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Illinois Supreme Court sends Philip Morris back to Madison County  

Philip Morris is back in Madison County.

The lawsuit which resulted in a $10.1 billion verdict against cigarette manufacturer Philip Morris is expected to return to Madison County court after the Illinois Supreme Court on Wednesday refused to hear an appeal by Philip Morris that could have ended the case.

In 2003, then-Circuit Judge Nicholas Byron ruled that consumers were injured when Philip Morris advertised certain cigarettes as "light" and containing "lowered tar and nicotine." At trial, plaintiffs' attorney Stephen Tillery said the company knew Marlboro Lights were not safer and could be more damaging to smokers' health than regular Marlboro Reds cigarettes.

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• Landmark $10 Billion Judgment Against Philip Morris in Korein Tillery Case Wins Support from the Illinois Supreme Court 

The landmark $10.1 billion verdict against cigarette-maker Philip Morris in a lawsuit filed by Korein Tillery won the support of the Illinois Supreme Court today when it refused to hear an appeal by Philip Morris that could have ended the case.

The momentous victory by Korein Tillery in the Illinois Supreme Court effectively reopens the $10.1 billion judgment – one of the largest in United States history – and returns the Price v. Philip Morris case to the trial court in the Third Judicial Circuit Court in Madison County, Illinois, for further proceedings . . .

In opposing Philip Morris’ petition, lead plaintiffs’ attorney Stephen M. Tillery argued that the evidence in the Good case should be applied to the Price case because it proved that “Philip Morris previously prevailed in this matter by advancing an inaccurate version of the historical record that now has been thoroughly rejected by the U.S. Supreme Court and the FTC.” Tillery also pointed out that the U.S. Department of Justice (DOJ) had “alleged that cigarette manufacturers (including Philip Morris) and tobacco-related trade organizations violated the Racketeer Influenced and Corrupt Organizations Act by engaging in a conspiracy to deceive the American public about, among other things, the purported health benefits from ‘Light’ and ‘low tar’ cigarettes.” Tillery quoted the DOJ allegations that cigarette-makers marketed those cigarettes as safer than regular cigarettes “despite either lacking evidence to substantiate their claims or knowing them to be false.”

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Plaintiffs Notch Legal Win in Ill. Cigarette Suit  

The Illinois Supreme Court on Wednesday cleared the way for plaintiffs' attorneys to push that a $10.1 billion verdict against cigarette-maker Philip Morris be revived, sending the matter back to the trial court for more hearings.

The court upheld a state appellate court's February ruling that sends the case back to southwestern Illinois' Madison County. A judge there had sided with plaintiffs after a two-month 2003 trial in a class-action lawsuit over Philip Morris' marketing of "light" cigarettes. The state's high court later threw out that verdict.

With the latest ruling, the plaintiffs expect to argue that a favorable 2008 U.S. Supreme Court decision may be applied to reinstate the Madison County case.

"The Supreme Court had an opportunity to review the appellate decision but found no basis to do so," Stephen Tillery, the attorney behind the lawsuit, said. "After a long journey through the courts, we believe this decision moves the judgment a step closer toward a final confirmation for the 1.1 million Illinois consumers who were represented in the lawsuit."

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• Ruling sends smoking lawsuit back to court in Madison County 

A lawsuit that produced a $10.1 billion judgment against cigarette-maker Philip Morris is headed back to Madison County circuit court after the Illinois Supreme Court declined on Wednesday to hear the company's appeal of a lower-court ruling that revived the litigation.

In 2003, then-Circuit Judge Nicholas Byron awarded plaintiffs $10.1 billion in compensatory and punitive damages after a two-month trial of a class-action lawsuit on behalf of Illinois smokers.

Plaintiffs represented by St. Louis attorney Stephen Tillery contended that Philip Morris (now Altria Group Inc.) deceived consumers when it advertised that certain of its cigarettes were "light" and contained "lowered tar and nicotine." They said the company knew that Marlboro Lights were not safer than nonlight cigarettes and might even be more dangerous to health. . . .

But the U.S. Supreme Court, in a December 2008 decision, Altria Group Inc. v. Good, found that the FTC did not authorize use of those terms. . . .

In a one-sentence ruling, the state Supreme Court declined on Wednesday to hear the company's appeal of that ruling. Supreme Court spokesman Joe Tybor said Justice Robert R. Thomas did not participate but said he would file a dissent later.

"The Illinois Supreme Court today issued a sound decision in Price v. Philip Morris that we believe charts the way for the circuit court to hear arguments regarding whether these terms were ever authorized by the FTC," Tillery, of the Korein Tillery law firm, said Wednesday. Tillery said the decision could signal a willingness by the state Supreme Court to reconsider its 2005 decision in light of the Good case.

Altria attorney Murray Garnick said the court's reversal of the Madison County judgment still stood. He said the court's decision on Wednesday meant that Ruth would consider the plaintiffs' petition on its merits, not on the time of its filing.

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Federal Trade Commission Cigarette Report for 2007 and 2008 (PDF) 

I. INTRODUCTION

This report is the latest in a series on cigarette sales, advertising, and promotion that the Federal Trade Commission (“Commission”) has prepared since 1967.

The statistical tables appended to this report provide information on domestic sales and advertising and promotional activity by the largest U.S. cigarette manufacturers. The tables were compiled from data contained in special reports submitted to the Commission pursuant to compulsory process by: Altria Group, Inc. (the ultimate parent of Philip Morris); Commonwealth Brands, Inc.; Lorillard, Inc. (the ultimate parent of Lorillard Tobacco Co.); Reynolds American, Inc. (the ultimate parent of R.J. Reynolds Tobacco Co. and Santa Fe Natural Tobacco Company, Inc.); and Vector Group Ltd. (the ultimate parent of Liggett Group, Inc. and Vector Tobacco, Inc.). The 2007 data also reflect a submission by Vibo Corporation (parent of General Tobacco Company). Because the 2007 data reflect the submissions of six companies, not five as previously, long term trends may be more relevant than single year changes.

II. TOTAL CIGARETTE SALES AND ADVERTISING AND PROMOTIONAL EXPENDITURES

The total number of cigarettes reported sold or given away decreased by 7.7 billion cigarettes (2.2 percent) from 2006 to 2007, and then by another 20.2 billion units (4.5 percent) from 2007 to 2008. Advertising and promotional expenditures also declined, falling from $12.49 billion in 2006 to $10.86 billion in 2007, and then to $9.94 billion.

The largest single category of these expenditures in both 2007 and 2008 was price discounts paid to cigarette retailers or wholesalers in order to reduce the price of cigarettes to consumers. This one category accounted for $7.70 billion (70.9 percent of total advertising and promotional expenditures) in 2007, and $7.17 billion (72.1 percent of total expenditures in 2008).

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• Feds say drop in cash spent on cigarette promotion 

The nation's top tobacco companies are spending less money on cigarette advertising and promotion and more money on promoting smokeless tobacco products, according to the latest data from the Federal Trade Commission.

The data mirrors an industry trend as tobacco companies look to cigarette alternatives such as smokeless tobacco products for future sales growth as tax hikes, smoking bans, health concerns and social stigma make the cigarette business tougher.

Numbers released by the federal agency late Friday show cigarette marketing decreased more than 34 percent to $9.94 billion in 2008, the latest year available, compared with 2003. Meanwhile, cigarette sales decreased 11 percent to 320 billion cigarettes in the same period.

Much of the money spent by cigarette makers, about 72 percent or $7.2 billion, was for price discounts paid to retailers and wholesalers in order to reduce the price of cigarettes to consumers as the average price per pack increased 19 percent to $4.55 in the five-year period.

The number of cigarettes given away fell 62 percent to 2.7 billion cigarettes between 2003 and 2008 after a spike of 11.1 billion cigarettes in 2002.

According to the federal data, the amount cigarette companies spent on advertisements directed to youth or their parents that are intended to reduce youth smoking fell 84 percent to only $11.5 million from between 2003 and 2008.

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FTC Reports Show Tobacco Companies Still Spend Huge Sums on Marketing -- Cigarette Marketing Declined, but Smokeless Tobacco Marketing Doubled in Recent Years 

The Federal Trade Commission on Friday reported that cigarette marketing expenditures in the United States declined from $12.5 billion in 2006 to $10.9 billion in 2007 and $9.9 billion in 2008. The FTC also reported that smokeless tobacco marketing increased from $354.1 million in 2006 to $411.3 million in 2007 and $547.9 million in 2008. When measured from 2005, smokeless tobacco marketing has more than doubled (from $250.8 million to $547.9 million).

While it is a positive step that cigarette marketing has declined, the tobacco companies continue to spend huge sums to market their deadly and addictive products. Counting both cigarette and smokeless tobacco marketing, the tobacco companies spent $10.5 billion on marketing in 2008 – nearly $29 million each day and 52 percent more than they spent at the time of the 1998 settlement of state lawsuits against the industry, which was supposed to curtail tobacco marketing. . . .

The continuing high level of tobacco marketing show why we need aggressive action by all levels of government to stop the tobacco epidemic. The Food and Drug Administration must effectively exercise its new authority over tobacco products and marketing, while the Administration and Congress should fund and implement the federal government's new Tobacco Control Strategic Action Plan. The states must pick up the pace of their efforts to increase tobacco taxes, enact smoke-free laws and fund tobacco prevention and cessation programs. Tobacco use is the nation's number one cause of preventable death, killing more than 400,000 people and costing $96 billion in health care bills each year. These deaths and costs are entirely preventable if elected officials at all levels fight tobacco use as aggressively as the tobacco companies market their deadly products.

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Federal report: Tobacco cos spending less on cigarette promotion, more on smokeless tobacco  

The latest federal data shows the nation's top tobacco companies are spending less money on cigarette advertising and promotion and more money on promoting smokeless tobacco products.

Numbers from the Federal Trade Commission show cigarette marketing decreased more than 34 percent to $9.94 billion in 2008, the latest year available, compared with 2005.

Meanwhile, cigarette sales decreased 9 percent to 320 billion cigarettes in the same period.

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• FTC Releases Reports on Cigarette and Smokeless Tobacco Advertising and Promotion 

The amount spent on cigarette advertising and promotion by the largest cigarette companies in the United States declined from $12.49 billion in 2006 to $10.86 billion in 2007, and again to $9.94 billion in 2008, according to a report released today by the Federal Trade Commission.

The largest spending category in both 2007 and 2008 was spending on price discounts paid to cigarette retailers or wholesalers in order to reduce the price of cigarettes to consumers. This category accounted for $7.70 billion, or 70.9 percent of total spending on advertising and promotion in 2007, and $7.17 billion, or 72.1 percent of that total, in 2008.

The number of cigarettes sold or given away to wholesalers and retailers in the United States declined from 350.5 billion in 2006 to 342.8 billion in 2007, and to 322.6 billion in 2008.

A separate report on the major manufacturers of smokeless tobacco products in the United States found that their spending on advertising and promotion rose from $354.1 million in 2006 to $411.3 million in 2007 and to $547.9 million in 2008. The dollar value of sales by these manufacturers rose from $2.59 billion in 2006 to $2.70 billion in 2007, and $2.76 billion in 2008, and the amount by weight of smokeless tobacco sold rose from 115.82 million pounds in 2006 to 118.23 million pounds in 2007, rising again to 119.92 million pounds in 2008.

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WATSON ET AL. v. PHILIP MORRIS COS., INC., ET AL. 

Petitioners filed a state-court suit claiming that respondents (Philip Morris) violated Arkansas unfair business practice laws by advertising certain cigarette brands as “light” when, in fact, Philip Morrishad manipulated testing results to register lower levels of tar andnicotine in the advertised cigarettes than would be delivered to consumers. Philip Morris removed the case to Federal District Courtunder the federal officer removal statute, which permits removal ofan action against “any officer (or any person acting under that officer)of the United States or of any agency thereof,” 28 U. S. C. §1442(a)(1)(emphasis added). The federal court upheld the removal, ruling thatthe complaint attacked Philip Morris’ use of the Government’s method of testing cigarettes and thus that petitioners had sued PhilipMorris for “acting under” the Federal Trade Commission. The EighthCircuit affirmed, emphasizing the FTC’s detailed supervision of the cigarette testing process and likening the case to others in which lower courts permitted removal by heavily supervised Government contractors.

Held: The fact that a federal agency directs, supervises, and monitors a company’s activities in considerable detail does not bring that company within §1442(a)(1)’s scope and thereby permit removal. Pp. 3–14. . . .

Nothing in this letter refers to a delegation of authority. And neither Congress nor federal agencies normally delegate legal authority to private entities without saying thatthey are doing so.

Without evidence of some such special relationship,Philip Morris’ analogy to Government contracting breaks down. We are left with the FTC’s detailed rules about advertising, specifications for testing, requirements about reporting results, and the like. This sounds to us like regulation, not delegation. If there is a difference between this kind of regulation and, say, that of Food and Drug Administration regulation of prescription drug marketing and advertising (which also involve testing requirements), see Serono Labs., Inc. v. Shalala, 158 F. 3d 1313, 1316 (CADC 1998), that difference is one of degree, not kind.

As we have pointed out, however, differences in the degree of regulatory detail or supervision cannot by themselves transform Philip Morris’ regulatory compliance into the kind of assistance that might bring the FTC within the scope of the statutory phrase “acting under” a federal “officer.” Supra, at 8. And, though we find considerable regulatory detail and supervision, we can find nothing

14 WATSON v. PHILIP MORRIS COS.

Opinion of the Court

that warrants treating the FTC/Philip Morris relationship as distinct from the usual regulator/regulated relationship. This relationship, as we have explained, cannot be construed as bringing Philip Morris within the terms of the statute.

For these reasons, the judgment of the Eighth Circuit is reversed, and the case is remanded for further proceedings consistent with this opinion.

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No. 04-1225. - WATSON v. PHILIP MORRIS COMPANIES INC - US 8th Circuit 

Lisa WATSON;  Loretta Lawson, Individually and On Behalf of All Others Similarly Situated, Plaintiffs-Appellants, v. PHILIP MORRIS COMPANIES, INC., a Corporation;  Philip Morris, Incorporated, a Corporation, Defendants-Appellees. . . .

Lisa Watson and Loretta Lawson filed this interlocutory appeal, on their own behalf and as representatives of a class, from the district court's 1 denial of their motion to remand to state court.   Watson and Lawson filed their class action in Arkansas state court, alleging that Philip Morris violated the Arkansas Deceptive Trade Practices Act. See Ark.Code Ann. § 4-88-107 et seq.   We hold that the case was properly removed to federal court.

Watson and Lawson claim that Philip Morris engaged in “unfair business practices and/or deceptive and unlawful conduct in connection with the manufacture, distribution, promotion, marketing, and sale of Cambridge Lights and Marlboro Lights.”   They basically allege that Philip Morris designed its cigarettes to deliver more tar and nicotine to smokers than its use of the labels “lights” and “lowered tar and nicotine” in its advertising would suggest.   The propriety of remand is the only issue before us, as it was in the district court, and we express no views on the merits.

Philip Morris removed the action pursuant to 28 U.S.C. § 1442(a)(1) (2000), which permits removal where a person is sued for actions taken under the direction of a federal officer.   Philip Morris claims it satisfies the requirements of the federal officer statute because it was acting under the direct control of the Federal Trade Commission (FTC) when it engaged in the allegedly unlawful conduct. . . .

I fully concur in the court's opinion and judgment.   I write separately to emphasize that our decision today should not be construed as an invitation to every participant in a heavily regulated industry to claim that it, like Philip Morris, acts at the direction of a federal officer merely because it tests or markets its products in accord with federal regulations.   I believe that in most instances, a contract, principal-agent relationship, or near-employee relationship with the government will be necessary to show the degree of direction by a federal officer necessary to invoke removal under 28 U.S.C. § 1442(a)(1).   See Virden, 304 F.Supp.2d at 845-46 (collecting cases embodying the “regulation plus” concept, where limited discretion under a government contract, action as an agent for the federal government, or action in the nature of a government employee, in addition to government regulation, supported a defendant's invocation of the federal officer removal statute).

In this case, as the court's opinion makes clear, the FTC's direction and control of the testing and marketing practices at issue is extraordinary.   The FTC developed the Cambridge Filter Method, conducted the testing itself for twenty years before farming it out to the cigarette companies, threatened a deceptive advertising action if the method of testing deviated in the smallest way from the government-mandated method and controlled the disclosure of the results throughout.   Because the FTC passed the function of performing the testing to the cigarette companies while allowing them no independent control of the process whatsoever, this is a rare case in which federal officer jurisdiction is appropriate even in the absence of a contract, principal-agent relationship, or near-employee relationship with the government.

With these observations, I join the court's opinion and judgment.

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FTC settling case over 'fake' iTunes reviews  

A PR firm accused of writing phony iTunes reviews of its clients' iPhone apps is settling the case with the Federal Trade Commission.

As part of the proposed settlement (PDF), PR firm Reverb Communications and owner Tracie Snitker must remove any iTunes reviews that were written by Reverb employees posing as ordinary customers and who failed to disclose a relationship between Reverb and its game developer clients. The agreement also bars Reverb and Snitker from posting further reviews on iTunes that pretend to be from independent consumers or that neglect to disclose any connection between the company and its clients, according to the FTC.

"Companies, including public relations firms involved in online marketing, need to abide by long-held principles of truth in advertising," Mary Engle, director of the FTC's Division of Advertising Practices, said Thursday in a statement. "Advertisers should not pass themselves off as ordinary consumers touting a product, and endorsers should make it clear when they have financial connections to sellers."

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• HOLMES v. PHILIP MORRIS 

The plaintiff, Connie J. Holmes, on behalf of herself and others similarly situated, filed a class action complaint alleging that the defendant, Philip Morris USA Inc., violated the Delaware Consumer Fraud Act (“DCFA”), 6 Del. C. §§ 2511-2527, by using the descriptors “lights” and “lowered tar and nicotine” in the advertising and packaging of Marlboro Lights cigarettes. The defendant has moved for summary judgment. . . .

The defendant claims that the descriptors “light” and “lowered tar and nicotine” are short hand references which were based upon measurements produced by the Cambridge Filter Method (“FTC Method”).2 The defendant contends that the use of the descriptors was developed and encouraged by the Federal Trade Commission (“FTC”). It further contends that the use of the descriptors is a merchandising practice which is exempt from the DCFA pursuant to 6 Del. C. § 2513(b)(2).3 . . .

I conclude that the factual findings recited in U.S. v. Philip Morris USA Inc.29 seem utterly in conflict with any contention that, as a matter of law, the defendant’s merchandising practice complied with a statute administered by the FTC.30 In addition, Good and Aspinall lead to the conclusion that there is at least a question of fact which precludes summary judgment for the defendant. . . .

I do, however, agree with the defendant that Good is not controlling, because it is a preemption case and did not consider the Delaware statute. Despite these distinguishing characteristics, the Supreme Court’s comments on the history of the interactions between the FTC and the cigarette industry, and the inferences drawn from that history, are relevant to the defendant’s motion.

Based on the foregoing, the defendant’s Motion for Summary Judgment is denied. . . .

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• FTC Releases Reports on Cigarette and Smokeless Tobacco Sales and Marketing Expenditures 

The amount spent on cigarette advertising and promotion by the five largest cigarette companies in the United States declined from $13.11 billion in 2005 to $12.49 billion in 2006, according to a report released today by the Federal Trade Commission. The largest spending category - spending on price discounts - fell from $9.78 billion in 2005 to $9.21 billion in 2006, but still accounted for nearly 74 percent of all marketing expenditures.

The number of cigarettes sold by those manufacturers to wholesalers and retailers declined from 2005 to 2006, while the number given away increased. Overall, the total number of cigarettes sold and given away declined from 354.6 billion in 2005 to 350.6 billion in 2006. A separate report on smokeless tobacco found that spending on advertising and promotion rose from $250.79 million in 2005 to $354.12 million in 2006. The dollar value of sales by the five largest manufacturers declined from $2.61 billion to $2.59 billion, and the number of pounds of smokeless tobacco sold declined from 116.2 million pounds to 115.82 million pounds.

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FTC Report Shows Declines In Cigarette Sales, Promotion 

A Federal Trade Commission report released Wednesday shows relatively slender declines in cigarette sales, advertising and promotion.

However, a separate FTC report shows that spending on smokeless tobacco, also referred to as chewing tobacco, advertising and promotion rose from $250.79 million in 2005 to $354.12 million in 2006.

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