Altria Fails to Block California Smokers' Lawsuit

Source from:  Bloomberg 05/20/2009

Altria Group Inc., the maker of Marlboro cigarettes, and other tobacco companies lost a bid to block a group lawsuit claiming that they misled thousands of Californians about the dangers of smoking. A divided California Supreme Court today reinstated a class-action, or group, lawsuit against tobacco companies, saying each smoker in the case isn't required to prove that they relied on specific false statements when the alleged misrepresentations were part of "an extensive and long-term advertising campaign." Altria, the Richmond, Virginia-based parent company of Philip Morris USA, is the largest U.S. tobacco company. The lawsuit names Philip Morris and seven other tobacco companies as defendants. The court also said that a 2004 California law requiring plaintiffs in group lawsuits to have personally been injured by a company's fraudulent conduct didn't require reversal of a lower court ruling that allowed smokers to sue as a group. "We believe the California Supreme Court reached the wrong conclusion by requiring the trial court to reconsider whether this case can move forward as a class action," Murray Garnick, Altria associate general counsel, said in an e-mailed statement. "Significant Defenses" "We continue to have many significant defenses to both class certification and on the merits, and we believe this case should ultimately be dismissed," Garnick said. The case, filed in 1997, accused tobacco companies of making misleading statements about the health risks and addictiveness of smoking, and sought restitution for money that smokers spent on cigarettes. In 2004, a trial court dismissed claims related to the tobacco companies' use of the term "lights" and "low tar." The court let the case proceed as a group lawsuit on unfair competition claims. The court defined the group as all California residents who smoked one or more cigarettes between 1993 and 2001. That same year, California voters approved a measure called Proposition 64 that required plaintiffs suing for fraudulent behavior to show that they had personally suffered injury or financial loss. Corporations lobbied for passage of the law to reduce the number of class action cases in California. Previously, an uninjured person could sue on behalf of others. Too Many Differences A lower court ruled that the smokers' case couldn't proceed as a class action because some of the plaintiffs didn't meet that requirement, and there were too many differences among California smokers to include them in a single lawsuit. The California Supreme Court today said even if the plaintiffs in the case didn't meet the requirement, the case shouldn't be decertified as a class action. Instead, the plaintiffs should be allowed to amend the lawsuit to redefine the group that is suing or find new class representatives. Mark Robinson, an attorney representing smokers, said he's considering amending the lawsuit to ensure that the named plaintiffs meet the Proposition 64 requirement. The case will also be amended to renew claims over tobacco companies' "light" cigarette ads, Robinson said in a telephone interview today. The case was referred back to state court in San Diego, which should apply the California Supreme Court's decision when deciding how the case should proceed, the ruling said. The U.S. Supreme Court ruled in December that smokers can sue over such marketing, saying a federal labeling law doesn't shield cigarette companies from suits accusing them of deceiving customers by describing cigarettes as "light" or "low tar." Altria fell 10 cents to $16.88 at 4:36 p.m. in New York Stock Exchange composite trading. The case is In Re Tobacco II Cases, S147345, California Supreme Court (San Francisco). Enditem