Blow to Philip Morris in class-action suit
Blow to Philip Morris in class-action suit
By Patti Waldmeir in Washington
Copyright The Financial Times Limited 2007
Published: June 11 2007 21:38 | Last updated: June 11 2007 21:38
The US Supreme Court on Monday reinvigorated some tobacco lawsuits when it refused to allow Philip Morris to fight cases involving deceptive marketing of “light” cigarettes in federal court, rather than in more plaintiff-friendly state trials.
The court ruled unanimously that Philip Morris, the big US cigarette maker, could not transfer a class action lawsuit alleging deceptive marketing of light cigarettes from the Arkansas state court, where it was filed, to federal court. US companies often prefer to fight class-action lawsuits in federal court, which they see as fairer to corporate defendants.
Philip Morris argued that the case should be shifted to federal court because the Federal Trade Commission, the US consumer watchdog, closely supervises testing of cigarettes.
“We can find nothing that warrants treating the FTC/Philip Morris relationship as distinct from the usual regulator/regulated relationship,” Justice Stephen Breyer wrote for the court. Ruling the other way could have let companies in a wide range of highly regulated industries escape from state courts, against the wishes of Congress, he wrote.
The ruling could affect all “lights” cases alleging deceptive marketing, including those involving other tobacco companies. Smokers have filed similar suits in 20 states.
The plaintiffs who brought the case said Philip Morris engaged in unfair business practices in marketing its lights brands. The case centred on a federal law that says a “person acting under a federal officer” can shift lawsuits to federal court. Philip Morris argued that the tobacco companies were “acting under a federal officer” by testing cigarettes for tar and nicotine.
If that argument had been accepted, it would have “severely damaged the ability of consumers harmed by corporate fraud to achieve a remedy in state court”, said Edward Sweda, senior attorney for the Tobacco Products Liability Project at Northeastern University School of Law.
The Supreme Court also ruled in several other business-related cases yesterday. The justices decided against imposing new restrictions on how US companies in bankruptcy can handle their pension plans. They also refused to impose minimum wage and maximum hours rules for home healthcare workers who are employed by an employment agency.
The court also ruled that companies that voluntarily clean up environmental problems can try to recoup their costs by suing other businesses and the federal government.
By Patti Waldmeir in Washington
Copyright The Financial Times Limited 2007
Published: June 11 2007 21:38 | Last updated: June 11 2007 21:38
The US Supreme Court on Monday reinvigorated some tobacco lawsuits when it refused to allow Philip Morris to fight cases involving deceptive marketing of “light” cigarettes in federal court, rather than in more plaintiff-friendly state trials.
The court ruled unanimously that Philip Morris, the big US cigarette maker, could not transfer a class action lawsuit alleging deceptive marketing of light cigarettes from the Arkansas state court, where it was filed, to federal court. US companies often prefer to fight class-action lawsuits in federal court, which they see as fairer to corporate defendants.
Philip Morris argued that the case should be shifted to federal court because the Federal Trade Commission, the US consumer watchdog, closely supervises testing of cigarettes.
“We can find nothing that warrants treating the FTC/Philip Morris relationship as distinct from the usual regulator/regulated relationship,” Justice Stephen Breyer wrote for the court. Ruling the other way could have let companies in a wide range of highly regulated industries escape from state courts, against the wishes of Congress, he wrote.
The ruling could affect all “lights” cases alleging deceptive marketing, including those involving other tobacco companies. Smokers have filed similar suits in 20 states.
The plaintiffs who brought the case said Philip Morris engaged in unfair business practices in marketing its lights brands. The case centred on a federal law that says a “person acting under a federal officer” can shift lawsuits to federal court. Philip Morris argued that the tobacco companies were “acting under a federal officer” by testing cigarettes for tar and nicotine.
If that argument had been accepted, it would have “severely damaged the ability of consumers harmed by corporate fraud to achieve a remedy in state court”, said Edward Sweda, senior attorney for the Tobacco Products Liability Project at Northeastern University School of Law.
The Supreme Court also ruled in several other business-related cases yesterday. The justices decided against imposing new restrictions on how US companies in bankruptcy can handle their pension plans. They also refused to impose minimum wage and maximum hours rules for home healthcare workers who are employed by an employment agency.
The court also ruled that companies that voluntarily clean up environmental problems can try to recoup their costs by suing other businesses and the federal government.
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