Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—D. Haw.: Certification of “Lights” cigarette purchaser class denied, (Jan 8, 2014)

By Jody Coultas, J.D.

The federal district court in Honolulu has denied cigarette purchasers’ request for certification of class to pursue Hawaii Unfair and Deceptive Practices Act (UDPA) claims filed against Philip Morris USA, Inc. because individual inquires would be necessary to establish the class members’ injuries (Cabbat v. Philip Morris USA, Inc., January 6, 2014, Watson, D.).

Philip Morris manufactured Marlboro Lights cigarettes. The light cigarette purchasers alleged that Philip Morris intended purchasers to believe that they would receive less nicotine and tar than with regular cigarettes, and that light cigarettes were a less harmful product. One of the essential consequences of the misrepresentations was the phenomenon of smoker compensation in which smokers of “Lights” cigarettes engage in compensatory smoking behavior due to the addictive nature of nicotine in order to receive 100% of the tar and nicotine that would be received by the smoker from the regular cigarette. The purchasers alleged they did not receive the product represented in Philip Morris’ advertisements.

Federal Rule of Civil Procedure 23(a) requires: a class is so numerous that joinder of all members is impracticable; questions of law or fact common to the class; the claims or defenses of the representative parties to be typical of the claims or defenses of the class; and the representative parties to fairly and adequately protect the interests of the class. Rule 23(b)(3) requires that questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.

The class met the Rule 23(a) requirements, according to the court. A class satisfies the numerosity requirement if it is likely to exceed 40 members. The purported class would include hundreds of thousands of members. Whether Philip Morris knowingly misrepresented to all smokers of Lights that they would receive less nicotine or tar was common to the class. Proof of this fact would establish whether Philip Morris employed an unfair or deceptive trade practice under the UDPA. The class representatives and all other class members purchased Lights and did not receive light cigarettes that were healthier to smoke than regular cigarettes. Thus, the class representatives’ claims were typical. The purchasers’ counsel had extensive experience in class actions and had no apparent conflict that would preclude them from representing the class.

Individual inquiries into whether each class member was actually injured by the alleged misrepresentations precluded class certification, according to the court. Whether Lights cigarette smokers were injured as a result of the misrepresentations could not be proven on a class-wide basis. There was evidence that many smokers of Lights cigarettes never believed that they received lower levels of tar and nicotine, and a significant number of individuals smoked Lights for reasons unrelated to any health benefits. The purchasers were also unable to show that compensation smoking could be proven on a class-wide basis. Smoking behavior was not uniform, nor was the level of understanding of the levels of tar and nicotine in Lights cigarettes and the effect that could have on a smoker’s behavior.

The court noted that although there was an objectively determined deceptive practice, the purchasers were not automatically entitled to damages. The purchasers were required to prove some private injury in addition to the deceptive practice. The issue of damages was where individual inquiries would be necessary given the specific idiosyncrasies of smokers and smoking habits.

The case is No. 10-00162 DKW/BMK.

Attorneys: Ben Barnow (Barnow and Associates PC) and Brandee J. Faria (Perkin & Faria) for Brett Nakoaokalani Brookshire Prejean. David E. Kouba (Arnold & Porter LLP) for Philip Morris USA, Inc.

Companies: Philip Morris USA, Inc.

Cases: StateUnfairTradePractices HawaiiNews