Bootleggers, Baptists, and Televangelists

Texas A&M University School of Law Texas A&M Law Scholarship Faculty Scholarship 1-2008 Bootleggers, Baptists, and Televangelists Andrew P. Morriss Texas A&M University School of Law, [email protected] Follow this and additional works at: https://scholarship.law.tamu.edu/facscholar Part of the Law Commons Recommended Citation Andrew P. Morriss, Bootleggers, Baptists, and Televangelists, 31 Regulation 26 (2008). Available at: https://scholarship.law.tamu.edu/facscholar/208 This Article is brought to you for free and open access by Texas A&M Law Scholarship. It has been accepted for inclusion in Faculty Scholarship by an authorized administrator of Texas A&M Law Scholarship. For more information, please contact [email protected]. I L I A I L I T Y There's a new player in Yandle's classic dynamic. Bootleggers, Baptists, and Televangeli sts BY ANDREW P. MORRISS University of Illinois n 1998, 46 state attorneys general, together with a and Baptists shared a common interest in restricting Sunday group of private attorneys, reached a Master Set- sales. The Baptists, of course, opposed liquor sales generally tlement Agreement with Philip Morris, R.J. for moral reasons. The bootleggers wanted to restrict compe- Reynolds, Brown & Williamson, and Lorillard, the tition on Sundays from legal liquor sellers. While the boot- nation's four largest cigarette manufacturers. The leggers could hardly lobby explicitly for Sunday closing on the agreement effectively imposed a hefty tax on smok- grounds that it would allow them to charge more for their ers nationwide to fund billions of dollars in payouts product, they could use Baptist arguments to support politi- to the states (and the participating private attorneys) and cre- cians who publicly supported Sunday closing laws. The implic- ated barriers to entry into the cigarette business to protect the it coalition of bootleggers and Baptists thus married the eco- signatories from price competition. The agreement included nomic muscle of the bootleggers to the publicly acceptable a model statute that states had to adopt in order to receive the policy arguments of the Baptists, allowing both groups to cash, foreclosing the opportunity for state legislatures to exer- achieve a policy objective neither was strong enough to obtain cise independent review of the settlement. One observer of the on its own. Much regulation, Yandle surmised, is the product agreement described it as "the largest privately negotiated of similar coalitions. transfer of wealth arising out of litigation in world history." The history of tobacco regulation includes quite a few The settlement and proposed statute substituted a private episodes of bootleggers-and-Baptists coalitions in the 1960s agreement for the normal processes of regulation and taxa- and 1970s. While there were sporadic efforts to suppress tion. They dramatically reduced the public's opportunity to tobacco use almost from the time it appeared in Europe - participate in both and to hold accountable those responsi- James I of England published A Counter-Blaste to Tobacco in ble for regulatory burdens and tax increases. How Americans 1604, denouncing smoking as "a custom loathsome to the eye, ended up with regulation and taxation without representation hateful to the nose, harmful to the brain, dangerous to the is a story of "bootleggers, Baptists, and televangelists." lung, and the black stinking fume thereof, nearest resembling the horribly Stygian smoke of the pit that is bottomless" - BOOTLEGGERS AND BAPTISTS serious regulatory efforts appeared in the United States only In 1983, economist Bruce Yandle published an article in Reg- in the 1960s. Prior to then, smoking was a widely accepted ulation entitled "Bootleggers and Baptists: The Education of practice that government at all levels mostly ignored. Indeed, a Regulatory Economist." In the article, Yandle set out a cru- the federal Food and Drug Administration had been explic- cial insight of public choice theory using the metaphor of the itly foreclosed from regulating tobacco when it was created by implicit coalition of bootleggers and Baptists behind laws the 1906 Pure Food and Drug Act and the agency consis- that forbade liquor sales on Sundays. He noted that despite tently foreswore any jurisdiction over smoking even after the their quite different views on liquor generally, bootleggers 1938 Food, Drug and Cosmetic Act granted the agency pow- ers over "articles (other than food) intended to affect the Andrew P. Morriss is the H. Ross and Helen Workman Professor of Law and structure or any function of the body," a definition that professor of business at the University of Illinois. He also is a senior scholar at arguably could have been read to include cigarettes as nicotine the Mercatus Center at George Mason University. This article draws on his forthcoming paper, co-authored with Bruce Yandle, delivery devices. When confronted with proposed amend- Joseph Rotondi, and Andrew Dorchak, in the University of Illinois Law Review. ments to the food and drug laws to give the FDA jurisdiction, 26 REGULATION SUMMER 2008 Congress repeatedly rejected such efforts. tee in 1962 to review the scientific evidence on smoking's A 1953 study of the impact of the tar from tobacco smoke health effects, health regulators spotted an opportunity to on mice prompted widespread discussion of health con- expand their regulatory authority. Only a week after the com- cerns about smoking. Responding to the demand for safer mittee issued its report, the FTC proposed sweeping regula- cigarettes, manufacturers introduced low-tar brands and trions requiring health warnings on cigarette packages and added filters to existing brands, resulting in what became advertisements, arguing that not telling consumers about known as the "tar derby," an expensive competition to potential health effects was an unfair and deceptive trade improve safety. When anti-smoking groups demanded gov- practice that it had authority to prohibit. Congress, where sen- ernment action, however, the tobacco companies were able ators and representatives from tobacco states held powerful / *~//~ / ~ ------------ to negotiate a deal with the Federal Trade Commission to positions as a result of the seniority system for committee ban all tar and nicotine claims from cigarette advertising, assignments and the safe seats of many Southern members of short-circuiting market pressures for safer cigarettes by elim- Congress, disagreed. After persuading the FTC to withdraw its inating health effects as a margin for competition. Although proposed regulations, the tobacco industry's lobbying team the FTC touted the ban as an example of "industry-govern- put together a successful legislative package with weaker warn- ment cooperation in solving a pressing problem," the reali- ing labels and preemption of state and local warning label ty was that the "bootleggers" had just succeeded in using requirements, and succeeded in moving the debate to the "Baptist" rhetoric to reduce competition. As Lee Fritschler more sympathetic terrain of the halls of Congress. So favor- concluded in his 1969 analysis of tobacco policy, the regu- able to tobacco interests was the resulting statute that anti- latory climate of the period was imbued with "a spirit of smoking activists denounced it as "one of the dirtiest pieces friendly and quiet cooperation between Congress, the of legislation ever." The bootleggers had triumphed over the C bureaucracy, and the interest group community." Baptists again. When Surgeon General Luther Terry convened a commit- The bootleggers-and-Baptists pattern was repeated sever- REGULATION SUMMER 2008 27 LIABILITY al times during the 1960s. In 1967,John F. Banzhaf III, a New istration FDA commissioner David Kessler made an effort to York attorney in private practice, successfully persuaded the assert his agency's jurisdiction over tobacco. The bootleggers- Federal Communications Commission to apply the fairness and-Baptists era of tobacco regulation thus has to be scored doctrine to tobacco advertising, requiring television stations as an overall win for the bootleggers. to provide organizations like the American Lung Association with free anti-smoking ads when they aired tobacco ads. LAWYERS AND LITIGATION Banzhaf's success persuaded him to leave practice and start In addition to periodic assaults by regulators, tobacco com- up Action on Smoking and Health, one of the first national panies have experienced three waves of private litigation over health interest groups focused on tobacco. (Banzhaf eventu- the health effects of smoking. The first wave began in 1954 ally became a law professor at George Washington University when the first of more than 100 suits were brought on behalf and remains active on tobacco issues. His webpage notes of smokers against tobacco companies under theories of neg- approvingly that he has been called "the Osama bin Laden of ligence, breach of implied warranty, and breach of express Torts" and a "Legal Flamethrower.") warranty. The tobacco companies successfully argued that The anti-smoking campaign took its toll on sales. Per-capi- smokers knew that smoking was potentially hazardous, mak- ta cigarette consumption fell by 5.7 percent between 1967 ing sure that their legal point got through by hiring many of and 1970. After the FCC's position was upheld by the courts the best law firms in the country to defend the suits and over- (in part because of clever lawyering by Banzhaf that maneu- whelming the lawyers from small personal injury firms who vered the appeal into the D.C. Circuit instead of the presum- represented the plaintiffs. By the mid-1960s, this first wave was ably tobacco-friendly territory of Richmond, Va., and the over and the tobacco companies had not lost a single case. Fourth Circuit), the FCC prepared to launch additional anti- In 1983, a second wave of tobacco suits began. Using new tobacco regulations. data on health effects, a group of entrepreneurial plaintiffs' Again the industry turned to Congress for help and suc- lawyers began suing under theories of strict liability and fail- cessfully obtained a complete ban on advertising in electron- ure to warn.

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