The US Court of Appeals for the Second Circuit tossed out an $800 billion lawsuit against big tobacco today by decertifying a class of smokers who said they were deceived into believing "light" cigarettes were healthier.
The smokers had sued the tobacco companies for $800 billion in economic damages stemming from their purchase of light cigarettes, and in 2006 U.S. District Judge Jack B. Weinstein certified the class.
The group of smokers, "allegedly deceived - by defendants' marketing and branding - into believing that 'light' cigarettes were healthier than 'full-flavored' cigarettes," sued under the Racketeer Influenced and Corrupt Organization Act.
The smokers alleged that those who used "light cigarettes" unknowingly ended up getting just as much tar and nicotine because they inhaled more frequently to compensate.
But the three-judge panel, in a unanimous, 39-page ruling, decertified the class. The ruling would require that each individual smoker prove that she or he had selected the product for perceived health benefits.
The ruling, written by Circuit Judge John Walker Jr, suggested that a "light" smoker might have "preferred the taste" or chosen light cigarettes as a matter of personal style.
"We are certainly pleased with the court's ruling and agree with its reasoning," said Martin L. Holton III, general counsel for R.J. Reynolds Tobacco. "Numerous courts across the country have held that claims such as these simply cannot be tried as
class actions."
Other tobacco companies echoed those sentiments.
Philip Morris USA noted that the ruling said the smokers' class action "suffers from an insurmountable deficit of collective legal or factual questions."
Goldman Sachs, in an analyst's note, viewed the ruling as a positive but noted "the consensus view has long been that the 2nd Circuit would overturn Judge Weinstein's certification ..."
Shares in the tobacco stocks were little changed in early afternoon trade.
The defendants in the case included: Altria Group Inc's Philip Morris USA unit; Reynolds American Inc's R.J. Reynolds Tobacco Co.; Loews Corp's Lorillard Tobacco unit; Vector Group Ltd's Liggett Group; and British American Tobacco Plc's British
American Tobacco (Investments) Ltd.
The class included tens of millions of people who bought cigarettes of any of 65 "lights" brands over a 35-year period and potentially exposed companies to hundreds of billions of dollars of liabilities, according to tobacco firms. Philip Morris USA
introduced the first light cigarette, Marlboro Lights, in 1971.