WASHINGTON — The Supreme Court on Monday snuffed out a tobacco industry legal tactic, ruling that Philip Morris can't shift a lawsuit from state to federal court.
The unanimous ruling undercuts embattled tobacco companies, which have hoped to escape the state courts, where they've suffered multibillion-dollar losses. Federal courts can give the companies some tactical advantages.
But the justices rejected Philip Morris' argument that the company belongs in federal court. Simply following rules and regulations doesn't make a company a federal officer with a right to have cases heard in federal court, the justices ruled.
"The upshot is that a highly regulated firm cannot find a statutory basis for removal (to federal court) in the fact of federal regulation alone," Justice Stephen Breyer wrote.
The ruling emboldens consumer advocates who have challenged Philip Morris' marketing of Cambridge Lights and Marlboro Lights cigarettes. The ruling also limits the legal maneuvering room available to pesticide companies and other heavily regulated industries.
"We're delighted that we won unanimously," Washington-based attorney David C. Frederick, who's challenging the tobacco companies, said in a brief telephone interview.
But as often happens, the Supreme Court's 14-page majority opinion on Monday didn't touch the underlying merits of the tobacco industry lawsuit. The justices didn't opine as to whether Philip Morris deceived consumers by advertising Cambridge Lights and Marlboro Lights as being low in tar and nicotine.
Instead, the court issued a technical ruling that nonetheless could sweep widely. It will now be up to an Arkansas jury to decide if Philip Morris deceived consumers such as Little Rock residents Lisa Watson and Loretta Lawson, who filed the original lawsuit.
"We have compelling defenses to the Watson claim that have been advanced in state courts," William S. Ohlemeyer, Philip Morris USA vice president and associate general counsel, declared in a prepared statement.
Ohlemeyer insisted that the Supreme Court's ruling was a narrow one that wouldn't affect the company's long-term legal prospects. Nonetheless, tobacco companies have had their reasons to seek protection in federal courts. Whopping verdicts and certification as a class action can be harder to get in a federal court.
"I think they perceive those to be a more favorable forum than state courts," Frederick said.
In 2003, notably, an Illinois state court hit Philip Morris with a $10.1 billion verdict following a similar case involving allegations of false advertising. That same year, a Florida trial court slammed the company with a $145 billion judgment, later reversed on appeal. Myriad other tobacco lawsuits are pending in other state courts, including California, Missouri, Louisiana and Nevada.
Frederick said that it may take months before the Arkansas case is ready for trial.
The legal question Monday was who can be considered a "federal officer."
Going back to the War of 1812, designated federal officers have been able to shift cases against them from state to federal courts. The idea is to prevent states from interfering with a national government.
The Virginia-based Philip Morris, now part of Altria Group Inc., argued that it was essentially recruited as a federal officer when it had to follow extensive orders from the Federal Trade Commission. The trade commission has regulated cigarette advertising for over 40 years.
The tobacco companies, for instance, now handle tar and nicotine testing under the supervision of federal officials. Acting under the "direction and control" of federal officials was tantamount to becoming a federal officer, Philip Morris argued.
The court rejected the reasoning, saying that the company was simply complying with the law.
"That is so even if the regulation is highly detailed and even if the private firm's activities are highly supervised and monitored," Breyer wrote.
Ruling otherwise would potentially allow "many highly regulated industries" to remove lawsuits to federal courts, Breyer added.
The cigarette brands in question were advertised as being lower in tar and nicotine, as measured by a machine that takes a 35-milliliter puff every 60 seconds. Critics said these claims were deceptive and violated an Arkansas consumer protection law.
The consumer advocates argue that smokers actually draw harder upon the "light" cigarettes in order to compensate for their relative weakness. The smokers thereby end up with more tar and nicotine than is measured by a machine, critics say.