Back in August I wrote, “the legal environment surrounding tobacco has not been this good in 20 year. I just got better.
The 2nd Circuit Court of Appeals Thursday reversed U.S. District Judge Jack B. Weinstein’s 2006 decision certifying a class of smokers in what became known as the “Schwab Case”. The suit sought $280 billion.
Altria argued that the lower-court judge was wrong in granting class-action status to the case, saying the certification was “overbroad” and the issues were so individualized for each brand or each smoker’s own circumstances that the case couldn’t be effectively grouped in such a class.
Altria also said the class certified by Judge Weinstein would cover “nearly everyone who ever purchased a cigarette”. Why? Light cigarettes weren’t introduced until the 70’s, and have been used by only an estimated 50 million U.S. residents.
The court agreed with Altria, saying, “Because individual issues outweigh issues susceptible to common proof, the class is not maintainable,”.
As if that was not enough, the court followed that rebuke of Weinstein with these gems:
* Federal law “is not a one-way ratchet, empowering a judge to conform the law to the proof.”
* Neither of plaintiffs’ theories of injury “is plausible as a matter of law.”
* Plaintiffs’ theory of distribution of damages “is an impermissible affront to defendants’ due process rights.”
I think that is the closest I have ever seen a court essentially say to another judge “are you #$#@$$ kidding me?”
For their part, Altria said today, “Philip Morris USA is pleased with today’s decision and believes the court came to the right conclusion in light of the overwhelming precedent denying class certification in smokers’ litigation,”: Murray Garnick, Altria Client Services senior vice president and associate general counsel.
I think this essentially ends any serious class action litigation against tobacco. With losses in both Florida and Illinois in the last two years added to this one, plaintiff’s attorneys are not going to see the payoff and the end of the rainbow in this litigation and will move on to the next cause dujor. There is far too many costs involved to bring these suits when to outcome bias has clearly switched against them.
This is not to say there will not be the occasional suit here and there, but billion dollar settlements are done….
The US tobacco litigation risk is now insignificant………..
Other defendants were R.J. Reynolds Tobacco (RAI), Loews Corp.’s Lorillard Tobacco (LTR), Vector Group Ltd.’s Liggett Group (VGR) and British American Tobacco (BAT) .
Disclosure (“none” means no position):Long MO, PM, None
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