FEDERAL JUDGE CERTIFIES COLOSSAL RACKETEERING CLASS ACTION

FOR IMMEDIATE RELEASE

Contact: Edward L. Sweda
Mark Gottlieb
(617) 373-2026

e-mail to media[at]tplp.org (use @sign)

September 25, 2006

FEDERAL JUDGE CERTIFIES COLOSSAL RACKETEERING CLASS ACTION
LAWSUIT AGAINST CIGARETTE INDUSTRY FOR "LIGHT" PRODUCTS

Judge Jack B. Weinstein of the Eastern District of New York today gave the green light to a massive class action on behalf of consumers of so-called "light" cigarette brands. Jury selection is scheduled to begin on January 22, 2007. Many of the key issues in this case were last month decided against the cigarette companies after a nine-month trial in a case also brought under the Racketeer Influenced and Corrupt Organizations Act (RICO). That case concluded with a federal judge's finding that the defendants were racketeers.

Background

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK

BARBARA SCHWAB, ET AL., AND ON BEHALF
OF ALL OTHERS SIMILARLY SITUATED
plaintiff

PHILIP MORRIS USA INC., f/k/a Philip Morris Incorporated, et al.,
defendants,

Case No. 04-1945

The Complaint

Schwab, et al. v. Philip Morris USA, Inc., et al., was filed May 11, 2004 (as McLaughlin et al. v. Philip Morris USA, Inc.) under the civil provisions of the federal anti-racketeering statute known as "RICO." It was filed as a class action challenging the defendants' sales, marketing and promotion of cigarettes described as "light," "lights," "mild," and other descriptors suggestive of lower delivery of tar or nicotine. The plaintiffs alleged that the defendants conspired in a scheme to perpetrate a massive fraud on consumers by selling products that indicated or suggested lower tar and nicotine delivery when, in fact, these defendants knew that actual tar and nicotine delivery to smokers did not occur. The lawsuit is not for personal injuries but rather for the property loss of the class members who received something other than what they thought they were buying whenever they purchased Defendants' "light" cigarettes.

Many of the same allegations were part of the U.S. Department of Justice's RICO lawsuit against the same cigarette manufacturer defendants (see TPLP Backgrounder on judgment in DOJ lawsuit). While that lawsuit was essentially an enforcement action action of the U.S. government, this action is on behalf of the injured consumers who purchase defendants' cigarettes.

The Class Certification Decision:

In a detailed and thoughtful decision, Judge Weinstein approved the following class of smokers for participation:

All United States residents who purchased in the United States, not for resale, cigarettes labeled as “Lights” and/or “Light” (collectively “light cigarettes”) that were manufactured and/or sold by Defendants during the period commencing on the first date that Defendants began selling light cigarettes until the date trial commences (the “Class Period”), and who are not, as of the date of trial, members of a certified state class seeking economic damages stemming from their purchases of light cigarettes or having obtained an award of, or a denial of, such damages. Excluded from the Class are individuals who are directors and officers of the Defendants’ corporations, their parents, subsidiaries and/or affiliates.

The Court also set January 22, 2007 as the jury selection date with a trial to follow immediately thereafter.

Other aspects to the Court's ruling include:

Class members from prior "lights" class actions that resulted in defendants' favor that were not decided on the merits but rather on state law (e.g., the Price case in Illinois and Marrone case in Ohio) will not be excluded from the Schwab class.
All of the plaintiffs' models for proving damages may be presented at trial.

Judge Weinstein also suggested to the litigants that he would consider amending the class definition to include smokers of "low tar" as well if that would facilitate agreement to a "Global Settlement."

Commentary:

Mark Gottlieb, Director of the Tobacco Products Liability Project at Northeastern University School of Law in Boston, noted that, "Judge Weinstein's class certification is extraordinarily well-reasoned and researched. Because the financial stakes are so high, perhaps in the hundreds of billions of dollars in potential liability, one short-term result of this decision will surely be a delay in the break up of Altria into distinct tobacco, food and international companies. While the defendants will seek immediate appeal to the U.S. Court of Appeals for the Second Circuit, this certification may very well survive such an appeal as have 'light' class certifications in several states. If it does, there is little dispute about the underlying facts and likely findings. The Judge released a 900 plus page appendix with his decision summarizing the findings of the Federal District Court for the District of Columbia on the Defendants' racketeering activity with 'light' cigarettes. "

“We are also pleased that light cigarette smokers in Illinois and Ohio, who recently had their legal claims thwarted by state court decisions that effectively immunized the cigarette companies from being held accountable for their wrongdoing in those states, now can seek justice in this national class action.,” said Edward L. Sweda, Jr., Senior Attorney for the Tobacco Products Liability Project

The Tobacco Products Liability Project (TPLP) is a project of the Public Health Advocacy Institute assisting attorneys involved in tobacco-related litigation. The Public Health Advocacy Institute is committed to advocacy and research to further law in common cause with public health. PHAI is a non-profit corporation located at Northeastern University School of Law in Boston, Massachusetts. More information about PHAI is available at www.phaionline.org.