## Facts

- California voters enacted Proposition 99, imposing a $0.25-per-pack cigarette excise surtax and creating a fund that earmarked revenues for, among other programs, a tobacco-control media campaign.
- The California Department of Health Services (DHS) designed, produced, and controlled television, radio, and print advertisements intended to reduce tobacco use, including among youth.
- Some advertisements criticized the tobacco industry’s conduct and credibility and used messaging that portrayed industry claims as misleading.
- Major tobacco companies did not challenge the validity of the surtax itself, but claimed the earmarking of surtax proceeds to fund ads critical of them compelled them to subsidize hostile, viewpoint-based speech.
- The companies sought declaratory and injunctive relief preventing DHS from using surtax revenues for the challenged advertising.
- The district court granted summary judgment for the state officials, and the tobacco companies appealed.

## Issues

1. Whether California violates the First Amendment by using cigarette surtax proceeds to fund state-run anti-tobacco advertisements that criticize the tobacco industry.
2. Whether an industry has a First Amendment right not to fund government speech critical of it when the government earmarks an industry-specific tax to pay for that speech.

## Decision

- The Ninth Circuit affirmed summary judgment for the state officials.
- The court held that the media campaign was government speech, and the First Amendment permits the government to express its policy views, including favoring one viewpoint over another.
- The court rejected the argument that an earmarked, product-specific excise tax creates a First Amendment right to prevent the government from funding its own speech with those revenues.
- The court concluded the program did not amount to compelled private speech, compelled subsidization of private speakers, or an unconstitutional condition on the companies’ market participation.

## Legal Principles

- When the government is the speaker, it may make content-based and viewpoint-based choices in expressing governmental policy without triggering the usual First Amendment constraints that apply to regulation of private speech.
- Taxpayers, including targeted industries, generally have no First Amendment right to withhold or redirect taxes because they object to government speech funded by those taxes.
- Compelled-subsidy precedents addressing mandatory payments funding private associations’ speech are not controlling where the challenged expression is the government’s own message.
- The earmarking of an industry-specific excise tax to finance government messaging about that industry does not, by itself, convert government speech into constitutionally impermissible compelled private speech.
- A lawful excise tax funding government speech does not impose an unconstitutional condition where regulated entities remain free to speak in opposition and are not required to disseminate the government’s message.

## Conclusion

The Ninth Circuit upheld California’s use of cigarette surtax revenues to finance a state-controlled anti-tobacco media campaign, ruling that the advertisements were government speech and that the First Amendment does not give taxed companies a veto over government messaging funded through earmarked excise taxes.


R.J. Reynolds Tobacco Co. v. Shewry, 423 F.3d 906 (9th Cir. 2005)