Tobacco Class Action Defense Cases-Altria Group v. Good: Supreme Court Holds Class Action Claims Challenging “Light” And “Low Tar” Labels Not Preempted By Federal Law And Affirms Reinstatement Of Class Action

Dec 18, 2008 | By: Michael J. Hassen

U.S. Supreme Court Affirms First Circuit Decision Reinstating Class Action Against Tobacco Companies Holding District Court Erred in Dismissing Class Action Challenging Advertising of “Light” and “Low Tar” Cigarettes as Expressly Preempted by the Federal Cigarette Labeling and Advertising Act (FCLAA)

Plaintiffs filed a class action against Philip Morris and its parent, Altria, for violations of Maine’s Unfair Trade Practices Act; specifically, the class action complaint alleged that defendants’ design, marketing and sale of “light” and “low tar” cigarettes “fraudulently conveyed the message that their ‘light’ cigarettes deliver less tar and nicotine to consumers than regular brands despite [defendants’] knowledge that the message was untrue.” Altria Group, Inc. v. Good, ___ U.S. ___, 2008 WL 5204477, *2 (December 15, 2008). Defense attorneys insisted that the advertisements were factually accurate, but moved 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. The district court agreed the dismissed the class action, but the First Circuit reversed, concluding that the class action claims were not preempted. See Good v. Altria Group, Inc., 501 F.3d 29 (1st Cir. 2007). The First Circuit’s decision conflicted with a decision out of the Fifth Circuit, which held that state-law challenges to the use of “light” and “low tar” descriptors was expressly preempted by the FCLAA. See Brown v. Brown & Williamson Tobacco Corp., 479 F.3d 383 (5th Cir. 2007). The Supreme Court granted certiorari in Good to resolve this conflict. 2008 WL 5204477, *3

The class action plaintiffs alleged that they had smoked for 15 years, and the class action allegations did not contest that under the “Cambridge Filter Method” test conducted using a machine that “smokes” cigarettes and collects tar and nicotine for weighing, less tar and nicotine is in fact drawn into the filter using “light” or “low tar” cigarettes. Altria Group, at *2 and n.2. The heart of the class action complaint, rather, was the allegation smokers unconsciously engage in behavior that negates the benefits sought to be achieved by the cigarette filter design “[b]y covering filter ventilation holes with their lips or fingers, taking larger or more frequent puffs, and holding the smoke in their lungs for a longer period of time.” Id., at *2. The class action further alleged that defendants knew of this compensation effect yet marketed “light” cigarettes with an intent to deceive smokers into believing that the cigarettes “would pose fewer health risks.” Id. Defense attorneys moved for summary judgment on the grounds, inter alia, that the FCLAA expressly preempted the class action claims, id. In granting the defense motion, the district court likened the class action claims to a “failure to warn” claim, akin to the claim found to be preempted in Cipollone v. Liggett Group, Inc., 505 U.S. 504 (1992) and Lorillard Tobacco Co. v. Reilly, 533 U.S. 525 (2001). Id. The First Circuit reversed, holding that the class action instead presented “in substance a fraud claim that alleges that [defendants] falsely represented their cigarettes as ‘light’ or having ‘lowered tar and nicotine’ even though they deliver to smokers the same quantities of those components as do regular cigarettes.” Id., at *3 (citing 501 F.3d at 36). The First Circuit analyzed the controlling authority – the plurality opinion in Cipollone – and concluded that a claim is not preempted merely because it is grounded on the advertising or promotion of cigarettes with FCLAA-compliant labels, or because it arises out of the adverse health consequences of such cigarettes. See 501 F.3d at 36-43.

A divided Supreme Court affirmed. The majority reaffirmed the plurality opinion in Cipollone, which held that whether a particular common-law claim is preempted turns on “‘whether the legal duty that is the predicate of the common-law damages action constitutes a “requirement or prohibition based on smoking and health…with respect to…advertising or promotion,” giving that clause a fair but narrow reading.’” Altria Group, at *6 (quoting Cipollone, 505 U.S. at 524). The High Court reasoned that the duty imposed by Maine’s statute “has nothing to do with smoking and health.” Id. It therefore had little difficulty in concluding that the class action’s claim “that the deceptive statements ‘light’ and ‘lowered tar and nicotine’ induced them to purchase [defendants’] product alleges a breach of the duty not to deceive. To be sure, the presence of the federally mandated warnings may bear on the materiality of petitioners’ allegedly fraudulent statements, ‘but that possibility does not change [plaintiffs’] case from one about the statements into one about the warnings.’” Id., at *6-*7 (citation and footnotes omitted). Accordingly, the Supreme Court affirmed the First Circuit decision reinstating the class action complaint, id., at *11.

NOTE: Justice Thomas filed a dissent, joined by the Chief Justice and Justices Alito and Scalia, which argued that the plurality opinion in Cipollone was flawed and that a majority of the Cipollone court had rejected the “predicate-duty” test as “unworkable…for pre-emption with little or no relationship to the text of the statute.” See Altria Group, at *12 (Thomas, J., dissenting). The dissent pleaded for adoption of a “clear test that advances Congress’ stated goals by interpreting [the statute] to expressly pre-empt any claim that ‘imposes an obligation…because of the effect of smoking upon health.’” Id. (citation omitted). The dissent explained at page *13:

Respondents’ lawsuit under the Maine Unfair Trade Practices Act … is expressly pre-empted under §5(b) of the Labeling Act. The civil action is premised on the allegation that the cigarette manufacturers misled respondents into believing that smoking light cigarettes would be healthier for them than smoking regular cigarettes. A judgment in respondents’ favor will thus result in a “requirement” that petitioners represent the effects of smoking on health in a particular way in their advertising and promotion of light cigarettes. Because liability in this case is thereby premised on the effect of smoking on health, I would hold that respondents’ state-law claims are expressly pre-empted by §5(b) of the Labeling Act.

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