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An operation that offered "free trials" of its herbal products, including smoking cessation patches, has agreed to halt its allegedly deceptive practices, pending trial. The Federal Trade Commission sued, alleging that the trials weren't free, the patches didn't work as claimed, and the operation was illegally debiting consumers' bank accounts without their authorization. The defendants have now agreed to abide by a federal court order that bars them from making deceptive claims, restricts their ability to dissipate assets, requires them to preserve records and other evidence, and account for the money they made from their venture.
According to the FTC, NextClick Media operates several Web sites that offer "free" 10- day trials for their products, including herbal stop-smoking patches called "Nicocure," "Stop Smoking 180," and "Zero Nicotine."
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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.
The U.S. Supreme Court refused on Monday to consider a lawsuit that alleged tobacco companies turned minors into smokers by targeting them with cigarette advertising. The California Supreme Court ruled against the smokers last August, saying a federal law on cigarette advertising and the companies' First Amendment rights to commercial speech
allowed the marketing campaigns. At issue is whether the Federal Cigarette Labeling and Advertising Act pre-empts California law. The federal law confirms the authority of the Federal Trade Commission to regulate unfair or deceptive practices in cigarette advertising.
Latest Major Action: 3/3/2008 Referred to Senate committee.
Status: Read twice and referred to the Committee on Commerce, Science, and Transportation.
(1) Cigarette manufacturers have, through the use of words, graphics, and color, sold, distributed, and falsely marketed brands of cigarettes to consumers as `light', `low-tar', `ultra light', `mild', `natural', and `low-nicotine', implying that the cigarettes are less harmful than other brands of cigarettes.
(2) Many smokers switch to brands of cigarettes marketed as `low-tar' or `light' out of concern for their health, believing them to be less risky or a step toward quitting.
(3) Recent studies have demonstrated that the use of cigarettes described in paragraph (1) have not resulted in any meaningful reduction of disease.
(4) In 2000, the Federal Trade Commission issued a consumer alert warning smokers that `cigarette tar and nicotine ratings can't predict the amount of tar and nicotine [a person] get[s] from any particular cigarette'.
(5) The National Cancer Institute has concluded that the marketing of cigarettes described in paragraph (1) as having lower delivery of tar and nicotine is deceptive to consumers.
(6) The marketing of one brand of cigarettes as less harmful than another brand of cigarettes when in fact there are no reduced risks is a serious enough threat to public health and welfare that there is a compelling governmental interest in ensuring that statements, claims, or other representations about cigarettes are truthful and not deceptive.
Sens. Frank R. Lautenberg (D-NJ) and Olympia J. Snowe (R-ME) today introduced legislation to prohibit tobacco companies from using a Federal Trade Commission (FTC) cigarette testing method to market their cigarettes as "light" or "low-tar."
"Tobacco companies need to be honest with smokers about tar and nicotine exposure. It is clear tobacco companies have been gaming the FTC cigarette testing method to deceive smokers for years. Our bill would make sure tobacco companies can no longer use this system to falsely market cigarettes," said Sen. Lautenberg.
Sen. Snowe said, "Over the years, smokers trying desperately to quit have been drawn to products labeled by tobacco companies as 'low tar' and 'low nicotine' as a safer alternative when in fact studies have proven that this isn't the case. This legislation ends the pretense that smoking certain types of cigarettes reduces risk. There is no safe cigarette."
In November, Sen. Lautenberg chaired a Senate Commerce Committee hearing to examine the accuracy of the FTC cigarette testing system, and the marketing claims of tobacco companies based on this system. The New Jersey Senator uncovered a lengthy history of false and deceptive cigarette ratings and marketing methods used by the tobacco industry based on this inaccurate system. Altria (Philip Morris) and R.J. Reynolds were called to the November hearing but refused to attend.
At the hearing, the FTC raised concerns about its testing methods and admitted that its ratings tend to be relatively poor predictors of tar and nicotine exposure, noting how machine-measured tar and nicotine ratings are not an accurate reflection of tar and nicotine intake. A document released at the hearing showed that the tobacco industry had knowledge of the inaccuracy of the ratings since the 1970s.
The Supreme Court sided with business in two cases Wednesday that limit state lawsuits against medical device manufacturers and invalidate Maine's regulations of package delivery companies.
The court denied business groups a third victory, however, in ruling that retirement plan participants could sue to recover losses.
The two favorable outcomes for business relied on federal laws that the court said pre-empt state action.
Meir Feder, a New York appeals court specialist, says the decisions are part of a trend that generally has limited the ability of individuals to sue businesses.
"There is a lot of skepticism by the court about the benefit of allowing private civil lawsuits against companies and a lot of concern about the downsides of litigation — deterring investment and raising costs," Feder said. . . .
Maine's law requires delivery companies to intercept packages from unlicensed tobacco sellers and to verify the age of buyers. This requirement hits delivery companies with huge additional costs, the industry said.
Wednesday's ruling could enable the industry to argue that similar laws in other states are invalid. The decision could clear the way for companies to challenge an aggressive campaign by New York that led the industry's biggest players to stop shipping cigarettes directly to consumers from illegal Internet sellers.
The fate of billions of dollars in potential lawsuit damages awards against Big Tobacco over "light cigarettes" now lies with the U.S. Supreme Court.
The USSC agreed last week to review a federal appeals court ruling that a class action fraud suit (Altria v. Good, 07-562) brought by smokers in Maine against Altria Group's Philip Morris USA (PMUSA) could proceed. Plaintiffs claim Philip Morris falsely advertised light cigarettes as containing less tar and nicotine.
More than 30 such suits against Big Tobacco are currently pending in courts around the country, reports note. A federal class action suit pending in New York that claims Big Tobacco violated anti-racketeering laws in promoting light cigarettes could contain up to 60 million smokers, AP reported.
The nation’s high court will not rule on the underlying merits of the case, Bangor attorney Samuel Lanham, who represents the plaintiffs, said Monday. Instead, the court will consider the question of pre-emption — a legal doctrine holding that federal laws take precedence over some state laws.
Lanham’s clients, three Maine residents who each smoked light cigarettes for more than 15 years, sued Philip Morris USA Inc., and its parent company, Altria Group Inc., in August 2005 under the Maine Unfair Trade Practice Act.
"What’s exciting is that this is an opportunity for Maine people to potentially have a voice at that level," Lanham said Monday. "As their attorney, I can’t lose sight of the fact that the plaintiffs chose to smoke light cigarettes because they believed light cigarettes offered lower tar and nicotine.
"It’s exciting for them to have the opportunity for their measure of justice," he continued. "It’s discouraging this is about their right to get to the merits of the case."
-- On Friday, January 18, 2008, the United States Supreme Court granted Writs of Certiorari in the case of Altria Group, Inc., et al v. Stephanie Good, Case No. 07- 562, to determine whether the nation's largest cigarette producer, Philip Morris, should be shielded from liability in connection with its representation that Marlboro Lights are lower in tar and nicotine, and in its use of the "Lights" descriptor. In their U.S. Supreme Court certiorari brief, the Plaintiffs emphasized, "For over 30 years, Philip Morris falsely reported on its cigarette packages that consumers would receive lower amounts of tar and nicotine from Marlboro Lights than from regular Marlboro cigarettes." . . .
The lead counsel for the class representatives is Gerard Mantese, an attorney at Mantese and Rossman, P.C. in Troy, Michigan. He commented, "Our position is supported by the U.S. Supreme Court ruling in Cipollone v. Liggitt Group, where the Court held that when tobacco companies affirmatively lie, they can be sued for fraud in state court."
Mr. Mantese added, "Nothing in the federal cigarette labeling act takes away the historic power of the states to hold tobacco companies accountable for fraud. This state power is rooted in the Constitution itself and the power of the states to protect its citizens."
On Friday, August 31, 2007, the First Circuit Court of Appeals reinstated a class action lawsuit brought by Maine residents against Philip Morris by unanimously rejecting Philip Morris' argument that the claims were preempted by federal law. The case challenges the cigarette company's representations that certain brands of its cigarettes are "light" or have "lowered tar and nicotine," alleging that Philip Morris, USA, Inc., and its parent company, Altria Group, Inc., violated Maine Unfair Trade Practices laws by engaging in unfair and deceptive acts or practices. The plaintiffs allege that the so-called "light" cigarettes are deceptively designed and marketed to the public, and that a smoker consumes the same quantities of tar and nicotine from light cigarettes as from full-flavored, or "regular," ones.
In what could turn out to be a shield from massive lawsuits over the marketing techniques used for 'light' cigarettes, the US Supreme Court has accepted to hear arguments from cigarette maker Altria Philip Morris, USA.
Altria Philip Morris, USA, is the biggest cigarette manufacturer in the United States. A lower court had decided that the company should face claims made by a smoker from Maine that it depicted 'light' cigarettes as safer than non-light cigarettes. Philip Morris says that according to federal law the suit cannot occur. Justices from the Supreme Court say they will review the lower court decision. . . .
Personal Observation by the Editor of Medical News Today, Christian Nordqvist
I have not smoked a cigarette since midnight, 31st December, 2007. Nineteen days so far cigarette-free!! I run on a treadmill (running machine) four times a week for 30 minutes, . . .
I have been running for over two years, so the improved pulse could not have been due to a recent fitness drive - the rapid improvement in my pulse is due to my not smoking. This will be my motivator, to check my pulse every week. I have tried to quit many times - I hope I will never smoke again.
The Supreme Court’s already substantial investment in defining the boundary between federal regulation and state tort law grew even bigger on Friday. The justices added two new cases to their docket on drug and cigarette labeling requirements.
In each case, as in four others the court has already agreed to decide in the current term, the question is one of federal pre-emption. The cases offer variations of a common question: if a product meets federal standards, can the manufacturer be liable for damages under state law for injuries suffered by consumers? . . .
The proliferation of pre-emption cases on the court’s docket in part reflects the considerable turmoil in the lower courts over the complex issues involved. It also reflects a concerted effort by the business community to push for federal pre-emption as a shield against state courts.
The United States Chamber of Commerce filed a vigorously worded brief in the cigarette case that the court accepted Friday, emphasizing for the justices the “jurisprudential gulf” that separates various lower court rulings on whether federally approved or required product labels should be given pre-emptive effect against state tort liability.
Referring to the lower court’s ruling in the cigarette case, the chamber’s brief said that “if allowed to stand, the First Circuit’s approach would Balkanize cigarette labeling, advertising, and promotion into a state-by-state endeavor,” adding that “it is difficult to imagine a more powerful blow to the interest of nationwide uniformity and consistency.”
The plaintiffs’ brief to the court emphasized the factual allegations of their case: that Philip Morris knew from its own research that based on actual smoking habits, smokers received the same tar and nicotine from “light” cigarettes as from regular brands, but that the company kept this from the F.T.C.
The clash may determine the fate of more than 30 similar lawsuits around the country against Philip Morris, Reynolds American Inc.'s R.J. Reynolds Tobacco Co. and other cigarette makers. An Illinois suit at one point threatened Philip Morris with a $10.1 billion award before it was overturned.
``These staggering stakes provide a compelling reason for this court to resolve the question,'' Philip Morris argued in its petition seeking Supreme Court review.
The high court's decision to hear the case suggests it will rule in favor of the tobacco industry, Morgan Stanley analyst David Adelman said in an investors' note. That probably would mark ``the death knell of the remaining lights class-action cases,'' wrote Adelman, who rates Altria shares ``overweight.'' . . .
The smokers argue that the 1992 ruling, known as Cipollone v. Liggett Group, permits suits that accuse tobacco companies of violating generally applicable laws, such as those that bar companies from deceiving consumers.
``Congress did not intend to give the tobacco companies a free pass to violate state laws that are promulgated pursuant to traditional state police powers and are binding on all other commercial actors,'' the consumers argued.
Philip Morris contends the Cipollone decision allows those types of suits only if they claim that cigarette makers lied about their products. The company says it didn't lie and simply used terms that had been endorsed by the Federal Trade Commission, the agency that oversees cigarette testing.
The smokers ``do not allege that PMUSA's tar and nicotine descriptors are inherently false and do not dispute that they provide an accurate shorthand means of conveying tar and nicotine testing results to consumers,'' the cigarette maker argued.
he Supreme Court agreed Friday to a cigarette maker's request to decide whether tobacco companies can be sued under state law for allegedly deceptive advertising of "light" cigarettes.
The tobacco industry is trying to head off a wave of state-based challenges regarding the light cigarettes, even as it is appealing a federal judge's order to stop marketing cigarettes as "low tar," "light," "ultra light" or "mild" because they mislead consumers.
The issue before the justices is whether state laws against unfair marketing practices may be used in suits against the tobacco companies or whether federal law bars such lawsuits. The Federal Cigarette Labeling and Advertising Act says states can't impose any requirements on the advertising or promotion of cigarettes.