advertisements targeting young children probably has yielded some success in preventing early teens from smoking, empirical data suggests that the educational programs have not seen any success (cite). Moreover, the tax against tobacco companies to fund these educational programs was not intended to last indefinitely. Accordingly, the benefits yielded by the MSA could be better met by allowing private individuals to seek redress. And there is no doubt that the MSA has interfered with the right to petition. Therefore, the MSA should be struck down under strict scrutiny, as it is not the best method to serve its purpose.

Note, through reverse incorporation of the Fourteenth Amendment, specifically the privileges and immunities clause, the right to petition will apply to the States. This incorporation gives federal courts power to enforce the First Amendment upon the States.

Second, textually, the Compact Clause of the Constitution, which provides that “No State shall, without consent of Congress…enter into any agreement or compact with another State”, prohibits any agreement or compact among States if they lack Congressional approval. The Supreme Court has tailored this seemingly broad clause narrowly. The Supreme Court has held that any agreement or compact requires Congressional consent when the agreement or compact increases the political power of the states, and thus encroaching upon the just supremacy of the United States. Virginia v. Tennessee, 148 U.S. 503, 519 (1883). Moreover, the purpose of the compact clause, as identified in Rhode Island v. Massachusetts, is to “guard against the derangement of compacting States federal relations with other states and the federal government which might be injuriously affected.” Rhode Island v. Massachusetts, 37 U.S. 657, 726 (1838).

Here, the MSA has increased the political powers of the States and therefore has encroached upon the rights and interests of the Federal Government. In other words, the MSA has enabled States to enhance their power in relation to States that failed to comport to the MSA and the federal government, in a way that probably would not have been accomplished without such agreement.

Lastly, the Compact Clause requires Congressional approval. This is to ensure that a States power end at its own border. The MSA, essentially, bypasses the requirement which was enacted as a political safeguard to federalism.

There's no authority whatever for the proposition that "petition for redress of grievances" in the First Amendment refers to state civil litigation against private parties. That makes no sense historically or legally. There's no basis for the conclusion that a joint settlement of civil litigation in which states are parties violates the Compact Clause. I have no idea why you think you need to assert that the Agreement is unconstitutional in order to argue that it would be good public policy to find a way around it or to reopen the issues.