NEW YORK -- A federal appeals court tossed out an $800 billion class-action lawsuit against tobacco companies last Thursday brought by smokers who said they were deceived into believing "light" cigarettes were healthier, reported Reuters.
The smokers had sued the tobacco companies under the Racketeer Influenced & Corrupt Organization Act (RICCO), contending they were misled by the industry's marketing and branding efforts into believing "light" cigarettes were healthier than "full-flavored" versions.
The U.S. Court of Appeals for the Second Circuit said the smokers could not [image-nocss] sue collectively. The decision means each individual smoker must prove that she or he had selected the product for perceived health benefits.
The plaintiffs had alleged that those who used "light cigarettes" unknowingly ended up getting just as much tar and nicotine because they inhaled more frequently to compensate; however, the appeals court decertified the class of plaintiffs, saying a "light" smoker might have "preferred the taste" or chosen light cigarettes as a matter of personal style.
"Individualized proof is needed to overcome the possibility that a member of the purported class purchased Lights for some reason other than the belief that Lights were a healthier alternative," Circuit Judge John Walker Jr. wrote in the 39-page decision.
The lawsuit was seeking at least $200 billion on behalf of possibly as many as 60 millions smokers, said an Associated Press report. The damages theoretically could go as high as $800 billion. If that were the case, it could become the largest class action in American history and more than has been spent on the Iraq war, said Theodore M. Grossman, a lawyer for the tobacco companies.
The defendants, including Marlboro maker Philip Morris USA, its biggest U.S. rival, R.J. Reynolds Tobacco Co., and other manufacturers, prefer trying each case on its own, saying circumstances for each smoker vary widely.
Grossman said the ruling has "tremendous significance," in part because there were similar class-action lawsuits pending in various states which make the same claims.
The case has been in the court for years. The three-judge appellate panel knocked down a 2006 ruling by U.S. District Judge Jack Weinstein in Brooklyn that granted the class-action status. But the lawsuit against cigarette makers had been filed in 2004.
The appeals court did say that some smokers may have relied on misrepresentations by tobacco companies to varying degrees.
The plaintiffs' lawyers argued that they could prove on a class-wide basis that smokers would not have favored light cigarettes had the truth been known.
The appeals court said each individual would have to prove whether they relied completely, in part, or not at all on marketing misrepresentations in purchasing light cigarettes.
Grossman said it will be difficult for plaintiffs to proceed individually because each will have to show why they purchased light cigarettes and what they would have done in the absence of light cigarettes.
"Because factors other than defendants' misrepresentation may have intervened and affected the demand and price of lights, and because determining the portion of plaintiffs' injury attributable to defendants' wrongdoing would require an individualized inquiry, plaintiffs cannot establish loss causation on a class-wide basis," the court said.
But Hausfeld, advocating for the class-action status, said there are core issues common to all purchasers, such as the mass marketing of light cigarettes.
Defendants in the case included Altria Group Inc.'s Philip Morris USA unit; Reynolds American Inc.'s R.J. Reynolds Tobacco Co; Loews Corp.'s Lorillard Tobacco unit; Vector Group Ltd's Liggett Group; and British American Tobacco Plc's British American Tobacco (Investments) Ltd.
"We are certainly pleased with the court's ruling and agree with its reasoning," said Martin L. Holton III, general counsel for Winston-Salem, N.C.-based R.J. Reynolds Tobacco in a statement. "Numerous courts across the country have held that claims such as these simply cannot be tried as class actions."
Richmond, Va.-based PM USA also issued a statement: "Philip Morris USA is pleased with today's decision and believes the court came to the right conclusion in light of the overwhelming precedent denying class certification in smokers' litigation," said Murray Garnick, Altria client cervices senior vice president and associate general counsel, speaking on behalf of PM USA.
It added that the court, among other things, stated the following in its opinion: "Plaintiffs' putative class action suffers from an insurmountable deficit of collective legal or factual questions."
Federal law "is not a one-way ratchet, empowering a judge to conform the law to the proof," it said.
Neither of the plaintiffs' theories of injury "is plausible as a matter of law." The plaintiffs' theory of distribution of damages "is an impermissible affront to defendants' due process rights."
Attorney Michael Hausfeld, who represented the smokers, said he planned to "go forward. One way or another, we're going to go ahead. We may seek a rehearing, we may go to the Supreme Court, or we may forgo all that and actually try one of the cases," he said.
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