Tobacco.org

• Tobacco Light Action Dims ($$) 

The McLaughlin decision represents another chapter in the convoluted history of tobacco mass tort litigation. In addition, the McLaughlin decision represents another landmark reversal in Weinstein's controversial history as the judicial King of Mass Torts.

The McLaughlin decision is significant in several respects. In the narrowest reading, the 2d Circuit has curtailed the utility of civil racketeering claims as a basis for classwide mass tort relief.

In a conventional application of class action principles, the court held that too many individualized issues defeated the predominance requirement for certification of a civil Racketeer Influenced and Corrupt Organizations Act (RICO) claim. The court concluded that the proposed smokers' class suffered from "an insurmountable deficit of collective legal or factual questions." McLaughlin, 2008 WL 878627, at *1.

In a broader constitutional dimension, the 2d Circuit dealt a blow to aggregate fluid-damages models for economic harms, often asserted in class litigation. The court held that the fluid recovery Weinstein approved offended the Rules Enabling Act, 28 U.S.C. 2072(b), as well as the due process clause.

Significantly, the 2d Circuit issued a sweeping policy statement that "not every wrong can have a legal remedy, at least not without causing damage to the fabric of our laws."

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COPLAND: Smoke Test for Supremes 

Later this year, the Supreme Court will hear the case of Altria Group v. Good in order to look at state lawsuits that claim that tobacco companies engage in deceptive trade practices when they advertise cigarettes as "light" or "low tar and nicotine." The case will "decide whether tobacco companies are vulnerable to state law suits arising from the claims on their labels."

The tobacco companies argue, convincingly, that such claims are preempted by the Federal Cigarette Labeling and Advertising Act of 1965. Under that law since 1967, the U.S. Federal Trade Commission has regulated cigarette packaging and advertising, including claims about tar and nicotine levels. . . .

Although Judge Weinstein inevitably will continue to attract similar cases before him, Thursday's decision does stand as a major rejection of stretching our federal anti-mob laws into lawyer-driven class actions that target legal businesses. But the state law claims proliferating around the country are based not upon RICO but often ambiguous state consumer fraud statutes. For the fate of those lawsuits, we'll have to wait until the Supreme Court speaks.

--Mr. Copland is the director of the Center for Legal Policy at the Manhattan Institute. He owns shares in Altria.

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• Lazarus: Are Courts the Right Place to Address Large-Scale Corporate Wrongdoing? 

Why the Decision Is Important - and Why the Court of Appeals Refused to Reach Out to Remedy This Wrong

The case, in which plaintiffs alleged that Big Tobacco's marketing of light cigarettes violated the civil provisions of the Racketeer Influenced and Corrupt Organizations Act (RICO), involved an estimated 60 million plaintiffs with alleged damages in the $800 billion range. It also claimed still more serious wrongdoing by the tobacco industry: The plaintiffs alleged that the tobacco companies touted light cigarettes as "lower risk," even though they knew full well that the purported health benefits were illusory, because smokers of lights would ultimately receive the same doses of tar and nicotine as smokers of regular cigarettes -- by either inhaling more deeply or smoking more cigarettes to satisfy their cravings.

U.S. District Judge Jack Weinstein, a liberal jurist once considered a leading authority on the rules of federal procedure, had written a 540-page opinion justifying class-action treatment of the plaintiffs' claims. But the three-judge Second Circuit panel that heard the case on appeal, despite recognizing the significant evidence supporting plaintiffs' allegations, nonetheless had little difficulty reversing Weinstein's ruling, and relegating light cigarette smokers to the water torture of litigating their claims against the tobacco companies on an individualized basis.

"While redressing injuries caused by the cigarette industry is 'one of the most troubling ... problems facing our nation today' ... not every wrong can have a legal remedy ... at least not without causing collateral damage to the fabric of our laws," Judge John M. Walker Jr. wrote for the Court of Appeals. .. .

Now, as we watch our financial markets struggle under the weight of questionable mortgage practices - the latest form of corporate excess - the question of how to strike the balance between over- and under-enforcement of the law becomes all the more urgent and timely.

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John M. Walker, Jr.  

John Mercer Walker, Jr. (born December 26, 1940), is a Judge of the United States Court of Appeals for the Second Circuit and a cousin of U.S. Presidents George H.W. Bush and George W. Bush. At the time of his appointment to the court in 1989, he was a United States District Judge in the U.S. District Court for the Southern District of New York. He was Chief Judge of the Second Circuit from October 1, 2000, until October 1, 2006, when he assumed senior status.

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Second Circuit Reverses Weinstein in Light Cigarette Case 

Rule 23 is not a one-way ratchet, empowering a judge to conform the law to the proof. We therefore reverse the order of the district court and decertify the class. -- Judge John Walker, Second Circuit Court of Appeals on Thursday reversing Judge Jack Weinstein's grant of class certification for "light" cigarette litigants

If you detect a faint hint of unhappiness in those lines, we're with you.

Earlier today, the Second Circuit ruled that, "given the number of questions that would remain for individual adjudication" -- such as whether a given plaintiff smoked light cigarettes for their relative health benefits, or for some other reason, such as taste -- Rule 23's 'predominance' requirement was not satisfied in the so-called light cigarette litigation . . .

Wanting to get a sense of what it feels like to defeat 50 million plaintiffs, we called up Jones Day's Ted Grossman. Grossman represented RJR and Brown & Williamson in the case, and he also argued the appeal before the Second Circuit. Grossman, in Florida on the golf links with his wife, told the Law Blog that the decision "is the product of 30 years of give and take between the district court and the Second Circuit over the individual rights of defendants to not have the diverse claims of diverse people homogenized for reasons of efficiency."

When asked whether he expects to be back in court defending individual claims of light cigarette smoker, Grossman said no. "The whole theory of these cases is trumped up. . . .

people who don't allege that they're sick and don't allege that they wouldn't have smoked. They're just alleging that they bought the wrong cigarettes." . . .

• 2nd Circuit Decertifies Light Cigarette Class 

Tobacco companies won a major victory Thursday as a federal appeals court ruled that lawsuits seeking economic damages due to their alleged deception about the relative safety of light cigarettes cannot be pursued as a class action.

Saying the "putative class action suffers from an insurmountable deficit of collective legal or factual questions," the 2nd U.S. Circuit Court of Appeals in McLaughlin v. American Tobacco Co., 06-4666-cv, reversed Eastern District Judge Jack B. Weinstein's decision to certify a class action brought under the Racketeer Influenced and Corrupt Organizations Act. . . .

Michael D. Hausfeld of Cohen, Milstein, Hausfeld & Toll in Washington D.C., who represented the plaintiffs, called the decision "wrong" and said he plans "to pursue the litigation" either through petition for rehearing en banc, petition for a writ of certiorari to the U.S. Supreme Court or through trial. . . .

Hausfeld said the court missed the point here, because the mere "possibility" of divergent reasons for buying light cigarettes ignores the primary reason for certification of a class -- that issues common to the class predominate over individual issues.

The circuit said that Weinstein adopted the so-called "fraud-on-the-market" presumption that is used in securities cases -- the idea that fraud may be established simply by a defendant's widespread dissemination of misleading information.

"But in this case, reliance is too individualized to admit of common proof," Walker said. . . .

Grossman said the circuit rebuked Weinstein when it said at the start of the opinion that "Rule 23 is not a one-way ratchet, empowering the judge to conform the law to the proof."

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Cigarette Makers Win Order Blocking $800 Billion Suit (Update5) 

ria Group Inc. and other tobacco companies won a decision blocking an $800 billion racketeering class-action lawsuit by U.S. smokers who claimed they were misled into thinking ``light'' cigarettes are safer than regular ones.

The ruling today by a federal appeals court in New York eliminates the biggest single litigation threat against the tobacco industry. Cigarette makers faced the possibility of paying as much as $800 billion under federal law that allows the judge to impose triple damages in racketeering cases.

``While redressing injuries caused by the cigarette industry is `one of the most troubling problems facing our nation today,' not every wrong can have a legal remedy,'' U.S. Circuit Judge John Walker wrote for a unanimous three-judge panel, quoting a 2000 U.S. Supreme Court decision.

The opinion reversed a 540-page ruling in 2006 by U.S. District Judge Jack Weinstein in Brooklyn, New York, granting class-action status to the case, which is known as the Schwab case after lead plaintiff Barbara Schwab.

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Federal Appellate Court Reverses Nationwide "Lights" Class 

"Philip Morris USA is pleased with today's decision and believes the court came to the right conclusion in light of the overwhelming precedent denying class certification in smokers' litigation," said Murray Garnick, Altria Client Services senior vice president and associate general counsel, speaking on behalf of PM USA.

The court, among other things, stated the following in its opinion:

*

"Plaintiffs' putative class action suffers from an insurmountable deficit of collective legal or factual questions."

*

Federal law "is not a one-way ratchet, empowering a judge to conform the law to the proof."

*

Neither of plaintiffs' theories of injury "is plausible as a matter of law."

*

Plaintiffs' theory of distribution of damages "is an impermissible affront to defendants' due process rights."

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Appeals court tosses $800 billion tobacco suit  

The U.S. Court of Appeals for the Second Circuit tossed out an $800 billion lawsuit against big tobacco on Thursday by decertifying a class of smokers who said they were deceived into believing "light" cigarettes were healthier.

The smokers had sued the tobacco companies for $800 billion in economic damages stemming from their purchase of light cigarettes, and in 2006 U.S. District Judge Jack B. Weinstein certified the class.

The group of smokers, "allegedly deceived - by defendants' marketing and branding - into believing that 'light' cigarettes were healthier than 'full-flavored' cigarettes," sued under the Racketeer Influenced and Corrupt Organization Act. . . .

Philip Morris USA noted that the ruling said the smokers' class action "suffers from an insurmountable deficit of collective legal or factual questions."

Goldman Sachs, in an analyst's note, viewed the ruling as a positive but noted "the consensus view has long been that the 2nd Circuit would overturn Judge Weinstein's certification..."

Shares in the tobacco stocks were little changed in early afternoon trade.

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• McLAUGHLIN v. PHILIP MORRIS, et. al. (PDF) 

In sum, because we find that numerous issues in this case are not susceptible to generalized proof but would require a more individualized inquiry, we conclude that the predominance requirement of Rule 23 has not been satisfied. We recognize that a court may employ Rule 23(c) (4) to certify a class as to common issues that do exist, "regardless of whether the claim as a whole satisfies Rule 23(b) (3)'s predominance requirement." In re Nassau County Strip Search Cases 461 F.3d at 227. Nevertheless, in this case, given the number of questions that would remain for individual adjudication, issue certification would not "reduce the range of issues in dispute and promote judicial economy." Robinson v Metro-N. Commuter R.R. 267 F.3d 147, 168 (2d Cir. 2001). Certifying, for example, the issue of defendants' scheme to defraud, would not materially advance the litigation because it would not dispose of larger issues such as reliance, injury, and damages. See id at 167 n.12. We therefore decline plaintiffs' request for issue certification.

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While redressing injuries caused by the cigarette industry is 'one of the most troubling . . . problems facing our Nation today', . . . not every wrong can have a legal remedy, . . . at least not without causing collateral damage to the fabric of our laws. Plaintiffs' putative class action suffers from an insurmountable deficit of collective legal or factual questions.
JOHN M. WALKER, JR., Circuit Judge, for the Appeals panel in Schwab.

R.J. Reynolds Tobacco Company Wins Appeal in 'Lights' Case 

The 2nd U.S. Circuit Court of Appeals today reversed a lower court's ruling in a "lights" class-action suit brought against cigarette makers, decertifying the nationwide class in Schwab.

In its ruling, the court stated: "Because individual issues outweigh issues susceptible to common proof, the class is not maintainable ... "

"We are certainly pleased with the court's ruling and agree with its reasoning," said Martin L. Holton III - general counsel for R.J. Reynolds Tobacco. "Numerous courts across the country have held that claims such as these simply cannot be tried as class actions."

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Suit on Light Cigarettes Is Thrown Out 

The tobacco industry scored a legal victory on Thursday when a federal appeals court threw out an $800 billion class-action lawsuit on behalf of smokers of light cigarettes who said they were misled to believe the cigarettes were safer than regular ones.

Plaintiffs' lawyers had wanted to represent potentially millions of people across the country who had smoked light cigarettes, but the court found that it was impossible to tell why smokers chose light cigarettes, so the group could not be treated as a class. Instead, smokers would have to sue individually.

"Individualized proof is needed to overcome the possibility that a member of the purported class purchased lights for some other reason than the belief that lights were a healthier alternative," the ruling said.

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• Appeals Court Rejects Class Action In 'Light' Cigarettes Marketing Case 

A federal appeals court decertified a class Thursday in a lawsuit seeking up to $800 billion against Altria Group Inc.'s Philip Morris USA and other cigarette makers over the marketing of "light" cigarettes.

In an order Thursday, the 2nd Circuit Court of Appeals reversed a lower court judge's 2006 decision certifying a class of smokers in the closely watched case. . . .

"Because individual issues outweigh issues susceptible to common proof, the class is not maintainable," the three-judge panel found Thursday. . . .

"Each plaintiff in this case could have elected to purchase light cigarettes for any number of reasons, including a preference for the taste and a feeling that smoking lights was "cool'," the circuit said.

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• Court hears arguments in "light" smokes case 

U.S. appeals court judges considered on Tuesday whether a $200 billion lawsuit against big tobacco companies by smokers of "light" cigarettes should be allowed to go ahead as a class action.

The hearing before the U.S. Court of Appeals for the Second Circuit is the latest development in a closely watched case filed by smokers, who say tobacco companies defrauded them into thinking "lights" were safer. Last year a federal judge certified the case as a class action, prompting tobacco companies to appeal.

During the hearing in Manhattan, a three-judge panel asked lawyers whether it could be presumed that smokers who bought "light" cigarettes believed they were safer or whether that had to be worked out on a case-by-case basis.

U.S. appeals court judges considered on Tuesday whether a $200 billion lawsuit against big tobacco companies by smokers of "light" cigarettes should be allowed to go ahead as a class action.

The hearing before the U.S. Court of Appeals for the Second Circuit is the latest development in a closely watched case filed by smokers, who say tobacco companies defrauded them into thinking "lights" were safer. Last year a federal judge certified the case as a class action, prompting tobacco companies to appeal.

During the hearing in Manhattan, a three-judge panel asked lawyers whether it could be presumed that smokers who bought "light" cigarettes believed they were safer or whether that had to be worked out on a case-by-case basis.

The judges questioned lawyers about issues such as whether smokers chose "lights" for reasons like taste, and when did smokers actually know about how health risks of smoking lights, compared with smoking regular cigarettes.

What did the individual consumer know, Circuit Judge John Walker said, adding, "That's the big problem here."

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• NY Panel Eyes Light Cigarette Class Case 

A federal appeals court gave a rough reception Tuesday to arguments that tobacco companies owe up to $200 billion to tens of millions of smokers for suggesting over the last three decades that light cigarettes might be less harmful than regular cigarettes.

The three-judge panel of the 2nd U.S. Circuit Court of Appeals has been asked to decide whether to let stand a ruling last summer . . .

Two of the three judges repeatedly expressed doubts about the class action status of the lawsuit as they questioned smokers' attorney Michael D. Hausfeld.

Judge John Walker said he saw a problem in that each smoker would have a different perception of how the tobacco companies marketed the cigarettes. He also said he doubted that the smokers considered health their primary concern since they were deciding to smoke anyway.

"These are all individual decisions," he said.

He also said he believed the statute of limitations may have expired before the lawsuit was filed.

Judge Ralph Winter said he doubted that tobacco companies could convince smokers that light cigarettes were healthier cigarettes with less tar and nicotine because each box still contained a health warning.

"It was a mixed message," he said.

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