U.S. Supreme Court to Hear Oral Arguments
on Wednesday in Consumer Protection Lawsuit Brought on
Behalf of Victims of Philip Morris’ “Light” Cigarette Scam

No. 05-1284

In the Supreme Court of the United States

LISA WATSON, ET AL., PETITIONERS

v.

PHILIP MORRIS COMPANIES, INC., ET AL.

ON WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT

            The U.S. Supreme Court on Wednesday, April 25^th will hear oral arguments in an appeal of an Eighth Circuit Court of Appeals ruling that, if upheld, would severely damage the ability of consumers harmed by corporate fraud to achieve a remedy in state court.

 

            The Watson, et al. v. Philip Morris Companies, Inc. case (the docket is at http://www.supremecourtus.gov/docket/05-1284.htm ) began as a class action, brought in state court under Arkansas law, based on Philip Morris’ fraudulent marketing and sale of so-called “light” cigarettes.  Smokers of those cigarettes were deceived by Philip Morris’ scam wherein those “light” cigarettes were characterized as a safer, or less hazardous alternative, to regular cigarettes.

             Similar lawsuits have been filed in more than 20 states.  Philip Morris, a private corporation, invoked the Federal Officer Removal Statute -- 28 U.S.C. sec. 1442(a)(1) – to remove the case to federal court.  The purpose of the statute is to protect federal officers and federal employees by allowing them to move actions against them to a federal forum to avoid possible state court prejudice when they are enforcing unpopular federal laws. The district court had denied the plaintiffs’ motion to remand the case back to state court; in August 2005, the U.S. Court of Appeals for the Eighth Circuit affirmed the district court’s judgment.

             On Wednesday morning at approximately 11:00 A.M., the U.S. Supreme Court will hear oral arguments in the Watson case, which has presented the following question: Whether a private actor doing no more than complying with federal regulation is a “person acting under a federal officer” for the purpose of 28 United States Code section 1442(a)(1), entitling the actor to remove to federal court a civil action brought in state court under state law.  In August 2005, the U.S. Court of Appeals for the Eighth Circuit answered that question “Yes,” in the Arkansas class action lawsuit.

             However, the U.S. Solicitor General, Paul D. Clement, submitted an amicus curiae brief (see  http://www.usdoj.gov/osg/briefs/2006/3mer/1ami/2005-1284.mer.ami.pdf) in which he concluded that: “The Court of Appeals’ conclusion that the FTC has exercised comprehensive control over respondent’s advertising of light cigarettes is incorrect. The conclusion that this case is removable under the federal officer removal statute is substantially wide of the mark.”

             On January 12, 2007, the U.S. Supreme Court granted certiorari in the case.  Since then, tobacco-friendly stock analysts have downplayed the importance of the Eighth Circuit’s August 2005 ruling in the case.  In the wake of the increasing likelihood of the U.S. Supreme Court overturning the Eighth Circuit’s decision in the Watson case, David J. Adelman of Morgan Stanley on March 6, 2007 said that although the “Watson venue-transfer argument was an added arrow in the industry’s defensive arsenal, it has absolutely not been an important component of the industry’s overall Lights-related legal defense.  Hence, the potential loss of that defense should not at all be worrisome or of concern.”      

                 However, this analysis contrasts sharply with how the tobacco industry had previously described the Eighth Circuit’s decision.     In commenting immediately after that 2005 ruling, William S. Ohlemeyer, Philip Morris USA’’s vice president and associate general counsel, said that “the very same thing that the plaintiffs were complaining about and suggesting was deceptive was the exact same thing that the FTC says that we have to do and the company has to do when it advertise those cigarettes in order to avoid being deceptive.”  Thus, the case should be removed to federal court from state court, which is, according to Bonnie Herzog of Citigroup, “typically a much less favorable venue for defendants.”

             In a March 10, 2006 letter to company shareholders, Louis Camilleri, CEO of Philip Morris’ parent company, Altria Group, Inc., said that while the plaintiffs in the Watson case “have indicated that they intend to seek United States Supreme Court review of this decision, we believe that this ruling has important ramifications going forward.”                   

            “It is imperative that the U.S. Supreme Court reverse the Eighth Circuit’s overbroad and historically inaccurate opinion in this case,” said Edward L. Sweda, Jr., Senior Attorney for the Tobacco Products Liability Project, which is based at Northeastern University School of Law in Boston and is a project of the Public Health Advocacy Institute (which signed onto the amicus curiae brief submitted by Publuic Citizen, Inc.).  “It is also important that other industries regulated by a federal agency not be allowed to evade state law simply by virtue of the fact that they are being regulated,” Sweda added. Mr. Sweda will be attending the oral arguments on April 25.

             Mark Gottlieb, Director of the Tobacco Products Liability Project, added that, “the Eight Circuit’s ruling that Philip Morris is, in effect, a federal officer simply ‘following orders’ and needs protection from state courts is comical.  That this conclusion is based on little if any real regulatory action by the Federal Trade Commission is laughable.  But a failure of the Supreme Court to reverse would be tragic for consumers of ‘light’ cigarettes and any other consumer product subject to any federal regulation.”

             The petitioners’ brief is at http://www.abanet.org/publiced/preview/briefs/pdfs/06-07/05-1284_Petitioner.pdf while the respondent’s brief is at http://www.abanet.org/publiced/preview/briefs/pdfs/06-07/05-1284_Respondent.pdf

             An amicus curiae brief from Public Citizen, Inc. (along with AARP, National Association of Consumer Advocates, US PIRG, Consumer Federation of California, Congress of California Seniors and Public Health Advocacy Institute, Inc.) is at http://www.citizen.org/documents/watsonmerits.pdf .  This brief summarizes the negative impact that the Eighth Circuit ruling would have for consumers were it upheld.