Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—E.D. Wis.: Certification as class action denied for state claims against tobacco company, (Aug 9, 2013)

By Edward L. Puzzo, J.D.

Claims against a tobacco company under Wisconsin’s Deceptive Trade Practices Act, Unfair Trade Practices Act, and unjust enrichment in connection with the marketing of light cigarettes could not be sustained as class actions, according to the federal district court in Milwaukee (Wyatt v. Philip Morris USA, Inc., August 8, 2013, Adelman, L.). Charles Wyatt sought to represent a class of Wisconsin residents seeking damages from tobacco company Philip Morris USA, Inc. Wyatt contended that Philip Morris' use of the terms "Light" and "Ultra-Light" to market certain of its cigarettes led class members to believe that such cigarettes were safer to smoke than regular cigarettes, and thus violated the statutes and resulted in unjust enrichment to Philip Morris.

Wyatt presented no evidence that Philip Morris claimed greater safety for "Light" and "Ultra-Light" cigarettes in its marketing materials, but alleged that the use of those terms alone misled purchasers into believing such cigarettes were safer, and thus more valuable, than those marketed without those terms.

The court noted that a fundamental requirement for class certification is a showing that class members suffered the same injury as a result of the defendant's conduct. While Wyatt alleged that he had misled by Philip Morris' deceptive marketing into believing that light cigarettes were safer and thus more valuable than other cigarettes, the court doubted that all potential class members were equally misled. Many publicly available materials, including Philip Morris' own surveys, showed that a large percentage of smokers did not believe that light cigarettes were safer to smoke than regular cigarettes.

If hearings would be needed to separate consumers who purchased light cigarettes based upon a mistaken belief in greater safety from those who were not so misled, the action would not be manageable as a class action. Without such an inquiry, it could not be assumed that all or most potential class members suffered a common injury.

Further, to sustain a claim under either the Wisconsin Deceptive Trade Practices Act or the Wisconsin Unfair Trade Practices Act, a pecuniary loss must have been sustained, the court noted. This required showing that most class members believed on each purchase occasion that light cigarettes were safer than regular cigarettes. This too would require individualized inquiries, rendering the claim unmanageable as a class action, the court decided.

Likewise, a claim for unjust enrichment could only be sustained if it were established that a class member thought he was purchasing cigarettes necessarily safer than ordinary cigarettes and thus paid more for them, unjustly enriching Philip Morris. This too would require an individualized inquiry into each member's beliefs.

Thus, the claims alleging deceptive practices, unfair trade practices or unjust enrichment were not maintainable as class actions.

The case is Civil Action No. 2:09-cv-00597-LA.

Attorneys: Ben Barnow (Barnow and Associates PC) for Charles Wyatt. David B. Bartel (Quarles & Brady LLP) for Philip Morris USA, Inc.

Companies: Philip Morris USA, Inc.

Cases: StateUnfairTradePractices Advertising WisconsinNews