June 28, 2011

Supreme Court Rejects Tobacco Appeal

The U.S. Supreme Court rejected an appeal by the nation's major tobacco companies to spend $242 million on a Louisiana smoking cessation program.

Philip Morris USA Inc., a Reynolds American Inc. unit, a Lorillard Inc. unit and British American Tobacco Plc's Brown & Williamson unit argued that the lower court had improperly allowed the case to proceed as a class action on behalf of more than 500,000 smokers.

At issue in the Louisiana case was whether several tobacco companies committed fraud by concealing and misrepresenting the addictiveness of nicotine.

The tobacco companies argued that the Louisiana courts denied them of constitutional due-process protections because the plaintiffs were not required to prove that their decisions to smoke were related to the industry's alleged false statements.

The litigants would have been required to make such a showing if the case had been an individual lawsuit, rather than a class action, the cigarette makers said.

The tobacco companies argued that the two representatives for the plaintiffs who testified at the trial smoked for reasons unrelated to any statements by the industry

However, lawyers for the plaintiffs disputed this, saying testimony at trial showed that cigarette advertising was a factor in the plaintiffs' decision to start smoking.

The lead Louisiana plaintiff, Deania Jackson, urged the high court not to hear the tobacco industry's appeal, saying she was suing under a state law that doesn't require individualized proof.

Jackson also argued that no individual plaintiff would file a lawsuit seeking smoking-cessation services valued at $153 a year.

"That Louisiana makes such a cause of action available as a class action without requiring proof of individualized reliance on misrepresentations does not implicate the due process clause," she said.

The tobacco companies said the court judgment, with interest, now stands at $270 million.

The case is Philip Morris USA v. Jackson, 10-735.


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