The 1st Circuit dealt a blow to tobacco retailers when it upheld two ordinances issued by the City of Providence that prohibited discounting of tobacco products and all sales of flavored, non-cigarette tobacco in outlets other than smoking bars. The Court rejected the tobacco retailers’ claim that the pricing ordinance violated the First Amendment. It also concluded that federal law does not bar municipalities from banning products from some types of retail outlets, if the products remain available for purchase in others. 

Free speech concerns

The first ordinance prohibited licensed tobacco retailers from discounting tobacco products by accepting coupons or multipack discounts, or by offering such discounts. The Court examined the legality of the prohibition on accepting discounts, and then examined separately the portion that outlawed offering such discounts. The retailers argued that the prohibition on discounting violated the First Amendment because it infringed on commercial speech. The City responded that the ordinance regulated only pricing, not speech, and should therefore survive First Amendment scrutiny. In affirming the legality of the pricing ordinance, the 1st Circuit held that the law does not “restrict the dissemination of pricing information generally,” but rather it prohibits retailers from engaging in certain pricing behavior or offering to engage in such behavior. The 1st Circuit relied on the Supreme Court’s decision in 44 Liquormart, Inc. v. Rhode island, which struck down a categorical ban on price advertising, but stated in dicta that regulations of liquor prices would not offend the First Amendment. The retailers also argued that the ordinance should be subject to a higher level of scrutiny because it regulates “expressive conduct.” The Court rejected this assertion, holding that setting prices does not qualify as expressive conduct entitled to constitutional protection.

Plaintiff tobacco manufacturers further claimed that, even if the price regulation did not violate the First Amendment, the second part of the ordinance, which precluded retailers from offering coupons or multi-pack discounts, constituted a free speech violation. The Court dismissed these concerns, reasoning that its ruling with regard to the price regulation applied with equal force to those provisions of the ordinance.

Federal preemption

The 1st Circuit also agreed with the lower court that neither Providence’s price regulation nor its outright ban on the sale of flavored tobacco products was preempted by the Federal Cigarette Labeling & Advertisement Act. While the Act expressly preempts state regulation of advertising or promotion, the Court held that a 2009 amendment to the Act allows for the regulation of advertising and promotion so long as the restriction is content neutral and addresses only the time, place, or manner of advertising or promotion.  The Court held that price regulations govern the manner of promotion, and therefore are not preempted.

Likewise, the Court held that the ordinance’s limit on the sale of flavored tobacco was not preempted by federal statute. The tobacco retailers argued that the ban on certain flavored tobacco products violated the Family Smoking Prevention and Tobacco Control Act. The 1st Circuit disagreed, noting that federal law prohibits states from enacting regulations that are different from federal rules governing “tobacco product standards, premarket review, adulteration, misbranding, labeling, registration, good manufacturing standards, or modified risk tobacco products.” While the Court found that the statute would preempt state or local attempts to ban the sale of certain tobacco products entirely, the ordinance merely limited sales of flavored tobacco to smoking bars. The ordinance therefore fell within the statue’s savings clause, which permits state and local regulation “relating to” the sale of tobacco products.