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Does Big Tobacco engage in deception when it markets so-called "light" and "low tar" cigarettes?
The U.S. Supreme Court didn't answer that question with a ruling yesterday, but it did give consumers from Maine a surprising go-ahead to make the argument. The unusually consumer-friendly ruling was a setback for tobacco companies from a court that recently has limited state regulation of business in favor of federal power. . . .
The decision forces tobacco companies to defend dozens of suits filed by smokers across the country.
The sales pitches for light cigarettes are based on creating a false impression that they're "healthier." This ruling gives consumers another chance to hold cigarette manufacturers accountable for their deadly products.
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Writing for the majority, Justice John Paul Stevens said the Maine state law forbids companies from making fraudulent statements. He said it created a broader duty for companies that extended beyond actions merely related to "smoking and health" that are regulated by federal law.
"We conclude ... that the Labeling Act does not pre-empt state-law claims like respondents' that are predicated on a duty not to deceive," Justice Stevens writes.
His decision was joined by Justices Anthony Kennedy, David Souter, Ruth Bader Ginsburg, and Stephen Breyer.
In a dissent, Justice Clarence Thomas said the court should have enforced preemption in the case, and created a clear test for the lower courts. In Justice Thomas' view, the Maine smokers' lawsuit imposed obligations tied to the "effect of smoking upon health," and thus must be preempted.
"With this suit, [the smokers] seek to require the cigarette manufacturers to provide additional warnings ... or to prohibit them from selling these products with the 'light' or 'low-tar' descriptors," Justice Thomas writes. "This is exactly the type of lawsuit that is pre-empted by the Labeling Act."
Smokers can sue over the marketing of “light” cigarettes, the U.S. Supreme Court ruled in a decision that bolsters billions of dollars in claims against Altria Group Inc.’s Philip Morris USA and other tobacco companies.
The justices, voting 5-4, said a federal labeling law doesn’t shield cigarette makers from suits accusing them of deceiving consumers by describing cigarettes as “light” or “low tar.” The high court also said federal oversight of cigarette testing didn’t preclude those lawsuits.
Light-cigarette suits represent probably the most significant legal threat facing the tobacco industry . . .
Philip Morris also argued that lawsuits would interfere with the Federal Trade Commission’s oversight of cigarette testing and its policy of encouraging companies to market low-tar brands.
Stevens rejected that argument, saying the FTC “has no longstanding policy authorizing collateral representations” based on the testing method used by cigarette makers. Thomas didn’t address that question in his dissent.
By way of full disclosure, I am a lawyer who represents consumers and have been involved in cases against tobacco giant Philip Morris for the same problem. For that reason, I am not unbiased about these issues.
It's a good result for consumers for the simple reason that state law fraud claims provide an important check on corporate conduct.
Tobacco firms can be sued under state law for deceptive advertising of "light" cigarettes, the U.S. Supreme Court ruled on Monday in a decision that could affect some 40 suits around the country seeking billions of dollars.
By a 5-4 vote, the high court ruled against Altria Group Inc.'s Philip Morris USA unit and held the Federal Cigarette Labeling and Advertising Act does not bar or preempt such state court lawsuits. . . .
Vice Fund portfolio manager Charles Norton said the ruling removed one defense used in cases involving light cigarettes, but does not signal a shift in tobacco litigation.
"In spite of today's ruling, I expect the future of (light cigarette) litigation to continue to move in the direction that it has in recent years, in favor of the industry," he said.
A related case is before a U.S. appeals court.
In October, a three-judge panel in Washington, D.C., heard arguments on whether a lower court erred in finding tobacco companies conspired to lie about the dangers of smoking.
Companies, including Philip Morris USA, were found to have violated federal racketeering laws in 2006 by a U.S. District judge, who ruled the firms could no longer use expressions such as "low tar" or light" in their cigarette marketing.
The 1965 law established federal health warning labeling requirements for cigarettes. It also mandated that no “requirement or prohibition based on smoking and health shall be imposed under state law” regarding advertising or promotion of cigarettes packaged with the requisite labeling.
That provision, the court ruled, did not pre-empt a fraud claim by the Maine smokers because such a claim is not based on smoking and health.
“We conclude . . . that the Labeling Act does not pre-empt state-law claims like respondents’ that are predicated on the duty not to deceive,” Justice John Paul Stevens wrote in the court’s opinion.
Everyone - with the obvious exception of the tobacco companies - should be happy with this decision. It only makes sense for the states to act to enforce their own laws on marketing. The rules in Massachusetts differ from the rules in, say, Mississippi. And the federal settlement didn't negate that fact.
Monday's decision will doubtless create an unruly mess, a thicket of lawsuits that may well drag on not quite into infinity. So be it. It's impossible to have even a bit of sympathy for the tobacco industry, which has long been quite happy manufacturing, marketing and selling a product that, when used as intended, will ultimately kill you.
Light smokes and low-tar cigarettes are fundamentally no different, and there is every reason to believe that the tobacco companies understood this fact well - for years and years. Now the courts will get to decide whether they brushed aside those facts - to the great detriment of smokers everywhere.
Justice John Paul Stevens said those who sold products had a "duty not to deceive" the public through their advertising or marketing.
Justices Anthony M. Kennedy, David H. Souter, Ruth Bader Ginsburg and Stephen G. Breyer joined him in the case of Altria Group vs. Good.
Anti-smoking activists called the ruling a breakthrough.
"This is a real threat to the [tobacco] industry," said Edward L. Sweda Jr., counsel for the Tobacco Products Liability Project at Northeastern University in Boston. "The companies' wrongdoing is crystal-clear. They said one thing and knew full well it was not true. They have done everything possible to keep these cases from going to trial."
Sweda said class-action lawsuits were set to go forward in Massachusetts, Minnesota and Missouri.
Five years ago, a state judge in Illinois handed down a $10.1-billion fraud verdict against Philip Morris in the marketing of light cigarettes. But the Illinois Supreme Court threw out the verdict on the grounds that it was barred by the federal cigarette warning law.
It was the rule of law rejected Monday by the high court, but it was too late to revive the suit.
"This decision eliminates what has been the first line of defense for these [tobacco] companies," said Chicago lawyer George A. Zelcs, who brought the suit in Illinois.
Business lawyers had hoped the court would block all such claims.
"I'm afraid for the tobacco industry; this means it is back to the litigation drawing board," said Robin Conrad, a vice president of the U.S. Chamber of Commerce.
I'm afraid for the tobacco industryRobin Conrad, a vice president of the U.S. Chamber of Commerce, on SCOTUS' Good decision.
Lawyer Sam Lanham Jr., a partner in Bangor-based Lanham Blackwell, represented three plaintiffs Monday who have now won the right to be able to make the claim that the marketing was deliberately fraudulent and in violation of Maine consumer-protection statutes.
"I represent three plaintiffs, but they seek the class certification status from the court on behalf of every other Maine smoker who has purchased Marlboro Light and Cambridge Light cigarettes since 1971," Lanham said. "With this decision, we can move forward."
When the Supreme Court justices made their decision against Altria, the parent company of Phillip Morris, a multitude of other pending lawsuits also were given the go-ahead to pursue their cases in court.
"There are about 14 other cases like this one nationally that were pending, based on the outcome of our case," Lanham continued. "Had we lost, it would've been all over nationally."
"Today's Supreme Court decision is a victory for smokers who were tricked into smoking 'light' cigarettes by Big Tobacco. For years, tobacco companies claimed so-called 'light' and 'low-tar' cigarettes delivered less tar and nicotine--but these cigarettes can actually be more harmful for smokers. We worked hard to eliminate the flawed federal testing method that allowed Big Tobacco to deceive smokers into thinking these cigarettes were healthier. With today's decision, smokers can hold the tobacco companies accountable."
Sen. Lautenberg chaired a Senate Commerce Committee hearing on November 13, 2007 to examine the accuracy of the FTC tar and nicotine cigarette rating system, and the marketing claims of tobacco companies based on these ratings. During the hearing, Sen. Lautenberg released a 1975 Philip Morris internal document that showed that the company's own testing method revealed that smokers who switched from Marlboro to Marlboro Lights actually took in more tar from the Marlboro Lights after the switch.
Sens. Lautenberg and Olympia Snowe (R - ME) are the authors of S. 2685, a bill to prohibit the cigarette companies from using the "FTC method" for measuring tar and nicotine. The bill was approved by the Senate Commerce Committee.
"While we had hoped for a dismissal based upon federal preemption, it is important to note that the Supreme Court made no finding of liability. We continue to view these cases as manageable, and the company will assert many of the strong defenses used successfully in the past to defend against this very type of case," said Murray Garnick, Altria Client Services senior vice president and associate general counsel, speaking on behalf of Philip Morris USA.
The Court said that the plaintiffs "still must prove that [the companies'] use of 'lights' and 'lowered tar' descriptors in fact violated the state deceptive practices statute."
Barry J. Cutler, a Washington advertising lawyer and former Federal Trade Commission official, said it showed the court's reluctance to supersede state enforcement actions. "Apart from tobacco, the potential impact of the case is that it underscores a reluctance to take away the rights of state attorneys general or plaintiffs in state court," he said.
"There is a common public misconception that 'pre-emption' means that there is no room for anything but the federal standard. That can be true in some cases, but more often state laws will be allowed to the extent that they do not contradict the federal rule. In other words, if you can comply with both rules, even though the state standard is higher, it is not 'pre-empted.'"
Philip Morris: Case still 'manageable' In a statement on behalf of Philip Morris USA, Altria Senior VP Murray Garnick said the company viewed the ruling's effect as "manageable."
Light and dark
-- About ten million adults smoke cigarettes in Great Britain
-- Packs sold in Britain have to include health warnings covering 30 per cent of the front surface and 40 per cent of the back European law sets an upper limit of tar, nicotine and carbon monoxide in cigarettes. Words such as "light" or "mild" are banned as part of a brand name, unless authorised by member states
-- A study by the American Journal of Public Health found that people who smoke light cigarettes are half as likely to quit as other smokers. A third of respondents said that they smoked lights because of health concerns
Stevens said neither the Federal Cigarette Labeling Act nor the U.S. Federal Trade Commission's action in this area preempted the fraud claim under state law.
But Stevens said the court was only ruling on whether the lawsuit could go forward and not on the merits of the claims. The smokers still must prove the company's use of "light" and "lowered tar" in fact violated the state deceptive practices law, he said.
The court's four most conservative members -- Chief Justice John Roberts and Justices Antonin Scalia, Clarence Thomas and Sam Alito -- dissented.
Because liability in this case is premised on the effect of smoking on health, Justice Clarence Thomas wrote in dissent that he would hold that the state-law claims are expressly preempted by the federal cigarette labeling law.
"[The ruling] really gives a healthy shot in the arm to tobacco litigation," said Edward L. Sweda, senior attorney for the Tobacco Products Liability Project at the Northeastern University School of Law.
"The No. 1 practical effect is that cigarette smokers from Maine who brought this lawsuit will have their day in court," Sweda said. . . .
Speaking on behalf of Philip Morris USA, associate general counsel Murray Garnick said: "While we had hoped for a dismissal based upon federal pre-emption, it is important to note that the Supreme Court made no finding of liability.
"We continue to view these cases as manageable, and the company will assert many of the strong defenses used successfully in the past to defend against this very type of case," he said.
University of Richmond law professor Carl Tobias said: "It would have been very beneficial for the [cigarette] companies if they could have won this case, because I think that would have been the end of this litigation."
However, the ruling "does not mean that the plaintiffs are going to win those cases on the merits," Tobias said.
"I think the burden on the plaintiffs could be significant to prove to a jury there actually was fraud," Tobias said. "There is some variation in the states as to what you have to show in these cases."