U.S. Supreme Court unanimously sends
"Lights" cigarette lawsuit
back to state court
Added June 14, 2007
Note: Background information on this lawsuit at http://www.tobacco.neu.edu
Note: Philip Morris/Altria shareholder meetings reported on for 2007
and earlier years in this web site.
articles are excerpted below from:
Journal of the Greater Triad Area [North Carolina]
EXCERPTS from Arkansas
Democrat-Gazette [Little Rock,
Arkansas], June 12, 2007, headlined, "U.S.
justices return cigarette suit to state court", writer John Lynch.
regulated by federal statute do not deserve special protection from
lawsuits filed in state court, the U.S. Supreme Court ruled Monday in a
involving two women's efforts to sue a cigarette manufacturer in
Pulaski County. The unanimous decision ends a
four-year battle over where the lawsuit by Lisa Watson
Lawson should be decided: the Pulaski County Courthouse before Circuit
Timothy Fox or the federal courts building in downtown Little Rock
before U.S. District Judge G.
Philip Morris Cos.
claimed that the 2003 classaction lawsuit over "light" cigarettes
belonged in federal court. The cigarette maker argued that by complying
regulations for making and marketing cigarettes, the company acts on
the government and therefore deserves the protections afforded to
employees. Eisele and the 8th U.S. Circuit Court of Appeals have
But in a unanimous decision written by
Justice Stephen Breyer, the nation's
highest court rejected those findings, ruling that state court is the
appropriate venue. Philip Morris, now
a division of Altria
Group Inc ., does not acquire the standing of a representative of a
agency just because a federal agency requires its products to be
court ruled. The nine justices heard oral arguments in the case in
"A highly regulated firm cannot find a
statutory basis for removal [from
state court] in the fact of federal regulation alone," Breyer wrote in
14-page decision released Monday. "A private firm's compliance (or
noncompliance) with federal laws, rules and regulations does not by
within the scope of the statutory phrase `acting under' a federal
And that is so even if the regulation is highly detailed and even if
private firm's activities are heavily supervised and monitored." The
decision reaches beyond tobacco
litigation, says tobacco
opponent Edward Sweda, senior attorney for the Tobacco
Liability Project at Northeastern University in Boston who has been
following the case closely. He said plaintiffs in state cases
forced to try their claims in federal court are at a disadvantage
federal judges are not as familiar with state statutes as state judges,
said. Plaintiffs who lose in federal court also have fewer avenues of
than they would in state court, he said.
"It absolutely would have decimated
the ability of consumers all over the
country to use their state consumer-protection statutes to seek relief
have been victims of ... improper conduct by a large corporation,
invariably any large corporations would have been regulated by the
government," he said. "Today's unanimous opinion is terrific news for
the Arkansas plaintiffs ... since it has reversed the 8th Circuit's
historically inaccurate opinion." Breyer acknowledged the impact of the
decision in Monday's ruling, noting that if the cigarette maker was
other private companies could bypass state courts.
"A contrary determination would expand
the scope of the statute
considerably, potentially bringing within its scope state-court actions
against private firms in many highly regulated industries," he wrote,
specifically referring to pesticide manufacturers.
Marcus Bozeman and Darrin Williams of Little Rock say they had been
justices would take their side, even after losing in lower courts.
"Although we did not expect it, we are
very happy with it," Bozeman said.
Having spent four years arguing where
the case should be tried, the attorneys
were particularly gratified by the unanimous nature of the high court's
"If there was anything surprising by
this ruling, it was 9-0,"
Williams said, noting the attorneys general from 30 states, including
Arkansas , supported the
lawyers' efforts to get a hearing before the Supreme Court. "Every
of the Supreme Court agrees with our position, which I think is very
Only a very, very small number of cases are ever granted [a hearing],
those ... a minor number of cases are cited 9-0." Altria,
news release, shrugged off the decision, saying the ruling does not
merits of the case.
"We have compelling defenses to the Watson
have been advanced in state courts," said William S. Ohlemeyer, Philip
vice president and associate general counsel, saying the decision will
minimal effect on similar lawsuits involving "light" cigarettes or
any other class-actions filed against the company.
Lawson, who smoked about a pack of
Marlboro Lights a day for seven years, filed
suit in April 2003, claiming the company violated the Arkansas
Practices Act in marketing its Marlboro Lights and Cambridge Lights,
the cigarettes were more dangerous than the company advertised. Watson,
about 1 1/2-half packs of Marlboro Lights daily for about six years
lawsuit two weeks later.
Philip Morris had
the case transferred to federal court in July 2003, claiming that since
company tested and marketed its cigarette "Lights" under the Federal
Trade Commission's "direct and comprehensive control," a federal
court should hear the case. The company argued that the regulatory
should earn the company the protection of the "Federal Officer Removal
Act," which was designed to protect federal officials from potentially
hostile state courts.
Private contractors have successfully
argued to have their state cases transferred
from state to federal court, but Breyer's ruling made a clear
between businesses when they work for the federal government and when
regulated by the government.
"The private contractor ... is helping
the government to produce an item
that it needs," the justice wrote. "The assistance that private
contractors provide federal officers goes beyond simple compliance with
and helps officers fulfill other basic governmental tasks."
EXCERPTS from The Business Journal of the Greater Triad
[North Carolina: Greensboro, Winston-Salem], June 12, 2007,
"Analyst: Supreme Court ruling
will make defense harder in cigarette
'lights' cases", writer not given.
Supreme Court decision handed down Monday [June 11, 2007] likely will
make it tougher for cigarette makers to defend themselves from lawsuits
the marketing of "light" cigarettes, according to a Wall Street
Bonnie Herzog, who follows tobacco companies for
Citigroup, wrote in a note to investors Monday that the case cut off
defense tobacco companies were using to defend themselves against
cases over light cigarettes.
Plaintiffs in those cases, which affect Philip Morris
and other big tobacco companies, including Winston-Salem-based Reynolds
American Inc. (NYSE: RAI), have argued that they were misled into
that light cigarettes weren't as unhealthy as regular cigarettes.
Big Tobacco had been trying to get lights cases into the
federal courts because they are perceived to be friendlier to corporate
defendants than state courts.
There are more than a dozen
class-action cases pending
against tobacco companies over light cigarettes, Herzog wrote.
EXCERPTS from The Richmond [Virginia] Times-Dispatch,
June 12, 2007, headlined, "Philip
Morris loses its bid to move suit; Supreme Court's ruling keeps Ark.
case in venue less favorable to firm", writer John Reid
Blackwell, contributions from the Associated Press.
Supreme Court ruling yesterday that went against Philip Morris USA
little impact on light-cigarette lawsuits and other class actions, the
legal experts said the ruling -- which forbids the company from moving
filed in an Arkansas state court to federal court -- takes away one
avenue that the company could
use to defend itself in similar cases.
lawsuit, Watson v. Philip Morris, was filed by consumers who smoked
Lights and Cambridge Lights. The suit claimed that Henrico County-based
Morris violated the Arkansas Deceptive Trade Practices Act by
marketing "light" cigarettes as having less tar and nicotine.
companies and other defendants sued in class-action cases see the
system as a more desirable place for such lawsuits because of the
large damages awards from state court juries.
ruling "may mean that more cases will stay in state court, which is a
favorable venue for the company," said Carl Tobias, a law professor at
the University of Richmond .
Morris, a part of Altria Group Inc., said it could move the case to
court in Little Rock , Ark. , because the company was regulated by
the Federal Trade Commission.
Supreme Court said the fact that a federal agency directs a company's
activities does not permit moving the case to federal court.
this ruling does make it easier for plaintiff attorneys to bring these
keep them in state court and try to get them to trial," said Edward L.
Sweda Jr., senior attorney for the Tobacco Products Liability Project
lawsuit contends the company designed the cigarettes to register lower
of tar and nicotine in government-approved testing than would be
the consuming public.
EXCERPTS from Financial Times, June 11, 2007,
headlined, "Blow to Philip Morris in
writer Patti Waldmeir.
The US Supreme
Court on Monday reinvigorated some tobacco lawsuits
when it refused to allow Philip Morris to fight cases involving
marketing of “light” cigarettes in federal court, rather than in
more plaintiff-friendly state trials.
ruled unanimously that Philip Morris, the big US cigarette maker, could
not transfer a classaction
lawsuit alleging deceptive marketing of light cigarettes from the
Arkansas state court,
where it was filed, to federal court. US companies often prefer to
class-action lawsuits in federal court, which they see as fairer to
argued that the case should be shifted to federal court
because the Federal Trade Commission, the US consumer watchdog, closely
supervises testing of cigarettes.
“We can find
nothing that warrants treating the FTC/Philip Morris
relationship as distinct from the usual regulator/regulated
relationship,” Justice Stephen Breyer wrote for the court. Ruling the
other way could have let companies in a wide range of highly regulated
industries escape from state courts, against the wishes of Congress, he
could affect all “lights” cases alleging
deceptive marketing, including those involving other tobacco companies.
have filed similar suits in 20 states.
who brought the case said Philip Morris engaged in
unfair business practices in marketing its lights brands. The case
centered on a
federal law that says a “person acting under a federal officer” can
shift lawsuits to federal court. Philip Morris argued that the tobacco
companies were “acting under a federal officer” by testing
cigarettes for tar and nicotine.
argument had been accepted, it would have “severely
damaged the ability of consumers harmed by corporate fraud to achieve a
in state court”, said Edward Sweda, senior attorney for the Tobacco
Products Liability Project at Northeastern University School of Law.
EXCERPTS from Market Watch, June 11, 2007,
headlined, "Supreme Court rules
against Philip Morris; Lawsuit filed against tobacco company cannot
move to federal court". writer William Spain.
U.S. Supreme Court handed Philip Morris a defeat on Monday, ruling
unanimously that an Arkansas class-action lawsuit against the tobacco
titan does not belong in federal court.
reverses a lower court ruling that would have taken the case -- a
lawsuit charging deceptive marketing practices of "light" cigarettes --
out of Arkansas state courts because the products are regulated by the
a unit of Altria Group, had
argued that the Federal Trade Commission was a "federal officer" and
because there was an agreement in place for uniform standards and tests
on light smokes with it, the case qualified for federal court under a
Stephen Breyer, writing for the court, disagreed:
"The fact that
a federal agency directs, supervises and monitors a company's
activities in considerable detail does not bring that company within
[the scope of the removal statute]," he said.
determination, he continued "would expand the statute's scope
considerably, potentially bringing within it state-court actions filed
against private firms in many highly regulated industries. Nothing in
the statute's language, history or purpose indicates a congressional
intent to do so."
Watson et al v. Philip Morris charged that the company violated state
laws against unfair and deceptive business practices, specifically with
its advertisements and packaging on light brands. The suit alleged that
the company manipulated cigarette design and used other techniques that
caused its cigarettes to register lower levels of tar and nicotine on
an industry standard test than smokers would actually get.
shrugged off Monday's decision, saying it does "not negatively affect
the ultimate outcome" of the case or similar cases around the country.
But at least
one anti-tobacco group hailed the ruling.
unanimous opinion is terrific news for the Arkansas plaintiffs in the
Watson case, since it has reversed an overbroad and historically
inaccurate opinion," said Edward Sweda, senior attorney for the Tobacco
Products Liability Project.
He said the
decision will also "benefit plaintiffs and their attorneys in other
'light' cigarette litigation since Philip Morris' attempt to evade
state law simply by virtue of the fact that it is regulated has
EXCERPTS from Bloomberg, June 11, 2007,
Morris Loses U.S. High Court Case on Suit Site", writer Greg Stohr.
The U.S. Supreme
Court gave a boost to smoker lawsuits that claim tobacco companies
deceptively marketed "light" cigarettes, ruling that Altria Group
Inc.'s Philip Morris USA can't shift a case into federal court.
unanimously said Arkansas state courts should handle the suit by
smokers Lisa Watson and Loretta Lawson, not the federal tribunals that
corporate defendants tend to prefer. Philip Morris argued that it could
shift the case because the Federal Trade Commission closely supervised
testing of the cigarettes.
"We can find
nothing that warrants treating the FTC/Philip Morris relationship as
distinct from the usual regulator/regulated relationship," Justice
Stephen Breyer wrote for the court in Washington.
which overturns a lower court decision, may affect several lawsuits
against Philip Morris and Reynolds American Inc.'s R.J. Reynolds
Tobacco unit, including Missouri and Minnesota cases in which the issue
Shares of New
York-based Altria were unchanged at $70.30 at 1:43 p.m. in trading on
the New York Stock Exchange. Reynolds shares rose 27 cents to $62.80.
investors and analysts had been anticipating a loss at the Supreme
Court. During arguments in April, the justices signaled they probably
would rule against Philip Morris.
Lawson accuse Philip Morris, the world's largest tobacco company, of
designing its Cambridge Lights and Marlboro Lights brands so they would
register artificially low tar and nicotine levels on tests mandated by
the U.S. Federal Trade Commission.
"This is a
major setback for the industry,'' said Edward L. Sweda Jr., a lawyer at
the anti-smoking Tobacco Products Liability Project in Boston . He said
company officials and analysts had touted the potential impact of the
lower court ruling overturned today by the Supreme Court.
The 8th U.S.
Circuit Court of Appeals in St. Louis ruled in 2005 that Philip Morris
could move the suit. The Bush administration backed the smokers at the
The issue before
the high court concerned a federal statute that says a "person acting
under a federal officer" can shift lawsuits to federal court. Philip
Morris contended that tobacco companies meet that definition because
they are doing the government's bidding by testing cigarettes for tar
and nicotine at an industry-financed lab.
rejected that contention, saying the companies were simply abiding by a
government requirement so that they could sell their products.
"We have found
no evidence of any delegation of legal authority from the FTC to the
industry association to undertake testing on the government agency's
behalf," Breyer said.
though procedural, may also have substantive implications. The
companies are contending that the government's oversight of the testing
program shields them from suit over light cigarettes in any court.
The high court
didn't directly address that question, though Breyer mentioned the
FTC's "detailed rules" about advertising, testing and reporting.
investors' note, Morgan Stanley analyst David Adelman said that
characterization "should be moderately helpful to the industry's
ongoing defense." Adelman rates Altria shares as "overweight."
anti-tobacco lawyer, called that characterization "pure spin and
lawsuits are about fraudulent marketing and other practices that the
companies engaged in," he said. "They voluntarily engaged in those
practices, and they most certainly were not just following orders from
some government agency."
EXCERPTS from Reuters, June 11, 2007. headlined, "Top court rules against Philip Morris",
writer not given, but note that "Additional reporting by Brad Dorfman
U.S. Supreme Court ruled on Monday that
a class-action lawsuit against Philip Morris USA, a unit of Altria
should not be decided in federal court, handing a defeat to the tobacco
unanimously reversed a ruling that
allowed Philip Morris to transfer the lawsuit to federal court from the
Arkansas state court
where it initially was filed.
At issue is a
suit filed against Philip Morris by two Arkansas women alleging that
the company engaged in unfair business practices in
marketing its low-tar Cambridge Lights and Marlboro Lights cigarette
facing class-action lawsuits typically
prefer to have those cases litigated in federal courts, where they
better than in state courts.
succeeded in having the case moved to
federal court, saying it was appropriate because cigarette
been regulated by a U.S. agency -- the Federal Trade Commission.
The move was
subsequently upheld by a federal appeals
court in St. Louis .
The U.S. Justice Department told the Supreme Court that the appeals
ruling should be overturned.
Court agreed and reversed the ruling in
an opinion written by Justice Stephen Breyer.
the fact that a federal regulatory agency
directs, supervises and monitors a company's activities in considerable
does not bring that company under the scope of the law that permits
Norton, a portfolio manager whose Vice Fund
counts Altria as its largest holding, said the ruling was expected and
have no have a big impact on the stock.
anti-tobacco lawyer Edward Sweda said the ruling
could help plaintiffs in similar lawsuits filed in more than 20 states.
senior attorney for the Tobacco Products Liability Project at
University School of Law in Boston,
said the unanimous ruling "shows that Philip Morris has been
the regulatory requirements of the federal trade commission."
14 June 2007