Alcohol Advertising And Regulation Of Health Claims Following Outgoing Surgeon General's Advisory

This Legal Update discusses whether federal law may preempt claims regarding certain health-related representations or omissions made in connection with the advertising and promotion of alcoholic beverages. Only a small handful of courts to date have considered this issue, and they have all taken a narrow approach in holding that federal regulations do not preempt certain state law claims. There may, however, be opportunities for industry players to capitalize on the federal regulatory framework and preemption doctrines to revisit the bounds of preemption under the Alcoholic Beverage Labeling Act.

As highlighted in our first update discussing the outgoing Surgeon General's advisory outlining the alleged causal link between alcohol consumption and cancer, the Alcoholic Beverage Labeling Act (ABLA) (27 U.S.C. ' 215) requires, in part, the placement of the following warning on all containers of alcoholic beverages:

The ABLA further provides: "No statement relating to alcoholic beverages and health, other than the statement required by section 215 of this title, shall be required under State law to be placed on any container of an alcoholic beverage . . . " (27 U.S.C. ' 216). Emphasizing the level of control that Congress retains over this warning, the ABLA allows parties outside of Congress to propose changes to the health warning statement only after an "appropriate investigation and consultation with the Surgeon General" (27 U.S.C. ' 217). And only then can the Secretary of Treasury "report such information to the Congress together with specific recommendations for such amendments" (27 U.S.C. ' 217). The outgoing Surgeon General's recent advisory similarly reinforces Congress's exclusive jurisdiction, writing that "[t]he power to change the label statement lies with Congress." Regulatory guidance similarly provides that the ABLA "specifies how the label should appear and the exact words to use." In that respect, it appears the ABLA prohibits alcoholic beverage manufacturers from unilaterally altering the language of the current health warning statement. That law similarly prohibits state governments from requiring their own version of a health warning statement on alcoholic products sold in their states.¹

Thus, despite statements by plaintiffs' firms to the contrary, it appears that the ABLA preempts claims by private litigants and state agencies alleging that a manufacturer breached a purported duty to warn consumers of this alleged cancer risk by failing to alter the health warning statement. Less clear is whether federal law preempts claims arising out of separate representations made outside of the health warning statement and in connection with the advertising and promotion of alcoholic beverages.

Similar to the backlash faced by the tobacco industry following the then Surgeon General's report concluding that smoking cigarettes causes cancer, manufacturers and distributors of alcoholic beverages may soon face accusations that they falsely promoted "healthy" or low-harm versions of their products despite what some would characterize as increasing guidance that there is no safe level of consumption. Yet, unlike the Federal Cigarette Labeling and Advertising Act (15 U.S.C. ' 1334)'a statute that the tobacco industry historically relied on to thwart both private litigation and state initiatives aimed at regulating the content of cigarette advertising'the ABLA only explicitly preempts changes to the health warning statement on "any container of an alcoholic beverage, or on any box, carton, or other package, irrespective of the material from which made, that contains such a container" (27 U.S.C. ' 216) (i.e., the product's "label") and does not address health claims made separately in advertising or promotion. Under the ABLA, a "container" is defined as "the innermost sealed container irrespective of the material from which made, in which an alcoholic beverage is placed by the bottler and in which such beverage is offered for sale to members of the general public" (27 U.S.C. ' 214).

Although traditional preemption doctrine would suggest that such regulation is often left to the states, in practice, this is blurred by the three federal agencies that each play a key role in the regulation of alcohol advertising: the Alcohol and Tobacco Tax and Trade Bureau (TTB), the Food and Drug Administration (FDA), and the Federal Trade Commission (FTC). In fact, the TTB, FDA, and FTC all have a hand in regulating and policing health claims made by the alcohol industry to ensure those statements are supported by scientific or medical evidence. In addition, states are similarly able to regulate false advertising or consumer fraud within their respective borders.

To date, only a small handful of courts have considered the question of preemption with respect to claims alleging defects and inaccuracies in the alcohol advertising space, and those courts have taken a narrow approach in holding that federal regulations do not preempt certain state law claims. That said, industry participants may push to expand the ABLA's preemptive impact to the extent any state laws or individual claims purport to conflict with the federal government's extensive regulatory scheme.

Enacted in 1935, the Federal Alcohol Administration (FAA) Act has served as the primary vehicle for regulating alcohol advertising in the United States. The TTB has the primary responsibility for enforcing the FAA Act and oversees "distilled spirits, wines, or malt beverage products" as defined by the Act.

Among other things, TTB regulations regarding advertising seek to prevent the "deception of the consumer and provide them with 'adequate information' as to the identity and quality of the product, to prohibit false or misleading statements, and to provide information as to the alcohol content of the product." TTB regulations broadly define "advertisement" as any written or verbal statement, illustration, or depiction which is in, or calculated to induce sales in, interstate or foreign commerce, or is disseminated by mail. Accordingly, TTB regulations govern a wide range of advertisements and include ads in or on:

• Newspapers or magazines;
• Trade booklets or sales pamphlets;
• Menus or shelf talkers:
• Leaflets, circulars, mailers, or catalogs;
• Promotional materials;
• Internet webpages, other electronic sites, or social networks;
• Any written, printed, graphic, or other matter (such as hang tags) accompanying the container;

• Representations made on shipping cases;
• Billboards, signs, or other outdoor displays;
• Other periodical literature or publications;
• Radio or television broadcasts; and
• Any other media.

The same regulations expressly exclude from the definition of an advertisement "[a]ny label affixed to any container" as well as any "covering[s]" (27 CFR ' 4.61(a), 5.232(a), and 7.232(a)).

Notably, although the ABLA requires that the health warning statement be included in each alcoholic beverage product label, TTB regulations do not require the inclusion of the current health warning statement in advertisements and other promotional materials. Instead, TTB regulations only prohibit the use of misleading and unsubstantiated health-related advertising, stating that advertisements "may not contain any...