WASHINGTON — The Supreme Court on Monday handed a surprising defeat to tobacco companies counting on it to put an end to lawsuits alleging deceptive marketing of “light” cigarettes.
In a 5-4 split won by the court’s liberals, it ruled that smokers may use state consumer protection laws to sue cigarette makers for the way they promote “light” and “low tar” brands.
The decision was at odds with recent anti-consumer rulings that limited state regulation of business in favor of federal power.
Altria Group Inc. argued on behalf of its Philip Morris USA subsidiary that the lawsuits are barred by the federal cigarette labeling law, which forbids states from regulating any aspect of cigarette advertising that involves smoking and health.
Justice John Paul Stevens, however, said in his majority opinion that the labeling law does not shield the companies from state laws against deceptive practices. The decision forces tobacco companies to defend dozens of suits filed by smokers in Maine, where the case originated, and across the country.
People suing the cigarette makers still must prove that the use of ‘light’ and ‘lowered tar’ actually violate the state anti-fraud laws, but those lawsuits may go forward, Stevens said.
Altria senior vice president and associate general counsel Murray Garnick said the company still could prevail in these fraud lawsuits. “We continue to view these cases as manageable, and the company will assert many of the strong defenses used successfully in the past to defend against this very type of case,” Garnick said.
Stevens was joined by the other liberal justices, Stephen Breyer, Ruth Bader Ginsburg and David Souter, as well as Justice Anthony Kennedy, whose vote often decides cases where there is an ideological division.
The conservative justices, Chief Justice John Roberts and Justices Samuel Alito, Antonin Scalia and Clarence Thomas, dissented.
Thomas, writing for the dissenters, said the lawsuit should be thrown out because it relies on claims about smokers’ health.
“The alleged misrepresentation here — that ‘light’ and ‘low-tar’ cigarettes are not as healthy as advertised — is actionable only because of the effect that smoking light and low-tar cigarettes had on respondents’ health,” Thomas said.
Shares of Altria Group Inc. fell 17 cents, or 1.1 percent, to $15.17 in morning trading Monday while shares of rival cigarette maker Reynolds American Inc. lost 91 cents, or 2.2 percent, to $39.64.
Three Maine residents sued Altria and Philip Morris under the state’s law against unfair marketing practices. The class-action claim represents all smokers of Marlboro Lights or Cambridge Lights cigarettes, both made by Philip Morris.
A federal district court threw out the lawsuit, but the 1st U.S. Circuit Court of Appeals said it could go forward.
The lawsuit argues that the company knew for decades that smokers of light cigarettes compensate for the lower levels of tar and nicotine by taking longer puffs and compensating in other ways.
David Frederick, who represented the Maine residents at the high court, said: “Had the court gone the other way, it would have been open season for the tobacco companies to continue to perpetrate fraud on the tobacco-consuming public.”
The court also rejected Philip Morris’ argument that the Federal Trade Commission’s endorsement in the mid-1960s of machine testing of cigarette tar and nicotine levels should relieve the company of liability for alleged fraud.
Last month, the FTC formally dropped its endorsement of the test, known as the Cambridge Filter Method.
The commission said the test method is flawed because, among other things, the machine doesn’t take into account the way smokers adjust their behavior.
The case is Altria Group Inc. v. Good, 07-562.