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May 24th, 2012:

Australia says big tobacco aiding WTO challengers

WTO challengers. Big tobacco aiding–sector.html;_ylt=A2KJ3CYzRb1PH2UANTHQtDMD

GENEVA (Reuters) – The tobacco industry is providing legal advice to Ukraine and Honduras in their challenges toAustralia’s new tobacco packaging rules at the World Trade Organization, Australian Health Secretary Jane Halton said on Tuesday.

“We know that the tobacco companies, because they have admitted it, are providing legal advice to WTO members in order to encourage them to take action against Australia,” she said.

Halton was speaking at an event on the sidelines of the World Health Organization’s annual ministerial assembly in Geneva, where WHO director-general Margaret Chan called for stepping up the “tooth-and-nail fight against one of public health’s biggest enemies — the tobacco industry.”

Australia is planning to introduce tough new packaging regulations for tobacco from October 1 which will force producers to abandon distinct colorful branding and sell their cigarettes in uniformly drab packets with no adornments. Other tobacco products such as cigars must follow suit by December 1.

“We believe this deals with one of the last forms of tobacco advertising in our country – the packet,” Halton said. “We are very very confident that we can withstand these attacks, our government will not be intimidated.”

Smoking rates in Australia have declined to 15.1 percent in 2010 from some 30.5 percent in 1998. “Our objective in the next few years is to reach 10 percent and hopefully lower,” she said.

Ukraine and Honduras have challenged the move at the WTO by saying it unfairly restricts trade, even though neither country has a significant share of the Australian market.

“We are a long way from both countries and we have very, very little trade with them,” Halton said.

Both complainants have “requested consultations” with Australia, the first step in the WTO legal process. The first round of negotiations was held in the past month, she said.

“Our belief is that some people in the meeting were British American Tobacco lawyers,” she told Reuters, adding that she wasn’t aware of any date for a second round.

A spokesman for British American Tobacco confirmed to Reuters that the company had provided assistance for the WTO challenges but could not confirm that BAT lawyers were directly involved in the talks.

If the case is not settled by negotiation, Honduras or Ukraine could ask the WTO to set up a panel of arbitrators to judge the dispute. If Australia were to lose, it could be forced to undo some of its rules on tobacco.

The two trade suits have attracted a large number of countries as third party observers to the disputes, and some diplomats see them as test cases in the struggle by tobacco firms to halt a global tide of regulation that has sharply tightened the rules on cigarette sales over the past decade.

British American Tobacco, Imperial Tobacco and Philip Morris have launched High Court challenges against the Australian laws, saying they infringe their trademark rights.

Halton told Reuters that she expected that the High Court’s decision could come by October.

She also said health must be factored into trade in future.

“When we negotiate new trade agreements, we need to be very clear that the right to protect health of our community is paramount. We will make sure we live up to our obligations under the Framework Convention on Tobacco Control,” she told the talks, referring to the WHO’s treaty ratified by 174 countries.

Philip Morris’ chief financial officer Hermann Waldemer has said he expects more countries to challenge Australia’s rules at the WTO, according to a transcripts analyst calls provided by ThomsonReuters Streetevents.

A Philip Morris spokeswoman told Reuters earlier this month that the firm was open to supporting governments that challenge Australia on plain packaging but it was not providing support to Ukraine in its WTO complaint.

(Reporting by Stephanie Nebehay and Tom Miles; Editing by Bob Burgdorfer)

US Supreme court ruling Good Guys 10 – Bad Guys Zero

Supreme Court Upholds Ohio’s Smoke Free Workplace Law

Enforcement of Law Against Columbus Tavern Is Not Unconstitutional ‘Taking’ of Property

Please note:Opinion summaries are prepared by the Office of Public Information for the general public and news media. Opinion summaries are not prepared for every opinion released by the Court, but only for those cases considered noteworthy or of great public interest. Opinion summaries are not to be considered as official headnotes or syllabi of Court opinions. The full text of this and other Court opinions from 1992 to the present are available online from the Reporter of Decisions. In the Full Text search box, enter the eight-digit case number at the top of this summary and click “Submit.”

2011-0019. Wymsylo v. Bartec, Inc., Slip Opinion No. 2012-Ohio-2187.

Franklin App. No. 10AP-173, 2010-Ohio-5558. Judgment affirmed.

O’Connor, C.J., and Pfeifer, Lundberg Stratton, Lanzinger, Cupp, and McGee Brown, JJ., concur.

O’Donnell, J., concurs in judgment only.


View oral argument video of this case.

(May 23, 2012) The Supreme Court of Ohio today affirmed a ruling by the Tenth District Court of Appeals that upheld the Ohio Smoke Free Workplace Act as constitutional.

The court’s 7-0 decision, authored by Justice Judith Ann Lanzinger, rejected claims by the owner of Zeno’s Victorian Village that fines assessed against his establishment for violating the statewide ban on smoking in places of employment exceeded the state’s legitimate police powers or were an unconstitutional governmental “taking” of private property.

In November 2006, Ohio voters passed a ballot initiative to enact the Smoke Free Act, which was codified in R.C. Chapter 3794 and became effective December 7, 2006. Subject to certain exemptions, the act prohibits proprietors of public places of employment from permitting smoking in their establishments, and authorizes the Ohio Department of Health (ODH) and local agencies designated by ODH to enforce the smoking ban, including the authority to impose fines that increase in severity for repeat violators.

On ten separate occasions between July 2007 and September 2009, Zeno’s Victorian Village, a privately owned bar in Columbus, was cited by the Columbus City Health Department for smoking ban violations and assessed fines, none of which were paid. Zeno’s did not file administrative appeals on eight of the citations. Two citations were appealed to the Franklin County Court of Common Pleas, but Zeno’s did not contest them and did not pursue further legal challenges to those citations or the resulting fines.

The director of ODH filed a complaint in the Franklin County Court of Common Pleas seeking preliminary and permanent injunctions ordering Bartec, Inc., d.b.a. Zeno’s Victorian Village, and Richard Allen, the CEO and sole shareholder of Bartec, Inc., to comply with the Smoke Free Act and to pay all outstanding fines. Bartec filed an answer asserting the affirmative defense that the Smoke Free Act was unconstitutional both on its face and as applied. The bar owner also filed a counterclaim seeking a declaratory judgment and injunction against ODH invalidating the citations against Zeno’s and vacating the resulting fines on constitutional grounds.

The trial court denied ODH’s requested injunctions. In its decision, the trial court reviewed rules and procedures that had been adopted by ODH to enforce the Smoke Free Act, and held that those rules exceeded the department’s statutory authority by holding proprietors “strictly liable” for illegal smoking by their customers. Based on that finding, the trial court vacated all of the citations and fines that ODH had imposed against Zeno’s.

ODH appealed. On review, the Tenth District Court of Appeals reversed the trial court and remanded with instructions to issue the injunction requested by ODH.

Bartec sought and was granted Supreme Court review of the Tenth District’s rulings.

In today’s unanimous decision, Justice Lanzinger affirmed the Tenth District’s finding that because the constitutional arguments raised by Bartec regarding its past citations presented “as applied” challenges to the Smoke Free Act, and such challenges must be advanced in administrative appeals in order to be preserved for appellate review, Bartec’s failure to raise those arguments in administrative appeals of its ODH citations waived those issues, and the trial court erred by considering them.

Justice Lanzinger wrote: “Appellants had the opportunity to request an administrative hearing in which they could have developed a record to show that ODH’s investigators used a strict-liability approach. … Because appellants failed to request an administrative hearing for eight of their violations and because they failed to prosecute the two administrative appeals they did request, appellants did not raise any constitutional challenge regarding any of its ten violations. Therefore, appellants failed to exhaust their administrative remedies, and this constitutional issue is not properly before the court.”

“In their second proposition of law, appellants assert that their inclusion as proprietors subject to the Smoke Free Act exceeds the outer limits of the state’s police power and unreasonably extinguishes property rights. Additionally, they argue that prohibiting smoking in an adults-only liquor-licensed establishment, such as Zeno’s, is unduly oppressive and amounts to a taking. It is clear that this is an as-applied challenge. Appellants are not contending that there is no set of circumstances under which the Smoke Free Act would be valid. Again, appellants are contending that, as applied to their particular circumstances, R.C. 3794.02 is unfair and unconstitutional. … (A)s discussed above, because appellants did not raise this as-applied constitutional challenge in any of the violations they failed to exhaust their administrative remedies, and this challenge is not properly before the court.”

With regard to Bartec’s request to enjoin future enforcement of the Smoke Free Act against Zeno’s, Justice Lanzinger wrote: “In their counterclaim, appellants requested that ODH be enjoined from unlawful enforcement of R.C. Chapter 3794. Specifically they contended that ODH’s policy of strict liability − where there’s smoke, there’s a violation − exceeds the authority R.C. Chapter 3794 grants to ODH. A rule adopted by an administrative agency is ‘valid and enforceable unless unreasonable or in conflict with the statutory enactment covering the same subject matter.’ … Appellants’ main contention is that investigators never inquired of appellants’ employees whether they had taken steps to prevent smoking in prohibited areas. The smoking enforcement coordinator for the city of Columbus, however, testified that when he observed a patron smoking at Zeno’s, he would on occasion speak with the employees and that none had told him that they had asked the patron to stop smoking.”

“Substantial evidence exists that appellants at least implicitly permitted smoking. For instance, on August 6, 2007, a Columbus City Health Department investigator witnessed two people smoking at Zeno’s and observed cigarette butts in plastic cups filled halfway with water. On November 29, 2007, another investigator found multiple Zeno’s patrons who were smoking and who were using partially filled plastic cups as ashtrays. Although appellant Richard Allen was present at the time, the investigator did not witness him address any of the smoking patrons. On November 6, 2008, a third investigator witnessed at least eight patrons smoking and using small plastic cups as ashtrays.”

“R.C. 3794.06(B) requires proprietors to remove all ashtrays and ‘other receptacles used for disposing of smoking materials’ from any area where smoking is prohibited. Finally, in eight of the violations, the investigator determined that the violation was intentional and doubled the fine. The court of appeals agreed: ‘On this record, the evidence is overwhelming that Bartec repeatedly and intentionally violated the Smoke Free Act, failed to comply with its provisions as R.C. 3794.09(D) requires, and in so doing exposed patrons and employees to the very harm the statute is designed to prevent. Due to the hearing the court conducted and the evidence adduced as a result of the hearing, the trial court could reach no other conclusion.’ We therefore conclude that appellants have failed to establish that appellants will be subject to an unlawful policy of strict liability.”

Citing a 2002 Supreme Court decision, D.A.B.E., Inc. v. Toledo-Lucas Cty. Bd. of Health, Justice Lanzinger wrote: “We have previously stated that the General Assembly has the authority to enact a public-smoking ban. … Although the Smoke Free Act was ultimately passed pursuant to a ballot initiative, the voters of Ohio also have a legitimate purpose in protecting the general welfare and health of Ohio citizens and workforce from the dangers of secondhand smoke in enclosed public places. By requiring that proprietors of public places and places of employment take reasonable steps to prevent smoking on their premises by posting ‘no smoking’ signs, removing ashtrays, and requesting patrons to stop smoking, the act is rationally related to its stated objective.”

“Although appellants complain that the Smoke Free Act is not being enforced against actual smokers themselves, the evidence establishes that ODH has not received a complaint against an individual smoker. The trial court may have also questioned how much a property owner can do, but the evidence also establishes that during their on-site visits, the investigators did not witness appellants or their employees ask patrons to stop smoking or remove the makeshift ashtrays being used. It is not unreasonable or arbitrary to hold responsible the proprietors of public places and places of employment for their failure to comply with the Smoke Free Act. … Our review of the act leads us to conclude that it is neither unduly oppressive nor arbitrary in its restrictions. Appellants’ own witness testified that most patrons who are asked to stop smoking readily do so. We therefore hold that the Smoke Free Act is a valid exercise of police power.”

Finally, in rejecting Bartec’s claim that application of the smoking ban to Zeno’s constituted a governmental “taking” of the bar’s property (i.e., that the ban confiscated the owner’s control of the indoor air), Justice Lanzinger noted that, except for narrow exceptions that do not apply in this case, regulatory takings claims are governed by standards set in the U.S. Supreme Court’s 1978 decision in Penn Central Trasport. Co. v. New York City.

Justice Lanzinger wrote: “With a Penn Cent. regulatory taking, a court engages in a factual inquiry of the following three factors: ‘(1) the economic impact of the regulation on the claimant, (2) the extent to which the regulation has interfered with distinct investment-backed expectations, and (3) the character of the governmental action.’ … Appellants submitted evidence that their gross sales declined in 2009, but the Smoke Free Act became effective in December 2006, and in 2007 and 2008 appellants’ gross sales actually increased. Furthermore, Columbus’s smoking ban, found at Columbus Code of Ordinances Chapter 715, is very similar to R.C. Chapter 3794 and went into effect in January 2005. Still, appellants’ gross sales increased in 2005 and 2006. Thus, appellants have failed to demonstrate that the Smoke Free Act has had a significant economic impact on their business.”

“The second and third factors also do not support finding a taking in this case. … The ‘taking’ of appellants’ indoor air space is not the type of taking contemplated by either the Fifth Amendment to the U.S. Constitution or the Ohio Constitution, Article I, Section 19. Appellants have also failed to demonstrate that the Smoke Free Act interfered with a distinct investment-backed expectation. The goal of this legislation is to protect the health of the workers and other citizens of Ohio. … It does so by regulating proprietors of public places and places of employment in a minimally invasive way. We therefore hold that the Smoke Free Act does not constitute a taking.”

Justice Lanzinger’s opinion was joined by Chief Justice Maureen O’Connor and Justices Paul E. Pfeifer, Evelyn Lundberg Stratton, Robert R. Cupp and Yvette McGee Brown. Justice Terrence O’Donnell concurred in judgment only.


Alexandra T. Schimmer, 614.995.2273, for Ohio Department of Health Director Theodore E. Wymsylo.

Maurice A. Thompson, 614.340.9817, for Bartec, Inc. and Richard Allen.