Topic: Contents and Disclosures Measures

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Quebec Class Action Appeal [Canada] [March 01, 2019]

Quebec residents filed two separate class action lawsuits against the Canadian tobacco companies of British American Tobacco ("BAT"), Philip Morris International ("PMI"), and Japan Tobacco International ("JTI") ("tobacco companies"). The first class involved Quebec residents who had lung cancer, throat cancer, or emphysema. The second class involved Quebec residents addicted to nicotine. The court found that the tobacco companies caused injury, failed to inform customers of the risks and dangers of its products, and violated Quebec law.

On March 1, 2019, the Quebec Court of Appeals ("the Court") unanimously upheld the lower Quebec Superior Court decision and found that the tobacco companies intentionally misled consumers about the dangers associated with their products for more than 50 years. The Court upheld the lower court's decision, but made technical corrections, that the appellants pay moral damages to members of the Blais action, as well as punitive damages to both classes, with interest and the additional indemnity provided by law. The appellants’ liability was based on private law of general application (Civil Code of Lower Canada and Civil Code of Quebec ), the Tobacco-related Damages and Health Care Costs Recovery Act, the Charter of Human Rights and Freedoms and the Consumer Protection Act.

All three tobacco companies have indicated that they will likely appeal the decision to the Supreme Court of Canada.

For the earlier decision, see: JTI, et al. v. Letourneau, et al., No 500-06-000076-980 and No 500-06-000070-983, (Quebec 2015).

Planta Tabak-Manufaktur Dr. Manfred Obermann GmbH & Co. KG v. Land Berlin [European Union] [January 30, 2019]

Planta Tabak, a Berlin-based tobacco company that primarily manufactures and markets flavored roll-your-own tobacco, challenged provisions of the EU Tobacco Products Directive (Directive 2014/40/EU) that prohibit characterizing flavors in cigarettes and roll-your-own tobacco and prohibit packaging from alluding to flavors, among others. The plaintiffs sought a declaration that these provisions were not applicable to its products and alleged that they violated the principles of legal certainty, equal treatment, and proportionality. Planta Tabak objected to the fact that manufacturers of flavored tobacco products with an EU-wide sales volume of 3% or more in a particular product category were given until May 2020 to comply with the ban on flavorings, while manufacturers of flavored products with a smaller sales volume must comply as of May 2016.

The Court held that flavored tobacco products were particularly attractive to young people and facilitate the initiation of tobacco consumption. While the Court admitted that the ban was a restriction on the EU's free movement of goods, "it was justified by the balancing of its economic consequences against the requirement to ensure a high level of protection of human health." Further, the Court found that the difference in treatment of products based on sales volume was intended to give consumers adequate time to switch to other products and was, therefore, objectively justified. The Court also upheld the ban on any indication of flavor on the product packaging and labeling.

The case now reverts to Berlin's administrative court, where Planta Tabak filed its initial challenge.

New Zealand MOH v. PMI [New Zealand] [March 12, 2018]

The Ministry of Health ("MOH") charged Phillip Morris Ltd. with selling tobacco product called “Heets,” a heated tobacco product, in violation of Sec. 29(2) of the Smoke-free Environment Act 1990 (‘the Act’). The Act prohibits the sale of tobacco "labelled, or otherwise described as suitable for chewing, or for any other oral use (other than smoking)." The Court held that the Act was originally intended to control the sales of chewing tobacco and other tobacco products consumed orally, and therefore "Heets" did not fall within Sec. 29(2).

National Confederation of Industry (Confederação Nacional da Indústria) v. ANVISA [Brazil] [February 01, 2018]

In 2012, Brazil banned tobacco additives and flavors. The National Confederation of Industry (Confederação Nacional da Indústria) challenged the ban. The Supreme Federal Tribunal, Brazil’s highest court, upheld the 2012 regulation and affirmed the Brazilian Health Regulatory Agency’s (ANVISA) right to regulate tobacco products. The court held that freedom of enterprise does not prevent Brazil from imposing conditions and limitations on private activities. The court found that while businesses have rights, they must be compatible with other fundamental and constitutional rights. In the case of tobacco control, these fundamental and constitutional rights include the right to health and the right to information. The court further held that the risks associated with tobacco consumption justify the tobacco market being subjected to intense health regulations.

Because the court failed to reach a majority (5-5 tie), the decision is not binding on other tribunals, and, by not reaching a majority, the court rejected the constitutionality claim against the ANVISA regulation (“Resolução da Diretoria Colegiada da ANVISA 14/2012”). Although the decision is not binding because of a lack of quorum, it is unlikely that subsequent challenges to the regulation would be decided differently.  (Note that the decision is in Portuguese with five pages translated into English. The English translation is located in "Related Documents.")

Nicopure Labs, LLC v. Food and Drug Administration [United States] [July 21, 2017]

A manufacturer of e-cigarette devices and liquids challenged a federal regulation that deemed e-cigarettes to be “tobacco products.” This rule subjects e-cigarettes to the same federal laws as traditional cigarettes under the Tobacco Control Act (TCA). The manufacturer argued that the Food and Drug Administration (FDA), which issued the regulations, did not have the authority to regulate empty e-cigarettes or nicotine free e-liquids, because they were not made or derived from tobacco. The company also argued that the TCA’s ban on distributing free samples and pre-approval for modified risk statements was arbitrary and violated their First Amendment rights.

In this decision, the District Court upheld the FDA’s rule. The TCA gives the FDA the power to regulate “components” of tobacco products. The court found empty e-cigarettes and nicotine-free e-liquids are “components” of a tobacco product because together they make up an electronic nicotine delivery system. Further, the court found that the rule did not violate the manufacturers’ First Amendment rights because the ban on free samples was regulating conduct, not speech. The court also held that pre-approval for modified risk statements did not violate the First Amendment because it does not ban modified risk statements, it only requires the claims be substantiated. Finally, the court found because of the public health risks associated with nicotine and increasing rates of e-cigarette use in adolescents and adults, the decision to subject e-cigarettes to the TCA was not arbitrary. 

British American Tobacco Ltd v. Ministry of Health [Kenya] [February 17, 2017]

British American Tobacco appealed a 2016 court decision, which upheld nearly all elements of Kenya’s Tobacco Control Regulations. The appeals court ruled that the tobacco company’s appeal had no merit and affirmed the decision of the lower court. The earlier ruling upheld nearly all elements of the Regulations, which are designed to implement the Tobacco Control Act, including:

- a 2% annual contribution by the tobacco industry to help fund tobacco control education, research, and cessation;
- graphic health warnings;
- ingredient disclosure;
- smoke-free environments in streets, walkways, verandas adjacent to public places and in private vehicles where children are present;
- disclosure of annual tobacco sales and other industry disclosures; and
- regulations limiting interaction between the tobacco industry and public health officials.

The appeals court agreed with the lower court that the tobacco company had been given adequate opportunities for participation in the development of the regulations and that the regulations do not violate the tobacco company’s constitutional rights. 

Republic of Poland v. European Parliament & Council of the European Union [European Union] [May 04, 2016]

Poland challenged the provisions of a European Union (EU) Tobacco Products Directive (TPD) that prohibit the sale of menthol and other flavored cigarettes by member states as of May 2020. The Court of Justice of the European Union (CJEU) dismissed the claim, finding that it was appropriate for the EU to adopt a directive in order to prevent barriers to the trade of such products if different member states have different laws. The court noted that the TPD is also designed to protect public health. The Court rejected Poland’s argument that the EU should have adopted less restrictive measures, such as an age-related restriction on the use of menthol products, or that the regulation of such products should have been left to individual member states to regulate, as such alternative measures did not appear to be equally suitable for achieving the objective pursued. The Court also rejected the argument that the measure breached the principle of subsidiarity (which requires that the EU should not regulate on matters that are within the competence of individual Member States). 

R (on the Application of) Philip Morris Brands SARL et al. v. Secretary of State for Health [European Union] [May 04, 2016]

A challenge to the validity of the European Union’s (EU) Tobacco Products Directive (TPD) 2014 brought by Philip Morris and British American Tobacco was dismissed on all grounds by the Court of Justice of the European Union (CJEU). The amended TPD was adopted in April 2014 and provides a wide range of requirements relating to emissions, reporting, 65% pictorial health warnings, packaging and labeling, a ban on characterising flavors and other additives, and regulates e-cigarettes. Article 24(4) permits member states to adopt further requirements to standardise packaging. The TPD applies to all countries within the EU.

In this case, Philip Morris and BAT brought a judicial review against the United Kingdom based on the government’s intention to implement the TPD requirements in UK legislation. The tobacco companies claimed that parts of the TPD and the Directive as a whole, were invalid because it was incompatible with the EU Treaties; was not proportionate or supported by evidence; was not sufficiently harmonising in nature; and contravened the principle of subsidiarity.  The UK court hearing the case referred questions on the interpretation of EU law to the CJEU. The CJEU upheld all aspects of the TPD, including provisions to require pictorial warning labels, to prohibit menthol cigarettes, and to allow countries to prohibit cross-border sales and to adopt additional packaging restrictions, such as plain packaging. The court noted that the EU may act to prevent obstacles to the trade of tobacco products while also ensuring a high level of public health protection. The court found that the packaging and labeling requirements were proportionate and did not go beyond what were necessary and appropriate. 

In addition the court highlighted the importance of the FCTC as a tool for interpretation and stated that it could have a 'decisive influence' on the interpretation of both EU law and Member States' tobacco control legislation. 

EU Member States are obliged, under the TPD, to implement most provisions of the TPD into domestic law by May 20, 2016 (although a number of states have been late in their implementation).

Pillbox 38 (UK) Ltd. v. Secretary of State for Health [European Union] [May 04, 2016]

A challenge to the validity of the e-cigarette regulations in the European Union’s (EU) Tobacco Products Directive (TPD) 2014 was dismissed on all grounds by the Court of Justice of the European Union (CJEU). Pillbox 38 (UK) Ltd. (trading under the name "Totally Wicked"), an e-cigarette manufacturer, brought a judicial review against the UK government challenging its intention to implement the TPD into domestic law on the basis that it claimed the TPD was not valid. The TPD Article 20 sets out requirements for e-cigarettes for all EU Member States. The UK court hearing the case asked the CJEU for a reasoned opinion on the validity of Article 20.

The CJEU found the TPD to be valid and upheld all of the e-cigarette requirements, including health warnings; a ban on most e-cigarette advertising; a limit on nicotine levels and amounts and e-liquid container sizes; a requirement to notify the government before introducing a new product; and the requirement to include a leaflet with the product containing information such as a list of ingredients. Firstly, because the purpose of the Directive is to harmonise regulations across the EU, the court found that there were significant divergences between the regulations in different Member States which justified the EU regulating the market. The court found that it was permissible to regulate e-cigarettes differently than other tobacco products in part because e-cigarettes are novel products and there is insufficient information on their health effects. The identified and potential risks linked to the use of e-cigarettes means the EU may act according to the precautionary principle. 

British American Tobacco Kenya Ltd. v. Ministry of Health [Kenya] [March 24, 2016]

British American Tobacco's Kenyan subsidiary filed a lawsuit claiming that Kenya’s Tobacco Control Regulations are unconstitutional. The court ruled against the tobacco company, finding that the process of developing the regulations was lawful and conducted with sufficient participation by the tobacco industry. The court upheld nearly all elements of the Regulations, which are designed to implement the Tobacco Control Act, including:

- a 2% annual contribution by the tobacco industry to help fund tobacco control education, research, and cessation;
- graphic health warnings;
- ingredient disclosure;
- smoke-free environments in streets, walkways, verandas adjacent to public places;
- disclosure of annual tobacco sales and other industry disclosures; and
- regulations limiting interaction between the tobacco industry and public health officials.

The court specifically noted that the Tobacco Control Act and Regulations are intended to comply with the Framework Convention on Tobacco Control. Additionally, the court acknowledged the harm caused by tobacco products and stated it would make its decision within the context of a public health system balanced against the commercial rights of the tobacco company.

The court struck down a few minor elements of the regulations, ruling that (1) the tobacco industry is not required to provide evidence of its market share to the government; and (2) that penalties for violation cannot exceed the maximums authorized by law.

The court ruled that the regulations should take effect six months after the date of the decision.