- The Washington Times - Tuesday, June 12, 2007

The Supreme Court unanimously ruled yesterday that a lawsuit against tobacco giant Philip Morris must resume in state court rather than in the federal system, where jury awards are generally much less generous.

The case was brought against Philip Morris, the world’s largest tobacco company, by two Arkansas women who saidthe cigarette company fraudulently marketed the Cambridge Lights and Marlboro Lights brands as having less nicotine and tar.

The Richmond company, a unit of Altria Group Inc., hadwon its argument inArkansas state court that the case should be heard in a federal court in Little Rock, Ark., because the company’s advertising and testing of its products are so heavily regulated by the Federal Trade Commission.

The case will return to the Arkansas state court where it initially began. The high court said a federalagency’s involvement in a company’s business does not give the company the right to have cases settled at the federal level. Justice Stephen G. Breyer wrote the court’s opinion.

“This was one tactical effort by the tobacco companies. Had they succeeded, they could have had a large number of cases outside of state court,” said Ed Sherman, former dean of Tulane University Law School. “The Supreme Court ruling means that tobacco companies will be subject to being sued in states where large awards can go against them.”

Deceptively advertising the content of “light” cigarettes is similar to a 2005 case in Illinois that led to a $10 billion award against Philip Morris. However, the Illinois Supreme Court later reversed that award, and the U.S. Supreme Court in November refused to hear the case. Smokers have filed similar suits in about 20 states.

The position taken by attorneys for Philip Morris — that the FTC’s involvement in a company’s business activities meant those companies were federal entities — was viewed as a stretch, according to Mr. Sherman and lawyers who are monitoring the case.

“If they had succeeded, it would mean that all private actors regulated by a federal agency would all be subject to removal to federal court,” Mr. Sherman said. “This ruling is not a great surprise.”

Businesses prefer federal courts to state courts, where the perception is that federal courts are pro-business.

Yesterday’s ruling will not stop businesses from attempting to move cases into federal courts, said Darren McKinney, communications director for the Tort Reform Association, a nonprofit group.

“This was a unique effort. There will be no less of desire from businesses to have cases against them heard in federal court,” he said.

The Bush administration took the plaintiffs’ side following the appeals court decision when the Justice Department told the Supreme Court that the case should be heard in state court.