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October Term, 2008

December 16, 2008

Today the Supreme Court issued a decision, described below, of interest to the business community.

Altria Group, Inc. v. Good, No. 07-562 (previously discussed in the January 21, 2008 Docket Report).

The Federal Cigarette Labeling and Advertising Act (Labeling Act) expressly bars States from imposing any "requirement or prohibition based on smoking and health * * * with respect to the advertising or promotion of any cigarettes." 15 U.S.C. § 1334(b). Today, in Altria Group, Inc. v. Good, No. 07-562, the Supreme Court held that the Labeling Act does not preempt, either expressly or impliedly, state-law fraud claims that challenge, as allegedly false, advertisements that describe certain cigarettes as "light" and containing "lowered tar and nicotine."

Good involves a putative class action filed under Maine's Unfair Trade Practices Act. Plaintiffs contend that Philip Morris deceived consumers by using the terms "light" and "lowered tar and nicotine" in marketing Marlboro Lights. They assert that these descriptors are deceptive because smokers of such cigarettes may "compensate" for the lower tar and nicotine levels, for example by taking deeper puffs or smoking more, and thus may in fact receive as much tar and nicotine as smokers of regular cigarettes. Defendants argued that allowing such state-law claims would effectively impose a prohibition "based on smoking and health" of the sort expressly preempted by the Labeling Act. Defendants also argued that plaintiffs' state-law claim conflicts with the regulatory approach taken by the FTC with respect to "light" and "low tar" cigarettes and is thus impliedly preempted as well.

Writing for a five-member majority, Justice Stevens held that the Labeling Act's express preemption provision is, in contrast to preemption provisions found in certain other statutes, narrowly written and does not bar plaintiffs' claim, because the Act's preemption of state-law claims "based on" smoking and health does not bar claims based on a general duty not to make fraudulent statements. Rejecting defendants' contention that the FTC had specifically authorized cigarette manufacturers to use the descriptors "light" and "low tar," Justice Stevens also held that plaintiffs' claim was not impliedly preempted, because the FTC's actions upon which the defendants relied did not constitute such specific authorization and thus did not conflict with the plaintiffs' state-law claim.

In a dissent joined by three other justices, Justice Thomas wrote that the majority's decision with respect to express preemption mandated a claim-by-claim approach that is both unworkable and unprincipled. In Justice Thomas's view, rather than look to the source of the state-law duty that plaintiffs seek to invoke—in this case, a generic consumer-protection statute—and ask whether it is "based on" smoking and health, courts should ask whether the actual requirement plaintiffs seek to impose—in this case, a prohibition on using the descriptors "light" and "low tar"—is "based on" smoking and health. According to Justice Thomas, there can be no doubt that the prohibition plaintiffs seek is based on smoking and health, because their fraud claim is premised on the allegation that they were misled into believing that "light" cigarettes with "low tar" are healthier than other cigarettes.

Mayer Brown was co-counsel to petitioner Philip Morris USA.

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