FOR IMMEDIATE RELEASE: April 11, 1988 FTC REVERSES ADMINISTRATIVE LAW JUDGE'S DECISION TO DISMISS R. J. REYNOLDS CASE; REMANDS CASE TO ALJ The Federal Trade Commission reversed a decision of an administrative law judge (ALJ) that had dismissed the FTC complaint against the R. J. Reynolds Tobacco Co., and remanded the case to the ALJ for further action. In its decision, the Commission stated that the judge erred when he granted R.J. Reynolds' motion to dismiss the complaint on the ground that it was not subject to the Commission's jurisdiction and when "he ruled that further opportunity to discover and present facts relating to jurisdiction was not permitted." The complaint alleges deception by Reynolds in the "dissemination of an advertisement entitled 'Of Cigarettes and Science'," dealing with the relationship between smoking and health. The vote to reverse the ALJ's decision and remand the matter was 4-1, with FTC Chairman Daniel Oliver dissenting. In June 1986 the FTC issued a complaint charging that R. J. Reynolds' "Of Cigarettes and Science" was an advertisement that misrepresented the purpose and results of a scientific study. The study was known as the Multiple Risk Factor Intervention Trial, or MR FIT. The complaint charged that "Of Cigarettes and Science" made claims about the MR FIT study that were false or misleading, including making false claims that the study provided credible scientific evidence that smoking is not as hazardous as the public or the reader has been led to believe. The complaint also charged that it was deceptive because it failed to disclose certain information about the study's findings. R. J. Reynolds filed a motion to dismiss the FTC complaint on the grounds that "Of Cigarettes and Science" was an editorial fully protected by the First Amendment and therefore could not be regulated by the FTC. In August 1986 ALJ Montgomery K. Hyun dismissed the case, concluding the text of "Of Cigarettes and Science" was noncommercial speech that was fully protected by the First Amendment and therefore was beyond the FTC's jurisdiction. However, according to the Commission decision, which was written by Commissioner Andrew J. Strenio, Jr., "viewed in light of the allegations contained in the complaint, we conclude that the ALJ erred when he granted respondent's motion to dismiss at this stage of the proceeding." The Commission stated in its decision, "We agree with the parties and the ALJ that unless the Reynolds advertisement can be classified as commercial speech, it is not subject to the Commission's jurisdiction." According to the Commission, however, "the ALJ was required to consider the various 'messages, means, and motives' of the advertisement" in determining whether it is commercial speech. The Commission concluded that, "Accepting the allegations of the complaint concerning jurisdiction as true for purposes of this appeal," -- the standard legal approach -- "the content of the Reynolds advertisement includes words and messages that are characteristic of commercial speech." The Commission opinion discusses (More) whether "Of Cigarettes and Science" constitutes commercial speech in light of the complaint allegations about jurisdiction. The following characteristics that the Supreme Court has identified as relevant to determining whether speech is commercial are stated in the Commission decision: -- The content of "the advertisement refers to a specific product, cigarettes." -- The content of "the advertisement discusses an important product attribute -- the alleged connection between smoking and heart disease." "A message that addresses health concerns that may be faced by purchasers or potential purchasers of the speaker's product may constitute commercial speech." -- "The 'means' used to disseminate the Reynolds ad -- paid-for advertising -- is characteristic of commercial speech." -- Reynolds is in the business of selling cigarettes. "It is not unreasonable to infer that Reynolds, as a seller of cigarettes, had a direct, sales-related motive for disseminating the 'Of Cigarettes and Science' advertisement." "[E]conomic motivation also may be indicative of commercial speech." The decision stated, "It should be clear, however, that the Commission makes no final determination of jurisdiction." According to the Commission, a final determination at this stage of the proceeding would be premature. Instead, the Commission remanded the case to the ALJ "for the purpose of determining whether the facts as applied to appropriate legal standards support the existence of jurisdiction." The Commission stated, "if the ALJ determines that additional evidence is needed to make a final determination on jurisdiction, he shall permit further opportunity to develop and present evidence on the issue," although the Commission did not conclude that presentation of additional evidence necessarily was required. The Commission rejected Reynolds' contention that consideration of extrinsic evidence, which is evidence other than the statement itself, was irrelevant to determining jurisdiction or that consideration of such evidence would violate the First Amendment. In the decision, the Commission reaffirmed that the protections the First Amendment affords "are of fundamental importance to a democratic society." The Commission noted, however, that the Constitution "accords different degrees of protection based upon the type of speech at issue." According to the decision, regulation of fully protected speech "generally is limited to reasonable time, place and manner restrictions," but commercial speech "can be regulated on the basis of its content." The Commission stated, "The more limited protection accorded commercial speech permits the FTC to act when necessary to challenge false or deceptive advertising." In a dissenting statement, Chairman Daniel Oliver stated that he would have affirmed the ALJ and dismissed the complaint. He cited decisions of the Supreme Court that have concluded that corporations have the full protection of the First Amendment for their "direct comments on public issues." In his view, the statement by R.J. Reynolds was a direct comment in which the company "questioned the objectivity of the scientists who examine the issue of smoking and health." He stated that, "If the editorial is deceptive, or not believable, or runs counter to other information on the health question (More) that the public is aware of, consumers are free to reject the message in the editorial. But it is critical for First Amendment purposes that the public, and not the government, decide the answer to this question." Chairman Oliver also disagreed with the decision to remand the case for additional discovery. He noted that much of the evidence the majority suggested would be relevant was simply background information that was not needed. He disagreed with the majority's conclusion that evidence of Reynold's motive was relevant, stating that "the Supreme Court has never looked to the subjective intent of the speaker" in deciding whether speech was fully protected or commercial. Copies of the Commission decision are available from the FTC's Public Reference Branch, Room 130, 6th St. and Pennsylvania Ave. N.W., Washington, D.C. 20580; 202-326-2222; TTY 202-326- 2502. # # # MEDIA CONTACT: Dee Ellison, Office of Public Affairs, 202-326- 2177 FTC File D.9206 [RJRDec]