Courts stamp out industry claims about 'light' cigarettes.

Tobacco companies have marketed "light" cigarettes as a healthier, safer alternative to regular cigarettes for years. Yet people who smoke them say the "lights" deliver as much tar and nicotine to smokers as regular cigarettes--and therefore are just as addictive and hazardous to health.

In a series of lawsuits, smokers and the federal government have alleged that the tobacco industry misled consumers about the risks of light cigarettes and should be held liable for the deception.

"They're selling a fraud," said Gerson Smoger, an Oakland, California, lawyer who represents plaintiffs suing tobacco companies. "We have been trying for eight years to get one simple thing: Stop calling these things 'lights' and deceiving the American consumer."

In one case that the U.S. Department of Justice (DOJ) brought against cigarette manufacturers, Judge Gladys Kessler ordered the defendants to stop marketing and selling cigarettes as "light" and "low-tar" and to issue corrective statements. (United States v. Philip Morris USA, Inc., 2006 WL 2380622 (D.D.C. Aug. 17, 2006).) The defendants moved to stay the final judgment and remedial order pending appeal, and the appeals court granted their motion. (No. 06-5267 (D.C. App. Oct. 31, 2006).)

In another federal court, Judge Jack Weinstein recently certified a class including all purchasers of light cigarettes, holding that class members were "induced by fraud" to buy the cigarettes and that they "suffered financial damage because they did not get what they thought they were getting--a more valuable, safer cigarette." (Schwab v. Philip Morris USA, Inc., 2006 WL 2726102 (E.D.N.Y. Sept. 25, 2006).) Schwab is the first "lights" case to be certified as a class action in federal court.

The results of tobacco cases in recent years have been mixed. However, "a lot of things have started going right in tobacco litigation that, over the next year, could totally reinvigorate it," said Richard Daynard, a law professor at Northeastern University in Boston and chair of the Tobacco Products Liability Project.

In the DOJ case, the court held that the manufacturers engaged in a scheme to defraud smokers and potential smokers, falsely denied the adverse effects of smoking and that nicotine and smoking are addictive, and falsely represented that light and low-tar cigarettes deliver less nicotine and tar and present fewer health risks than regular, full-flavor cigarettes.

Kessler held that the tobacco companies violated the RICO statute. The government had proposed disgorgement, but the court held that it was not a permissible remedy under RICO.

Some types of light cigarettes contain the same amount of nicotine as regular cigarettes. But even when lights contain less, smokers end up getting the same level of nicotine by inhaling more deeply and/or covering the filter holes--a process called "smoker compensation."

Smoger explained that lights contain more holes in the filter, which "bring sidestream air into the shaft of the cigarette." When the cigarettes are tested by machine, the machine receives less nicotine from the lights, but when people smoke them, they puff harder to compensate.

Altria (Philip Morris's parent company) said in a statement about the case on its Web site that "the Federal Trade Commission has mandated the method for measuring cigarette tar and nicotine yields. Yet the DOJ now effectively asserts that defendants' compliance with those regulations is somehow insufficient and thus fraudulent."

Kessler noted that the defendants "manipulated the use of nicotine so as to increase and perpetuate addiction, they distorted the truth about low-tar and light cigarettes so as to discourage smokers from quitting, and they abused the legal system in order to achieve their goal--to make money with little, if any, regard for individual illness and suffering, soaring health costs, or the integrity of the legal system."

These efforts have been successful, Kessler concluded. "Even though low-tar smokers have a greater desire to quit, their misconception that low-tar cigarettes are less harmful dissuades them from doing so," she wrote.

Kessler had cautioned against granting the defendants a stay. "Smokers, potential smokers, young people exposed to defendants' extensive and ubiquitous advertising and marketing campaigns, and those exposed (particularly the very young and elderly) to environmental tobacco smoke ... will be directly and seriously harmed if a stay is granted and the remedial order is not left in place to ensure that further violations of RICO do not occur," she wrote.

Daynard noted that "there's a strong argument to be made that a stay would be inappropriate, because the evidence of fraud is so overwhelming."

Class questions

Michael Hausfeld of Washington, D.C., who represents the Schwab plaintiffs, emphasized that class actions are essential in these cases. The court agreed with him.

If each smoker had to be considered separately, "it would be impossible to proceed with a suit of this nature even if it were absolutely clear that each plaintiff had been damaged in the manner plaintiffs allege," Weinstein wrote. "Denial of certification will sound the death knell of this suit."

On the other hand, Altria stated on its Web site: "Tobacco companies contend that individual issues overwhelm common questions and fail to meet the predominance or superiority requirements necessary to class certification."

Weinstein noted, "Candor impels recognition of the fact that the courts of appeals have not been kind to massive claims against tobacco companies. Despite repeated findings of fact by judges and juries supporting claims of fraud, appellate courts have repeatedly dismissed such cases whether the claim was for consumer fraud, personal injury, or third-party damages for costs of medical treatment. The defendants make a strong case that this suit, too, must founder on that appellate predilection for individual suits."

Hausfeld said class actions are an appropriate way to address deceptive marketing, because the manufacturers directed their advertisements to smokers as a group rather than to each individual smoker. The class action provides a procedural mechanism that matches the misconduct, he said.

Smoger noted that few cases have been filed since Congress passed the Class Action Fairness Act (CAFA) last year. Because CAFA requires that the principal defendant in state actions be from that state--and because the tobacco companies are largely concentrated in three states (Delaware, North Carolina, and Virginia)--the law moves most cases into federal court.

Some state actions have been brought in federal court, Smoger said, but "nobody really likes to have a state-only case before a federal panel."

If Schwab is upheld, it will have a significant effect on class certification in general, Hausfeld said. The case involves "the most massive alleged fraud, to this point, that has existed in American jurisprudence, and it provides methods--short of individual trials--to address this massive fraud."

Philip Morris applied for stay and interlocutory review of Schwab on October 6.

A few lights cases--including class actions filed before CAFA took effect--are pending in state courts.

* In a personal injury case, a Missouri appeals court affirmed a trial court's judgment in favor of the plaintiffs, a man who smoked light cigarettes and his wife. (Thompson v. Brown & Williamson Tobacco Corp., 2006 WL 2403153 (Mo. App. Aug. 22, 2006).)

* Lights smokers in Missouri filed a class action under the Merchandising Practices Act in Craft v. Philip Morris Cos. The appeals court upheld a modified class. (190 S.W.3d 368 (Mo. App. Aug. 16, 2005.)

* Philip Morris USA, Inc. v. Hines is pending before the Florida Supreme Court. An appeals court decertified a class action alleging that tobacco companies violated Florida's Deceptive and Unfair Trade Practices Act by their conduct in designing, marketing, and selling lights. (883 So. 2d 292 (Fla. Dist. App. Dec. 31, 2003).)

The Illinois Supreme Court also addressed the issue in Price v. Philip Morris, Inc. The court declined the plaintiffs' petition to rehear a class action. The trial court had found the manufacturer liable for fraud for selling light cigarettes, and the state supreme court had reversed that judgment. (848 N.E.2d 1 (Ill. May 5, 2006).)

The legal fight over light-cigarette marketing has drawn attention in Congress. In September, Sen. Frank Lautenberg (D-N.J.) introduced the Truth in Cigarette Labeling Act, which would prohibit tobacco companies from using health-related descriptors such as "light" and "low tar" in advertising their products.

"Big tobacco's lawyers are trying to drag the case [United States v. Philip Morris] out in court," Lautenberg stated in a press release. "That's why we need to move fast to help stop the cigarette companies from continuing to make these fraudulent claims."

Smoger noted that in the DOJ case and the Schwab case, "substantial documentation and substantial testimony went into each of these determinations." At the very least, these cases have established the cigarette makers' fraud, he said. The only way the tobacco companies "have ever been able to defend--to the extent that they've defended anything successfully--is on procedural grounds, never on the merits," he added.

To avoid individual cases, tobacco companies try to make them "more expensive to bring than any possible compensatory award," Smoger said. "The unknown factor for them--because you can gauge compensatory verdicts in some kind of range--is the punishment for truly outrageous behavior, because they knew they were killing People, and they lied about it."