Altria Group Inc (MO)

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US court to hear arguments in 'light' smokes case
Tue Jul 10, 2007 7:00AM EDT
NEW YORK, July 10 (Reuters) - Several major tobacco companies are set to go to a U.S. appellate court on Tuesday to argue about whether a $200 billion lawsuit against them by "light" cigarette smokers should proceed as a class action.

The hearing scheduled before the U.S. Court of Appeals for the Second Circuit is the latest development in the closely watched case, which could potentially expose tobacco companies to hundreds of billions of dollars in liabilities.

The defendants in the case include Altria Group Inc.'s (MO.N: Quote, Profile, Research) Philip Morris USA unit; Reynolds American Inc.'s (RAI.N: Quote, Profile, Research) R.J. Reynolds Tobacco Co.; Loews Corp.'s (LTR.N: Quote, Profile, Research) Lorillard Tobacco unit; Vector Group Ltd.'s (VGR.N: Quote, Profile, Research) Liggett Group; and British American Tobacco Plc's (BATS.L: Quote, Profile, Research) British American Tobacco (Investments) Ltd.

The appellate court's decision, although not expected on Tuesday, would help shape how far the case is ultimately allowed to go, said Benjamin Zipursky, professor at Fordham University School of Law.

At Tuesday's hearing, observers should watch out for any indications that the court might give of its thinking, Zipursky said. "Do the judges appear to be leaving any room for partial classes or subsets?"

The lawsuit filed in May 2004 argued that tobacco companies defrauded smokers into thinking "light" cigarettes were safer than regular ones.

In September of last year, U.S. Senior District Judge Jack Weinstein in Brooklyn, New York, granted class-action status in the case, and the tobacco companies appealed.

The class includes tens of millions of people who bought cigarettes of any of 65 "lights" brands over a 35-year period, according to tobacco companies. Philip Morris USA introduced the first light cigarette, Marlboro Lights, in 1971.

Tobacco companies have argued that various smokers' reasons for choosing "light" cigarettes and beliefs about the risks were different, making it inappropriate to group them together in a class action.

"The class members' disparate knowledge, beliefs, and reasons for choosing lights preclude class treatment," tobacco companies said in their brief to the appellate court earlier this year. "This is an unlawful class certification order, exemplifying the 'systemic urge to aggregate litigation.'"

Lawyers for the smokers have argued that a class action is the only way to practicably take the case forward and that the district court's decision should be upheld.

"The broad scope of this fraud, the relatively small value of individual claims involved, and the complexity of this case make a class action the only meaningful opportunity to redress this wrong," they said in their brief.