Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Ohio: Class certification denied in Ohio “light” cigarette case, (Mar 3, 2014)

By Edward L. Puzzo, J.D.

The federal district court in Akron, Ohio has denied class certification in a case against a tobacco company for economic damages incurred when cigarettes advertised as “light” were found to be no lower in tar and nicotine than their regular brand (Phillips v. Philip Morris Companies Inc., February 28, 2014, Lioi, S.).

Eva Marie Phillips sought to certify as a class action her claims against Philip Morris USA based on its marketing of “Marlboro Light” cigarettes. She alleged that the use of terms such as “Light”, “Low Tar,” and “Lowered Tar and Nicotine,” when in fact the cigarettes had the same amount of tar and nicotine as its regular cigarettes, violated the Ohio Consumer Sales Practices Act (CSPA) an Ohio Deceptive Trade Practices Act (DTPA).

Plaintiff did not seek to recover damages for personal injuries resulting from her use for these cigarettes. Instead, she sought to recoup the cost of the cigarettes, alleging that Philip Morris unjustly profited from marketing its cigarettes as offering lower tar and nicotine, without delivering a product that actually did so. She sought to certify a class consisting of all Ohio purchasers of Marlboro Lights from the date it was first introduced into Ohio commerce up to September 23, 2003.

Law of the case. Plaintiff first argued that certification as a class action under federal rules was unnecessary, because a 2003 state court ruling in the predecessor case already certified a similar class. The court disagreed, ruling that the state trial court’s brief certification of a similar class could not be considered the law of this case. The court noted that the state trial court’s certification order was ultimately overturned by the Ohio Supreme Court, and regardless was based on a less stringent standard on the predominance issue and the level of evidentiary support required to support class certification.

Federal procedural law applied. Under the Erie doctrine, federal courts sitting in diversity must apply state substantive law and federal procedural law, the court explained. So in this class certification determination, Federal Rule of Civil Procedure 23, as construed by federal courts, must be used to determine whether a class of plaintiffs bringing state-law claims, as construed by state courts, was appropriate.

The court noted that other courts have considered class certification of state claims challenging warnings similar to those given by Philip Morris relative to its light and low tar cigarettes. “The majority of the courts to have decided the issue—including every federal court that has been asked to consider certification under Fed. R. Civ. P. 23—has rejected class certification”, the court noted.

Common issues vs. individual issues. The court found that the Fed. R. Civ. P. 23(a) requirements of numerosity, commonality, typicality, and adequate representation for class actions were arguably met here by plaintiff. However, the Fed. R. Civ. P. 23 (b)(3) predominance requirement required a showing that common issues among class members predominated over individual ones. Plaintiff did not meet that burden, the court stated.

A fundamental requirement for class certification is that the plaintiff is able to show that she and the absent class members have suffered the same injury, the court explained. Plaintiff’s claims alleged that class members did not receive what they bargained for: cigarettes with less tar and nicotine. However, experts have testified that the amount of tar and nicotine received by each smoker could vary widely, depending on how they smoked their cigarette; thus, a significant percentage of the putative class may indeed have received a cigarette that delivered lower tar and nicotine, making them ineligible for inclusion in the class. Consequently, the court stated, whether each class member was damaged would require an individual inquiry that cannot be proven on a class-wide basis.

Individual inquiries necessary. Other individual inquiries were also involved, the court continued. A common law fraud claim would require proof that each class member relied upon the allegedly fraudulent representations. Phillip Morris presented evidence in which smokers testified that they either did not believe or did not rely upon the representations that light cigarettes were healthier than regular cigarettes. In other light cigarette cases, the court noted, the use of common proof was deemed inappropriate because it was less than clear that individual members necessarily relied on the representations. Because it is not “virtually certain” that class members all relied upon Philip Morris’ representations, presuming reliance would be inappropriate, the court ruled.

Damages. Findings of damages also could not be determined class-wide, stated the court. Relying on the recent Sixth Circuit decision in In re Whirlpool Corp. Front-Loading Washer Prods. Liab. Litig., 722 F.3d 838, 850 (6th Cir. 2013), cert. denied, 2014 WL 684065 (Feb 24, 2014), Phillips argued that the economic loss or harm was the same for each putative class member because each light cigarette purchased was “worth less than” each consumer paid for it. In Whirlpool, the court found that class certification was appropriate, and that any individualized inquiries into actual damages could be handled in a separate proceeding. However, the court opined that plaintiff’s reliance on Whirlpool was misplaced. Unlike the allegedly defective washing machines in Whirlpool, there was no inherent design defect that rendered the product less valuable, regardless of who purchased it, the court stated. In this case, the court continued, for many, the cigarettes performed precisely the way they were warranted to do, by delivering less tar and nicotine.

Because individual issues as to liability, proximate cause, and injury abound in the present case, it was readily distinguishable from Whirlpool, the court found. The court found that the plaintiff failed to satisfy her burden that the case was suitable for treatment as a class action.

The case is Civil Action No. 5:10CV1741.

Attorneys: A. Russell Smith (Law Office of A. Russell Smith) for Eva Marie Phillips. David E. Kouba (Arnold & Porter) for Philip Morris USA Inc.

Companies: Philip Morris USA Inc.

Cases: Advertising ConsumerProtection StateUnfairTradePractices OhioNews