Email
Password
(Forgot Password?)
The California Supreme Court revived a major class action lawsuit against the tobacco industry Monday, ruling that smokers could hold it accountable for alleged deceptive advertising.
After years of consumer cases meeting their demise in lower courts, the state high court's 4-3 decision helped resuscitate a key consumer law that voters sharply limited in 2004 in the wake of lawsuit scandals.
Justice Carlos R. Moreno, writing for the majority, said Proposition 64 was intended to stop "shakedown" lawsuits that enriched only lawyers and "did not propose to curb" genuine consumer grievances.
The decision, the court's most significant interpretation of Proposition 64, was a departure from many lower court rulings that interpreted the measure as having broader sweep.
Trial lawyers called the ruling a major consumer victory, while corporate litigators predicted a flood of frivolous lawsuits and accused the court of ignoring voters.
The case against the tobacco industry, which lower courts had dismissed, charges the industry with luring people to smoke with deceptive ads about cigarette safety. . . .
The court's three most conservative justices dissented, arguing that the majority ruling invited "mischief" and frivolous lawsuits that Proposition 64 was designed to halt.
The ruling will be applied "not only to the unsympathetic facts alleged in the case -- i.e., that larger tobacco companies lured consumers into nicotine addiction by falsely claiming over many years that cigarettes were safe -- but also to myriad situations in which the anti-consumer implications are far less dire," wrote Justice Marvin R. Baxter, joined by Justices Ming W. Chin and Carol A. Corrigan.
Jump to full article »
The complaint before us alleges that the tobacco industry defendants violated the UCL by conducting a decades-long campaign of deceptive advertising and misleading statements about the addictive nature of nicotine and the relationship between tobacco use and disease. Prior to passage of Proposition 64, the trial court had certified the case as a class action. The class was defined as “All people who at the time they were residents of California, smoked in California one or more cigarettes between June 10, 1993 to April 23, 2001, and who were exposed to Defendants’ marketing and advertising activities in California.” After Proposition 64 was approved, the trial court granted defendants’ motion to decertify the class on the grounds that each class member was now required to show an injury in fact, consisting of lost money or property, as a result of the alleged unfair competition. The Court of Appeal affirmed.
On review, we address two questions: First, who in a UCL class action must comply with Proposition 64’s standing requirements, the class representatives or all unnamed class members, in order for the class action to proceed? We conclude that standing requirements are applicable only to the class representatives, and not all absent class members. Second, what is the causation requirement for purposes of establishing standing under the UCL, and in particular what is the meaning of the phrase “as a result of” in section 17204? We conclude that a class representative proceeding on a claim of misrepresentation as the basis of his or her UCL action must demonstrate actual reliance on the allegedly deceptive or misleading statements, in accordance with well-settled principles regarding the element of reliance in ordinary fraud actions. Those same principles, however, do not require the class representative to plead or prove an unrealistic degree of specificity that the plaintiff relied on particular advertisements or statements when the unfair practice is a fraudulent advertising campaign. Accordingly, we reverse the order of decertification to the extent it was based upon the conclusion that all class members were required to demonstrate Proposition 64 standing, and remand for further proceedings regarding whether the class representatives in this case have, or can demonstrate, standing.
Philip Morris International Inc. and other cigarette makers lost a bid to block a group lawsuit claiming that the companies misled thousands of California smokers about the dangers of smoking.
The California Supreme Court today reinstated a class- action, or group, lawsuit against tobacco companies, saying each smoker in the case isn’t required to prove that they relied on specific false statements when the alleged misrepresentations were part of “an extensive and long-term advertising campaign.”
The case, filed in 1997, accused tobacco companies of making misleading statements about the health risks and addictiveness of smoking, and sought restitution for money that smokers spent on cigarettes.
Yesterday morning, the Supreme Court heard oral argument in In re Tobacco II Cases, no. S147345. Attorney Mark P. Robinson of Robinson Calcagnie & Robinson argued for the plaintiffs. Attorney Daniel P. Collins of Munger, Tolles & Olson argued for the defendants. Court of Appeal Justice Eileen C. Moore sat in place of Chief Justice Ronald M. George, who was recused.
Mr. Robinson began his argument by saying that with the UCL, the Legislature and the Supreme Court, for the past 35 years, have sought to protect consumers from deceitful marketing practices by use of the "likely to deceive" standard. Case law, including Chern and Justice Tobriner in Fletcher, has not required individualized proof of reliance. That is because, as the court in Fletcher pointed out, it is often impossible to prove in a class setting. The lightened burden of proof is part of the damages trade-off noted by the Court in Bank of the West. The purpose of the lightened burden is to effectuate the intent of the Legislature. Proposition 64 changed who can sue, it changed standing.
Justice Kennard was the first justice to speak and she wanted to get right to "the threshold inquiry." She asked whether the class was decertified because of the trial court's belief that the heightened standing requirement pertained to every class member. Mr. Robinson said that Judge Prager read Proposition 64 to require individualized proof of reliance for every member of the class. Justice Kennard: So your short answer is yes. Robinson: Yes. . . .
The final question was from Justice Kenard: Must the misrepresentations be a substantial factor in causing the plaintiff’s conduct? Mr. Robinson replied that the misrepresentation had to be material and likely to deceive the general public. He cited Harper v. 24 Hour Fitness, then concluded it’s up to the trial court to decide how the class is defined.
And that was the end of the argument.
Reporting from San Francisco -- Consumer class-action lawsuits in California, which have encountered mounting skepticism from courts, face a major test in a tobacco case to be decided Monday by the state Supreme Court.
The court will determine whether smokers who say they purchased cigarettes in response to deceptive ads can collectively sue the industry for the money they spent to smoke.
The court has grappled with the case for more than two years, trying to determine the reach of Proposition 64, a 2004 initiative intended to stop bogus lawsuits aimed at extorting money from small business. During the last several years, lower courts have tossed out many consumer class actions and scrutinized settlements more closely.
"Judges have started . . . wondering why there was a million dollars in attorneys fees and virtually nothing for the people who were supposedly defrauded," said Trent Norris, a San Francisco lawyer who defends corporations. "California is part of a national trend." . . .
Proposition 64 amended the state's Unfair Competition Law to limit suits to people who have lost money or property. . . .
The tobacco case will determine whether class actions can be filed under the Unfair Competition Law. At issue is whether all members of the class must prove that the advertisements prompted them to buy cigarettes, a requirement that some attorneys said would doom the case.
The suit was brought on behalf of every Californian who was exposed to tobacco ads and bought cigarettes from 1998 to 2007. A similar suit in Michigan obtained a $10-billion jury award, Arkin said.
Federal judges in Miami, Jacksonville and Tampa have thrown a legal monkey wrench into thousands of lawsuits filed on behalf of sick smokers by rejecting a pivotal part of a Florida Supreme Court decision.
The state's high court broke up a statewide class action but ruled future plaintiffs could use a Miami jury's findings on 23 illnesses caused by smoking and industry negligence in future personal injury suits against cigarette makers.
U.S. District Judge Ursula Ungaro in Miami backed off in an Aug. 8 ruling by allowing the link between cigarette makers and illnesses to come into play again.
U.S. District Judge Howard Schlesinger in Jacksonville followed up Aug. 28 with a stronger order rejecting the findings, and U.S. District Judge Steven D. Merryday in Tampa adopted Schlesinger's order the same day.
Edward Sweda Jr., senior attorney for the Tobacco Liability Project, an anti-smoking group at Northeastern University's law school in Boston, said he found the developments "troubling."
"The effect of it would be that a federal judge would be overturning the ruling of a state supreme court," he said. . . .
Schlesinger concluded the state violated the U.S. Constitution by depriving the tobacco industry of due process.
"This court will not sacrifice the fundamental right of due process upon the altars of expediency, thrift and 'pragmatism,' " he wrote. . . .
"The Florida Supreme Court is the apex judicial system in the state of Florida, and its rulings are binding," said Miles McGrane of McGrane Nosich & Ganz in Coral Gables, Fla. He represented his late father-in-law, John Lukacs, in a smoking case that produced a $24.8 million compensatory judgment last month.
"This is typical of the tobacco industry. If they don't like what they get, they find some other court," he said. "I don't think the state judges are going to fall for it."
Philip Gerson with Gerson & Schwartz in Miami, who also represents smokers, said the rulings mean "nothing." . . .
"We think it's a federal court commenting on what Engle means in a rather aggressive manner," he said. "It is a failure of the federal court to reflect the faith and credit of the state court system."
The Florida Supreme Court is the ultimate arbiter and decider of Florida law, except to the extent that any constitutional issue is indicated. To the extent there are any constitutional issues, it would create federal questions that ultimately the U.S. Supreme Court would have jurisdiction to decide.Joel S. Perwin, a Florida lawyer who specializes in appellate work, on the Engle litigation.
This court will not sacrifice the fundamental right of due process upon the altars of expediency, thrift and 'pragmatism.'U.S. District Judge Howard Schlesinger in Jacksonville, who rejected FL Supreme Court Engle ruling.
We think it's a federal court commenting on what Engle means in a rather aggressive manner. It is a failure of the federal court to reflect the faith and credit of the state court system.Philip Gerson with Gerson & Schwartz in Miami, who represents some Engle smokers.
Altria Group Inc., the biggest U.S. cigarette maker, and other U.S. tobacco companies won a court ruling that might help them defend thousands of individual lawsuits in Florida.
U.S. District Judge Harvey Schlesinger in Jacksonville, Florida, ruled Aug. 28 that smokers suing the companies can't use factual findings from a state class-action, or group, suit to prove their cases.
``Doing so would comprise an arbitrary deprivation of the defendants' federal due process rights guaranteed under the Fourteenth Amendment,'' Schlesinger wrote.
The ruling threatens to erase much of the advantage that Florida plaintiffs received from the state's highest court in the ``Engle'' tobacco class action in 2006. The ruling, if upheld on appeal, would apply to 4,000 cases filed in the Jacksonville court and federal cases throughout the state. . . .
Murray Garnick, Altria Client Services Inc. senior vice president and associate general counsel, said yesterday in a statement that three judges, including Schlesinger, have ruled that ``plaintiffs in these cases must prove each and every element of their claims.'' . . .
In his ruling, Schlesinger said that Florida law and the U.S. Constitution require smokers to prove all the elements of their claims. He urged them to appeal to the federal appeals court in Atlanta to provide guidance to trial courts.
As the foregoing examples illustrate, the Phase I findings fail to establish that the issues tried in the Engle Phase I proceeding are identical to the issues presented in this case. Moreover, it is impossible to discern what specific issues were actually decided by the Phase I jury, and what facts and allegations were necessary to its decision; thus this Court is unable to give the Phase I findings preclusive effect with respect to the elements of any of the Engle plaintiffs' claims. . . .
The Defendants also raise a constitutional challenge to Plaintiffs' proposed use of the Phase I findings, arguing that since it is impossible to know what allegations formed the basis of each finding, affording preclusive effect to the general Phase I findings would be an arbitrary application of the common law rules of preclusion. In the Defendants' view, such a fanciful application of well-established procedural doctrine would violate constitutional guarantees of due process. The Court agrees and--as an additional basis for its decision--finds that application of the Phase I findings as Plaintiffs propose would contravene the dictates of due process. . . .
As the above cases establish, this Court is constitutionally bound to strictly apply the doctrine of issue preclusion consistent with its common law origins. Thus, since it is impossible to determine the precise issues decided by the Phase I jury, with respect to individual claims against particular Defendants, the traditional elements of issue preclusion--e.g., identicality, criticality, and necessity to the prior determination--cannot be satisfied. This Court is accordingly foreclosed from applying the Phase I findings as establishing any part of Plaintiffs' claims. 26 See Goodman, 804 So. 2d at 546-47. Doing so would comprise an arbitrary deprivation of the Defendants' federal due process rights guaranteed under the Fourteenth Amendment. . . .
Without deciding the issue, there is some question concerning the constitutional validity of the Phase I findings. While many aspects of the sprawling and unwieldy Engle trial proceedings are troubling, none are more galling and shocking--in a constitutional sense--than the conduct of Mr. Stanley M. Rosenblatt, Engle class counsel. Relying on the limited record provided the Court, it seems that during the Engle Phase I proceedings, Mr. Rosenblatt made numerous racially charged statements and openly advocated jury nullification. . . .
A constitutionally sound verdict must be premised on adherence to the law, and not the caprice of individual moral discretion. Verdicts based on unfettered and subjective notions of "morality" and "justice" "are lawless, a denial of due process and constitute an [*55] exercise of erroneously seized power." . . .
In summary, the Engle Phase I findings may not be used to establish any element of an individual Engle plaintiff's claim. A general, non-specific finding of tortious conduct on the part of one or more Defendants does not satisfy the requirements of issue preclusion, as the Engle plaintiffs as a whole allege different acts and omissions by different Defendants, breached different tort duties to different people at different times causing different injuries. Additionally, this Court may [*57] not, as Plaintiffs urge, stretch the boundaries of preclusion law beyond its understood common law limits in the interests of convenience and economy. Despite any temptation to do so, this Court may not manipulate established procedural and substantive law in the interests of expediting the progress of this litigation. 29 To do so would be to perpetrate an independent constitutional violation. See In re Repetitive Stress Injury Litig., 11 F.3d 368, 373 (2d Cir. 1993) ("considerations of convenience and economy must yield to a paramount concern for a fair and impartial trial" (internal quotation marks omitted)); In re Brooklyn Navy Yard Asbestos Litig., 971 F.2d 831, 853 (2d Cir. 1992) ("The systemic urge to aggregate litigation must not be allowed to trump our dedication to individual justice, and we must take care that each individual plaintiff's--and defendant's--cause not be lost in the shadow of a towering mass litigation."). This Court will not sacrifice the fundamental right of due process upon the altars of expediency, thrift, and "pragmatism."
At most, these findings establish that at some time the Defendants sold a defective product, concealed their tortious behavior, acted negligently, breached an express or implied warranty, and engaged in a conspiracy to misrepresent information relating to the health effects of smoking. . . . the Phase I findings merely establish conduct as a broad abstraction, and conduct in the abstract fails to meet the identity requirement to apply such findings in the specific cases before this Court.HARVEY E. SCHLESINGER , United States District Judge in Jacksonville, FL, ruling on the Engle/Brown case.
The apparent flaw with the jury form, and any verdict delivered from the form, is its nonspecificity with respect to what acts or omissions committed by what Defendant breached what duty to which Plaintiff causing what injury. As such, this Court "would have to embark on sheer speculation" to determine what issues were actually decided during the Phase I trial and how to apply them to the individual claims before this Court. HARVEY E. SCHLESINGER , United States District Judge in Jacksonville, FL, ruling on the Engle/Brown case.
This is a “tobacco†case, but not of the personal injury variety. Highly summarized, the legal claims in this case are that the defendants, Philip Morris USA, Inc. (“Philip Morrisâ€), and its corporate parent, Altria Group, Inc. (“Altriaâ€), violated the Kansas Consumer Protection Act (“KCPAâ€), K.S.A. § 50-623 et seq., and that defendants were unjustly enriched, by marketing “Marlboro Lights†and “Cambridge Lights†brands of cigarettes as being lower in tar and nicotine than regular cigarettes. The factual allegation upon which these claims is predicated is that although defendants’ light cigarettes yield lower tar and nicotine quantities when tested by a machine approved by the Federal Trade Commission (“FTCâ€), they do not in fact deliver lower quantities of tar and nicotine to smokers. Defendants allegedly knew their light cigarettes would not actually deliver lower amounts of these chemicals to smokers, but marketed them as such.
. . .Philip Morris argues that Ms. Brown cannot demonstrate its statements regarding its light cigarettes caused her to suffer a loss, as required by K.S.A. § 50-634(d), because she has not shown she relied on those statements in deciding to smoke Marlboro Lights. Ms. Brown argues that a showing of reliance is not required, but even if it is, she claims she did in fact rely on Philip Morris’ statements when she started smoking Marlboro Lights. As set forth in connection with the Rule 23(b)(3) analysis above, the court finds that K.S.A. § 50-634(d) requires a showing that Ms. Brown relied on Philip Morris’ representations regarding their light cigarettes. This inquiry is a factual one, specific to the individual plaintiff in question. Given the current state of the record, the court is unprepared to say, as a matter of law, Ms. Brown did not rely on Philip Morris’ statements when she started smoking. Although neither side complied with D. Kan. Rule 56.1, the court believes that a rational trier of fact could find that Ms. Brown relied on Philip Morris’ representations in purchasing light cigarettes. Thus, a genuine issue of material fact exists as to causation, and therefore Philip Morris’ motion for summary judgment is denied.
A federal judge has dealt a crippling blow to a tobacco case that sought damages not for personal injuries but for misleading advertising under the Kansas Consumer Protection Act.
In denying plaintiff Tammy Brown's motion to certify the case against Philip Morris USA as a class action, U.S. Magistrate Judge James P. O'Hara ruled that the act requires proof that each would-be class member relied on the company's alleged misrepresentations.
Brown had argued that such an interpretation of the statute would effectively gut its class-action provision. O'Hara said that, while he was sensitive to that concern, the language of the statute "requires individual showings of reliance, even if the result is very few class certifications in misrepresentation cases."
"If the statute is in need of revision (and it goes without saying that nobody has suggested that K.S.A. Section 50-634 presents a model of good drafting)," he wrote, "the task constitutionally must be performed by Kansas legislators, not a federal judge." . . .
Given its own amply documented history of dishonesty about the dangers of cigarette smoking, it was more than a little ironic that Philip Morris argued that Brown's convictions for dishonest acts called into question her ability to act as an honest class representative.
We thus conclude that an express warranty claim arising solely out of the use of descriptors based on the FTC method is preempted. In Cipollone, where the plaintiff was permitted to proceed with his express warranty claim, the plaintiff had produced advertisements explicitly stating that there was “proof†that that brand of cigarettes “never ... did you any harm.†Cipollone v. Liggett Group, Inc., 893 F.2d 541, 549 (3d Cir. 1990). The defendant in that case was held liable for the additional representations that it made with respect to the safety of its products, not for its use of the FTC-approved descriptors. We therefore hold that the district court erred in finding that Plaintiffs’ express warranty claim is not pre-empted by the Labeling Act.
2. The district court also held that Plaintiffs’ claims based on alleged breach of implied warranty are not pre-empted. This holding finds no support in the Cipollone opinion. As Plaintiffs failed to explain the basis of this claim in their pleadings or to argue in support of this claim on appeal, and as the district court failed to provide any discussion of the pre-emption analysis with respect to the claim in its order, we will not consider it for the first time here. We therefore hold that this claim is dismissed with prejudice.
IV.
For the foregoing reasons, we reverse the judgment of the district court and remand with directions to enter a judgment dismissing all claims with prejudice.
Phillip Morris used Proposition 64 to have a class action lawsuit charging the tobacco giant with marketing tobacco to minors and deceiving consumers about the health effects of "light" cigarettes decertified this week. Phillip Morris contributed $200,000 to pass Proposition 64, which big industry proponents claimed would not apply retroactively or to pending suits before the November election.
Proposition 64 proponents also told the public that the initiative was aimed at stopping baseless suits against small businesses, not legitimate consumer protection cases against big business. It is, however, the initiative's large corporate donors that are aggressively seeking to dismiss unfair business competition lawsuits, like the Phillip Morris case, filed against them prior to the election, according to consumer advocates.
"Phillip Morris gave $200,000 to Proposition 64 to avoid accountability for marketing tobacco to kids and lying about the health dangers of cigarettes," said Carmen Balber, consumer advocate with the Foundation for Taxpayer and Consumer Rights (FTCR). "These attacks by Phillip Morris and more than 100 other big corporations on pending unfair business competition suits are the tip of the iceberg revealing that Prop. 64 is the greatest threat to consumer, public health and environmental protections in decades."
San Diego Superior Court Judge Ronald S. Prager has decertified the Brown class action after finding that the November 2004 voter referendum known as Proposition 64 applied to the case. Proposition 64 modified California's Unfair Competition and False Advertising Law by mandating that the only private plaintiffs with standing to prosecute such statutory claims are those who have suffered injury in fact and lost money or property as a result of the defendant's alleged conduct.
"We believe the judge’s ruling was appropriate in light of the law, and should dispose of the case," said William S. Ohlemeyer, Philip Morris USA vice president and associate general counsel.
Altria Group said late Wednesday that a San Diego judge has decertified the class action known as the Brown case.
The case was based on claims that advertising and promotion by the nation's major cigarette manufacturers targeted minors and deceived smokers into purchasing so-called "light" cigarettes.
The court dismissed those claims in November 2004, the tobacco company said in a statement. . . .
Altria (MO) said the decertification came after the judge found that the November 2004 voter referendum known as Proposition 64, which mandated that "the only private plaintiffs with standing to prosecute such statutory claims are those who have suffered injury in fact and lost money or property as a result of the defendant's alleged conduct" applied to the case.
Trial of the case, known as Daniels vs. Philip Morris, had been expected this fall. . .
Although not binding on courts in other states, the decision was a setback for lawyers and health groups that have sought to hold cigarette makers legally responsible for underage smoking, which they say the industry has encouraged with ads portraying smoking as glamorous and cool.
Industry lawyers are certain to cite Prager's reasoning in other big cases in Illinois, Massachusetts and the District of Columbia involving cigarette marketing practices. . .
Prager's decision came in a pair of preliminary rulings Thursday. He set a Sept. 30 hearing for plaintiffs to seek reconsideration. John F. "Mickey" McGuire, a lawyer for the plaintiffs, said if their argument fails, they expect to appeal. . .
Moreover, Prager said, "apart from asserting the defendants' advertising is misleading and deceptive ... because it associates smoking with 'glamorous,' 'cool,' 'strong,' 'macho,' 'tough' and 'sophisticated' images ... that have 'sex appeal'... plaintiffs point to no other allegedly misleading or deceptive information contained in the ads." . .
Also pending before Prager is another tobacco class action called the Brown case, which seeks to hold the industry liable for its marketing practices. Some observers said that based on Prager's reasoning in Daniels, the Brown case seems in jeopardy too.