Law for Business 10th Edition by James Barnes,Terry Dworkin,Eric Richards

Exercise 10

Iowa enacted the Tobacco Use Prevention and Control Act (Control Act). The Control Act established an "initiative" to reduce the use of tobacco products. One specific provision flatly prohibited retailers from giving away cigarettes. Further, it would not permit retailers to provide free articles, gifts, or concessions in any exchange for the purchase of cigarettes. Terry K. Jones, an Iowa retailer, complained that these provisions of the Control Act hampered his business. Specifically, he contended that the prohibitions precluded him 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. He asserted that the giveaways and concessions foreclosed by the Control Act attract customers and generate significant sales revenue for retailers. He believed that such concessions were essential to his economic viability because federal and state regulations have severely curtailed tobacco advertising and other avenues of communicating with consumers. Further, he claimed that the Control Act particularly affects retailers situated near Iowa's borders because they face stiff competition from nearby out-of-state retailers unaffected by the Iowa statute. Accordingly, Jones filed a complaint against the state. He argued that the Control Act was unconstitutional because it was preempted by a federal statute-the Federal Cigarette Labeling and Advertising Act (FCLAA). That federal statute states: " 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. " Is Iowa's Control Act preempted by the federal statute?