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Calif. top court revives class action against tobacco industry

State Supreme Court's 4-3 decision involving a deceptive advertising case surprises those who thought Prop. 64 had essentially ended consumer lawsuits.

May 19, 2009|Maura Dolan

The California Supreme Court revived a major class action lawsuit against the tobacco industry Monday, ruling that smokers could hold it accountable for alleged deceptive advertising.

After years of consumer cases meeting their demise in lower courts, the state high court's 4-3 decision helped resuscitate a key consumer law that voters sharply limited in 2004 in the wake of lawsuit scandals.

Justice Carlos R. Moreno, writing for the majority, said Proposition 64 was intended to stop "shakedown" lawsuits that enriched only lawyers and "did not propose to curb" genuine consumer grievances.

The decision, the court's most significant interpretation of Proposition 64, was a departure from many lower court rulings that interpreted the measure as having broader sweep.

Trial lawyers called the ruling a major consumer victory, while corporate litigators predicted a flood of frivolous lawsuits and accused the court of ignoring voters.

The case against the tobacco industry, which lower courts had dismissed, charges the industry with luring people to smoke with deceptive ads about cigarette safety.

Brought on behalf of every Californian who saw the ads and purchased cigarettes from 1993 to 2001, the suit could produce a jury award in the billions of dollars, lawyers said.

Proposition 64 amended the state's unfair competition law to require people who sue to show they lost money or property as a result of an illegal act.

The initiative was spurred by scandals involving lawyers threatening to sue or suing small businesses for minor violations and then pocketing the money the stores paid to get rid of the suits. Several lawyers lost their legal licenses as a result of these "shakedown" suits.

After the successful campaign for Proposition 64, which highlighted lawsuit abuses, lower courts interpreted it to be a death knell for many consumer class actions.

Monday's ruling was unanimous in requiring representatives of the class -- the named individuals who filed the lawsuit -- to prove they relied on tobacco ads when they purchased cigarettes. Trial lawyers had conceded that point.

The court also agreed with trial lawyers that the named representatives should not have to prove "an unrealistic degree of specificity" about which ads they saw.

Business groups had argued that every member of the class -- all those who purchased cigarettes during the eight-year period--should also have to prove they bought cigarettes as a result of the advertisements, a huge legal hurdle.

The court majority said such a requirement would "effectively eliminate the class action lawsuit as a vehicle for the vindication" of consumer rights.

The court's three most conservative justices dissented, arguing that the majority ruling invited "mischief" and frivolous lawsuits that Proposition 64 was designed to halt.

The ruling will be applied "not only to the unsympathetic facts alleged in the case -- i.e., that larger tobacco companies lured consumers into nicotine addiction by falsely claiming over many years that cigarettes were safe -- but also to myriad situations in which the anti-consumer implications are far less dire," wrote Justice Marvin R. Baxter, joined by Justices Ming W. Chin and Carol A. Corrigan.

Joining Moreno in the majority ruling were Justices Joyce L. Kennard, Kathryn Mickle Werdegar and Court of Appeal Justice Eileen C. Moore, who sat in for Chief Justice Ronald M. George. George declined to participate because one of the law firms in the case handles his estate planning.

Trent Norris, who defends corporations, said the ruling would lead to more litigation.

"California is to litigation as the Cayman Islands is to banking, and I think we will see more and more of these suits brought in California," Norris said.

William Stern, a corporate litigator who argued on behalf of the California Chamber of Commerce in the case, said the ruling would "attract lawsuits like a magnet into California from other states."

"I think they permitted the exact thing that Prop. 64 was designed to curb," Stern said.

In a written statement, Philip Morris, the tobacco company, said the court "reached the wrong conclusion" and pledged to continue to fight the suit in hopes of getting it dismissed.

Mark P. Robinson, a Newport Beach lawyer who brought the suit, said the ruling would not stop courts from throwing out illegitimate suits. He said the ruling's biggest effect would be in false advertising cases.

"The way Justice Moreno wrote this opinion is just a work of art," Robinson said. "He really has protected the consumers of California."

Sharon Arkin, an appeals lawyer who worked with Robinson on the case, said some lower courts had a "mentality" after Proposition 8 passed that consumer lawsuits should be scaled back.

"I am giddy," Arkin said moments after reading the ruling. "I am so happy and so relieved and so excited that the [law] remains an actual useful tool for protecting consumer interests."

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maura.dolan@latimes.com

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