US: Santa Fe Cigarette Lawsuits May Be Combined

Source from:  Winston-Salem Journal 01/19/2016

A third potential federal class-action lawsuit has been filed against Reynolds American Inc. and a subsidiary.

Meanwhile, the other plaintiffs want to combine their cases.

At stake are Santa Fe Natural Tobacco Co.'s organic and additive-free marketing claims for the Natural American Spirit brand.

Santa Fe emphasized the additive-free element when it launched the super-premium cigarette in 1982, well before Reynolds bought the company for $340 million in December 2001.

The latest complaint was filed Wednesday in the U.S. District Court for Southern New York. The other two complaints were filed Dec. 22 in New Mexico by six plaintiffs from four states, and in September in the Southern District of Florida

Reynolds and Santa Fe requested dismissal of the Florida lawsuit Dec. 16.

Attorneys for the Florida plaintiff filed a motion Friday that begins the process of transferring the claim to New Mexico.

Natural American is a Top 10 traditional cigarette brand in the U.S. with a 1.9 percent market share as of Sept. 30. Reynolds announced Wednesday it has completed selling the global trademark rights to Natural American to Japan Tobacco Group for $5 billion.

All three lawsuits piggyback on an Aug. 27 notice from the Food and Drug Administration that it had sent warning letters to Santa Fe and two other manufacturers. The letter said the manufacturers' advertising of their traditional cigarette products as "additive free" or "natural" is in violation of federal regulations.

The FDA warning came about a month after Santa Fe launched a national advertising campaign for Natural American with full-page ads in magazines such as Sports Illustrated, Time, Field and Stream, Southern Living, Architectural Digest, Vanity Fair and US Weekly.

It was the first time the FDA had used its authority under the Tobacco Control Act of 2009 to target additive-free and natural tobacco product labeling.

Santa Fe spokesman Seth Moskowitz said Aug. 27 that the company has provided the FDA with a written explanation of its marketing strategy. There has been no FDA or Reynolds public update since the notice.

The lawsuits share several claim counts, including: fraud; false advertising; negligent misrepresentations; unjust enrichment; and unfair competition.

Besides compensatory and punitive damages, the N.M. lawsuit plaintiffs want Santa Fe enjoined from selling Natural American cigarettes, to have to recall all cigarettes at retail, and conduct "a corrective advertising campaign."

The Florida and New York plaintiffs requests defendants pay for medical monitoring and smoking cessation programs.

The lawsuit likely boils down to which federal regulatory agency, the FDA or the Federal Trade Commission, has authority over the Santa Fe marketing claims.

In 2000, Santa Fe and the FTC reached a settlement in which Santa Fe agreed to include disclosures that "no additives in our tobacco does NOT mean safer." A similar agreement was reached with R.J. Reynolds Tobacco Co. with marketing for certain Winston styles.

The FDA said its authority supersedes the FTC agreement. The FDA determined that marketing the cigarettes as additive free and natural "represents explicitly and/or implies" that the products offer a modified risk or are less harmful to consumers without having FDA approval as a modified-risk product.

Santa Fe has said its organic tobacco is certified through the National Organic program of the U.S. Agriculture Department. Certified organic tobacco is grown without the use of pesticides and fertilizers prohibited under the program. Enditem