U. S. Supreme Court refuses to extinguish light-cigarette fraud claims against tobacco companies

High Court clarifies role of federal preemption to protect victims’ rights

2009 February

In a decision that has been hailed as a resounding victory for federalism and victims’ rights, the U.S. Supreme Court held 5-to-4 in Altria v. Good (2008), 129 S.Ct. 538 that federal law does not preempt lawsuits against tobacco companies for defrauding the public by fraudulently advertising that their “light” cigarettes deliver less tar and nicotine than “regular” cigarettes.

The plaintiffs in the case allege that the cigarette manufacturers, in promotions and advertisements touting Marlboro and Cambridge Lights as “light” and having “lowered tar and nicotine,” violated Maine’s statutory prohibitions on fraudulent misrepresentation. The defending cigarette companies argued that the plaintiffs’ claims were: (1) expressly preempted by the Federal Cigarette Labeling and Advertising Act (the “Act”); and (2) impliedly preempted because “the [Federal Trade Commission (‘FTC’)] has for decades promoted the development and consumption of low tar cigarettes...” (Id. at 549.)

A majority of the Court rejected the defendants’ arguments on all counts. The decision starts by powerfully reaffirming the presumption against preemption of state law. It says: “When addressing questions of express or implied pre-emption, we begin our analysis ‘with the assumption that the historic police powers of the States [are] not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.’” (Id. at 543 (citation omitted).) “Thus,” the decision continues, “when the text of a pre-emption clause is susceptible of more than one plausible reading, courts ordinarily ‘accept the reading that disfavors preemption.’” (Ibid. (citation omitted).)

Against this backdrop, the Court rejected the tobacco companies’ argument that federal law both expressly and impliedly preempts claims that they violated Maine laws that prohibit fraudulent misrepresentation by promoting and advertising Marlboro and Cambridge Lights as “light” and having “lowered tar and nicotine.”

In regard to express preemption, the Court held that the Act does not immunize tobacco companies for making allegedly fraudulent statements. On this point, the tobacco companies relied on a provision of the Act stating that “[n]o requirement or prohibition based on smoking and health shall be imposed under State law with respect to the advertising or promotion of any cigarettes...” (Id. at 504 (quoting 15 U.S.C. § 1334(b)).) They argued that the plaintiffs’ attempt to hold the tobacco companies liable for fraudulently advertising their cigarettes as “light” constituted a “requirement or prohibition based on smoking and health” and thus is expressly preempted by the Act. The plaintiffs countered that success on their claims would not run afoul of the Act because they merely alleged a violation of the “general duty not to deceive” codified in the Maine Unfair Trade Practices Act (“MUTPA”). The Supreme Court agreed, holding that the MUTPA “says nothing about either ‘smoking’ or ‘health.’” Rather, the Court held, it is merely “a general rule that creates a duty not to deceive...” (Id. at 547.)

Regarding implied preemption, the tobacco companies argued that the plaintiffs’ claims should be held preempted because they conflict with the FTC’s allegedly “long-standing policy” of “promoting the development and consumption of low tar cigarettes...” (Id. at 549.) The Supreme Court rejected this argument without difficulty, noting that “[t]he Government itself disavows any policy authorizing the use of ‘light’ and ‘low tar’ descriptors.” (Id. (citing Brief for United States as Amicus Curiae at 16-33).) Given the United States’ position that it “has no long-standing policy authorizing” the advertising of cigarettes as “light,” the Court rejected the tobacco companies’ implied preemption argument as meritless.

Why Altria matters

•Putting victims first. The first reason why Altria matters is that the decision preserves the rights of thousands of consumers to hold tobacco companies liable for their fraudulent and deceptive misuse of the terms “light” and “ultra light” in their advertising and promotion of cigarettes. As one commentator has noted, not only will the Altria plaintiffs be allowed their day in court, but some 40 similar lawsuits pending in an array of other states - seeking billions of dollars in damages – also presumably can proceed. (See http://www.scotuswiki.com/index.php?title=Altria_Group_v._Good.)

This could lead to tremendous benefits for consumers of “light” cigarettes. As described in detail in our amici brief to the Court, more than 45 million Americans smoke cigarettes, and the vast majority of them – over 80 percent – smoke “light” or “ultra light” cigarettes. (See United States v. Philip Morris (D.D.C. 2006) 449 F. Supp. 2d 1, 508 appeal pending, No. 06-5267 et al. (D.C. Cir.).) More than half of these smokers believe, because tobacco companies repeatedly told them so, that “light” cigarettes are less dangerous than regular cigarettes and that switching to “light” cigarettes is a healthy alternative to quitting. (Id. at 467-68, 488-92, 513-29.) The scientific evidence, however, is unequivocal: “light” cigarettes are no less deadly than regular cigarettes and offer no health benefit whatsoever. The Supreme Court’s decision in Altria will not only permit “light” cigarette smokers to seek economic damages, but it may also result in many such smokers quitting cigarettes altogether.

• The presumption against preemption is alive and well. Altria also matters because it put to rest, for once and for all, any notion that the long-standing presumption against preemption no longer exists. On this point, Justice John Paul Stevens’ decision (which was joined by Justices Stephen G. Breyer, Ruth Bader Ginsburg, Anthony M. Kennedy, and David H. Souter) powerfully reaffirms the presumption, both in cases involving express and implied preemption. As noted above, the majority held that, “[w]hen addressing questions of express or implied preemption, we begin our analysis ‘with the assumption that the historic police powers of the States [are] not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.’” (Id. at 543 (citations omitted).)

In so ruling, the majority swatted back various conservative forces who have vociferously argued that the presumption against preemption should not be applied in either express or implied preemption cases. (See, e.g., Altria v. Good, Brief of Washington Legal Foundation as Amicus Curiae in Support of Petitioners, 2008 WL 976401 at *4 (arguing that the presumption against preemption “ought to be laid to rest”); Warner-Lambert v. Kent, Brief of the Chamber of Commerce of the United States of America as Amicus Curiae in Support of Petitioners, 2007 WL 4205141 at *14 (arguing that “there is no basis in the text of the Constitution for a presumption against preemption in any circumstance.”).) The majority’s decision leaves no room for doubt that the presumption against preemption is alive and well in all cases involving “the historic police powers of the States...” (129 S. Ct at 543 (citation omitted).)

The majority’s embrace of the presumption against preemption is also striking in light of the vehement disagreement voiced by Justice Clarence Thomas in dissent (joined by Chief Justice John G. Roberts, Justice Antonin Scalia, and Justice Samuel A. Alito, Jr.). (Id. at 551-63.) In the dissenters’ view, the presumption has “waned” in recent years, particularly in cases involving express preemption. (Id. at 557.) According to Justice Thomas, the presumption has only been invoked “sporadically” of late, and was notably absent from the Court’s recent decision in Riegel v. Medtronic (2008)128 S.Ct. 999, which held that federal law expressly preempts state common law claims challenging the safety and effectiveness of a medical device given premarket approval by the Food and Drug Administration. Justice Thomas observed that Riegel “interpreted the statute without reference to the presumption or any perceived need to impose a narrow construction on the provision in order to protect the police power of the States.” (129 S.Ct. at 557.) Based on the absence of any reference to the presumption in Riegel (and other recent cases), Justice Thomas vehemently argued that “there is no authority for invoking the presumption against preemption in express preemption cases.” (Id. at 558.)

Justice Thomas’ views on the matter, however, do not make it so. Whatever he and the other dissenting Justices believe about the viability of the presumption against preemption, the five-Justice majority opinion in Altria makes crystal clear that the presumption must be applied in all cases involving the historic police powers of the States. And, in the hotly contested area of federal preemption, the presumption can often prove to be the critical deciding factor between victory and defeat.

• Federal government inaction does not exert preemptive force. Altria also reaffirmed an important principle underlying the Supreme Court’s unanimous conclusion in Sprietsma v. Mercury Marine (2002) 537 U.S. 51, that the federal government’s inaction does not, standing alone, provide any basis for finding implied conflict preemption. In Altria, the tobacco companies pointed to the fact that the FTC had never expressly prohibited them from advertising their cigarettes as “light” as evidence that the plaintiffs’ claims would conflict with federal regulatory policy. (Id. at 550.) The majority made short shrift of this argument, noting that “agency non-enforcement of a federal statute is not the same as the policy of approval.” (Id. (citing Sprietsma, 537 U.S. at 51 (holding that the Coast Guard’s decision not to regulate propeller guards did not impliedly preempt the plaintiff’s tort claims).) This conclusion is of paramount importance in a day and age when the federal government, even in the best of times, lacks the resources necessary fully to enforce even a small fraction – let alone the full gamut – of consumer protection statutes on the books.

• Cipollone is still good law. Finally, and arguably most importantly, Altria is noteworthy for what it did not do: accept the tobacco companies’ invitation to overrule the Court’s landmark decision in Cipollone v. Liggett Group (1992) 505 U.S. 504, which affirmed cigarette smokers’ rights to bring intentional misrepresentation and other claims against tobacco companies. (See id. at 531 (holding that the Act “does not pre-empt petitioners’ claims based on express warranty, intentional fraud and misrepresentation, or conspiracy.”).) In arguing in favor of express preemption, the tobacco companies strongly urged the Court to overrule Cipollone, arguing that the Court’s fractured decision (which has caused some confusion among the lower courts) should be abandoned in favor of Justice Scalia’s view that the Act expressly preempts all cigarette-related claims. (See id. at 547-48.) While acknowledging that Cipollone analysis may have lacked “theoretical elegance,” the Altria majority “remain[ed] persuaded him that [the plurality’s ruling] represents ‘a fair understanding of Congressional purpose’.” (129 S.Ct. at 547 (quoting Cipollone, 505 U.S. at 529-30, n.27 (plurality opinion)).)

Any other conclusion would have been a disaster, both for consumers who had been tricked into buying “light” cigarettes and for the thousands of individuals who have suffered – and are suffering – terrible injuries and deaths caused by cigarettes.

These are just the most obvious lessons of Altria. As with any Supreme Court case, the full implications of the decision remain to be seen. But there is no doubt that the Court’s ruling is a tremendous victory for access to justice and for public health and safety.