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Altria Group, Inc. v. Good: Supreme Court Rejects Pre-emption and Allows Smokers to Sue for Fraud

On December 15, 2008, the United States Supreme Court issued a decision in Altria Group, Inc. v. Good, the latest in a series of cases over the last two decades addressing pre-emption under the Federal Cigarette Labeling and Advertising Act ("Labeling Act").

On December 15, 2008, the United States Supreme Court issued a decision in Altria Group, Inc. v. Good, the latest in a series of cases over the last two decades addressing pre-emption under the Federal Cigarette Labeling and Advertising Act ("Labeling Act"). In a divided five-to-four opinion, the Court held that the Labeling Act did not expressly or impliedly pre-empt claims of fraudulent advertising under the Maine Unfair Trade Practices Act ("MUPTA"). This decision allows claims by smokers seeking billions of dollars in damages from tobacco companies to proceed.

Altria involves claims by a putative class of Maine consumers against Altria Group and Philip Morris in connection with their sale of certain brands of "light" cigarette. The Altria plaintiffs contend that the cigarette manufacturers knew that consumers' smoking behaviors are such that individuals often inhale as much tar and nicotine from "light" cigarette as from "regular" cigarettes and that, by concealing this information, they fraudulently marketed their "light" cigarettes as less harmful than "regular" cigarettes. In other words, the plaintiffs claimed they had overpaid for cigarettes based on deceptive advertisements claiming "light" cigarettes were safer than regular ones.

Altria Group and Philip Morris moved for summary judgment on the grounds that the Labeling Act, which requires tobacco companies to place four explicit warnings on their packaging and advertising, pre-empted plaintiffs' claims under the MUPTA. The U.S. District Court granted summary judgment for the tobacco companies, ruling that the claims were pre-empted by the Labeling Act, which protects cigarette manufacturers from inconsistent state labeling laws by prohibiting the requirement of additional statements relating to smoking and health on cigarette packages, stating in part that "no requirement or prohibition based on smoking and health shall be imposed under state law with respect to the advertising or promotion of cigarettes." The First Circuit, however, reversed, finding that the Labeling Act does pre-empt consumer fraud claims. The question before the Supreme Court was not whether use of the term "light" amounted to fraud. Rather, it was whether plaintiffs should be allowed to sue at all given the federal Labeling Act, including its pre-emption provisions.

In a decision written by Justice John Paul Stevens, the Supreme Court agreed with the First Circuit. In dismissing Altria Group's argument that the Labeling Act expressly pre-empts state statutes like the one in Maine, the Court noted the two stated purposes of the Act: to inform the public about the health risks of smoking and to protect commerce and the economy by creating uniform standards with respect to the first goal. Applying the standard established by the plurality in the 1992 case Cipollone v. Ligget Group, the Court found that the Maine statute did not constitute a "requirement or prohibition based on smoking and health ... with respect to ... advertising or promotion." The Labeling Act "does not refer to harms related to smoking and health," Justice Stevens wrote. "Rather it pre-empts only requirements and prohibitions - i.e. rules - that are based on smoking and health." According to the Justice Stevens, claims that labeling is misleading or deceptive fall outside this group.

The dissent in Altria was vigorous. In an opinion joined by Chief Justice Roberts, Justice Scalia and Justice Alito, Justice Thomas variously described the majority's opinion as "ill-conceived," "un-workable," "mischievous," "distorted," and "seriously flawed."

It remains to be seen how much traction Altria will gain outside the tobacco litigation, particularly the application of the presumption against pre-emption, which has many concerned.

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