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Tobacco companies won a major victory last week as the 2d U.S. Circuit Court of Appeals ruled that lawsuits seeking economic damages due to their alleged deception about the relative safety of light cigarettes cannot be pursued as a class action. Saying the “putative class action suffers from an insurmountable deficit of collective legal or factual questions,” the 2d Circuit in McLaughlin v. American Tobacco Co., No. 06-4666-cv, reversed a decision by U.S. District Judge Jack B. Weinstein of the Eastern District of New York to certify a class action brought under the Racketeer Influenced and Corrupt Organizations Act (RICO). The lawsuit claims tobacco companies promoted light cigarettes as a lower-risk alternative to regular cigarettes, even though their internal documents showed they knew the risks were about the same. The class may consist of as many as 60 million people, lawyers say. The appeals court said each individual would have to prove whether they relied completely, in part or not at all on marketing misrepresentations in purchasing light cigarettes. “While redressing injuries caused by the cigarette industry is ‘one of the most troubling . . . problems facing our nation today’ . . . not every wrong can have a legal remedy . . . at least not without causing collateral damage to the fabric of our laws,” Judge John M. Walker Jr. wrote for the 2d Circuit. The decision was joined by Judges Ralph K. Winter and Rosemary S. Pooler. Theodore Grossman of Jones Day, who represented R.J. Reynolds Tobacco Co., Philip Morris USA Inc. and the other cigarette makers, said the decision will have a “profound” impact on a number of similar actions in state courts around the country that are based on allegations of consumer fraud. Michael D. Hausfeld of Cohen, Milstein, Hausfeld & Toll in Washington, who represented the plaintiffs, called the decision “wrong,” and said he plans “to pursue the litigation” either through petition for rehearing en banc, petition for a writ of certiorari to the Supreme Court or through trial. Weinstein issued a 540-page opinion certifying the class in 2006. Smokers seeking treble damages that could go as high as $800 billion claimed they bought the tobacco companies’ line that light cigarettes were healthier than “full-flavored” cigarettes and therefore bought more of the products and paid more for them. But Walker wrote, “Most smokers who smoke Lights obtain just as much tar and nicotine as they would if they smoked full-flavored cigarettes, principally by ‘compensating’ � that is, either by inhaling more smoke per cigarette (e.g., by covering ventilation holes, drawing more deeply with each puff, etc.) or by buying more,” practices that cannot be tested by a machine used by the Federal Trade Commission. “Cigarette manufacturers have apparently been aware of this phenomenon for some time,” he said. For a class to be certified under RICO, “each plaintiff must prove reliance, injury and damages,” the circuit noted. Weinstein had ruled that the plaintiffs could prove misrepresentation by the tobacco companies on the relative safety of light cigarettes and reliance on those misrepresentations on a class-wide basis. But Walker said that proof of misrepresentation satisfies only half the equation; the other half, reliance on the misrepresentation, cannot be the subject of general proof.

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