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Big Tobacco scored another significant win Thursday when a divided federal appeals court refused to revive a proposed class action civil rights suit brought by African-American smokers of menthol cigarettes who say they were targeted in an aggressive marketing campaign, but were never warned of the increased health risks of mentholated cigarettes. In Brown v. Philip Morris et al., Judge Jane R. Roth of the 3rd U.S. Circuit Court of Appeals found that civil rights laws were never designed to include such claims. Although a higher percentage of black smokers choose menthols when compared to white smokers, Roth also found that white smokers nonetheless account for a significant portion of the menthol market, and possibly a majority of that market. She also found that black smokers are free to purchase nonmenthol cigarettes. As a result, Roth concluded that a class of black smokers have no valid claims under Sections 1981 and 1982 of the Civil Rights Act. “We agree with the district court that black smokers’ allegations of racially targeted marketing of mentholated tobacco products cannot, in the absence of any disparity between the products sold to African-Americans and the products sold to others, constitute a deprivation of contract or property rights actionable under Sections 1981 or 1982,” Roth wrote in an opinion joined by U.S. Circuit Judge Maryanne Trump Barry. “Black smokers do not make the sort of claim that is most readily actionable under the statute: that they have been deprived by defendants of the right to contract for, purchase, own or use either menthol or non-menthol cigarettes,” Roth wrote. The plaintiffs, she said, never alleged that tobacco companies engaged in a “discriminatory refusal to deal” with African-Americans with respect to either menthol or non-menthol cigarettes. They also never alleged that tobacco companies dealt with customers on differing terms on the basis of race, instead conceding that they paid the same price as whites. As a result, Roth said, “it is difficult to understand black smokers’ allegations to constitute a deprivation of contract or property rights actionable under Sections 1981 or 1982.” Instead, she said, the suit seem to allege “quite the opposite situation” by accusing tobacco companies of encouraging blacks to consume more of their mentholated products. “The question at the heart of black smokers’ Section 1981 and 1982 claims, then, is whether such encouragement is unlawful under the civil rights statutes,” Roth wrote. But no court has ever held that “encouragement to deal” is actionable under civil rights laws, Roth said, although one appellate court has suggested that targeting consumers for sales of defective products on the basis of race is actionable. Roth concluded that the claims in the suit were actually “discriminatory advertising claims,” saying the plaintiffs “virtually admit as much when they characterize their claims as allegations of discriminatory targeting in sales of allegedly defective products.” Discriminatory advertising, she said, is not actionable under Sections 1981 and 1982. “Although black smokers argue that their claims resemble racial profiling and racially-motivated prepayment cases, all such fact patterns are distinguishable from [this] case because they involve either a naked, racially-motivated restriction on dealing or a race-based variation of the terms of the contract at issue,” Roth wrote. DISSENT But in dissent, visiting Senior U.S. District Judge Milton I. Shadur of the Northern District of Illinois said he would have given the black smokers a chance to gather evidence in an effort to prove their case. “I find it particularly poignant that we deal here with a group of defendants whose industry is centered in an area where blacks were once chattels, viewed as subhuman — again ironically in terms of the present litigation, chattels whose slave labor was responsible in large part for the economic success of the tobacco industry,” Shadur wrote. “Even though a century and a half has elapsed since that mindset was supposed to have been eliminated by the Civil War and by the post-War Civil Rights Acts (including Sections 1981 and 1982), all of us know that the reality of racial prejudice has unfortunately long outlived the theory embodied in those statutes,” Shadur wrote. Shadur said he believed the factual assertions in the suit were “solidly supported” and “not in the least fanciful.” The majority’s problems with the complaint, he said, “really represent skepticism as to their ability to prove causation and intent — classic issues of fact to be resolved by a fact-finding jury and not by judicial prescreening.” Tossing the suit out before any discovery, he said, “does violence to the fundamental principles of judicial reading of complaints.” Thursday’s ruling upholds a 1999 decision by U.S. District Judge John R. Padova, who found there was no authority for suing under civil rights laws over alleged “targeted” marketing. “Holding that defendants could limit plaintiffs’ freedom to contract or to own property simply by targeting plaintiffs with intensive advertising that caused plaintiffs to choose defendants’ dangerously defective mentholated tobacco products would require a radical departure from the jurisprudence of Sections 1981 and 1982, a departure this court is not prepared to make,” Padova wrote. The plaintiffs in the suit alleged that tobacco companies have for many years targeted African-Americans and their communities with specific advertising to lure them into using mentholated tobacco products. Every year, the suit said, the tobacco industry spends millions of dollars on advertising designed exclusively to appeal to African-Americans. Low-income African-American communities in major U.S. cities have more tobacco billboards than do neighboring more affluent white communities, the suit said. The suit relied heavily on a recently released report of the Surgeon General titled “Tobacco Use Among U.S. Racial/Ethnic Groups,” that documents the targeting of the African-American community by the tobacco companies. Based on the conclusions of the report, the suit alleged that, as part of its overall scheme, the tobacco industry intentionally replaces thousands of African-American users who die each year by unfairly and illegally targeting young African-Americans on the basis of their race. The report found that African-American daily smokers begin smoking when they are young, noting that 82 percent had their first cigarette before the age of 18; 62 percent before the age of 15; and 32 percent before the age of 14. “Thus, a black person who does not begin smoking in childhood or adolescence is unlikely ever to begin,” the report concluded, and the younger an African-American person begins to smoke, the more likely he or she is to become a heavy smoker and to die of lung cancer. The suit alleged that tobacco companies pursued a course of intentional conduct and a conspiracy of deception and misrepresentation against the African-American public to promote and maintain sales of mentholated tobacco products in order to maximize their profits. The alleged conspiracy consisted of three strategies: acting in concert to represent falsely that their mentholated tobacco products are safe for African-Americans to use; engaging in a concerted campaign to saturate the African-American community with dangerous, defective and hazardous products which they know cause harm, in violation of the civil and Constitutional rights of African-Americans; and misrepresenting, suppressing, distorting and confusing the truth about the health dangers of mentholated tobacco products. The plaintiffs in the appeal were represented by attorneys William R. Adams Jr. and Bruce M. Ludwig of Sheller Ludwig & Badey. Attorney Jeffrey G. Weil of Dechert argued the case for Philip Morris and was joined on the brief by Dechert attorneys Michael F. R. Harris, Matthew S. Miner and Alan C. Promer. B.A.T. Industries was represented by Christopher S. D’Angelo of Montgomery McCracken Walker & Rhoads; Lorillard Tobacco Co. was represented by Howard M. Klein and William J. O’Brien of Conrad O’Brien Gellman & Rohn; US Tobacco Co. was represented by Stephen J. Imbriglia of Hecker Brown Sherry & Johnson. Attorney Patrick W. Kittredge of Kittredge Donley Elson Fullem & Embrick represented the Council for Tobacco Research; the Smokeless Tobacco Council Inc. was represented by Wilbur L. Kipnes of Schnader Harrison Segal & Lewis; and Hill & Knowlton Inc. was represented by Richard L. Kremnick of Blank Rome Comisky & McCauley. RJR Nabisco Holdings was represented by Daniel F. Kolb and Anne B. Howe of Davis Polk & Wardwell in New York; R.J. Reynolds Tobacco was represented by Edward C. Schmidt of Jones Day Reavis & Pogue in Pittsburgh, along with Morton F. Daller of Daller Greenberg & Dietrich in Fort Washington; and the Liggett Group Inc. and Liggett & Myers Tobacco were represented by J. Kurt Straub and Jonathan W. Hugg of Obermayer Rebmann Maxwell & Hippel.

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