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Troy lawyer Gerard V. Mantese is taking on the tobacco industry. . . .
Now, with a lawsuit against Philip Morris pending before the U.S. Supreme Court, Mantese has his chance to do just that.
"In 2004, I put together a consortium of law firms in several states ... with the goal of representing consumers who were defrauded by Philip Morris [when it] falsely represented that its Marlboro Lights had 'lowered tar and nicotine,'" he explained.
Since then, Mantese has filed lawsuits in Maine, Arkansas and New Mexico accusing Phillip Morris of violating each state's prohibition against deceptive advertising.
"All of the cases are based on the same theory: Philip Morris misrepresented the true nature of its so-called 'light' cigarettes [because] it represented that they contained lower [amounts of] tar and nicotine ... when a multitude of data, internal documents and evidences proves otherwise," he said.
One case, Altria Group, et al., v. Good, et al., has landed Mantese before the U.S. Supreme Court.
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Jul 8 2008 Letter from the Acting Solicitor General received and distributed.
Aug 11 2008 Reply of petitioners Altria Group, Inc., et al. filed. (Distributed)
Aug 18 2008 Motion of the Acting Solicitor General for leave to participate in oral argument as amicus curiae and for divided argument GRANTED.
In the pending Altria Group appeal in the Supreme Court, the “Cambridge Filter Method” — or “FTC Test” — is directly at issue. The company argues that FTC policy actually requires tobacco companies to disclose tar and nicotine yields based on the test, and that the FTC has authorized the companies to advertise cigarettes by using words such as “light” as short-hand ways of referring to the test results.
Because of these FTC “mandates,” as the company calls them, federal policy on cigarette marketing of “light” cigarettes bars states from allowing lawsuits in their courts challenging the use of such words or phrases, the appeal contends. . . .
In the federal brief filed last month, the U.S. Solicitor General’s office in the Justice Department, joined by the FTC, directly disputed the tobacco company’s claim that its ads on “light” cigarettes were the result of FTC “mandates.”
The Commission’s policy, in 1966 and since, has never required the companies to use ads that refer to the yields from the FTC Test, and has not authorized them to use “light” or other descriptive phrases as short-hand indications of the Test’s results.
The company’s claim that state court lawsuits are preempted by FTC policy, the brief said, “should be rejected because it is based on a mischaracterization of the scope and effect of FTC’s actions concerning cigarette advertising.” . . .
The FTC, the brief added, does not view state court lawsits like the one in Maine “as undermining the FTC’s policies in any way. . . .
The Solicitor General’s office on Tuesday notified the Court, by letter, of the FTC’s new proposal to drop its 1966 policy. Attached to the letter was the Commission’s Federal Register notice of its plan.
The tobacco company has gained added time, until Aug. 11, to file its reply brief; that will provide a chance to challenge not only the government brief, but also the impact, if any, of the FTC’s new approach.
The case, along with a separate tobacco lawsuit against Altria Group Inc., centers on whether federal regulation of products overrides state laws, including those that govern when a person or company can be held liable for another's injury.
The court's ruling in the Wyeth case "potentially could apply to all lawsuits against all manufacturers of prescription drugs," said Mark Herrmann, an attorney at Jones Day in Chicago who represents drug and medical device companies. "It's the 800-pound gorilla."
That's because the vast majority of lawsuits against drugmakers involve the same issue: whether the company provided sufficient notice of potential hazards in the product's label. Pharmaceutical labels are approved by the Food and Drug Administration.
If the court issues a broad ruling in favor of Wyeth, other industries likely will follow suit
The U.S. Supreme Court's decision to drastically slash a punitive damages award against Exxon over the 1989 Valdez oil spill from $2.5 billion to $500 million has lawyers debating whether the ruling will have an impact on punitive damage awards beyond maritime cases. . . .
The Court held in a 5-3 decision that an appropriate punitive damages award should not exceed an amount equal to the compensatory damages in the case, which totaled $507.5 million.
However, the Court relied heavily on an analysis of punitive damages generally.
Some attorneys say the case has widespread implications.
The U.S. Supreme Court Wednesday said punitive damages are allowed in a lawsuit over the 1989 Valdez oil spill by a 5-3 vote but ordered lower courts to reduce the $2.5 billion award to no more than $507.5 million.
Justice David Souter, in the court's majority opinion, said the punitive damages award should be brought into line with compensatory damages calculations made by lower courts earlier in the litigation.
"The award here should be limited to an amount equal to compensatory damages," Souter wrote, adding the high court ruling endorses a $507.5 million amount calculated by a federal trial judge in 2002. The original award in the lawsuit, not including interest and other costs, was $287 million.
The high court otherwise split evenly 4-4 on an important maritime law question in the case as a majority concluded that federal environmental laws don't bar punitive damages against the oil giant.
Chief Justice John Roberts Jr. and Justices Antonin Scalia, Anthony Kennedy and Clarence Thomas joined Souter in the majority holding limiting the punitive damages. Justices John Paul Stevens, Ruth Bader Ginsburg and Stephen Breyer dissented, saying the court went too far in restricting punitive damages to a one-to-one ratio with compensatory damages.
A divided U.S. Supreme Court slashed the $2.5 billion punitive damage award against Exxon Mobil Corp. for the 1989 Valdez oil spill to $507.5 million, ending a 19-year legal saga over the worst such disaster in U.S. history.
The justices, voting 5-3, said the original award, which would have been increased by more than $2 billion with accrued interest, was excessive under federal maritime law. The $507.5 million figure is equal to the economic damages that a trial judge determined were suffered by thousands of Alaskan commercial fishermen involved in the case.
Writing for the court, Justice David Souter pointed to studies showing that punitive damages awarded in maritime cases were generally less than the amount of compensatory damages.
``A 1:1 ratio, which is above the median award, is a fair upper limit in such maritime cases,'' Souter wrote. . . .
The court divided largely along ideological lines. Chief Justice John Roberts and Justices Antonin Scalia, Clarence Thomas and Anthony Kennedy joined Souter in the majority. Justices John Paul Stevens, Ruth Bader Ginsburg and Stephen Breyer dissented.
Court convenes at 10 a.m.; . . .
Monday, October 6
(1)
07-562 ALTRIA GROUP, INC. V. GOOD
Current constitutional doctrine affords Congress broad authority to preempt state law. If meaningful balance in our federal system is to be preserved, the courts must not overread the preemptive scope of the legislation that Congress enacts. It is for Congress, not the federal courts, to expand the preemptive force of federal regulation into areas of health and safety regulation that have long been subjects of state authority. And courts must be particularly careful not to accord preemptive force to action by federal agencies-which elude both the political and procedural safeguards of federalismexcept when such agencies are either interpreting Congress's statutes or acting within clear delegations of authority to act with the force of law. In this case, these principles require Respondents' state law claims to go forward.
SUMMARY OF ARGUMENT . . .
A plurality of this Court made clear in Cipollone v. Liggett Group, Inc. that a claim of fraud or misrepresentation premised on a cigarette manufacturer’s duty not to deceive consumers is not preempted by the Federal Cigarette Labeling and Advertising Act (“FCLAA”). Cipollone held that while some state law claims alleging deception in the advertising and promotion of cigarettes are preempted by the FCLAA, some claims are not preempted. The critical factor in determining whether a claim is preempted is the predicate duty upon which a claim is based. Causes of action that allege warning neutralization or constitute failure to warn are preempted; those that are based on the cigarette manufacturer’s duty not to deceive are not preempted. Based on the MUTPA’s imposition of a general duty to not deceive on all commercial actors in Maine, Good’s claims are not preempted by the FCLAA. To construe the FCLAA or Cipollone in any other manner would result in immunity for cigarette manufacturers to deceive consumers on matters that concern smoking and health. Given the explicit documentation of PMUSA’s deception in the advertising and promotion of its light and low tar and nicotine cigarettes, allowing Good to pursue her consumer fraud claims will result in an equitable and legally sound outcome.
SUMMARY OF ARGUMENT
Amici file this brief to emphasize a point that may not stand out in respondents’ more comprehensive treatment of the issues before the Court — namely, that there is no hint in either the Labeling Act or in the FTC’s on-again, off-again actions regarding disclosure of cigarettes’ tar and nicotine content that Congress or the FTC intended to “insulate [cigarette] manufacturers from longstanding rules governing fraud.” Cipollone, 505 U.S. at 528-29. Make no mistake, this case is about fraud. As the United States argued in its civil racketeering action against Philip Morris and other cigarette companies, “marketing of ‘light’ cigarettes is a principal weapon in their attempts to mislead the public regarding the health risks of smoking.” Brief for the United States in United States v. Philip Morris, et al., No. 06-5267, et al., at 146 (D.C. Cir. filed Nov. 19, 2007). The question in this case is whether petitioners are shielded from state anti-fraud litigation because Congress or the FTC preempted fraud claims arising from statements made to deceive smokers that “light” cigarettes are less deadly than regular cigarettes. The answer to that question is “no.”
To be sure, this Court in Cipollone held that the Labeling Act preempts state law claims that would require cigarette companies to add or modify the warnings prescribed by Congress. But Cipollone also held that the Labeling Act does not preempt claims arising from false statements made in advertising, press statements, government submissions and other channels of communication, where the claim is based on the duty not to deceive. 505 U.S. at 528, 529 (plurality). Thus, allegations that a cigarette company deliberately misrepresented and concealed material facts in violation of a state anti-fraud statute — the precise allegations at issue here — are not preempted. Id. As the plurality saw it, Congress did not intend the Labeling Act “to insulate cigarette manufacturers from longstanding rules governing fraud.” Id. Such claims are not predicated on a duty “based on smoking and health,” but on a general duty imposed by state law — i.e., the duty not to deceive. Id. at 528-89. Petitioners’ theory should be rejected because it would, contrary to Congress’ intent, effectively insulate cigarette manufacturers from rules governing fraud, no matter how egregious the manufacturers’ false statements or fraudulent concealment. Equally insubstantial is petitioners’ argument that the FTC “authorized” tobacco companies to use “Light” as a product descriptor (Marlboro Lights), and that permitting respondents’ claims to go forward “would impede the FTC’s low-tar policy.” Br. at 46. The signal defect in petitioners’ argument is that the FTC itself disclaims the existence of any authorization or policy, let alone a policy that justifies ousting longstanding state anti-fraud laws. Even Philip Morris has acknowledged elsewhere that there is no such policy. In 2002, Philip Morris filed a petition with the FTC urging the agency “to promulgate rules governing . . . the use of descriptors such as ‘light’ and ‘ultra light.’” See Good, 501 F.3d at 56 n.29. Philip Morris’ petition, of course, would have been superfluous had the FTC previously “authorized” the use of these descriptors.
Just as fundamentally, the hodge-podge of FTC actions cited by the Philip Morris as evidence of a federal policy on light cigarettes could not have the sweeping preemptive effect it claims. Because the FTC’s mission of protecting consumers against unfair and deceptive advertising practice overlaps with state law, Congress established regulatory procedures for the FTC to follow when it intends to take preemptive action. See, e.g., American Financial Servs. Ass’n v. FTC, 767 F.2d 957, 989-90 (D.C. Cir. 1985). The FTC did not avail itself of those procedures here, which further confirms the FTC’s position that it did not act to preempt state law. For these reasons as well, petitioners’ implied preemption argument should be rejected.
The Labeling 4 Act’s preemption provision states that “[n]o requirement or prohibition based on smoking and health shall be imposed under State law with respect to the advertising or promotion of any cigarettes the packages of which are labeled in conformity with the provisions of this chapter.” 15 U.S.C. § 1334(b). Those provisions require that packages of cigarettes and their advertisements bear one of a rotating series of warnings about the adverse health effects of smoking. Id. § 1333(a), (c). The Act also provides that no additional “statement relating to smoking and health . . . shall be required on any cigarette package.” Id. § 1334(a).
QUESTIONS PRESENTED
1. Whether the Federal Cigarette Labeling and Advertising Act expressly preempts state-law claims that a cigarette company violated the Maine Unfair Trade Practices Act by falsely representing its “light” cigarettes to the public when the predicate state-law duty of such claims is the duty not to deceive.
2. Whether such claims are impliedly preempted where the FTC has never exercised its rulemaking power to address the conduct at issue nor defined the terms at issue in this dispute. . . .
This case presents the questions whether the FCLAA or the actions of the FTC preempt state-law deception claims arising out of Petitioners’ practices with respect to “low tar and nicotine” and “light” cigarettes. Neither the FCLAA nor the actions of the FTC license Petitioners to deceive consumers in violation of state law. Immunizing Petitioners from the consequences of the alleged wrongful conduct is not a result that should be presumed without clear language and intent, neither of which is present here.
1. In Cipollone v. Liggett, 505 U.S. 504 (1992), the Court held that the FCLAA does not preempt claims resting upon false representation of a material fact or concealment of a material fact by tobacco companies where such claims are founded upon a general duty under state law not to deceive. The suit at issue here brings precisely such claims. It seeks economic, not personal injury, damages, under Maine’s general prohibition against any “material representation, omission, act or practice that is likely to mislead consumers acting reasonably under the circumstances.” Me. Rev. Stat. Ann. tit. 5, § 207 (Supp. 2007). Because the lawsuit before the Court is predicated upon a general statutory prohibition against deception (that the manufacturers made false statements and concealed information regarding “light” cigarettes), under Cipollone it is not preempted. To find otherwise would disrupt and do serious harm to the sovereigns’ complementary efforts to protect consumers, which would have adverse implications beyond the “light” cigarettes dispute before the Court here. State law suits pursuant to state unfair practices and consumer protection statutes combating deceptive practices are a critical complement to the administrative and prosecutorial efforts of the FTC. In fact, recognizing that it cannot combat consumer fraud on its own, FTC regulations direct the agency “to assist and cooperate” with state consumer protection efforts. One common outgrowth of that cooperation is that the FTC and the States often target the same wrongdoers, which sometimes results in separate settlements that provide different forms of relief. There is no exception in this complementary regulatory scheme for fraud or deception by cigarette manufacturers. Indeed, the FTC acknowledges the States’ vital part in prohibiting deception by tobacco companies.
2. Petitioners’ arguments that the FTC has somehow impliedly preempted the state-law claims are patently incorrect. Nothing in the text, structure, or regulatory history of the FTC Act or in the actions of the FTC relating to “light” cigarettes supports implied preemption. Petitioners are not claiming that the FTC Act itself imposes requirements on tobacco companies that conflict with state law. Nor could they, given that the FTC Act lacks an express preemption provision and instead contains a broad saving clause protecting state remedies and causes of action. In addition, Congress imposed heightened requirements for FTC rulemaking, and the FTC’s procedural rules require that it explain the impact of any of its rules on state law. And petitioners do not assert that the FTC has promulgated specific rules that preempt state-law actions with respect to “low tar” and “light” cigarettes. Rather, Petitioners’ implied preemption claim is based on their assertion that the FTC has blessed tobacco companies’ “light” cigarette advertisements through a history of less formal actions, such as consent decrees reached with individual companies. But neither the consent decrees nor the other actions relied upon by Petitioners mandated or approved Petitioners’ “light” and “low tar” advertisements. Moreover, in none of those actions did the FTC ever suggest that State consumer protection laws present an obstacle to, or are preempted by, some sort of FTC policy. Indeed, the FTC has eschewed any suggestion that its actions have resolved the issue of tobacco companies’ deceptive practices regarding “low tar” cigarettes. . . .
* * * The common purpose of the FTC Act and State unfair trade practices and consumer protection acts, such as Maine’s, is to protect consumers from deceptive practices. The FTC has been most sensitive to this relationship, as have the courts. Finding preemption here would run counter to how the FTC and the States have worked cooperatively together, and would do serious harm to that relationship and to the protections afforded consumers through their efforts. The particular claims of deception here fall squarely within those permitted under Cipollone, and the FTC has not established a cohesive policy impliedly preempting the States with respect to deceitful conduct by tobacco companies regarding “low tar” and “light” cigarettes. For these reasons, the Court should find that the state-law claims before it are not preempted.
CONCLUSION Philip Morris voluntarily markets Cambridge Light cigarettes and Marlboro Lights as “light” or “lowered in tar and nicotine” without FTC control or direction. Thus, Respondents’ claims are not impliedly preempted. For these reasons, and because Respondents’ claims are not expressly preempted under the FCLAA, as discussed in Respondents’ brief, this Court should affirm the First Circuit’s decision.
CONCLUSION
The FTC’s primary mission as a law enforcement agency is to enforce the FTC Act’s Section 5 prohibition against unfair or deceptive conduct in commerce, rather than to give broad immunity to an industry from state police power. See 15 U.S.C. § 45(a)(2) (“The Commission is hereby empowered and directed to prevent persons, partnerships, or corporations … from using unfair methods of competition in or affecting commerce and unfair or deceptive acts or practices in or affecting commerce.”); Fleming v. FTC, 670 F.2d 311, 313 (D.C. Cir. 1982) (Commission’s mandate is “to ferret out any unfair competition and unfair or deceptive trade acts or practices in or affecting commerce” ). Nothing in the FTC’s regulatory history suggests an intent to authorize, encourage, or immunize Petitioners’ use of lights descriptors. The judgment of the court of appeals should be affirmed.
BRIEF FOR THE UNITED STATES AS AMICUS CURIAE SUPPORTING RESPONDENTS
WILLIAM BLUMENTHAL General Counsel Federal Trade Commission Washington, D.C. 20580 GREGORY G. GARRE Acting Solicitor General Counsel of Record EDWIN S. KNEEDLER Deputy Solicitor General MICHAEL F. HERTZ Deputy Assistant Attorney General DOUGLAS HALLWARD-DRIEMEIER Assistant to the Solicitor General MARK B. STERN ALISA B. KLEIN Attorneys Department of Justice Washington, D.C. 20530-0001 (202) 514-2217 (I)
QUESTION PRESENTED
The Federal Trade Commission has authority to prevent “unfair or deceptive acts or practices in or affecting commerce,” 15 U.S.C. 45(a)(2), and the Federal Trade Commission Act expressly provides that its remedies “are in addition to, and not in lieu of, any other remedy or right of action provided by State or Federal law,” 15 U.S.C. 57b(e). The United States will address the following question:
Whether guidance statements and consent orders issued by the Federal Trade Commission impliedly preempt a state-law tort claim based on a cigarette manufacturer’s allegedly fraudulent use of the descriptors “Light” and “Lowered Tar and Nicotine” to characterize its cigarettes when the manufacturer allegedly knew that the cigarettes, as smoked by a human smoker, would deliver as much tar and nicotine as so-called “full flavor” cigarettes. . . .
3. Petitioner failed for decades to disclose to the FTC its internal research indicating that, due to compensatory behaviors, smokers receive as much tar from cigarettes with lower Cambridge Method ratings than so-called “full-flavor” cigarettes. After hiding its own research for years, despite the Commission’s requests for information in light of growing concerns about compensation, petitioner now claims that the FTC has known about compensation for years and affirmatively decided that it does not warrant any change in the Cambridge Method. In fact, the absence of definitive action on that question to date reflects only the Commission’s ongoing consideration of the issue. Its inaction (particularly insofar as it is based on petitioner’s own failure to provide information to the FTC) does not constitute even a definitive interpretation of the federal Act, much less one that would bar application of state law.
ARGUMENT
RESPONDENTS’ CLAIMS ARE NOT IMPLIEDLY PREEMPTED BY THE FEDERAL TRADE COMMISSION’S ACTIONS CONCERNING CIGARETTE ADVERTISING