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Judge Permits Federal Suit For Light Cigarette Smokers

By David Cay Johnston
and Melanie Warner
THE NEW YORK TIMES


NEW YORK

In a legal blow to the tobacco industry, a federal judge in Brooklyn ruled Monday that people who smoked light cigarettes that were often marketed as a safer alternative to regular cigarettes can press their fraud claim as a class action suit.

Judge Jack B. Weinstein of U.S. District Court in Brooklyn found “substantial evidence” that the manufacturers knew light cigarettes were at least as dangerous as regular cigarettes.

The decision, coming at a time when the tobacco industry felt it had been on a legal winning streak, raises the possibility that so-called lights cases will become a major legal threat to the companies and expose them to potentially significant damages.

The case, first filed in 2004 against Philip Morris USA, R. J. Reynolds Tobacco Co., British American Tobacco, Liggett Group, Brown & Williamson and Lorillard Tobacco, differs from many previous tobacco lawsuits in that it does not claim that smokers suffered personal injury. Instead, the case — called the “Schwab” case after lead plaintiff Barbara Schwab — claims that the industry defrauded consumers beginning as early as 1971, when Philip Morris began selling Marlboro Lights, the first light cigarette.

While plaintiffs’ lawyers have been filing such class-action suits against cigarette makers since the early 1990s, this is the first lights case to be certified as a class action in a federal court. Currently, three other lights cases have received class certification, all in state courts and encompassing fewer numbers of smokers.

Because some 45 percent of smokers currently smoke light cigarettes, potentially vast numbers of people from around the country could be involved.

Michael Hausfeld, a partner at Cohen, Milstein, Hausfeld & Toll who is representing the plaintiffs, has said that the class could reach tens of millions of people and involve damages to the industry of up to $200 billion. Any damage award would be tripled under the racketeering law on which the case has been brought.

Investors on Monday immediately drove down the price of tobacco stocks. Shares of Altria, whose Philip Morris division makes half the nation’s cigarettes, fell 6.4 percent to $77.06 at the prospect that a jury would decide what monetary damages might be due smokers who thought that light cigarettes were less deadly

But before the case can proceed to a jury trial, the class action ruling must be upheld by the 2nd U.S. Circuit Court of Appeals. Some litigation experts expressed strong doubt that it would survive such an appeal.

Bill Ohlemeyer, associate general counsel of Altria, said “the judge is wrong on the law and wrong on the facts.”

Ohlemeyer said that Supreme Court decisions and court rules prohibit treating fraud cases as class actions because each individual claim of reliance on false statements must be proven.

Monday’s ruling is a blow to what tobacco companies have previously described as an “improving legal environment” for the industry.

Tobacco companies in recent months had won a string of victories in cases involving the dangers of smoking.