In a surprise 5-4 decision Monday, the Supreme Court ruled that a state lawsuit brought by Maine smokers could proceed against Altria Group, parent company of Philip Morris USA, for fraudulently advertising the health benefits of "light" cigarettes.
Justice John Paul Stevens, writing for the majority in Altria Group v. Good (pdf), rejected Altria's assertion that the Federal Cigarette Labeling and Advertising Act pre-empts state tort actions. The ruling runs against the Court's recent trend in favor of federal pre-emption in cases involving tort litigation against businesses.
Altria had argued that in passing the law, Congress sought to regulate advertising with one set of rules, not 50 that might be imposed through state actions. The company was represented at oral argument by former solicitor general Theodore Olson, now a partner at Gibson, Dunn & Crutcher.
But Stevens said the law only pre-empted state action that would require additional warning labels on cigarette packs. The law, he wrote, does not limit "states' authority to prohibit deceptive statements in cigarette advertising."
Stephanie Good and other Maine smokers of light cigarettes claimed the advertising was fraudulently based on testing that ignored the fact that, in real life, smokers "compensate" for the lower tar and nicotine of light cigarettes by inhaling more deeply or covering filter ventilation holes.
Invoking diversity jurisdiction, the smokers filed in federal district court but cited a Maine unfair business practices law. The district court dismissed the case on pre-emption grounds, but the 1st U.S. Circuit Court of Appeals reinstated it.
Stevens based the decision on his reading of the Court's 1992 decision Cipollone v. Liggett Group. That ruling, which Olson called "baffling, confusing, litigation-generating" during oral argument, favored pre-emption for some claims, but not for fraudulent misrepresentation, according to Stevens. Joining Stevens were Justices Anthony Kennedy, David Souter, Ruth Bader Ginsburg, and Stephen Breyer.
Justice Clarence Thomas dissented, joined by Chief Justice John Roberts Jr. and Justices Antonin Scalia and Samuel Alito Jr. Thomas warned that the majority opinion will trigger "an untold number of deceptive-practices lawsuits across the country."
Ilya Shapiro of the Cato Institute agreed with Thomas, warning in a statement that because of Monday’s ruling, "not only will cigarette manufacturers who dutifully comply with federal law now face countless suits under countless state laws, but their fates in those suits will hinge on the creativity of counsel and the gullibility of judges." He also said the ruling's reasoning could have an impact on the other major pre-emption case pending before the Court: Wyeth v. Levine, in which drug makers seek federal pre-emption of state lawsuits claiming harm from prescription drugs.
Les Weisbrod, president of the American Association for Justice -- a trial lawyers group that filed an amicus brief for the smokers -- said in a statement, "State laws have an important role to play in helping the federal government police false claims, and today's decision supports that role."
The ruling was a victory for David Frederick, a partner at Kellogg, Huber, Hansen, Todd, Evans & Figel in D.C. He argued for the Maine smokers and also represents Diana Levine, the plaintiff in the pending Wyeth case.
Issued at the final sitting of the Court this calendar year, the Altria decision is only the second signed opinion of the current term. Last term at this point, the Court had issued five signed opinions, and the term before, it had released four.