Federal Judiciary

Another big class-action test

By Lyle Denniston

The long-running controversy over consumers’ complaints pursued through large class-action lawsuits is building anew in the Supreme Court as the new Term dawns.  Following up the recent appeal on class-action issues in the federal courts in the Wal-Mart Stores case, major tobacco companies are challenging the handling of such cases in the state courts.  At this point, Justice Antonin Scalia is pondering the tobacco companies’ plea to temporarily stay a Louisiana court ruling pending a coming appeal.

The tobacco firms’ petition, due later this year, will ask the Court to decide what limits the Constitution’s due process clause imposes on class-action litigation in the state courts.  ”This case,” the companies argued in their stay application, “presents an ideal vehicle for the Court to provide much-needed guidance on the extent to which the Due Process Clause establishes minimum requirements in the context of class-action adjudication….Confusion among lower courts over the requirements of due process…is expecially evident in decisions dealing with proposed class actions asserting health-related fraud and other tort claims against manufacturers of mass consumer products, including cigarette manufacturers.”

The companies are facing a state court order to pay more than $241 million into a ten-year, court-supervised program to help smokers stop using cigarettes.  (As of now, they say, more than $29 million has been tacked onto that amount in interest.)  On Sept. 14, Justice Scalia temporarily blocked the duty to pay the money into the fund, while he studied the stay issue.  He could decide that on his own, or share it with his colleagues.

The industry attorneys argued in the stay filings that, since the Court appears likely to hear the Wal-Mart appeal, raising due process issues about federal class-action cases (Wal-Mart Stores v. Dukes, et al., docket 10-277), the Court would be likely to hear the tobacco case, too — or at least hold it until Wal-Mart is decided.

Thei stay application in Philip Morris USA, et al., v. Jackson, et al. (10A273) is here; it is a large file.  The opposition brief is here.  The reply is here.

Lawyers for the two former smokers who began the class-action case in Louisiana state court more than 14 years ago have urged the Supreme Court not to disurb the lower court rulings, arguing that the companies’ legal rights were fully protected as the case has made its way through Louisiana courts.  They also noted that the Supreme Court refused in 2008 to hear an earlier appeal by industry firms.

The opposition brief also noted that, from an original request for a 25-year, $1,182,000,000 program, the smoking-cessation fund has been reduced twice, to $241.5 million.   That brief also disputed that there is a link between this case and the Wal-Mart petition, saying that the Wal-Mart case involves a recurring split among lower courts over federal class-action rules, an issue not raised in the Louisiana litigation, and involves a different due process question.

The companies’ plea for temporary relief said they were not seeking to stop all proceedings in the Louisisna courts in the case.  Rather, the application said, they want a stay only of the order that they pay money into the smoking-cessation fund “for the limited time it takes for” the Justices to act on the coming petition for review.  State courts can go ahead and work out the logistics of the program, and decide who can participate.

The application noted that this lawsuit was filed in state courts one day after the Fifth Circuit Court had nullified an order to create a nationwide class of smokers.  Two of those involved in that case (Castano v. American Tobacco Co.) then pursued the state class-action case, making the same basic claims, the companies recalled.  Nothing in the state case, the firms contended, fixes the defects that led the Fifth Circuit to de-certify a class.

Full post as published by SCOTUSBLOG on September 23, 2010 (boomark / email).