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Contact: Edward L. Sweda e-mail to media[at]tplp.org (use @sign)
June 11, 2007
The U.S. Supreme Court today unanimously
reversed an Eighth Circuit Court of Appeals ruling that, if it had been upheld,
would have severely damaged the ability of consumers harmed by corporate fraud
to achieve a remedy in state court.
The Watson, et al. v. Philip Morris
Companies, Inc. case (today’s opinion is
here while the docket is
here) began as a
class action, brought in state court under Arkansas law, based on Philip Morris’
fraudulent marketing and sale of so-called “light” cigarettes. Smokers of
those cigarettes were deceived by Philip Morris’ scam wherein those “light”
cigarettes were characterized as a safer, or less hazardous alternative, to
regular cigarettes.
Similar lawsuits have been filed in more than 20 states. Philip Morris, a
private corporation, invoked the Federal Officer Removal Statute -- 28 U.S.C.
sec. 1442(a)(1) – to remove the case to federal court. The district court
had denied the plaintiffs’ motion to remand the case back to state court; in
August 2005, the U.S. Court of Appeals for the Eighth Circuit affirmed the
district court’s judgment.
The U.S. Supreme Court answered the question presented -- Whether a private
actor doing no more than complying with federal regulation is a “person acting
under a federal officer” for the purpose of 28 United States Code section
1442(a)(1), entitling the actor to remove to federal court a civil action
brought in state court under state law – with a resounding “No.”
The U.S. Solicitor General, Paul D. Clement, submitted an
amicus curiae brief (see
it
here ) in which he concluded that: “The
Court of Appeals’ conclusion that the FTC has exercised comprehensive control
over respondent’s advertising of light cigarettes is incorrect. The conclusion
that this case is removable under the federal officer removal statute is
substantially wide of the mark.”
On January 12, 2007, the U.S. Supreme Court granted certiorari in the case.
Since then, tobacco-friendly stock analysts have downplayed the importance of
the Eighth Circuit’s August 2005 ruling in the case. In the wake of the
increasing likelihood of the U.S. Supreme Court overturning the Eighth Circuit’s
decision in the Watson case,
David J. Adelman of Morgan Stanley on March 6, 2007 said that although the
“Watson venue-transfer argument was an added arrow in the industry’s defensive
arsenal, it has absolutely not been an important component of the industry’s
overall Lights-related legal defense. Hence, the potential loss of that
defense should not at all be worrisome or of concern.”
However, this analysis contrasts sharply with how the tobacco industry had
previously described the Eighth Circuit’s decision. In
commenting immediately after that 2005 ruling, William S. Ohlemeyer, Philip
Morris USA’’s vice president and associate general counsel, said that “the very
same thing that the plaintiffs were complaining about and suggesting was
deceptive was the exact same thing that the FTC says that we have to do and the
company has to do when it advertise those cigarettes in order to avoid being
deceptive.” Thus, the case should be removed to federal court from state
court, which is, according to Bonnie Herzog of Citigroup, “typically a much less
favorable venue for defendants.”
In a March 10, 2006 letter to company shareholders, Louis Camilleri, CEO of
Philip Morris’ parent company, Altria Group, Inc., said that while the
plaintiffs in the Watson case
“have indicated that they intend to seek United States Supreme Court review of
this decision, we believe that this ruling has important ramifications going
forward.”
“Today’s unanimous opinion is terrific news for the Arkansas plaintiffs in the
Watson case, since it has
reversed the Eighth Circuit’s overbroad and historically inaccurate opinion,”
said Edward L. Sweda, Jr., Senior Attorney for the Tobacco
Products Liability Project (which signed onto the
amicus curiae brief submitted
by Public Citizen, Inc.). Mr. Sweda attended the U.S. Supreme Court oral
arguments in the Watson case on April 25, 2007. “This unanimous opinion
also will definitely 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,” Sweda added. -- 30 --
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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. |