WASHINGTON -- The Supreme Court unanimously rejected a tobacco industry legal tactic, ruling yesterday that Philip Morris cannot shift a lawsuit from state to federal court.
Simply following rules and regulations does not make a company a federal officer with a right to have cases heard in federal court, the justices ruled.
The ruling undercuts embattled tobacco companies, which have hoped to escape the state courts, where they've suffered multibillion-dollar losses.
"The upshot is that a highly regulated firm cannot find a statutory basis for removal [to federal court] in the fact of federal regulation alone," Justice Stephen G. Breyer wrote.
"We're delighted that we won unanimously," said Washington-based attorney David C. Frederick, who's challenging the tobacco companies.
As often happens, the Supreme Court's 14-page opinion yesterday was a technical ruling that did not touch on the underlying merits of the lawsuit. The justices did not opine as to whether Philip Morris deceived consumers by advertising Cambridge Lights and Marlboro Lights as being low in tar and nicotine.
It will now be up to an Arkansas jury to decide whether Philip Morris deceived consumers such as Little Rock residents Lisa Watson and Loretta Lawson, who filed the original lawsuit.
"We have compelling defenses to the Watson claim that have been advanced in state courts," said William S. Ohlemeyer, Philip Morris USA vice president and associate general counsel.
Ohlemeyer said the Supreme Court's ruling was a narrow one that would not affect the company's long-term legal prospects. Nonetheless, tobacco companies have sought to have cases tried in federal courts, where whopping damages awards and certification as a class action can be harder to obtain than in state courts.
In 2003, Philip Morris was hit with a $10.1 billion verdict in Illinois state court in a similar case involving allegations of false advertising. That year, a Florida trial court slammed the company with a $145 billion judgment, later reversed on appeal. Many tobacco lawsuits are pending in state courts, including in California, Missouri, Louisiana and Nevada.
The legal question yesterday was who can be considered a "federal officer."
Going back to the War of 1812, designated federal officers have been able to shift cases against them from state to federal courts. The idea is to prevent states from interfering with a national government.
The Virginia-based Philip Morris, now part of Altria Group Inc., argued that it was essentially recruited as a federal officer when it had to follow extensive orders from the Federal Trade Commission. The trade commission has regulated cigarette advertising for more than 40 years.