Re: The Recent Trend in "Collective Contracts"

[Peter Swire <swire.1@osu.edu>]

At 09:29 AM 7/10/97 -0700, Tim May wrote:

>I'm not a lawyer, but I am interested in the various ramifications--and the
>constitutionality--of recent "sweeping contracts" between vendors,
>lawmakers, consumers, etc.
>
>Two recent example:
>
>1. The "tobacco agreement." Supposedly a deal involving the transfer of
>$360 billion from some number of tobacco companies in exchange for dropping
>of liability suits, immunity from future claims, voluntary restrictions (!)
>on advertising, etc. (And the "etc." is especially complicated in this huge
>case.)

        So far as I know, the agreement has no legal effect until and unless
a bill is enacted in Congress. Once a bill is enacted, there can obviously
be far-reaching ramifications.  For instance, an individual's right to sue
in tort can be cut off.  Punitive damages can be abolished for the defined
class of suits, etc.
        If such a bill is enacted, various groups would likely sue on the
basis that it is unconstitutional.  That's what happened with CDA -- the
indecency provisions first became law, and then were overturned in the courts.
>
>2. The "voluntary ratings" agreement being announced today by Al Gore and
>some of the television networks. (Earlier "voluntary agreements" were
>implemented, but, according to supporters of censorship, "failed." Hence
>the new push for newer voluntary restrictions.)

        The big legal fight on ratings is whether any "state action" takes
place.  The First Amendment governs efforts by a federal or state government
to restrict speech.  If private companies "voluntarily" agree to do
something, the First Amendment simply does not apply.  But if the coercive
power of the state forces them to do the same thing, then the courts can get
involved under the First Amendment.
        Here, if the government is too explicit that it will ban certain
speech unless the networks ban it, then a court might find that the
government in fact is involved in an impermissible way.

>The issue, it seems to me, is that ordinary concepts of illegality and
>civil liability are being swept aside in favor of these huge "deals" to
>reduce liability in exchange for various actions. Well, who is bound by
>these deals?
>
>If "Tim's Tobacco Company" starts up next year, after this deal is
>"signed," is his company bound by this deal? If Tim the Smoker develops
>lung cancer, is he blocked from suing?
>

       The basic concepts are pretty clear.  A contract among various
parties binds that group of parties.  A statute of general applicability can
regulate everyone in the jurisdiction.
       The existing tobacco companies can't bind "Tim's Tobacco Company" in
their contract.  However, if they support a bill in Congress, and the
statute is enacted, then their actions might indeed play a role in
restricting your actions later on.

        Peter

Prof. Peter Swire
Ohio State University
College of Law
mailto:swire.1@osu.edu
web: http://www.osu.edu/units/law/swire.htm (in early stages of construction)