Monday, December 15, 2008
A sharply divided (5-4) Supreme Court ruled today in Altria Group, Inc. v. Good that plaintiffs' lawsuit against a cigarette manufacturer under a state fraud claim was not preempted by the Federal Cigarette Labeling and Advertising Act. I previously posted on the case here.
Plaintiffs brought their state claim against the cigarette manufacturer for fraudulently advertising that their "light" cigarettes delivered less tar and nicotine than regular brands. Defendants moved for summary judgment and won: the district court ruled that the federal Labeling Act preempted plaintiffs' fraud claim under the Maine Unfair Trade Practices Act. The First Circuit reversed, and the Supreme Court today upheld. The Court's ruling resolves the "apparent conflict" in the circuits as to whether state fraud claims were actually "warning neutralization" claims and thus expressly preempted by the Labeling Act under Cipollone v. Liggett Group, Inc. (1992). The First Circuit's opinion in this case and the Fifth Circuit's 2007 opinion in Brown v. Brown & Williamson Tobacco Corp. represent the two sides of the circuit split.
The Labeling Act's preemption provision, sec. 5(b), reads as follows:
No requirement or prohibition based on smoking and health shall be imposed under State law with respect to the advertising or promotion of any cigarettes the packages of which are labeled in conformity with the provisions of this chapter.
In determining whether a state claim is preempted under 5(b), the Cipollone plurality looked to
whether the legal duty that is the predicate of the common-law damages action constitutes a "requirement or prohibition based on smoking and health . . . with respect to . . . advertising or pormotion," giving that clause a fair but narrow reading.
Here, the MUTPA is not a "requirement or prohibition based on smoking or health"; instead it simply creates a duty not to deceive. This is true, even though any injuries included the harm to the plaintiffs' health from smoking "light" cigarettes. The Court:
It is true, as petitioners argue, that the appeal of their advertising is based on the relationship between smoking and health. And although respondents have expressly repudiated any claim for damages for personal injuries, their actual injuries likely encompass harms to health as well as the monetary injuries they allege. These arguments are unavailing, however, because the text of [the preemption provision] does not refer to harms related to smoking and health. Rather, it pre-empts only requirements and prohibitions--i.e., rules--that are based on smoking and health. The MUTPA says nothing about either "smoking" or "health."
Thus under the plain language of the Labeling Act's preemption provision and the MUTPA, and under the Cipollone (plurality) test, plaintiffs' fraud claims were not expressly preempted. (The Court declined the petitioners' invitation to reconsider the Cipollone test.)
Moreover, wrote the Court, the plaintiffs' claims were not impliedly preempted:
[The history of Federal Trade Commission labeling policies] shows that, contrary to petitioners' suggestion, the FTC has no longstanding policy authorizing collateral representations based on Cambridge Filter Method test results. Rather, the FTC has endeavored to inform consumers of the comparative tar and nicotine content of different cigarette brands and has in some instances prevented misleading representations of Cambridge Filter Method test results. The FTC's failure to require petitioners to correct their allegedly misleading use of "light" descriptors is not evidence to the contrary; agency nonenforcement of a federal statute is not the same as a policy of approval.
More telling are the FTC's recent statements regarding the use of "light" and "low tar" descriptors. . . . "It d[id] not apply to other conduct or express or implied representations, even if they concern[ed] tar and nicotine yields."
Justice Thomas's dissent (joined by Chief Justice Roberts and Justices Scalia and Alito) focused on the unworkability of the Cipollone test. Justice Thomas recommended Justice Scalia's test (from his Cipollone opinion) as a workable alternative for the lower courts:
The majority today ignores these problems and adopts the methodology of the Cipollone plurality as governing law. As a consequence, the majority concludes that state-law liability for deceiving purchasers about the health effects of smoking light cigarettes is not a "requirement or prohibition based on smoking and health" under the Labeling Act. The Court's fidelity to Cipollone is unwise and unnecessary. The Court should instead provide the lower courts with a clear test that advances Congress' stated goals by interpreting sec. 5(b) to expressly pre-empt any claim that "imposes an obligation . . . because of the effect of smoking upon health."
The Court's ruling today simply means that the plaintiffs' lawsuit can go forward; it says nothing on the merits of their MUTPA claims.