Saturday, December 4, 2010

Tobacco Companies Appeal Class Action Judgment to Supreme Court

Tobacco companies Philip Morris, Brown & Williamson, R.J. Reynolds, Lorillard, and The Tobacco Institute filed a Petition for Writ of Certiorari in the Supreme Court last Thursday to appeal a $271 million judgment in a class action in Louisiana state court based on fraud.  The judgment would go into a 10-year smoking cessation program designed to benefit the class of Louisiana smokers.

Petitioners argue that the class action device in their case violated due process because it "permits state courts to impose massive liablity in a class action without a truly representative trial of indivudal claims."  Brief at 12.  Particularly: They were denied any meaningful opportunity to cross-examine the class representatives, both of whom had "already quit smoking years before the trial."  Brief at 12-13.

Petitioners appealed to the Louisiana Supreme Court, but that court declined to review the case.

Petitioners previously won a stay from Justice Scalia, acting as Circuit Justice.  Justice Scalia was principally concerned about the Lousiana court's use of the aggregation device to allow plaintiffs to dodge proof of fraud in individual cases.  He wrote in his Opinion in Chambers on September 24, 2010, that

[a]pplicants complain of many violations of due process . . . [b]ut one asserted error in particular (and perhaps some of the others as well) implicates constitutional constraints on the allowable alteration of normal process in class actions.  This is a fraud case, and in Louisiana the tort of fraud normally requires proof that the plaintiff detrimentally relied on the defendant's misrepresentations. . . .  But the Court of Appeals held that this element need not be proved insofar as the class seeks payment into a fund that will benefit individual plaintiffs, since the defendants are guilty of a "distort[ion of] the entire body of public knowledge" on which the "class as a whole" has relied.  Thus, the court eliminated any need for plaintiffs to prove, and denied any opportunity for applicants to contest, that any particular plaintiff who benefits from the judgment (much less all of them) believed applicants' distortions and continued to smoke as a result.


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