Jump to full article: Law.com, 2008-04-04
Author: Mark Hamblett New York Law Journal
Intro: 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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