Tobacco Class Action Defense Cases-Good v. Altria Group: First Circuit Holds That Class Action Claims Challenging “Light” And “Low Tar” Labels Not Preempted By Federal Law And Reverses Dismissal Of Class Action

Sep 10, 2007 | By: Michael J. Hassen

District Court Erred in Granting Defense Motion to Dismiss Class Action Challenging Advertising of “Light” and “Low Tar” as Expressly Preempted by the Federal Cigarette Labeling and Advertising Act (FCLAA) First Circuit Holds

Plaintiffs filed a class action against Philip Morris and others violations of the state’s unfair and deceptive business practices statutes arising out of its design, marketing and sale of “light” and “low tar” cigarettes, which plaintiffs argued suggested that they were “safer” – i.e., lower in tar and nicotine – than regular cigarettes. Good v. Altria Group, Inc., ___ F.3d ___, Slip Opn., at 2-3 (1st Cir. August 31, 2007). Defense attorneys moved the federal court for summary judgment on the ground that the claims in the class action complaint were preempted by the Federal Cigarette Labeling and Advertising Act (FCLAA), id., at 2. The district court agreed the dismissed the class action, but the First Circuit reversed, concluding that the class action claims were not preempted.

Plaintiffs alleged that they had smoked for 15 years. Good, at 2. The class action apparently did not contest that under the “Cambridge Filter Method” test conducted using a machine that “smoked” cigarettes and collected tar and nicotine for weighing, less tar and nicotine was drawn into the filter using “light” or “low tar” cigarettes. Id., at 3. Rather, plaintiffs alleged that a smoker “engages in unconscious behavior that essentially negate” the benefits sought to be achieved by the cigarette filter design, id. The class action claimed that defendants knew of this “compensation” effect yet marketed “light” cigarettes with an intent to deceive smokers into believing that the cigarettes were less harmful, id., at 4. Defense attorneys argued that the FCLAA expressly preempted the class action claims, id., at 5. Alternatively, the defense argued that the class action claims were implicitly preempted by “the efforts of Congress and the [Federal Trade Commission] for 40 years to implement to a national, uniform policy of informing the public about the health risks of smoking,” id. Finally, the defense argued that the state law claims in the class action complaint, brought under the Maine Unfair Trade Practices Act, id. The thrust of Philip Morris’ argument was the FTC’s “comprehensive, nationwide program regulating the disclosure of tar and nicotine yields,” id., at 5, and that tobacco companies have been complying with FTC pronouncements concerning tar and nicotine content of cigarettes, id., at 5-8. Accordingly, the class action constituted, in effect, “a challenge to the FTC’s regulatory scheme,” id., at 8. The district court agreed and dismissed the class action finding that it was expressly preempted by the FCLAA, id., at 8-9.

The First Circuit analyzed the controlling authority – the plurality opinion in Cipollone v. Liggett Group, Inc., 505 U.S. 504 (1992). Good, at 9-18. The Circuit Court concluded that “[a] claim is not preempted…merely because it is ‘grounded on’ the advertising or promotion of cigarettes with FCLAA-compliant labels,” id., at 18, or because “it arises out of the adverse health consequences of such cigarettes,” id. Rather, “the FCLAA preempts only those claims based on a ‘requirement or prohibition based on smoking and health under State law with respect to the advertising or promotion of any cigarettes the packages of which are labeled in accordance with’ the FCLAA.” Id., at 19-20. The First Circuit concluded at page 23 that the FCLAA does not preempt claims that tobacco companies made false representations in advertising or promoting cigarettes. It also rejected the district court’s view that the class action did not allege any affirmative misstatement by Philip Morris, id., at 24-25; the Circuit Court believed that the descriptors themselves may be viewed as fraudulent statements, and noted that plaintiffs “allege[d] that Philip Morris made material statements of act that it knew to be false – ‘that Marlboro Lights and Cambridge Lights cigarettes are “light” or have “lower tar and nicotine”’ – to encourage smokers to purchase its products, and that smokers did so in reliance on those statements,” id., at 28. The First Circuit held that those class action allegations “state a claim for fraudulent misrepresentation,” id.

In sum, the First Circuit explained at pages 28 and 29, “Unlike the district court, then, we do not see the plaintiffs’ claims as arising out of what Philip Morris ‘should have said,’ but rather, what did in fact say: that Marlboro Lights and Cambridge lights have ‘lower tar and nicotine’ than their full-flavored counterparts.” The bottom line, in the Circuit Court’s view, is that “the plaintiffs allege that the statements deceived them into purchasing Marlboro Lights and Cambridge Lights,” id., at 32-33.

The Circuit Court recognized that its conclusion was contrary to the decision reached by the Fifth Circuit in Brown v. Brown & Williamson Tobacco Corp., 479 F.3d 383 (5th Cir. 2007), see Good, at 33-38, but explained that it disagreed with _Brown_’s conclusion that “the FCLAA preempts fraud theories arising out of ‘light’ and ‘lower tar and nicotine’ because those statements are not ‘inherently deceptive or untrue,’” id., at 38 (citing Brown, 479 F.3d at 392).

The First Circuit also rejected defense arguments that the class action claims are “impliedly preempted by federal law.” Good, at 39-60. In the Circuit Court’s opinion, “[t]he FTC…has not invariably allowed tar and nicotine claims that are supported by the Cambridge Filter Method, but as recognized that such claims may nevertheless amount to unfair or deceptive acts or practices in certain circumstances,” id., at 57. The Court was untroubled by the fact that “the claim at issue here…differs from those the FTC has challenged in the past,” id. Nor was the Circuit Court persuaded by defense arguments that the challenged advertising practices are authorized by the FTC, id., at 60-68. Accordingly, it reversed the district court order dismissing the class action, id., at 68-69.

NOTE: The First Circuit recognized that the central issue was the precise meaning of the phrase “based on smoking and health,” and that the Supreme Court stated it has “debated” but not resolved the meaning of that phrase. Good, at 22 n.12.

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