Tuesday, January 04, 2011

Minnesota light cigarette class action properly certified

Curtis v. Altria Group, Inc., --- N.W.2d ----, 2010 WL 5292065 (Minn. App.)

Key rulings in this “light” cigarette false advertising class action: Minnesota’s consumer protection law requires that a claimant show a “public benefit” from a suit. The court of appeals here ruled that this requirement is satisfied by evidence that misrepresentations were made to the public at large. This is so even though the government has already acted to address the misrepresentations and Altria had entered into a settlement with the government, given that the settlement at issue did not provide a remedy for individual consumers who’d been harmed by the complained-of practices. Likewise, the subsequent federal law barring the marketing of tobacco products using terms such as “light” and “low tar” did not deprive the instant lawsuit of a public benefit component. Given that the Minnesota statute allows “any person” to sue, whether or not they’d been harmed, indicating a broad remedial purpose, the court of appeals declined to narrow the right to sue in such circumstances. Also, a consumer protection plaintiff is not a state actor or representative who could be bound by the state’s release of claims in its settlement with the tobacco companies.

However, the district court’s refusal to apply collateral estoppel against Altria for factual findings against it was not an abuse of discretion; among other things, the trial court reasonsed, Altria had won similar cases in the past, and the case it lost was a bench trial, so the court thought that it should be able to make its defense to a jury. Without detailed discussion of the merits of these reasons, the court of appeals held that this was not an abuse of the trial court’s broad discretion on collateral estoppel issues.

Class treatment was appropriate, despite defendant’s argument that proof of causation couldn’t be made on a classwide basis. The trial court found that all class members were similarly injured by defendant’s lengthy course of prohibited conduct, and the court of appeals agreed. The class representatives all testified that they bought Lights only because they thought that Lights were safer, and Philip Morris internal documents “demonstrate Philip Morris's early and continuing awareness of smokers' attitudes toward health issues, recognition of the market potential of a cigarette perceived by consumers to be healthier than regular cigarettes, and recognition that the reason smokers accept low-tar cigarettes is due to the health reassurance they seem to offer.” A jury could infer that but for defendant’s conduct, consumer in general wouldn’t have bought the product, such that class members’ awareness of ads may provide a sufficient causal nexus.

Defendant argued that, if smoked in the right way, Lights indeed may have delivered what was advertised, requiring individual assessments. But given that it deliberately withheld the relevant information about smoking methods and advertised falsely, and given that consumer protection actions require only a causal relationship between the advertising and the alleged injury rather than the stringent proof of individual reliance required for common-law fraud, there was enough proof of causation to allow the class action to proceed. Defendant “raised some questions that are unique to individual smokers, but has not, at this point in the litigation, negated the commonsense inference that its massive advertising campaign was successful in persuading consumers that Lights were healthier than regular cigarettes.” Thus, certification was not an abuse of discretion, especially since, realistically, a class action is consumers’ only avenue for redress.

In addition, fraudulent concealment will toll the six-year statute of limitations. There was a genuine issue of material fact about whether fraudulent concealment occurred. “In this case, the record is bursting with government documents, scientific studies, surveys, newspaper reports, ‘confidential’ memos, affidavits, depositions, and other evidence describing who knew what and when it was known.”

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