Lawsuit filed against tobacco company cannot move to federal court
By William Spain, MarketWatch
CHICAGO - The U.S. Supreme Court handed Philip Morris a defeat on Monday, ruling unanimously that an Arkansas class-action lawsuit against the tobacco titan does not belong in federal court.
The decision reverses a lower court ruling that would have taken the case -- a lawsuit charging deceptive marketing practices of "light" cigarettes -- out of Arkansas state courts because the products are regulated by the federal government.
Philip Morris, a unit of Altria Group had argued that the Federal Trade Commission was a "federal officer" and because there was an agreement in place for uniform standards and tests on light smokes with it, the case qualified for federal court under a "removal statute."
But Justice Stephen Breyer, writing for the court, disagreed:
"The fact that a federal agency directs, supervises and monitors a company's activities in considerable detail does not bring that company within [the scope of the removal statute]," he said.
A contrary determination, he continued "would expand the statute's scope considerably, potentially bringing within it state-court actions filed against private firms in many highly regulated industries. Nothing in the statute's language, history or purpose indicates a congressional intent to do so."
The case, Watson et al v. Philip Morris charged that the company violated state laws against unfair and deceptive business practices, specifically with its advertisements and packaging on light brands. The suit alleged that the company manipulated cigarette design and used other techniques that caused its cigarettes to register lower levels of tar and nicotine on an industry standard test than smokers would actually get.
The company shrugged off Monday's decision, saying it does "not negatively affect the ultimate outcome" of the case or similar cases around the country.·
"Today's ruling is narrow and merely determined whether the Watson case should be heard in federal court or state court," said William Ohlemeyer, Philip Morris USA's associate general counsel. "We have compelling defenses to the Watson claim that have been advanced in state courts."
But at least one anti-tobacco group hailed the ruling.
"Today's unanimous opinion is terrific news for the Arkansas plaintiffs in the Watson case, since it has reversed an overbroad and historically inaccurate opinion," said Edward Sweda, senior attorney for the Tobacco Products Liability Project.
He said the decision will also "benefit plaintiffs and their attorneys in other 'light' cigarette litigation since Philip Morris' attempt to evade state law simply by virtue of the fact that it is regulated has failed."
Shares of Altria were flat at $70.30 in midday action