The U.S. Supreme Court has declined to hear the appeal of a $270 million verdict in Louisiana against Philip Morris and other big cigarette companies, dashing their hopes that the court’s animosity toward big class actions displayed in Wal-Mart vs. Dukes may extend to tobacco lawsuits.
Justice Antonion Scalia exercised the rarely-used prerogative of a SCOTUS judge last September to stay enforcement of the verdict, saying at the time “I think it reasonably probable that four Justices will vote to grant certiorari, and significantly possible that the judgment below will be reversed.” He was wrong.
The case was cleverly constructed as a class action on behalf of Louisiana smokers only, to keep it from being removed to federal court on diversity grounds (smokers from multiple states suing companies from multiple states.) The lawyers were doubly clever by constructing it as a lawsuit seeking money for a statewide smoking-cessation program: That way, they could hit the tobacco companies with damages (and win large fees for themselves), without forcing the plaintiffs to explain how they could have been misled by catchy ad slogans into ignoring the warning on every pack of cigarettes that the product could kill them.
Scalia thought there was a due-process issue in the fact that the companies were denied the right to question each plaintiff about their reliance on advertising. Reliance is a key component to proving fraud in Louisiana and most other states. But in his order last year he acknowledged the case was confined to a single state and lacked the disagreement among federal districts that usually leads to the high court granting certiorari.
The denial is still striking, however, since in Wal-Mart the court struck down a class action on behalf of 1.5 million women who lawyers said all had suffered sex discrimination. A few important differences might explain why the court took one case and not the other. In Wal-Mart the question was whether the class could even be formed under federal rules of civil procedure; the majority said it couldn’t because there wasn’t a single claim uniting them all that could be decided by a jury. The Louisiana case had already been certified as a class and proceeded to verdict.
Also, while Scalia ruminated upon the unjustness of denying Wal-Mart the right to challenge the claims of each female employee, the decision hinges upon the unworkability of the court’s scheme to try a few representative cases and then award back pay according to a formula. In the tobacco case, the court would put the money in a fund for smoking cessation, sidestepping the issue of individual damages entirely.
Philip Morris, a unit of Altria, said it was “disappointed” with the outcome but noted it beat back a medical-monitoring claim of the sort asbestos lawyers have tried to win for years. That sort of lawsuit would allow lawyers to assemble classes of people who aren’t even sick, under the idea they might be someday and thus require medical monitoring until that day comes. Of course the legal fees would get paid up front.