Tuesday, October 07, 2008

Supreme Court Hears Oral Arguments in "Lights" Cigarette Case

The United States Supreme Court yesterday heard oral arguments in the case of Altria v. Good, an appeal of a Maine lawsuit which will likely determine the fate of all "lights" cigarettes suits in the nation.

In the original case, four Maine smokers allege that they were defrauded by Philip Morris advertising for "light" cigarettes, which turns out to be deceptive advertising because so-called "light" cigarettes expose smokers to virtually the same level of nicotine and tar as "regular" cigarettes.

Philip Morris argues that the claim is barred by an express preemption clause in the Federal Cigarette Labeling and Advertising Act of 1965, as amended in 1970, which established mandatory warning labels for cigarette packages and advertisements and placed regulatory authority over cigarette advertising into the hands of the Federal Trade Commission.

The relevant clause states: "No requirement or prohibition based on smoking and health shall be imposed under State law with respect to the advertising or promotion of any cigarettes the packages of which are labeled in conformity with the provisions of this chapter." [see U.S.C. 15, 1334(b)]

The attorney for the smokers argues that the federal preemption clause does not apply to claims brought solely on the basis of fraudulent advertising, rather than on smoking and health. And he argued, further, that the Maine smokers' claim had nothing to do with smoking and health, just fraudulent advertising.

Moreover, the plaintiffs' attorney argues that in Cipollone v. Liggett, the Supreme Court (7 of 9 justices) ruled that fraud cases are not preempted by the Federal Cigarette Labeling and Advertising Act.

In opening arguments, the plaintiffs' attorney struggled to try to convince the Court that the Maine smokers' claim has nothing to do with smoking and health and that it is merely a deceptive advertising claim. Justice Scalia gave him a hard time with this argument but notably, was joined by Justices Souter and Kennedy, who seemed nonplussed with the argument that the claims are not preempted because they don't at all relate to smoking and health. Justice Kennedy in fact gave the plaintiffs' attorney a chance to apply a second line of reasoning.

The Rest of the Story

In my opinion, Justice Ruth Bader Ginsburg is going to decide this one, breaking a 4-4 tie among the other justices.

I was never one of those athletes who would "guarantee a victory" and I'm not a tobacco legal analyst who usually pretends to be able to predict how a court is going to rule, but I think it's pretty clear how 8 of the 9 justices are going to rule on this case.

First of all, in Cipollone v. Liggett Group, Inc. [see 112 S.Ct. 2608, 505 U.S. 504, 120 L.Ed.2d 407], Justices Scalia and Thomas have already argued that section 4 of FCLAA preempts all state-law damages actions based on claims of fraudulent advertising. They will most likely reiterate this opinion and be joined by Justices Alito and Thomas.

Scalia and Thomas argued in Cipollone that: "I would apply to all petitioner's claims what I have called a 'proximate application' methodology for determining whether they invoke duties 'based on smoking and heath' - I would ask, that is, whether, whatever the source of the duty, it imposes an obligation in this case because of the effect of smoking upon health. On that basis, I would find petitioner's failure-to-warn and misrepresentation claims both pre-empted."

In Altria v. Good, this 'proximate application' methodology would certainly yield a conclusion that the "lights" damages claims are preempted. The very reason why the "lights" advertising is relevant is because of its implications for smoking and health. The advertising is deceptive specifically because it implies a degree of safety from these cigarettes when this degree of safety is not present. The smoking and health link is the lynchpin which imposes the duty on cigarette companies not to represent low-tar or low-nicotine cigarettes as "lighter" than others.

Second of all, in Cipollone, Justices Stevens, Kennedy, and Souter ruled that while FCLAA does preempt some state-law damages actions, it does not specifically preempt claims based on intentional fraud in advertising by false representation and hiding of material facts. They will most likely reiterate this opinion and be joined by Justice Breyer.

Justices Stevens, Kennedy, and Souter wrote in Cipollone that: "State-law prohibitions on false statements of material fact do not create 'diverse, nonuniform, and confusing' standards. Unlike state-law obligations concerning the warning necessary to render a product 'reasonably safe,' state-law proscriptions on intentional fraud rely only on a single, uniform standard: falsity. Thus, we conclude that the phrase "based on smoking and health" fairly but narrowly construed does not encompass the more general duty not to make fraudulent statements. Accordingly, petitioner's claim based on allegedly fraudulent statements made in respondents' advertisements is not pre-empted by section 5(b) of the 1969 Act."

I don't see anything in this case that is likely to change the minds of these justices or to somehow apply their earlier reasoning in a different way.

Thus, we are likely to have a 4-4 tie, which would be broken by Justice Ginsburg, who joined the Court shortly after the Cipollone decision.

And, no, I'm not going to predict how she will rule. I have no idea.

Were I to decide the case, I would rule in favor of Philip Morris. First, I think it is unquestionable that the claim being brought by the Maine smokers is based on an advertising prohibition or requirement that is based on smoking and health. The issue of whether calling a cigarette "light" is fraudulent depends specifically on whether or not it delivers the same amount of harmful ingredients as a "regular" cigarette. The issue is relevant only because of the implied safety of the cigarette. Without the implication of a safer cigarette, there are no damages to the smokers. There is no question that the subject matter of the preemption clause applies to the content of the damages claim.

Second, as Philip Morris pointed out in its petitioner's brief: "Where, as here, a statute contains an express pre-emption clause, the task of statutory construction must in the first instance focus on the plain wording of the clause.” CSX Transp., Inc. v. Easterwood, 507 U.S. 658, 664 (1993).

The plain wording of the preemption clause is quite clear. Any claims with respect to requirements for cigarette advertising that are based on smoking and health are preempted. One could almost read that wording with the Good case in mind. Can there be a better example of an advertising requirement based on smoking and health?

I think the intent of Congress in enacting FCLAA was quite clear. Its primary purpose was to occupy the field of regulation of cigarette advertising. The only reason the legislation passed was that it had the quiet blessing of the tobacco companies, which were content with having to put the warning labels in place as long as they received something more valuable to offset that sacrifice: namely, immunity from lawsuits based on a failure to warn or deception in advertising. I don't think there was any question when the legislation was enacted that this was exactly the intent: occupy the field of cigarette advertising to the exclusion of any state action on this issue.

While I understand why Justices Kennedy, Souter, and Stevens are uncomfortable with the idea of Congress intending to preclude any state regulation of cigarette advertising based on smoking and health, no matter how deceptive, I have no doubt that is exactly what Congress intended.

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