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California can continue to tax cigarettes to raise funds for anti-smoking ads, the 9th U.S. Circuit Court of Appeals ruled on Sept. 28. R.J. Reynolds v. Shewry, 04 C.D.O.S. 8842 By a 2-1 vote, the court shot down the tobacco industry’s argument that the use of the tax money violated its commercial speech rights under the First Amendment. “When the government acts as a speaker,” wrote 9th Circuit Judge Raymond Fisher, “it may espouse views that directly contradict those of taxpayers without interfering with taxpayers’ freedom of expression.” Fisher’s opinion upheld and echoed Eastern District Judge Lawrence Karlton, who ruled in July 2003 that the “government’s speech is necessarily paid for by citizens, some of whom . . . will disagree with the message.” In a dissent, Judge Stephen Trott agreed that the government could pay for anti-smoking messages from general funds, but said it was dangerous to give the government the power to destroy an industry through a targeted tax. “Who knows whose disfavored ox or whose industry or whose business or lifestyle will be the next fatally gored,” he said. Lawyers say it isn’t clear yet what effect this decision may have on other compelled-speech cases making their way to the U.S. Supreme Court. “It’s creating a different type of category, so it’s really not going to guide the [high] court’s analysis,” predicted Anthony Caso, senior vice president and general counsel for the Pacific Legal Foundation, who successfully argued Keller v. State Bar of California, a 1990 Supreme court case limiting the use of mandatory state bar fees. In previous marketing order cases “there was government involvement, but the speech was private speech,” said Karen Leaf, the deputy attorney general who argued the present case in front of the 9th Circuit. “Here, the speaker was the government, and nobody disputes that.” The majority agreed that the advertising campaign created by the 25-cent-per-pack cigarette tax levied by Proposition 99 in 1989 and administered by the California Department of Health Services amounted to government-funded, protected speech. “This case says as long as the government is the speaker, they can do whatever they want,” said H. Joseph Escher III of San Francisco’s Howard Rice Nemerovski Canady Falk & Rabkin, who argued the case for two tobacco companies and R.J. Reynolds Smoke Shop Inc. Robert O’Neil, a professor of law at the University of Virginia and director of the Thomas Jefferson Center for the Protection of Free Expression and the Media Institute, said it’s clear government speech is protected. “The only question is, can they take a specially earmarked fund paid for by those producers and take the gun out of their hands and turn around and shoot them with it?” In reaching its decision, the majority rejected attempts by tobacco company attorneys to link the case to other compelled-speech cases that the Supreme Court has reviewed. In two of the cases, Glickman v. Wileman Bros. & Elliott and U.S. v. United Foods, the high court sidestepped the issue of whether marketing orders actually constitute government speech. The high court is expected to act on a livestock marketing case in the next few months, possibly opening an avenue for the tobacco industry to appeal the 9th Circuit ruling. “I think they will take the third case and try to settle the issue,” predicted Richard Samp, chief counsel of the Washington Legal Foundation, which has backed dissident growers. “If they rule in favor of the beef producers, I would say R.J. Reynolds will appeal.” But if the ruling “is carried to its ultimate conclusion, it would be the end of the compelled speech doctrine,” said Samp. “You could always find a way to make speech into government speech.”

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