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The New York Sun

 

Smoke Test for Supremes

April 09, 2008

By James R. Copland

PRINTER FRIENDLY

Later this year, the Supreme Court will hear the case of Altria Group v. Good in order to look at state lawsuits that claim that tobacco companies engage in deceptive trade practices when they advertise cigarettes as “light” or “low tar and nicotine.” The case will “decide whether tobacco companies are vulnerable to state law suits arising from the claims on their labels.”

The tobacco companies argue, convincingly, that such claims are preempted by the Federal Cigarette Labeling and Advertising Act of 1965. Under that law since 1967, the U.S. Federal Trade Commission has regulated cigarette packaging and advertising, including claims about tar and nicotine levels.

A parallel decision of national importance was made on April 3, 2008: the United States Court of Appeals for the Second Circuit here in New York shot down a federal class action lawsuit against tobacco companies for light-cigarette marketing. In the federal case, the lawyers sought to recover a sum of money, $2.4 trillion, roughly equivalent to the gross domestic product of Great Britain. How did the attorneys concoct such a massive total of damages? The injuries alleged were not related to illness or death caused by smoking. Instead, the lawyers’ claim was that individuals were harmed by buying, or overpaying for light cigarettes under the mistaken notion that they were safer than regular cigarettes — a notion perpetuated by the tobacco companies’ allegedly fraudulent marketing.

On its face, the lawsuit’s claim makes little sense. The lawyers do not quibble with the tobacco companies’ measurement of tar and nicotine under the strict guidelines supervised by the FTC. Rather, the lawyers simply cite evidence that individuals smoking low-tar cigarettes actually inhale more deeply, or simply consume more cigarettes — a different claim altogether.

In its decision last Thursday, the court did not rely on the weakness of the facts underlying the claim, though the opinion did state, in a footnote, that “it makes little sense to argue that defendants’ tar- and nicotine-content representations were untrue or deceptive.” The court based its decision on a common-sense ruling that the class action device — which aggregated everyone in America who had ever smoked a light cigarette — was misapplied.

The federal case was founded upon the Racketeer Influenced and Corrupt Organizations Act, a 1970 law designed to enable U.S. prosecutors a better vehicle for getting convictions against the mob. Like many federal statutes, RICO has civil enforcement provisions that allow private attorneys to file claims against organizations alleged to have committed the predicate criminal acts outlined in the statute.

With nebulous offenses like “mail fraud” and “wire fraud” at play, plaintiffs’ lawyers, and federal prosecutors, have abused civil RICO to attack hosts of genuine businesses. Because the statute allows successful plaintiffs to recover triple the damages actually proved, it is one of the favorite weapons in the tort bar’s arsenal.

But as the Second Circuit noted in its decision, to make a civil RICO claim, a plaintiff must show that he relied on the fraud and suffered economic injury as a result. To proceed as a class action lawsuit, each plaintiff must be similarly situated; i.e., there must not be significant, relevant factual questions that differ from plaintiff to plaintiff. The court ruled, in essence, that even if the tobacco companies’ light-cigarette marketing constituted a fraud under RICO, there was no way to assume that each and every smoker of light cigarettes relied on that fraud and suffered economic loss as a result.

The Second Circuit’s ruling was a blow to the district judge of Brooklyn, Jack Weinstein, the “creative” jurist who had given a green light to the litigation. The 86-year-old Weinstein was appointed to the bench by President Johnson in 1967. Notwithstanding his advanced age, he has managed a plethora of mass tort cases over the last two decades, including litigation involving asbestos, firearms, the Vietnam defoliant Agent Orange, and the antipsychotic drug Zyprexa, as well as tobacco.

Judge Weinstein has grabbed all these cases by abusing the “related case” rule, a judicial economy measure that allows judges to assume control of litigation similar to that which they’ve already seen, given their expertise. Since Judge Weinstein managed the Agent Orange cases back in the 1980s, he has been able to assume control of much of the nation’s mass injury litigation: plaintiffs’ lawyers seeking a friendly judge know to file their cases in Brooklyn, where Judge Weinstein inevitably gets the case.

Although Judge Weinstein inevitably will continue to attract similar cases before him, Thursday’s decision does stand as a major rejection of stretching our federal anti-mob laws into lawyer-driven class actions that target legal businesses. But the state law claims proliferating around the country are based not upon RICO but often ambiguous state consumer fraud statutes. For the fate of those lawsuits, we’ll have to wait until the Supreme Court speaks.

Original Source: http://www.nysun.com/editorials/smoke-test-supremes

 

 
 
 

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