Tobacco Apology Ruling Puts Retailers in Limbo

RICHMOND, Va. -- Last month a federal judge ruled tobacco companies must admit they lied about the dangers of cigarettes and issue an apology. The sanction originates in a 1999 U.S. Justice Department case that accused tobacco companies of racketeering, and demands a two-year public advertising campaign. But one question remains: where do retailers fit into this decision?

U.S. District Judge Gladys Kessler ruled that the new campaign would be an appropriate counterweight to the companies' "past deception" dating to at least 1964. The advertisements are to be published in various media for as long as two years, as CSNews Online previously reported.

However, the ruling left open the possibility that retailers could be required to post the apologies in large displays at retail -- which has some industry groups upset about the possibility the displays would take up their most valuable selling space and imply their own guilt-by-association, according to the Associated Press.

While major tobacco and the U.S. Justice Department are working out the details of the corrective statements, a footnote in the ruling said the issue of whether retailers that have agreements with tobacco companies to sell their products will have to place the placards front and center in their stores "will be resolved in the near future," the news agency said.

Retail associations, however, are arguing that the directive would infringe on their First Amendment and property rights. Public health organizations, on the other hand, say the tobacco companies have long used retail displays for deceptive marketing and that retailers are an important place to communicate the public confession.

The Associated Press reported retailers estimate the industry could lose $82 million per year in sales for every square foot of counter space taken up by the signs. The public health groups, however, said that would average out to only about 65 cents per day per retailer, according to court filings.

In their court filings on the issue, the tobacco companies, including Philip Morris USA, owned by Altria Group Inc., R.J. Reynolds Tobacco Co., owned by Reynolds American Inc., and Lorillard Inc., said the retailer requirements would vary by store, but that they wouldn't be workable or fair.