Thursday, May 31, 2012

Minnesota S.Ct. rejects tobacco class action

Curtis v. Altria Group, Inc., --- N.W.2d ----, 2012 WL 1934726 (Minn.)

Curtis filed a class action against Philip Morris, alleging that the use of “light” and “lowered tar and nicotine” for cigarettes was false and deceptive under Minnesota’s consumer protection law.  The state’s highest court held that a prior settlement of a case brought by the AG under the same laws barred the class action.  The settlement agreed to “settle and resolve with finality all claims of the State of Minnesota relating to the subject matter of this action which have been or could have been asserted by the State of Minnesota.” The state “release[d] and forever discharge[d]” Philip Morris from any and all claims asserted in the state’s lawsuit, or that could have been asserted therein.

The court found that a private litigant’s right to bring a lawsuit was not separate from the state AG’s right.  The remedies and procedures available to the AG are broader than those available to a private litigant; the right to bring a private lawsuit was therefore part of the broader authority of the AG.  (I don’t really get how the conclusion follows from the AG’s broader powers.)  Private litigants must establish that their cause of action benefits the public, because they’re acting as private AGs.  So private litigants’ rights are limited by the role and duties of the state AG, whose rights to bring a specific lawsuit are superior to private litigants’ rights.

The state AG could bring claims and settle claims on behalf of the citizens of the state, acting “representatively” and “derivatively” for them.  Because the AG could seek not only the relief available to the state, but also the relief available to a private litigant, it could also settle and release the private claims.  A private litigant can’t settle or release the state’s claims without the state’s express consent, but it may settle its own claims, and a court can approve a settlement that binds all similarly situated private litigants.  (The court’s a bit unclear about whether such a settlement could bind the state to the extent the state sought relief available to private litigants such as restitution, rather than just relief available to the state.)

So, the question remained whether the state AG action released these claims.  The state alleged that Philip Morris made deceptive claims about light cigarettes, and the release language was “broad and comprehensive” as to any claims that the state had relating to the subject matter of the case (for past conduct) or for monetary claims “directly or indirectly based on, arising out of or in any way related to, in whole or in part, the use of or exposure to” tobacco products (for future conduct).  The court concluded that the state unambiguously released all of consumer protection claims against Philip Morris for past conduct; the case here was related to the AG’s case, which asserted violation of the same consumer protection statutes arising from the same fraudulent and deceptive misrepresentations regarding health risks.  Likewise, the future conduct claims were also unambiguously released; the claims here were related to the use of or exposure to tobacco products: plaintiffs’ theory was that Philip Morris’s “light” and “lowered tar and nicotine” claims were false because the cigarettes as used weren’t light and didn’t expose smokers to lowered tar and nicotine.  The dissent argued that a statutory consumer fraud claim doesn’t require a plaintiff to have bought or used the product.  But such a claim does require falsity, and the falsity here turned on how much tar and nicotine cigarettes delivered when smoked, making the claims “related to the use of and exposure to tobacco products.”

Because the settlement agreement released any and all claims of the state, “whether directly, indirectly, representatively, derivatively or in any other capacity,” that also covered plaintiffs’ rights as private litigants. 

The dissent, for two justices, also expressed doubt that the AG could release private claims because the statute appeared to provide private parties a cause of action independent of the AG’s right to sue.  (I wonder, for example, what would happen if the AG intervened in a private plaintiff case and desired to settle, or argued that the case didn’t meet the statutory requirements.  Would the court be required to dismiss the case or could it evaluate the plaintiff's contrary arguments?)  The dissent would have found that fraud claims don’t relate to the use of or exposure to tobacco products, the same way that the Supreme Court has found that false advertising claims aren’t preempted by the federal law that preempts product liability claims as to cigarettes.

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