Big Tobacco Sues Uruguay

fda cigarette warning lungsThose who follow efforts to use law to reduce smoking will be aware the United States Court of Appeals for the District of Columbia found in R.J. Reynolds v. FDA, 696 F.3d 1215 (D.C. Cir. 2012) that mandatory graphic imagery on cigarette packs was a violation of commercial speech rights. As a result of the decision, cigarette packs continue to have only prosaic warnings, which go not only unread but also, for the most part, unnoticed.

Foreign countries, of course, are not bound by U.S. law, and Uruguay forged ahead with its own laws requiring graphic warnings. They include photos of decaying teeth, premature babies, and disturbing hospital scenes, with each picture covering 80 percent of each pack. Big Tobacco cannot invoke its commercial speech rights in Uruguay, but Philip Morris has sued Uruguay for $25 million, alleging the required warnings violate treaties protecting intellectual property rights.

The case is in the courts, with former New York City Mayor Michael Bloomberg paying many of Uruguay’s legal costs. Smoking is on the rise in developing countries, and many think the decision in Uruguay will have significant impact on other developing countries’ willingness to require graphic warnings.

For my own part, I strongly endorse the required graphic warnings in the name of social justice. Smoking in both the United States and abroad is increasingly concentrated among poor and working-class men and women, and the health problems associated with smoking are also greater in these sectors of the world population. For the poor and members of the working class, reading skills and even any interest in written texts are limited, but poor and working-class smokers are aware of and receptive to visual imagery. If they could literally see what smoking causes, they might fight harder to break their deathly, addictive habit.

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US Supreme Court Review: Two Employee Benefit Cases (Dudenhoeffer and Hobby Lobby)

US Supreme Court logo(This is another post in our series, Looking Back at the U.S. Supreme Court’s 2013 Term.) This blog post is the third of three on labor and employment law cases by the United States Supreme Court in the last Term. This post focuses on two employee benefit law/ERISA cases: Fifth Third Bancorp v. Dudenhoeffer and Burwell v. Hobby Lobby Stores, Inc. First, a disclosure: Along with six other law professors, I co-wrote an Amicus Curiae brief in support of the Dudenhoeffer plaintiffs.

Dudenhoeffer involves so-called ERISA stock-drop litigation, which has been rampant in the federal courts for a couple of decades now. The basic formula of these cases is that, as part of the employer-sponsored retirement plan (whether an employee stock ownership plan (ESOP) or a participant-directed 401(k) plan), the employer offers its own stock as either the entire pension plan investment or part of the pension plan investment.   When the company goes south and its stock price falls, plan fiduciaries find themselves in a difficult position as far as whether to sell the stock or to hold on to it. This is especially so when the plan fiduciary has conflicting duties as an officer of the company and as a fiduciary of the plan. As a corporate officer, not only is the person supposed to act in the best interests of shareholders to maximize the value of the company, but securities law forbids them to trade stock based on non-public material information. As a fiduciary to the ESOP or 401(k) plan, ERISA gives that same person an obligation to act in the best interest and with the same care as a prudent fiduciary would when making decisions about that employee benefit plan. And in case you are wondering, ERISA Section 408(c)(3) gives employers the ability to assign the same person both officer and plan fiduciary roles or set up so-called “dual-role fiduciaries.”

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Chevron and the Hobby Lobby Decision

Hobby Lobby logoThe majority opinion in the Supreme Court’s decision in the Hobby Lobby case is founded on the Religious Freedom Restoration Act (RFRA) and the restrictions it places on the Secretary of Health and Human Services (HHS) when she regulates and enforces the Affordable Care Act (ACA). While the issues raised by Justice Ruth Bader Ginsburg’s dissenting opinion as to the battle of interests protected by the Constitution are significant, an important practical legal issue that was not addressed in the Hobby Lobby case is the power of HHS to interpret the meaning of the ACA. Considering the majority’s reliance on two terms that go undefined by the Court — “sincere religious belief” and “closely held corporation” [see page 29 of the slip opinion and footnote 28] — and the fact that none of the other Hobby Lobby opinions address the meaning of these terms, it is essential that these terms be defined as they fit into the ACA context.

The Court’s failure to address how HHS might interpret the meaning of these terms is reasonable considering that HHS has not acted to interpret the meaning of a “sincere religious belief” or a “closely held corporation” in the context of the ACA. In fact, the majority states explicitly that courts will be able to separate those with “sincere religious beliefs” from those who do not. However, despite the majority’s reference to the ability, and impliedly the power, of courts to interpret the terms “sincere religious beliefs” and “closely held corporations,” terms such as these have been regularly interpreted by federal agencies as they apply to the statutes these agencies enforce.

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