Ruling hands big tobacco big setback on state suits

McClatchy NewspapersDecember 15, 2008 

WASHINGTON — A divided Supreme Court ruled Monday that smokers can sue tobacco companies in state court for making fraudulent claims.

The surprising 5-4 ruling was a victory for the court's liberals, who in recent years have seen conservatives systematically curtail courtroom access. The ruling also drove down tobacco company stocks, on the prospect that multibillion-dollar lawsuits seeking class-action status may proliferate.

"Congress had no intention of insulating tobacco companies from liability from inaccurate statements about the relationship between smoking and health," Justice John Paul Stevens declared.

Stevens and Justices Ruth Bader Ginsburg, Anthony Kennedy, David Souter and Stephen Breyer didn't rule on the merits of the fraudulent advertising claim against Altria Group, the parent company of Philip Morris USA. The underlying case will now return to Maine, where longtime smokers will make their arguments.

The smokers maintain Philip Morris deceived them by claiming that "light" cigarettes deliver less tar and nicotine to consumers than regular brands. In fact, the smokers say, the tobacco company knew consumers would simply draw more deeply on their Marlboro Lights and Cambridge Lights.

"By 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, smokers of 'light' cigarettes unknowingly inhale as much tar and nicotine as do smokers of regular cigarettes," Stevens explained.

Even the court's four dissenters in Altria Group v. Good didn't defend the tobacco company's alleged actions, nor did they deny a link between smoking and disease. Instead, Chief Justice John Roberts and Justices Antonin Scalia, Samuel Alito and Clarence Thomas insisted that federal health-and-safety powers preempted the state lawsuits.

The court's majority believed the case was about false advertising, which states can regulate. The dissenters thought it was about tobacco and health, an area that the federal government calls its own.

"When . . . allegedly wrongful conduct involves misleading statements about the health effects of smoking a particular brand of cigarette, the liability and resulting requirement or prohibition are, by definition, based on smoking and health," Thomas wrote for the dissenters.

Share prices for Altria Group and fellow tobacco giant Reynolds American plunged immediately following the ruling, before stabilizing. Trial lawyers praised the ruling, while the tobacco company vowed to fight on.

"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," said Murray Garnick, an Altria senior vice president who handles litigation issues, in a statement.

The ruling is the court's first 5-4 decision since the current term began in October. It is also a marked departure from other cases upholding preemption, a technical but all-important rule that can determine which lawsuits live or die. In February, for instance, the court ruled that federal law blocks state lawsuits over medical devices.

The federal government preempted some tobacco regulation when it imposed the first health labeling requirements in the mid-1960s. States can't supplement these federal warning labels. The court on Monday, however, clarified that the labeling law's purposes of uniformity and preemption should not block challenges based on fraud.

"Neither would be served by limiting the states' authority to prohibit deceptive statements in cigarette advertising," Stevens wrote.

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McClatchy Newspapers 2008

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