Opposition — Warner-Lambert Co. v. Federal Trade Commission

Supreme Cou

No. 77-855 | FB 8

rt, U.S,

FILED

1978

, JR., CLERK

Gu the Supreme Court of the Gnited States

OcroBER TERM, 1977

WaARNER-LAMBERT COMPANY, PETITIONER

Vv.

FEepeRAL TRADE COMMISSION

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA

CIRCUIT

BRIEF FOR THE FEDERAL TRADE COMMISSION IN OPPOSITION

WADE H. McCREE, JR.,

Solicitor General,

JOHN H. SHENEFIELD,

Assistant Attorney General,

BARRY GROSSMAN,

ANDREA LIMMER,

Attorneys,

Department of Justice,

Washington, D.C. 205380.

MICHAEL N. SOHN,

General Counsel,

GERALD P. NORTON, J

Deputy General Counsel,

W. DENNIS CROSS,

Assistant General Counsel,

JEROLD D. CUMMINS,

Attorney,

Federal Trade Commission,

Washington, D.C. 20580.

Page

EE Ne Aen Ie 1

GI ctintiasenadnennsensanetbennneesendwenennen 1

EY ITI icsnineeerenendeniceenerenntnimeendidrenediniedneniomemiieet 1

TET mitnenndmncemendnneennaemimamedaee 2

GREE ‘etmncdemeadedaumnionesnnatsunnnaneenee 8

A eR CAL Ie 21

CITATIONS

Cases :"

Ail: State Industries v. Federal Trade iaeaiieaiin 423

F. 2d 423, certiorari denied, 400 U.S, 828___.--.--- 1]

Bateman Bracelet Corp. y. Federal Trade Commission,

325 F, 2d 1012, certiorari denied, 377 U.S. 923.._--- 11

Bates vy. State Bar of ashen, No. 76-316, decided

PURO Wh, WUC cccccctcntrescotoendnsccccesccces 12, 15

Bowman Transportation, Inc. vy. Arkunsas-Best

Freight Syatem, Inc., 419 U.S. 281...2.-+.--.---.- 20

Federal Trade Commission v. Algoma Lumber Co

. Be Wet Setecadadgecncusdnbonsssceminetcssen 13

» Federal Trade Commission v. Colgate-Palmolive Co.,

SY ere aii 9,11

Federal Trade Commission v. National Lead Co., 352

We Glanbtenenessnmasnseeeneedaednnaine 9

Federal Trade Commission vy. Ruberoid Co., 343 U.S

GP anmenscnganeageccsnentionsslenannne 9

Feil vy. Federal Trade Commission, 235 F. 2d 879__--- 13

Interstate Commerce Commission v. Jersey City, 322

Weed Girenencnnncwewssncnstibeainegsaneenpeseneus 20

Jacob Siegel Co. v. Federal Trade Commission, 327

We Gennccncuccensuncecenewscesssseecenneses 9-10

J. B. Williams Co. v. Federal Trade Commission, 381

FF. £8 Gib ccencennrennaiepeneccoucetevasssuesce 13

Keele Hair & Scalp Specialists, Inc. v. Federal Trade

OLS 13

Kerran v. Federal Trade Commission, 265 F. 2d 246,

certiorari denied sub nom. Double Eagle Refining

Co. vy. Federal Trade Commission, 361 U.S. 818____- 11

Bo)

BEST COPY AVAILABLE

Il

Cases—Continued

National Commission on Egg Nutrition, 88 F.T.C, 89,

affirmed as modified sub nom. National Commission

on Eyg Nutrition y. Federal Trade Commission, C.A.

7, No. 76-1969, decided November 29, 1977, supple- page

mental opinion issued, January 23, 1978----------- 14

Pan American World Airways, Inc. v. United States,

es 9

Reilly v. Pinkus, 338 U.S. 269---------------------- 13

Royal Baking Powder Co. y. Federal Trade Commis-

sion, 218 F. 2d 744.----------------------------- 11

Virginia State Board of Pharmacy v. Virginia Citi-

zens Consumer Council, Inc., 425 U.S. 748------ 12, 15, 17

Waltham Precision Instrument Co., 61 F-T.C. 1087,

affirmed, 327 F. 2d 427, certiorari denied, 377 U.S.

—— 11

Waltham Watch Co. v. Federal Trade Commission, 318

F. 2d 28, certiorari denied, 375 U.S. 944-_--------.- 11

Ward Laboratories, Inc. v. Federal Trade Commission,

276 F. 2d 952, certiorari denied, 364 U.S. 827------- 13

Young v. American Mini Theatres, Inc.,427U.S.530--- 15

Constitution, statutes and regulations :

United States Constitution, First Amendment_-_--_-_--- 7,

12, 14, 15, 17

Federal Trade Commission Act, 38 Stat. 719, as

amended, 15 U.S.C. (1970 ed. and Supp. V) 45:

Section 5(b), 15 U.S.C. (1970 ed.) 45(b) --------- 10, 21

Section 19, 15 U.S.C. (Supp. V) 57b(e) ---------- 10

21 C.F.R. 330.10(a) (5) (ili) ------------------------ 19

21 C.F.R. 331.10(a) (6) (i1) ------------------------- 19

Miscellaneous :

40 Fed. Reg. 52631 (1975) -------------------------- 19

41 Fed. Reg. 38312 (1976) -------------------------- 5

HLR. Conf. Rep. No. 93-1606, 93d Cong., 2d Sess.

ee 10

Note. “Corrective Advertising Orders” of the Federal

Trale Commission, 85 Harv. L. Rev. 477 (1971) ----- 10

ee

Gn the Supreme Court of the United States

OctoBER TERM, 1977

No. 77-855

WaRNER-LAMBERT COMPANY, PETITIONER

Vv. °

FEepERAL TRapE CoMMISSION

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR T ;

caneee HE DISTRIUT OF COLUMBIA

BRIEF FOR THE FEDERAL TRADE COMMISSION IN OPPOSITION

OPINIONS BELOW

‘The opinion of the court of appeals (Pet. App. 5la-

86a) and its supplemental opinion on petition for re-

hearing (Pet. App. 87a-94a) are reported at 562 F

2d 749. The decision and order of the Federal Trade

Commission (Pet. App. la-47a) are re

; . rted

F.T.C. 1598. a i

JURISDICTION

The judgment of the court of appeals was entered

on August 2, 1977. Timely petitions for rehearing were

denied on September 14, 1977 (Pet. App. 95a-97a)

(1)

2

The petition for a writ of certiorari was filed on De-

cember 13, 1977. The jurisdiction of this Court 1s in-

voked under 28 U.S.C. 1254(1).

QUESTIONS PRESENTED

1. Whether the Federal Trade Commission is au-

thorized by statute to require advertisers that have

been found to have engaged in false or deceptive ad-

vertising to include corrective statements in future

advertisements.

2. If so, whether the Conimission properly exercised

its authority on the particular facts of this case.

3. Whether the court of appeals abused its discre-

tion in declining to remand the case to the Commission

for its consideration of a Food and Drug Administra-

tion advisory panel report.

STATEMENT

Since its introduction in 1879, Listerine Antiseptic

Mouthwash (“Listerine”) has been represented as be-

ing beneficial for the treatment of colds and sore

throats (J.A. 2819-2820).' Petitioner Warner-Lam-

bert Company, which manufactures and sells Listerine,

has spent approximately $10 million annually adver-

tising Listerine; the advertisements frequently

stressed that Listerine prevents or ameliorates colds

and cold symptoms (J.A. 490-492, 2817). Listerine’s

major competitors have made no such claims (J.A.

900). In 1972 sales of Listerine accounted for ap-

1“J.A.” refers to the Joint Appendix filed in the court of

appeals.

es re ee

3

proximately 50 percent of the nearly $200 million

mouthwash market (J.A. 491, 2817).

The Federal Trade Commission issued an admini-

strative complaint charging that Warner-Lambert’s

representations * that Listerine would cure, prevent

or ameliorate colds, sore throats and their symptoms

were false and misleading (J.A. 3-13). After exten-

sive hearings the administrative law judge found that

Warner-Lambert’s representations were false (J.A.

503-562). He recommended that Warner-Lambert be

ordered to cease and desist from making such repre-

sentations in advertising and labeling and to include

in all Listerine advertising (if any) for the next two

years the corrective disclaimer that: “Contrary to

prior advertising of Listerine, Listerine will not pre-

vent or cure colds or sore throats, and Listerine will!

not be beneficial in the treatment of cold symptoms or

sore throats’’ (J.A. 586-589).

The Commission substantially adopted the adminis-

trative law judge’s factual findings and order. It found

that Warner-Lambert’s advertisements had created

false beliefs, which are likely to continue to exist and

influence decisions to purchase Listerine, and that

despite any discontinuance of the misrepresentations

a substantial proportion of the consuming public

would retain such false beliefs “well into the 1980’s"’

* Not only Listerine’s advertisements but also its labels repre-

sented that the product was efficacious for the treatment of colds

and sore throats. A typical Listerine label and package carried

the statement : “For * * * Colds and resultant Sore Throats” (Pet.

App. 6a). .

4

(Pet. App. 26a-31a).’ The Commission concluded that

“the continued sale of a product under false pretenses

is itself a violation of the FTC Act, which, in the case

of lingering false beliefs created by discontinued ad-

vertisements, can be remedied only by dispelling the

false belief” (Pet. App. 26a; footnote omitted).

The Commission concluded that a “corrective advcr-

tising” disclosure order is “essential” to dispel the lin-

gering effects of years of false advertising and re-

*The continuing association in the public’s perception of

“Listerine” with the prevention and mitigation of “colds” was

demonstrated in market surveys. The court of appeals summarized

the evidence as follows (Pet. App. 74a-75a n. 65):

“The Commission used the results of a series of market surveys

known as ‘Product Q" reports on the ‘Mouthwash Market.’ The

surveys were conducted by petitioner for its own purposes from

1963 to 1971. According to petitioner’s own advertising agency,

‘Product Q is ideally suited to provide guidance in such vital

areas as * * * [hJow successful are the current advertising cam-

paigns of different brands on awareness, recall, attitudes and

sales?’ JA 2785-2786. The surveys showed that about 70%

of the consumers questioned recalled ‘effective for colds and sore

throats’ as a main theme of Listerine advertising. During the

summer, when no cold claims had been broadcast for about six

months, the percentage fell to only 64%; ie., the recall of

cold claims after six months of silence was very substantial. The

surveys also showed that about 60% of consumers questione:|

believed Listerine was ‘one of the best’ mouthwashes for the

quality ‘effective against colds and sore throats.’” JA 568-580.

“The Commission also relied on the testimony of two experts in

the field of consumer marketing surveys. Dr. Bass testified that

cold efficacy belief levels would continue at about 60% for

two years after colds advertising ceased and would remain high

after five years. JA 1591-1592, 1617. Dr. Rossi testified that col]

eflicacy beliefs would decline at no greater a rate than 5% per

year.” JA 1522, 1556-1559.

5

lated misrepresentations (Pet. App. 3la-34a). The

Commission ordered Warner-Lambert to include, in

approximately $10 million of Listerine advertising

(if it chooses to advertise), the following statement

(Pet. App. 46a): *

Contrary to prior advertising, Listerine will

not help prevent colds or sore throats or lessen

their severity.

Warner-Lambert requested the Commission to re-

open its proceedings to consider a draft report issued

in February 1976 by an advisory panel of the Food

and Drug Administration. The advisory panel, estab-

lished to review over-the-counter cough and cold prep-

arations, had dealt with some of the active ingredients

of Listerine (J.A. 922-938). Warner-Lambert did not,

however, contend that the advisory panel had consid-

ered evidence that was unavailable to the Commis-

sion. The Commission denied the petition to reopen,

stating that the draft report had not been adopted by

the Food and Drug Administration and that it had

not found Listerine’s ingredients to be effective for

colds (Pet. App. 49a).°

*The Commission’s statement does not refer to Warner-

Lambert’s “cure” claims, because “the record does not demon-

strate that consumers hold cure beliefs” (Pet. App. 32a n, 29).

* While the case was pending before the court of appeals, the

advisory panel issued its final recommendations to the Commis-

sioner of the Food and Drug Administration. See 41 Fed. Reg.

38312 (1976). Warner-Lambert requested the court to remand

the case to allow it to present additional evidence to the Com-

mission concerning the panel’s recommendation. Tie court of ap-

peals denied the application (Pet, App. 50a). The panel later

dealt with the question fully (id. at 57a-60a).

6

A divided panel of the court of appeals affirmed

the Commission's order. The court first held that the

Commission's finding that Listerine is ineffective for

the treatment of colds and sore throats is supported

by substantial evidence (Pet. App. 54a-60a). It

pointed out that Listerine’s active ingredients kill

only germs (bacteria), whereas colds are caused by

viruses, and that Listerine’s active ingredients do not

reach the loci of cold infections in therapeutic quan-

tities. The court also concluded that there was no

need for the Commission to reopen its proceedings to

consider the report of the Food and Drug Adminis-

tration advisory committee. Nothing in the draft re-

port undermined any of the Commission’s findings,

the court observed, and the report had not, in any

event, been approved by the Food and Drug Adminis-

tration.

The court also held that the Commission has the

statutory authority to order corrective advertising

because its “cease and desist’? power comprises,

aniong other things, the power to prevent advertisers

from capitalizing on a reputation that was based on

false or misleading advertisements in the past (Pet.

App. 60a-G4a, 66a-7la). The court then sustained

the corrective disclosure as an appropriate exercise of

the Commission’s authority (id. at 72a-T7a)-* '

® The court modified the order by striking the preamble “[e ]on-

trary to prior advertising” (Pet. App. Tha~16a). The Commission

disagrees with this modification, and it has filed a conditional

cross-petition for a writ of certiorari, seeking review of the modi-

fication in the event that the Court should grant Warner-Iambert's

petition.

A

7

Judge Robb dissented (Pet. App. 78a-86a). He

would have held that the Commission does not have

the authority to require corrective disclosures in

future advertisements. He agreed with the majority,

however, that the advertisements for Listerine were

false and deceptive and that the Commission was not

required to reopen its proceedings.

Warner-Lambert’s petition for rehearing argued,

among other things, that the required disclosure of

Listerine’s ineffectiveness violated the First Amend-

ment. The court of appeals issued a supplemental

opinion (Pet. App. 87a-93a), pointing out that gov-

ernmental bodies may regulate advertising to ensure

that it is not false and deceptive. It explained (id. at

89a-90a) : “The Commission is not regulating truth-

ful speech protected by the First Amendment, but is

merely requiring certain statements which, if not

present in current and future advertisements, would

render those advertisements themselves part of a

continuing deception of the public.”

‘ The court recognized that on some occasions a re-

quirement of corrective statements might “chill’’

speech, but it thought that the predominant effect

would be to chill false or misleading speech. It con-

cluded (id. at 90a): “whatever incremental chill is

caused by a corrective advertising order beyond that

which would result from a cease and desist order may

well be necessary if the interest of consumers in

truthful information is to be served at all. Otherwise,

advertisers remain free to misrepresent their prod-

ucts to the public, knowing full well that even if the

255-126—78—-2

———E

[Commission] chooses to prosecute they will be re-

quired only to cease an advertising compaign which

by that point will, in all likelihood, have served its

purpose by deceiving the public and already been re-

placed.”’ Finally, the court concluded that the corree-

tive disclaimer is the “least restrictive means” (td.

at 92a) of protecting the public from the continuing

effects of Warner-Lambert’s past deception.

ARGUMENT

This case is, as Warner-Lambert concedes (Pet.

5, 14, 15), one of first impression. 'There is no conflict

among the courts of appeals concerning either the

statutory authority for or the constitutionality of

requirements of “corrective advertising.” The facts

of this case provide compelling justification for the

corrective advertising the Commission ordered, and

the court of appeals correctly upheld the agency’s

authority to provide that relief.

1. The Commission found, and the court of appeals

agreed, that Warner-Lambert’s representations in ad-

vertisements and labels that Listerine is effective for

the treatment of colds and resultant sore throats were

false and misleading. Warner-Lambert does not

challenge those conclusions here. The Commission also

found, and again the court of appeals agreed, that the

continuing sale of Listerine amounts to capitalization

on the erroneous beliefs engendered by the prior false

and misleading advertising (Pet. App. 26a, 87a-92a).

Petitioner does not challenge those conclusions either.

Consequently, as the case comes to this Court, the

ee es seen se

9

only question is whether the Commission may take the

steps that it found, and the court of appeals agreed,

were the “‘least restrictive means” (Pet. App. 92a) es-

sential to prevent Warner-Lambert from capitalizing

in the future on beliefs it produced by prior deception.

Warner-Lambert contends that the Commisison may

not, because, Warner-Lambert argues (Pet. 23-24),

the Commission’s authority to issue “cease and de-

sist” orders does not include the authority to require

advertisers to undo the consequences of their misdeeds.

But this Court has held many times that the Commis-

sion’s “cease and desist” powers afford it ample

authority to impose requirements that it reasonably

believes are appropriate to overcome the past mis-

conduct.’ The Commission’s “cease and desist” powers

similarly authorize it to require corrective statements

in future advertising that Warner-Lambert uses,

where capitalization on the lingering beliefs about

Listerine would constitute renewed deception. The

relief ordered by the Commission “has [a] reasonable

relation to the unlawful practices found to exist”

(Jacob Siegel Co. y. Federal Trade Commission, 327

* See, e.g., Pan American World Airways, Inc, v. United States,

371 U.S, 296, 311-313 and nn. 17 & 18; Federal T’'rade Commission

v. Colgate-Palmolive Co., 380 U.S. 374, 395 (ban on misleading

advertising of “any product,” not only the products involved in

the case) ; Federal Trade Commission v. National Lead Co., 352

U.S. 419, 429-430 (ban on zone delivered pricing system) ; Federal

Trade Commission vy. Ruberoid Co., 343 U.S. 457, 470, 473 (“If the

Commission is to attain the objectives Congress envisioned, it

cannot be required to confine its road block to the narrow lane

the transgressor has traveled”). _

10

U.S. 608, 612-613) and thus was within the Commis-

sion’s authority.” Section 5(b) of the Federal Trade

Commission Act, 38 Stat. 719, 15 U.S.C. (1970 ed.)

45(b), gives the Commission the authority to stop any

person from “using” an unfair practice, and it was

proper for the Commission to conclude that future

advertisements and sales of Listerine without a dis-

claimer amount to a continued “use” of past deception.

Petitioner’s reliance on the legislative history of

the Commission’s statutes is unwarranted. The fact

that Congress chose not to give the Commission the

power to impose civil or criminal penalties is simply

irrelevant to the question whether the Commission

may require an advertiser to undo in future advertis-

ing what it has improperly done in past advertising

and to refrain from capitalizing on its misrepresen-

tations.

The 1975 legislation to which Warner-Lambert

refers expressly states that Congress did not affeet in

any way the Commission’s power under existing

statutes.” The Commission has exereised for many

* Warner-Lambert contends, in effect, that it may use deceptive

advertising and continue to reap the benefits of the deception

during the pendency of enforcement proceedings and even after

an order is issued, knowing that the order would at most require

it to “go, and sin no more.” The ineffectiveness of such a remedy

might encourage manufacturers to take a “free bite at the apple.”

See Note, “Corrective Advertising Orders” of the Federal Trade

Commission, 85 Harv. L. Rev. 477, 482-483 (1971).

* See 15 U.S.C. (Supp. V) 57b(e). The conference report on the

legislation, which the court of appeals quoted at Pet. App, 64a

but which Warner-Lambert ignores, also stated that the legislation

had nothing to do with the Commission’s existing power, See H.R.

Conf. Rep. No. 93-1606, 93d Cong., 2d Sess, 42 (1975).

|

jl

11

decades the power to require the correction of false

impressions produced by advertising. As the court of

appeals observed, the term “corrective advertising”

may be new, “but the concept is well established”

(Pet. App. 66a). The Commission's longstanding

interpretation of the statute it administers, an inter-

2° For example, courts have uphe!d orders requiring corrective

language to be used in connection with trade names (in advertis-

ing or otherwise) where consumer beliefs associated with products

sold under the trade name and instilled through years of adver-

tising have become misleading because of changes in the product.

See Royal Baking Powder Co. v. Federal Trade Commission, 281

Fed. 744, 753 (C.A. 2); Waltham Watch Co. v. Federal Trade

Commission, 318 F. 2d 28 (C.A. 7), certiorari denied, 375 U.S.

944. See also Waltham Precision Instrument Co., 61 F.T.C. 1027,

1049, affirmed, 327 F. 2d 427 (C.A. 7), certiorari denied, 377 U.S.

992. Similarly, numerous decisions have upheld orders requiring

affirmative disclosures intended to impart material information to

the prospective purchaser (rather than to remove deception from

an ongoing advertising theme), on the ground that it is an unfair

or deceptive practice for the seller to fail to correct erroneous

material assumptions about a seller’s product, even though the

seller never affirmatively misrepresented its products. See Aerran

vy. Federal Trade Commission, 265 F. 2d 246 (C.A. 10), certiorari

denied sub nom. Double Eagle Refining Co. vy. Federal Trade Com-

mission, 361 U.S. 818 (requiring disclosure that oil has been re-

processed ) ; Baldwin Bracelet Corp. v. Federal Trade Commission,

325 F. 2d 1012 (C.A. D.C.), certiorari denied, 377 U.S. 923 (re-

quiring disclosure of country of origin of a manufactured prod-

uct) ; All-State Industries v. Federal Trade Commission, 423 F.2d

423 (C.A. 4), certiorari denied, 400 U.S. 828 (requiring disclosure

that buyer has certain rights). This line of authority was cited

with approval in Federal Trade Commission v, Colgate-Palmolive

Co., supra, 380 U.S. at 388-389, where this Court referred to the

practice as misrepresentation by concealment. If affirmative dis-

closure can be required to correct erroneously held beliefs that did

not arise from any affirmative misrepresentation of the seller, then

it must follow that the Commission may require corrective dis-

closure where erroneous beliefs were caused by the advertiser.

12

pretation left standing by Congress, is entitled to

substantial deference here. |

It makes no difference—cither to the question of

statutory authorization or to the question whether

the Commission has transgressed’ First Amendment

limitations—that Warner-Lambert may believe that

the truth of its previous representations is open to

good-faith dispute. The Conimission is authorized by

statute to ensure that the representations in advertise-

ments are truthful, and the First Amendment also

permits the Commission to scrutinize advertisements

for truth. See Bates v. State Bar of Arizona, No. 76-

316, decided June 27, 1977, slip op. 29-31; Virginia

State Board of Pharmacy v. Virginia Citizens Con-

sumer Council, Ine., 425 U.S. 748, 771-772. Someone

must decide where the truth lies, and the fact that

Warner-Lambert may believe that a statement is

truthful does not make it so.'' Contentions about mat-

ters of scientific fact are susceptible of proof or dis-

proof; once the Commission, supported by substantial

evidence, has found particular contentions to be inac-

curate, it should not matter whether persons reason-

ably could have believed the contrary. The most de-

ceptive statements may be those that reasonable per-

sons could think to be true, but which are false in faet.

There has been no finding in this case, however, that Warner-

Lambert believed in good faith that its representations concerning

Listerine were truthful. The court of appeals observed that the

record “could support” such a finding (Pet. App. 76a), but neither

the court nor the Commission so found. The court held that good

faith “is irrelevant to the need for corrective advertising in gen-

eral” (id. at 76a n. 20). We assume for present purposes, however,

that Warner-Lambert was acting in good faith.

13

The Commission found Warner-Lambert’s repre-

sentations to be false in fact. Many courts have held

that advertisers must accept such resolutions of dis-

puted questions. See, ¢.g., J.B. Williams Co. v. Fed-

eral Trade Commission, 381 F. 2d 884, 887-889 (C.A.

6); Keele Hair & Scalp Specialists, Inc. v. Federal

Trade Commission, 275 F. 2d 18 (C.A. 5); Feil v.

Federal Trade Commission, 285 F. 2d 879 (C.A. 9).

The advertiser’s good faith belief that the Commission

is wrong does not insulate it from remedial action;

otherwise the advertiser, rather than the Commission,

would have the last word on which product claims

are permissible and which are not. See Federal Trade

Commission v. Algoma Lumber Co., 291 U.S. 67, 81.

Cf. Reilly v. Pinkus, 338 U.S. 269, 276-277. “It is

indeed a rare case where medical experts are called

which does not involve disagreement” (Ward Labora-

tories, Inc. v. Federal Trade Commission, 276 F. 2d

952, 954 (C.A. 2), certiorari denied, 364 U.S. 827),

and there is no sound reason to confine the Commis-

sion’s power effectively to deal with untruthful or

misleading advertisements to the “rare case” in which

everyone (including the advertiser) agrees that the

advertiser’s claims are baseless.”

That the Commission might choose not to resolve a disputed

scientific or medica] issue in one case does not mean that its

authority to resolve such disputes in other cases is limited. Accord-

ingly, Warner-Lambert errs in arguing (Pet. 20-21) that the

decision here conflicts with the Commission’s own decision in

National Commission on Egg Nutrition, 88 F.T.C. 89, affirmed

as modified sub nom. National Commission on Eqg Nutrition v.

14

2. Warner-Lambert contends (Pet. 16-21) that the

Commission’s order violates the First Amendment

Federal Trade Commission, C.A. 7, No. 76-1969, decided November

29, 1977, supplemental opinion issued, January 23, 1978. The Com-

mission did not attempt there to resolve the unsettled scientific

question whether the intake of cholesterol is related to the incidence

of heart disease. The Commission had no need to do so; it found

it to be a deceptive practice to advertise that there was absolutely

no scientific evidence to show that eating eggs increases the risk

of heart disease, where recognized experts, based on reliable and

competent evidence, thought that there is such a connection.

Because its decision was not an endorsement of either side of the

scientific controversy, the Commission’s order did not prevent

the association from presenting to consumers its point of view

regarding the safety of eating eggs. provided that it also made

the statement that many medical experts believe increased con-

sumption of dietary cholesterol, including that in eggs, may

increase the risk of heart disease (88 F.T.C. at 203-205).

Although there were once conflicting beliefs about the cause of

the common cold, the record established that during the last 30

years research has proved that antibacterial agents of the sort

contained in Listerine cannot prevent or mitigate colds. It is un-

disputed that the common cold is caused by viruses, which, after

being inhaled into the nose, infect cells in the nasal pharynx.

Bacteria in the mouth play no role in the causation of colds; hence,

although an antiseptic such as Listerine perhaps “Kills Germs By

Millions on Contact” (as Listerine labels have stated and may

continue to state under the Commission’s order), this would have

no effect on the common cold. Nor would the ingredients of

Listerine have any significant therapeutic effect on symptoms of

colds, according to the evidence (J.A. 506-510). As for sore

throats, Listerine can provide only transient relief attributable to

the mechanical action of gargling rather than to the effects of

Listerine’s ingredients (.J.A. 506).

Petitioner's assertion that there is “genuine scientific contro-

versy” rests largely on the report of the Food and Drug Admin-

istration advisory group. This report, Warner-Lambert says,

found Listerine “likely to be effective for colds” (Pet. 11-12, 22).

15

because it requires an advertiser to make particula:

statements that it does not desire to make.

This Court’s recent cases have held that commercial

speech is protected by the First Amendment. But

the protection is not unqualified. Government may

regulate commercial advertisements to ensure their

truthfulness and to prevent deception. Bates v. State

Bar of Arizona, supra; Virginia State Board of

Pharmacy v. Virginia Citizens Consumer Council,

Inec., supra; Young v. American Mini Theatres, Inc.,

427 U.S. 50, 69 n. 31 (plurality opinion). Commercial

speech is engaged in for profit and is not easily

chilled; moreover, as here, questions about truth and

falsity can be resolved objectively. These special at-

tributes of commercial advertisements “make it ap-

propriate to require that a commercial message

appear in such a form, or include such additional

information, warnings and disclaimers, as are neces-

sary to prevent its being deceptive.” Virginia State

Board, supra, 425 U.S. at 772 n. 24 (emphasis added).

The Commission’s order at issue here is, as the

court of appeals held (Pet. App. 92a), the “least

restrictive means of achieving [the] substantial and

important governmental objective” of preventing de-

ception of consumers. Warner-Lambert’s prior ad-

The court of appeals, however, held that Warner-Lambert’s

Cacaseaatian “is not supported by the facts” (Pet. App. 59a n.

23). The agency advisory panel concluded only that the data it

reviewed—which did not include all the evidence before the Com-

mission (see note 16, infra)—were sufficient to demonstrate

whether the ingredients were effective and that further testing

was required.

16

vertisements have created a widespread belief:on the

part of the public that Listerine is effective as a

treatment of colds and sore throats. Unless Warner-

Lambert includes in future advertisements the lan-

guage specified by the Commission, Warner-Lambert

will continue to obtain benefits from its deception.

It makes little conceptual difference whether this

continued benefit is seen as the fruit of deception or

whether, instead, future advertisements without the

corrective disclaimers are seen as themselves decep-

tive.’ The point, in either case, is that the First

Amendment does not give advertisers a license to reap

the rewards of deceit. The Commission has prohibited

Warner-Lambert from making future representations

that Listerine is efficacious for colds. It is too late to

undo the sales of Listerine from prior years, and the

Commission did not require Warner-Lambert to make

reparations to those it deceived. But the truth need

not lie dormant, and the Commission properly re-

quired Warner-Lambert effectively to retract the

falsehood of its prior advertisements and to desist

from trading on the incorrect beliefs it created.

13 Warner-Lambert repeatedly asserts (Pet. 6, 14, 17) that the

Commission did not find that future advertising would itself be

deceptive unless it carried a disclaimer. This assertion is mislead-

ing. The Commission found (Pet. App. 26a) that future sales

of Listerine would be unfair and based on deception unless the

false beliefs were dispelled and, in light of this finding, it simply

had no occasion to pass on the administrative law judge’s addi-

tional finding that future Listerine “germ killer” advertisements

without a disclaimer would be misleading because they would

remind the public of past “cold” claims (see id. at 32a n. 28).

17

Warner-Lambert’s further contention (Pet. 18)

that the First Amendment prohibits the Commission

from compelling it to say something with which it does

not agree overlooks this Court’s statement in Virginia

State Board that the government may require adver-

tisers to disclose material facts even when they would

rather not do so.“ If petitioner were correct in this

regard, the Commission could cope with deceptive ad-

vertising only when the advertiser consented to the

remedy; this Court has never held that the Commis-

sion’s authority is so limited. Moreover, in proceedings

before the Commission, Warner-Lambert opposed a

suggestion that the required disclosure state that “the

Federal Trade Commission has found” that Listerine

is ineffective in the treatment of colds (J.A. 480-481).

The Commission thus has not required Warner-Lam-

bert to state the Commission’s findings as if it were

** Petitioner contends that the passage in note 24 of the Court's

opinion pertains only to disclosures necessary to make the adver-

tisement truthful within its four corners and not to disclosures

that correct misrepresentations in other advertisements. But there

is no reason to treat the government’s authority to ensure that

the stream of commercial information flows “cleanly as well as

freely” (425 U.S. at 772) so narrowly. The effects of advertising

campaigns may persist for years; the evidence of record shows

that Listerine’s advertisements have had lasting effects (see Pet.

App. 26a-31a). The ability to prevent deception should not be

circumscribed by the 60-second length of a television commercial.

If the Commission can require correct disclosure to follow 30

seconds after a misleading statement, it also should be able to

require disclosure several years later. To hold otherwise is to

allow advertisers to retain the benefits of deceit, since particular

advertisements or advertising campaigns almost always would

have run their course before the Commission could find that the

absence of a full disclosure had made them deceptive.

18

Warner-Lambert’s own belief; to the extent the lan-

guage in the Commission’s order has that appearance,

it does so at Warner-Lambert’s option. Nothing would

prevent Warner-Lambert from stating in advertise-

ments that the Commission, and not Warner-Lam-

bert, has determined that Listerine is useless as a cold

remedy.

3. Petitioner contends (Pet. 22) that the court of

appeals was required to remand the case to the Com-

mission and to instruct the Commission to accept evi-

dence concerning the ongoing Food and Drug Ad-

ministration proceedings. The court of appeals prop-

erly held, however, that the advisory panel’s report

has no significant bearing on this case (Pet. App.

5Ha-60a). It has not been adopted by the Commis-

sioner of the Food and Drug Administration; it is not

based on any evidence that Warner-Lambert has not

already presented to the Commission; and it “does

not, to any significant degree, contradict the Commis-

sion’s findings” (id. at 57a).

The advisory panel did not find, as Warner-

Lambert implies (Pet. 9), that Listerine as a mouth-

wash would “likely” be effective against colds:or their

symptoms. Rather, it concluded concerning each of

Listerine’s ingredients that (Pet. App. 58a-59a) :

there are no well-controlled studies document-

ing the effectiveness of [this ingredient] as an

fantitussive, expectorant, or nasal decon-

gestant |.

19

The panel recommended that each of Listerine’s active

ingredients should be placed in Category ITI, and

that Warner-Lambert and other producers should be

required to produce “[d]ata to demonstrate effective-

ness * * *” (Pet. App. 59a)."* As the court of appeals

stated, “[s]ince the FDA did not consider the exten-

sive record compiled in the FTC proceedings, its con-

clusion that there is insufficient data about the ingre-

dients of Listerine to justify classifying it as effective

or ineffective is not necessarily inconsistent with the

15 Under the Food and Drug Administration (FDA) regula-

tions, the placement of a product in Category ITI denotes that the

panel lacks evidence either to approve or to disapprove the elaims

for the product. See 21 C.F.R. 330.10(a) (5) (iii).

After the FDA panel report was placed on the public record, the

Commission’s Bureau of Consumer Protection filed comments with

FDA, submitting relevant excerpts from the adjudicative record

in this case and recommending, in view of the affirmative evidence

adduced in the Commission’s proceeding concerning the lack of

efficacy of Listerine for treatment of colds, that the FDA place

the active ingredients in Listerine, when used by a gargling

mechanism, in Category IT. Placement in Category II would mean

that a mouthwash similar to Listerine could not, under FDA

regulations, carry a label indicating that the product may be used

as treatment for cold symptoms (21 C.F.R. 331.10(a) (6) (ii) ).

The Commissioner of FDA has not yet acted on this recommenda-

tion.

Warner-Lambert incorrectly asserts (Pet. 8-9 n. 9) that under

the Commission’s “Proposed Rule Concerning Advertising for

Over-the-Counter Drugs” (40 Fed. Reg. 52631), the Commission

would proceed against advertising for over-the-counter drugs only

where the FDA has found the drug misbranded and has placed

it in Category II. This is incorrect. The rule applies to drugs in

Category II, but nothing in the proposed rule would limit Com-

mission action to such situations and, indeed, the rule is silent on

the proper treatment of drugs that the FDA finally places in Cate-

gory ITI.

20

FTC’s conclusion that Listerine’s advertising claims

are deceptive” (Pet. App. 59a-60a ).”"

The court of appeals’ refusal to remand the case to

the Commission for additional evidence is consistent

with this Court’s prior decisions. Bowman Transpor-

tation, Inc. vy. Arkansas-Best , Freight System, Inc.,

419 U.S. 281, 294-296; Interstate Commerce Commis-

sion v. Jersey City, 322.U.S. 503, 514-515. Administra-

tive proceedings must have an end, and the submission

of the advisory panel’s report is not a sufficient reason

to require the Commission to go through another

round of hearings.”

%* The evidence that was before the FDA panel fell far short

of the extensive evidence that was before the Commission. .The

record before the FDA advisory panel (which had the task of

analyzing some 180 ingredients used in as many as 50,000 products

(.J.A. 3121-8229) ), insofar as it deals with these ingredients in a

monthwash, was limited to the St. Barnabas study, a clinical study

of Listerine conducted by Warner-Lambert but assessed as worth-

less by experts who had examined the methodology Warner-

Tambert used in the study (J.A. 2207-2394). See generally Pet.

App. 38a—41a, 55a-56a, 58a n. 19.

The panel’s tentative report, published in February 1976, did

not refer to mouthwashes or the St. Barnabas study (J.A. 3090-

3803). As the court of appeals noted, it appears that the references

to the St. Barnabas study and to mouthwashes were included in

the report only as an afterthought, and then only at Warner-

Lambert’s urging (Pet. App. 58a). The minutes of the panel’s final

meeting state that “a letter was received concerning the fact that

no references were made in the report on a submission concerning

the use of volatile aromatics in mouthwashes for the symptomatic

relief of the common cold.” The panel voted to add to sections of

the report dealing with menthol, eucalyptol and thymol a para-

graph containing a reference to mouthwashes and the St. Barnabas

study (J.A. 3045-3046).

17 If the FDA eventually takes final action that Warner-Lambert

deems relevant to the continued validity or applicability of the

Commission’s decision and order, it may petition the Commission

for relief pursuant to 15 U.S.C. 45(b).

21

CONCLUSION

The petition for a writ of certiorari should be

denied.

Respectfully submitted.

Wave H. McCrer. Jr.,

Solicitor General.

JOHN Fi. SHENEFIELD,

Assistan: Attorney General.

Barry Grossman,

ANDREA LIMMER,

Atto "

MICHAEL N. Soun, as

General Counsel,

GERALD P. Norton,

Deputy General Counsel,

W. Dennis Cross,

Assistant General Counsel,

JeEROLD D. Cummins,

Attorney,

Federal Trade Commission.

FEesruary 1978.

©.S. GOVERN WENT PRINTING OFFicE: i978