Low tar will finally go to the high court. The Supreme Court has added a case, Altria Group Inc. v. Good, that will finally result in a review of the recent cases brought around the country against low tar cigarette companies. It represents one of the most significant areas of liability for the tobacco industry after weathering the multistate settlement and various class action lawsuits seeking hundreds of billions of dollars.
In the case, the Court will consider whether state consumer-fraud laws are preempted by federal law, preventing their use against cigarette makers for advertising a brand as containing low tar and nicotine. The Federal Cigarette Labeling and Advertising Act will be at the heart of the preemption debate. The manufacturers lost before the United States Court of Appeals for the First Circuit in seeking to preempt Maine’s deceptive practices laws.
The case closely follows other cases where consumer laws have proven effective in securing verdicts against the industry. Juries have tended to find these marketing campaigns as deceptive because they suggest that the cigarettes are healthier or better for smokers. The industry has since changed many of these marketing images and statements.
In cases across the country, lawyers have put on experts to show that, while there is lower nicotine, smokers tend to inhale more deeply or smoking more cigarettes when buying the low-tar brands — making them as harmful as the regular cigarettes. The use of consumer protection laws has helped plaintiffs avoid the classic barriers in tort law to recovery on products liability or negligence claims like comparative negligence defenses. These state statutory claims reduces the cases to largely a question of how the jury view the message of these ads.
For the industry and its critics, the case could be extremely important. The industry has been on a run of successes recently in court. The most notable was the overturning of the Engle decision by the Florida Supreme Court. Click here for a discussion of the case. The court threw out a $145 billion award against tobacco companies — the largest punitive-damages award in history. The industry also destroyed a federal lawsuit started in the Clinton Administration that sought $280 billion.
For full disclosure, I have been critical of the government’s litigation. Click here for prior testimony before Congress. I have no love of either cigarettes or the industry, but I tend to disfavor regulation by litigation.
This is a good Court for the tobacco industry. With the addition of Roberts and Alito, it is now one of the most pro-business courts in many decades. Just last week, the Court handed down a major blow to investors when it ruled 5-3 in Stoneridge Investment Partners LLC vs. Scientific-Atlanta Inc. that shareholders may be barred from suing third parties that help companies deceive investors. Kennedy (the usual swing vote on the divided court) tends to be pro-business and both Roberts and Alito were on the top of the list of nominees from the business community in discussions with the White House.
The industry can continue to carry a relatively high level of litigation costs given its sales (the benefit of selling an addictive product). Yet, low-tar cases represent one of the few areas of consistent losses for the industry. For a copy of the first circuit opinion, click here