Terry K. Jones v. Thomas J. Vilsack , 272 F.3d 1030 ( 2001 )


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  •                       United States Court of Appeals
    FOR THE EIGHTH CIRCUIT
    ___________
    No. 01-2312
    ___________
    Terry K. Jones, doing business as       *
    Filling Station, Inc.; William H. Miller,
    *
    doing business as Bills World, Inc.;    *
    Bradly Alan Joslin, Inc.;               *
    Becks Oil Company, of Illinois,         *
    *
    Appellees,                * Appeal from the United States
    * District Court for the
    v.                               * Southern District of Iowa
    *
    Thomas J. Vilsack, in his official      * [TO BE PUBLISHED]
    capacity as Governor of the             *
    State of Iowa; Stephen C. Gleason,      *
    in his official capacity as             *
    Director of the Iowa Department         *
    of Public Health,                       *
    *
    Appellants.               *
    ___________
    Submitted: November 1, 2001
    Filed: December 5, 2001
    ___________
    Before BYE, BEAM, and RILEY, Circuit Judges.
    ___________
    BYE, Circuit Judge.
    Iowa’s Tobacco Use Prevention and Control Act (Control Act) prohibits
    retailers from giving away tobacco products and from providing free goods and other
    concessions in exchange for the purchase of tobacco products. Iowa Code §
    142A.6(6). Several retailers who sell tobacco products in Iowa filed this action
    contending that § 142A.6(6) is preempted by the Federal Cigarette Labeling and
    Advertising Act (FCLAA), which bars states from regulating the “advertising or
    promotion of any cigarettes.” 15 U.S.C. § 1334(b). The district court accepted the
    retailers’ arguments and held the pertinent provisions of the Control Act preempted.
    We affirm in part, reverse in part, and remand for further proceedings.
    I
    The Governor of Iowa, Thomas Vilsack, signed the Control Act into law on
    May 15, 2000. The Control Act establishes “a comprehensive partnership among the
    general assembly, the executive branch, communities, and the people of Iowa in
    addressing the prevalence of tobacco use in the state.” Iowa Code § 142A.1(1). The
    Control Act seeks to reduce tobacco use “by engaging all who are affected by the use
    of tobacco in the state, including smokers and nonsmokers, youth, and adults.” 
    Id. § 142A.1(3).
    Although the Control Act affects all citizens, portions of the Control
    Act “will specifically address reduction of tobacco use by youth and pregnant women,
    promotion of compliance by minors and retailers with tobacco sales laws and
    ordinances, and enhancement of the capacity of youth to make healthy choices.” 
    Id. § 142A.1(2).
    The Control Act establishes an “initiative” to reduce the use of tobacco
    products by youth and pregnant women and to increase compliance by minors and
    retailers with tobacco sales laws and ordinances. 
    Id. § 142A.6(1)-(2).
    The initiative
    will sponsor media, marketing, and communications programs. 
    Id. § 142A.7(1).
    The
    Control Act also creates a “commission” to implement and monitor the initiative. 
    Id. §§ 142A.3-142A.5.
    The commission will conduct surveys and studies, and will
    measure the progress of the initiative by collecting a variety of data from local, state,
    and federal monitors. 
    Id. § 142A.7(1)(d).
    -2-
    Quite apart from developing a new tobacco prevention bureaucracy, the
    Control Act flatly prohibits the following retail sales practices designed to place
    tobacco products in the hands of consumers:
    a.     A manufacturer, distributor, wholesaler, retailer, or distributing
    agent or agent thereof shall not give away cigarettes or tobacco
    products.
    b.     A manufacturer, distributor, wholesaler, retailer, or distributing
    agent or agent thereof shall not provide free articles, products,
    commodities, gifts, or concessions in any exchange for the
    purchase of cigarettes or tobacco products.
    Iowa Code § 142A.6(6)(a)-(b).
    According to the retailers, these provisions of the Control Act hamper their
    businesses. The retailers contend that these provisions preclude them from
    participating in national sales promotions orchestrated by tobacco manufacturers that
    often involve redeeming cents-off coupons and proofs of purchase, distributing
    related merchandise with tobacco products (such as a free lighter with a pack of
    cigarettes), and offering two-for-one sales. The give-aways and concessions
    foreclosed by the Control Act attract customers and generate significant sales revenue
    for retailers. The retailers believe that such concessions are essential to their
    economic viability because federal and state regulations have severely curtailed
    advertising and other avenues of communicating with consumers. The Control Act
    particularly affects retailers situated near Iowa’s borders, some of whom are plaintiffs
    in the present action. Border stores face stiff competition from nearby out-of-state
    retailers unaffected by § 142A.6(6) of the Control Act.
    Shortly after the Control Act took effect, several retailers filed a complaint
    against Governor Vilsack and Stephen Gleason, the Director of the Iowa Department
    of Public Health (together, “the State”) in federal district court. The retailers
    -3-
    contended that § 142A.6(6) of the Control Act is preempted by the FCLAA, 15
    U.S.C. § 1334(b), that it violates their First Amendment commercial speech rights,
    and that it interferes with their liberty and property rights safeguarded by the Due
    Process and Equal Protection Clauses of the Fourteenth Amendment. The parties
    generally agreed on the pertinent facts and presented the case to the district court on
    cross-motions for summary judgment. The district court determined that § 142A.6(6)
    of the Control Act was preempted by the FCLAA and granted the retailers’ motion.
    The State now appeals the district court’s preemption decision, a ruling we review de
    novo. See Bock v. St. Louis S.W. Ry. Co., 
    181 F.3d 920
    , 922 (8th Cir. 1999).
    II
    Background preemption principles are familiar to all. The Supremacy Clause
    provides that federal law “shall be the supreme Law of the Land; . . . any Thing in the
    Constitution or Laws of any State to the Contrary notwithstanding.” U.S. Const., art.
    VI, cl. 2. Thus state law that conflicts with federal law has no effect. Maryland v.
    Louisiana, 
    451 U.S. 725
    , 746 (1981).
    To determine whether federal law preempts state law, we must discern
    Congress’s intentions, which the Supreme Court has described as the “ultimate
    touchstone” of preemption analysis. Cipollone v. Liggett Group, Inc., 
    505 U.S. 504
    ,
    516 (1992) (quotation omitted). We do not lightly deem state law to be superseded
    by federal law due to our solicitude for the states’ exercise of their traditional police
    powers. See 
    id. Yet we
    may not shrink from recognizing that federal law supplants
    state law when Congress clearly manifests that intention.
    The clearest indication that federal law supplants state law is a statutory
    preemption provision. When Congress expressly codifies its preemptive intent in
    statutory form, our analysis “begins with the language of the statute.” Lorillard
    Tobacco Co. v. Reilly, 
    121 S. Ct. 2404
    , 2415 (2001). The federal law we consider
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    in this case, the FCLAA, contains such a preemption provision, 15 U.S.C. § 1334(b).
    Because “the pre-emptive scope of the [FCLAA] is governed entirely by the express
    language in § [1334(b)],” 
    Cipollone, 505 U.S. at 517
    , we devote our attention to its
    precise terms.
    A
    In its initial form, the FCLAA preempted regulation of cigarette advertising
    only: “No statement relating to smoking and health shall be required in the
    advertising of any cigarettes the packages of which are labeled in conformity with the
    provisions of this Act.” Pub. L. No. 89-92, § 5(b), 79 Stat. 282, 283 (1965).
    Congress revised the FCLAA in 1969 when new scientific evidence disclosed
    previously unforeseen risks associated with tobacco use. The Public Health Cigarette
    Smoking Act, Pub. L. No. 91-222, 84 Stat. 87, amended several aspects of the
    FCLAA, including its preemption provision. While the 1965 Act had preempted the
    regulation of advertising, the 1969 amendment preempted both advertising and
    promotion:
    No requirement or prohibition based on smoking and health shall be
    imposed under State law with respect to the advertising or promotion of
    any cigarettes the packages of which are labeled in conformity with the
    provisions of this chapter.
    15 U.S.C. § 1334(b).
    “Without question, ‘the plain language of the pre-emption provision in the
    1969 Act is much broader.’” 
    Lorillard, 121 S. Ct. at 2416-17
    (quoting 
    Cipollone, 505 U.S. at 520
    (plurality opinion)). We address the language of the 1969 Act in this case
    because Congress has not amended § 1334(b) in the intervening years.
    -5-
    The literal terms of § 1334(b) delineate five requirements for federal
    preemption of state regulatory efforts. The provision preempts (1) state regulations
    (2) based on smoking and health (3) concerning the advertising or promotion (4) of
    cigarettes (5) whose labels comply with the FCLAA.
    Four of the five requirements are readily established in the present case.
    Iowa’s Control Act is unquestionably a state regulation. The State has also conceded
    that its prohibition on give-aways and concessions stems from a concern for the
    public health. Compare Amended Complaint ¶ 33 (“The new tobacco control law .
    . . is clearly a public health measure.”), with Answer ¶ 33 (“Defendants admit the
    allegations of paragraph 33.”). The Control Act explicitly regulates tobacco products,
    which the Act defines to include cigarettes. 
    Id. § 142A.2(12).
    Finally, the State
    agrees that cigarette packages sold by the retailers comport with the FCLAA’s
    intricate labeling scheme, 15 U.S.C. § 1333.
    The dispute in this case centers upon the third element, whether § 142A.6(6)
    of the Control Act concerns “advertising or promotion.” By all accounts, the Control
    Act does not disturb retailers’ opportunities to advertise cigarettes for sale; and
    neither the State nor the retailers have opined that § 142A.6(6) might be preempted
    as an impermissible regulation of “advertising.” Thus the parties’ dispute may be
    further winnowed to the following question: do the activities prohibited in §
    142A.6(6) constitute the promotion of cigarettes? The FCLAA does not define the
    term “promotion,” so both the State and the retailers have proposed their own
    preferred definitions.
    The State contends that we must construe the term “promotion” extremely
    narrowly so that § 1334(b) preemption does not emasculate its police powers. We
    disagree. In Cipollone, a majority of the Justices of the Supreme Court rejected an
    invitation to construe § 1334(b) preemption narrowly. “Under the Supremacy Clause,
    . . . our job is to interpret Congress’s decrees of pre-emption neither narrowly nor
    -6-
    broadly, but in accordance with their apparent meaning.” 
    Cipollone, 505 U.S. at 544
    (Scalia, J., with whom Thomas, J., joins); 
    id. at 532
    (Blackmun, J., with whom
    Kennedy and Souter, JJ., join) (“An interpreting court must begin with the language
    employed by Congress and the assumption that the ordinary meaning of that language
    accurately expresses the legislative purpose.”). More recently, the Court described
    the language of § 1334(b) as “sweeping,” 
    Lorillard, 121 S. Ct. at 2415
    , further
    eschewing the “narrow construction” approach proposed by the State in this appeal.
    We think the Court’s position is clear: we must not interpret the term “promotion”
    more narrowly than its plain and ordinary meaning would suggest.
    Our obligation to ascertain the plain meaning of “promotion” does not require
    us to establish an all-purpose definition capable of deciding each and every § 1334(b)
    preemption dispute that might arise. We are not lexicographers, nor should we be.
    Our task is simply to discern whether the particular conduct proscribed by the Control
    Act naturally falls within the range of meaning ordinarily attributed to the term
    “promotion.” We think it does.
    Two federal reports on tobacco use and marketing describe the promotion of
    cigarettes as including conduct banned by the Control Act. The Federal Trade
    Commission’s (FTC) 1998 Report to Congress describes the “distribution of cigarette
    samples and specialty gift items” as “sales promotion activities.” App. 50. And the
    Surgeon General’s 1994 report, Preventing Tobacco Use Amongst Young People,
    lists in detail a variety of promotions conducted by tobacco companies:
    Promotional activities can take many forms. Promotional expenditures
    can stimulate retailers to place and display products in ways that will
    maximize the opportunity for purchase (e.g., supplying retailers with
    point-of-purchase displays to locate products at checkout stands).
    Coupons reduce the price a consumer pays for products and thereby
    reduce the consumer’s cost-sensitivity, which may be a substantial
    barrier to making a purchase. Premiums (e.g., including a cigarette
    -7-
    lighter in the purchase price or even within the actual packaging of a
    box or carton of cigarettes) reduce cost-sensitivity by increasing (or
    appearing to increase) the value of a purchase. Free samples do away
    with cost-sensitivity altogether and actually give consumers an
    opportunity to try something new. Promotional devices such as these
    are more likely than advertising alone to lead consumers to purchase a
    product more than once—a pattern sought by all manufacturers.
    App. 177 (internal citations omitted).
    The FTC Report and the Surgeon General’s Report do not, of course, announce
    formal agency definitions of “promotion” to which we owe a measure of deference.
    But we find the Reports’ use of “promotion” probative of the term’s plain and
    ordinary meaning in the context of cigarette marketing. To be sure, the FTC and the
    Surgeon General are experts on the topic. The FCLAA charges the FTC with a duty
    to report to Congress on the “current practices and methods of cigarette advertising
    and promotion,” 15 U.S.C. § 1337(b)(1), and the Surgeon General’s Reports
    historically have provided the political and scientific impetus to enact and amend the
    FCLAA. Thus we consider the Reports’ use of the term “promotion” indicative of
    the term’s plain and ordinary meaning.
    Recent Supreme Court opinions also guide us in ascertaining the plain meaning
    of “promotion.” The Court has twice employed the term in its tobacco regulation
    cases to describe conduct akin to that proscribed in the Control Act. Two Terms ago,
    in FDA v. Brown & Williamson Tobacco Corp., the Court emphasized that the
    federal Food and Drug Administration’s regulation of tobacco company promotions
    “prohibit the distribution of any promotional items, such as T-shirts or hats, bearing
    the manufacturer’s brand name.” 
    529 U.S. 120
    , 128 (2000). And last Term, in a
    portion of the Lorillard opinion, the Court recounted the FTC’s role in monitoring
    advertising and promotional campaigns conducted by tobacco companies. The Court
    -8-
    described retailer give-aways and the receipt of free merchandise in exchange for
    buying cigarettes as “promotions.”
    In 1999, . . . the FTC reported that the cigarette industry expended $8.24
    billion on advertising and promotions, the largest expenditure ever.
    Substantial increases were found in point-of-sale promotions, payments
    made to retailers to facilitate sales, and retail offers such as buy one, get
    one free, or product giveaways.
    
    Lorillard, 121 S. Ct. at 2416
    (emphasis added) (internal citations omitted).
    Finally, we believe that dictionary definitions of “promotion” suggest a plain
    and ordinary meaning of the term that encompasses conduct prohibited by the Control
    Act. Merriam-Webster’s Collegiate Dictionary defines “promotion” as “the act of
    furthering the growth or development of something; especially: the furtherance of the
    acceptance and sale of merchandise through advertising, publicity, or discounting.”
    Available at http://www.m-w.com (last visited November 26, 2001). A more specific
    definition—one aligned with the context of the present dispute—would include “[a]ll
    forms of communication other than advertising that call attention to products and
    services by adding extra values toward the purchase. Includes temporary discounts,
    allowances, premium offers, coupons, contests, sweepstakes, etc.” University of
    Texas, Department of Advertising, Dictionary of Terminology, at
    http://advertising.utexas.edu (within “Research Resources” link) (last visited
    November 26, 2001). The latter definition fairly tracks Congress’s intent by
    distinguishing advertising from promotion in its opening clause. Congress obviously
    distinguished between the two in 1969 by amending the FCLAA’s preemption
    provision (which then mentioned only advertising) to regulate the promotion of
    cigarettes as well.
    We think it abundantly clear that the activities prohibited by the Control Act
    are promotions. The Control Act prohibits retailers from offering “free articles,
    -9-
    products, commodities, gifts, or concessions in any exchange for the purchase of
    cigarettes or tobacco products.” Under this regime, retailers could not give away T-
    shirts, see Brown & 
    Williamson, 529 U.S. at 128-29
    , offer buy one/get one free
    concessions, see 
    Lorillard, 121 S. Ct. at 2416
    , redeem cents-off coupons and proofs-
    of-purchase, see Surgeon General’s Report, supra at 7-8, or engage in other sales
    practices commonly utilized by cigarette retailers. Retailers who offer consumers free
    cigarettes or other free products unquestionably add extra value to consumers’
    underlying purchases. There is little room for doubt that the Control Act prohibits
    retailers from engaging in activities which promote cigarettes.
    Because states may not regulate such cigarette promotions, 15 U.S.C. §
    1334(b), we hold that the provisions of the Control Act challenged by the retailers,
    § 142A.6(6)(a)-(b), are preempted by federal law.
    B
    The State raises several objections to this plain meaning analysis, none of
    which we find persuasive.
    First, the State argues that the scope of FCLAA preemption may not extend
    beyond the regulatory scope of its substantive provisions. The State points to the
    overall structure of the FCLAA, and to its varied substantive provisions, as evidence
    that Congress intended to regulate only mass-media advertising and cigarette package
    labeling. Finding no substantive regulation in the FCLAA of the sales practices
    forbidden by the Control Act, the State contends that § 1334(b) should not be
    interpreted to preempt them.
    We disagree with the State’s premise that we may compare the FCLAA’s
    substantive provisions to deduce Congress’s preemptive intent from their structural
    composition. “[T]here is no need to infer congressional intent to pre-empt state laws
    -10-
    from the substantive provisions of the legislation. Such reasoning is a variant of the
    familiar principle of expressio unius est exclusio alterius: Congress’ enactment of a
    provision defining the pre-emptive reach of a statute implies that matters beyond that
    reach are not pre-empted.” 
    Cipollone, 505 U.S. at 517
    (internal citations and
    quotations omitted). This principle holds true “[w]hen Congress has considered the
    issue of pre-emption and has included in the enacted legislation a provision explicitly
    addressing that issue, and when that provision provides a reliable indicium of
    congressional intent with respect to state authority.” 
    Id. (internal citations
    and
    quotations omitted). Cipollone explains that the scope of FCLAA preemption is
    governed by the express language in § 1334(b), and we therefore reject the State’s
    effort to discard § 1334(b)’s plain and ordinary meaning in favor of a competing
    interpretation forged from the substantive provisions within the FCLAA.
    Second, the State invites us to rely on committee reports produced during
    Congress’s debates on the 1965 and 1969 Acts. The State points to fragments of
    legislative history which purport to show that Congress was concerned only with the
    advertising and labeling practices of tobacco companies when it enacted the FCLAA.
    But the scant legislative history to which the State directs our attention is decidedly
    unhelpful. The plain fact remains that Congress’s reports address neither the meaning
    of “promotion” in § 1334(b) nor the relationship between “promotion” and
    “advertising.” In these circumstances, we must interpret “promotion” according to
    its ordinary meaning.
    The State attempts to carve out a meaning for “promotion” that is less
    expansive than its apparent plain meaning, and yet conceptually distinct from
    “advertising.” We are unpersuaded by the State’s herculean efforts for it appears that
    the State defines “advertising” and “promotion” almost identically. We may not
    conflate the “advertising” and “promotion” of cigarettes; both words appear in the
    text of § 1334(b) and we “must give meaning to each element of the pre-emption
    provision.” 
    Lorillard, 121 S. Ct. at 2415
    . Congress added the word “promotion” to
    -11-
    § 1334(b) in 1969 though the term “advertising” was already present. Conflating the
    terms would render the 1969 amendment nugatory, a position we cannot accept
    because the Supreme Court has indicated that the 1969 amendment expanded the
    scope of preemption under the FCLAA. See 
    id. at 2416-17.
    Third, the State suggests that our holding portends a deplorable consequence
    which Congress did not intend. Drawing upon an opinion of the Seventh Circuit, the
    State says it “cannot imagine that Congress intended the states to be without power
    to prohibit a cigarette company from handing out free cigarettes in an elementary
    school yard.” Fed’n of Adver. Indus. Representatives, Inc. v. City of Chicago, 
    189 F.3d 633
    , 638 (7th Cir. 1999) (holding that a city ordinance banning certain highly-
    visible forms of tobacco advertising—but not promotion—is preempted). We find
    fault with the State’s dire prediction. Our preemption holding does not disturb an
    entirely separate Iowa statute that would forbid a tobacco company from handing out
    free cigarettes in a schoolyard. Iowa Code § 453A.2(1) provides that persons “shall
    not sell, give, or otherwise supply any tobacco, tobacco products, or cigarettes to any
    person under eighteen years of age.” The retailers have not challenged § 453A.2(1)
    in this action, and we need not decide whether it too would be preempted by the
    FCLAA. For a variety of practical reasons, we tend to doubt that cigarette retailers
    would ever challenge § 453A.2(1); in any event, “States and localities also have at
    their disposal other means of regulating conduct to ensure that minors do not obtain
    cigarettes.” 
    Lorillard, 121 S. Ct. at 2420
    .
    III
    After the district court held that the Control Act’s ban on tobacco promotions
    was preempted by federal law, the court entered a judgment declaring § 142A.6(6)
    “null and void in its entirety.” The judgment permanently enjoined the State from
    enforcing the provision or “taking any action pursuant thereto.” Appellant’s Add. 19.
    -12-
    We believe that the district court’s judgment sweeps too broadly. Section
    142A.6(6) prohibits retailers from conducting certain promotions of all tobacco
    products, including cigars, little cigars, pipe tobacco and chewing tobacco. See Iowa
    Code § 142A.2(12) (incorporating the broad definition of “tobacco products” in Iowa
    Code § 453A.1(26)). But the FCLAA preempts only cigarette promotions. 
    Lorillard, 121 S. Ct. at 2416
    (“The new pre-emption provision, like its predecessor, only applied
    to cigarettes, and not other tobacco products.”). Thus the FCLAA does not preempt
    every action prohibited by § 142A.6(6) of the Control Act.
    Because § 142A.6(6) is only partially preempted by federal law, we must
    determine whether the preempted portion may be severed from the non-preempted
    remainder, or whether the entire provision falls under the weight of the invalid part.
    “Severability is of course a matter of state law,” Leavitt v. Jane L., 
    518 U.S. 137
    , 139
    (1996) (per curiam), and Iowa favors severance of invalid statutory provisions. In
    Iowa, “there is no presumption that the legislature intends its statutes to be treated as
    an entirety.” Clark v. Miller, 
    503 N.W.2d 422
    , 425 (Iowa 1993). “If any provision
    of an Act or statute or the application thereof to any person or circumstance is held
    invalid, the invalidity does not affect other provisions or applications of the Act or
    statute which can be given effect without the invalid provision or application, and to
    this end the provisions of the Act or statute are severable.” Iowa Code § 4.12.
    The Supreme Court of Iowa has further clarified matters. “Severance is
    appropriate if it does not substantially impair the legislative purpose, if the enactment
    remains capable of fulfilling the apparent legislative intent, and if the remaining
    portion of the enactment can be given effect without the invalid provision.” Am. Dog
    Owners Ass’n, Inc. v. City of Des Moines, 
    469 N.W.2d 416
    , 418 (Iowa 1991) (per
    curiam). These elements can be established in this case. The Control Act’s purpose
    is mainly hortatory: most of the Control Act is devoted to establishing a commission
    to study the tobacco use phenomenon and to propose initiatives that will improve the
    public health. Though the preemption of § 142A.6(6) as to cigarettes slightly
    -13-
    damages the General Assembly’s broader aspirations, we are unable to conclude that
    our narrow preemption holding substantially impairs the General Assembly’s
    intentions. As the district court observed, § 142A.6(6) “is tucked into the part of the
    Act that sets forth the establishment, purpose, and expected results of the initiative
    and bears virtually no relation to the rest of the Act.” Appellants’ Add. 15. We
    perceive no logistical or legal impediment to Iowa’s continued enforcement of §
    142A.6(6) to the extent that it regulates tobacco products other than cigarettes.
    Although the FCLAA preempts § 142A.6(6)(a)-(b) insofar as it regulates
    cigarette promotions, the state law is not otherwise preempted. We therefore reverse
    the judgment of the district court declaring the entirety of § 142A.6(6)(a)-(b)
    preempted, and we remand the matter for further proceedings consistent with our
    opinion. On remand, the retailers are free to renew their arguments that non-
    preempted portions of the Control Act nevertheless violate their First and Fourteenth
    Amendment rights.
    IV
    We affirm the district court’s essential holding that the FCLAA preempts
    portions of the Control Act that prohibit retailers from selling cigarettes with the
    assistance of certain promotions. But we reverse in part the relief granted by the
    district court and remand the matter for further proceedings.
    A true copy.
    Attest:
    CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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