R.J. Reynolds Tobacco Co. and Lorillard Tobacco Co. argued that the tone of the state's advertising, which was supported by a 25-cent tax on each pack of cigarettes sold by wholesalers, violated their rights.
The marketers said the ads for the California Tobacco Control Program that looked to prevent teen smoking focused on the tobacco industry's marketing practices, suggesting they were deceptive, rather than citing the health risks of smoking.
"Warning: Some people will say anything to sell cigarettes," said one of California's ads. Another featured cigarettes raining down from the sky as an announcer said, "We have to sell cigarettes to your kids. We need half a million new smokers a year just to stay in business."
The marketers argued those ad statements vilified the tobacco industry.
The case stems from the California Legislature's passage of the 25-cent tax to help fund the state's anti-smoking advertising program. (That program was in addition to a national program run by the American Legacy Foundation set up following the 1998 settlement of 46 state suits accusing tobacco makers of underplaying smoking risks and marketing tobacco illegally.) Lorillard and RJR argued that the way the tax was structured resulted in the tobacco companies, not the wholesalers, paying the tax and essentially funding advertising they disagreed with.
Not compelled speech
In September 2004, a panel of 9th Circuit U.S. Court of Appeals rejected the tobacco makers' appeal 2 to 1. The majority decision said the ads represented government speech, not private speech, so the advertising couldn't be challenged as compelled speech. The minority ruling said California's message and the funding for it was questionable. The companies appealed that decision to the Supreme Court.
Advertising lawyers have worried that the compelled speech issues set in tobacco cases would set precedents for other cases, including some involving direct-to-consumer prescription drug advertising.