Small v. Lorillard Tobacco Co.

252 A.D.2d 1, 679 N.Y.S.2d 593
CourtAppellate Division of the Supreme Court of the State of New York
DecidedOctober 27, 1998
StatusPublished
Cited by89 cases

This text of 252 A.D.2d 1 (Small v. Lorillard Tobacco Co.) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Small v. Lorillard Tobacco Co., 252 A.D.2d 1, 679 N.Y.S.2d 593 (N.Y. Ct. App. 1998).

Opinion

OPINION OF THE COURT

Rosenberger, J. P.

These consolidated appeals arise out of five related class actions brought by cigarette consumers against the leading cigarette manufacturers, their parent organizations, the Council for Tobacco Research (CTR) and the Tobacco Institute (TI). The latter two defendants are research and lobbying organizations created by the tobacco companies.

In one of the orders appealed from, plaintiffs moved to certify two proposed classes: a damages class composed of all New York State residents who became nicotine dependent on or after June 19, 1980, and an injunction class of smokers who purchased defendants’ cigarettes in New York State. For each of the five class actions, the IAS Court certified a class defined as persons who purchased and smoked defendants’ cigarettes, in order to eliminate the need for proof of each class member’s addiction. So defined, the plaintiff class for each of the five [5]*5lawsuits would exceed one million people. In the other order, the court denied the defendants’ motions to dismiss the action for failure to state a cause of action, lack of subject matter jurisdiction and lack of personal jurisdiction over Brown & Williamson’s corporate parents. Both orders should be reversed.

Plaintiffs do not seek damages for ill health caused by smoking. Rather, they cast this action as a consumer fraud case and seek only recovery of the money they spent on cigarettes since 1980, as well as an injunction preventing defendants from making further misrepresentations about nicotine and ordering them to notify the class members about the drug’s true effect on smokers.

Plaintiffs claim that they were deceived into becoming smokers because defendants lied about nicotine’s addictive properties while secretly manipulating the nicotine content of their products in order to addict consumers. They allege common-law fraud, violations of General Business Law §§ 349 and 350 (deceptive business practices) and civil conspiracy.

The extent of the defendants’ allegedly deceptive practices was first revealed to the public in the spring of 1994 during the Congressional investigation into the tobacco industry. This investigation uncovered cigarette manufacturers’ internal memoranda and studies, going back as far as the 1950’s, which appeared to show that the manufacturers extensively researched nicotine addiction with the express intention of designing products so addictive that people would be unable to stop buying them. Meanwhile, the manufacturers’ public statements consistently denied that nicotine was addictive.

Among these manufacturers were defendants Philip Morris, Brown & Williamson, R.J. Reynolds, American Tobacco Company and Lorillard. Plaintiffs claim that CTR and TI were also aware of, or actively generating, such research, even as they attempted, at the manufacturers’ behest, to convince the public that their objective scientific studies cast doubt on the purported adverse consequences of smoking.

Defendants contend, first, that class certification is inappropriate because individual questions of fact predominate, particularly as to reliance and damages; and second, that in whatever form this action is brought, plaintiffs’ claims fail to establish the elements of fraud and deceptive business practices, and are preempted by the Federal Cigarette Labeling and Advertising Act, as interpreted by the Supreme Court in Cipollone v Liggett Group (505 US 504). We share plaintiffs’ concern that unethical business dealings should not go [6]*6unpunished simply because defendants harmed so many people that judicial resolution of their claims would be unmanageable. Nevertheless, as to those particular actions, the law is on defendants’ side.

CLASS CERTIFICATION

CPLR 901 (a) provides that the court has discretion to grant class certification only if:

“(1) the class is so numerous that joinder of all members, whether otherwise required or permitted, is impracticable;
“(2) there are questions of law or fact common to the class which predominate over any questions affecting only individual members;
“(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class;
“(4) the representative parties will fairly and adequately protect the interests of the class; and
“(5) a class action is superior to other available methods for fair and efficient adjudication of the controversy.”

While the plaintiffs bear the burden of showing that certification is appropriate, the statute should be broadly construed, especially where the denial of certification “ ‘would effectively terminate further litigation’ ” (Brandon v Chefetz, 106 AD2d 162, 169 [citation omitted]).

Defendants do not dispute the IAS Court’s finding of numerousness, for the obvious reason that each of the five classes would contain at least a million members.

The heart of defendants’ argument is that individual issues predominate. First, even though they seek compensation only for economic losses as consumers, not personal injury damages, plaintiffs have not eliminated the very individualized issue of whether each was nicotine dependent. Second, it cannot be presumed that each class member even knew of the alleged misrepresentations, let alone relied on them.

The IAS Court distinguished Castano v American Tobacco Co. (84 F3d 734 [5th Cir]), in which the Fifth Circuit decertified a class of allegedly nicotine-dependent persons because proof of actual addiction would involve too many subjective and individualized factors. Unlike Castaño, the IAS Court reasoned, proof of addiction was not an issue here because plaintiffs’ theory of liability was based on the fraudulent nature of the transaction, not its health effects. The court accordingly redefined the class as all persons who purchased and smoked defendants’ cigarettes.

[7]*7Yet, this strategic redefinition superficially strengthened one aspect of plaintiffs’ case only by fatally weakening another aspect. If plaintiffs do not prove addiction, they cannot show that they were harmed by defendants’ deceptive exploitation of the addictive properties of nicotine to maintain their customer base.

Proof of injury is essential to plaintiffs’ General Business Law claims. While General Business Law § 349 “does not require proof of justifiable reliance, a plaintiff seeking compensatory damages must show that the defendant engaged in a material deceptive act or practice that caused actual, although not necessarily pecuniary, harm” (Oswego Laborers’ Local 214 Pension Fund v Marine Midland Bank, 85 NY2d 20, 26). Section 349 (h), which was added to the original statute to give private parties a right of action, grants that right only to “any person who has been injured” by deceptive business practices. Neither the case law nor the statutory language supports plaintiffs’ argument that the deception is the injury.

Various courts around the Nation have denied class certification in tobacco lawsuits similar to this case because individual issues of fact as to addiction and personal injury predominated (e.g., Lyons v American Tobacco Co., 1997 US Dist LEXIS 18365 [SD Ala]; Barnes v American Tobacco Co., 984 F Supp 842 [ED Pa]; Arch v American Tobacco Co., 175 FRD 469 [ED Pa];

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Bluebook (online)
252 A.D.2d 1, 679 N.Y.S.2d 593, Counsel Stack Legal Research, https://law.counselstack.com/opinion/small-v-lorillard-tobacco-co-nyappdiv-1998.