Phillip Morris lost a bid Monday to have a class action lawsuit moved to federal court. The U.S. Supreme Court ruled that the case should not be moved to federal court, effectively reversing previous lower court rulings that had allowed the case’s transfer. Phillip Morris is a division of Altria Group Inc.
Phillip Morris claimed that the suit should be allowed to move to federal court because the company’s advertisements were overseen by the Federal Trade Commission. The company’s desire for moving the case stems from previous cases of this nature faring better in federal court than state court.
The class action lawsuit was filed in Arkansas. It originated with two women. They allege that the tobacco company used unfair business practices when advertising two of their light, low tar cigarette brands. The brands in question are Cambridge Lights and Marlboro Lights.
Phillip Morris appears to be unconcerned about the effect Monday’s decision will have on the outcome of the lawsuit. According to Reuters, the tobacco company issued a press release that stated the determination would: “not negatively affect the ultimate outcome of the case or that of other ‘lights’ cases.”
Investors appeared to be nonplussed by the ruling. According to Reuters, Charles Norton’s Vice Fund primarily consists of Altria holdings. He is unfazed and had this to say regarding the Supreme Court’s decision: “Altria has a huge arsenal of defenses that they have successfully used in prevailing in ‘lights’ related cases and this ruling doesn’t really do anything to undermine any of their defenses.” Norton also claimed that ruling was not a surprise and should not have a meaningful impact on the tobacco company’s stock.
Despite Phillip Morris and its investor’s confidence about the insignificance of the ruling, one anti-smoking lawyer by the name of Edward Sweda feels the case sets a precedent that may be beneficial in future lawsuits against the Tobacco company. According to Reuters, Sweda commented that the ruling “shows that Philip Morris has been exaggerating the regulatory requirements of the federal trade commission.” Sweda works for the Northeastern University School of Law in Boston as Senior attorney for the Tobacco Products Liability Project.
U.S. Supreme Court Justice Stephen Breyer wrote the opinion that overturned the previous decisions. Breyer claimed that supervision, direction, and monitoring of a company by a federal agency does not qualify a company to have lawsuits moved to federal court.
The case will now be tried in Arkansas State Court where the lawsuit was originally filed.
Reuters, Top court rules against Phillip Morris, http://www.reuters.com/article/domesticNews/idUSN1230374920070611?pageNumber=1