Philip Morris USA Says Watson Ruling Should Not Affect Outcome of "Lights" Cases

The U.S. Supreme Court’s decision to reverse rulings by lower federal courts in the Watson case and remand it to state court does not negatively affect the ultimate outcome of the case or that of other “Lights” cases, Philip Morris USA said today.

“Today’s ruling is narrow and merely determined whether the Watson case should be heard in federal court or state court. We have compelling defenses to the Watson claim that have been advanced in state courts,” said William S. Ohlemeyer, Philip Morris USA vice president and associate general counsel.

Ohlemeyer added that the Watson case will have minimal effect on “Lights” or other class actions filed against the company after enactment of the Class Action Fairness Act in 2005, which requires most class actions to be heard in federal court.

In considering the issue of federal jurisdiction in the Watson case, a three-judge panel for the U.S. Court of Appeals for the Eighth Circuit earlier had ruled that because Philip Morris USA tested and marketed its “Lights” cigarettes under the Federal Trade Commission’s “direct and comprehensive control,” a federal court should hear the case. Today, the U.S. Supreme Court reversed that decision, holding that the company’s compliance with federal regulations did not confer exclusive jurisdiction on federal courts. 

Today's decision clarified the procedural issue of when defendants, who are acting under a federal agency like the FTC and sued in state court, can remove the case to federal court.  While today’s decision does not directly address the issue of whether the federal labeling act or agency regulation of a defendant's advertising and marketing activities prevents plaintiffs from suing under state consumer fraud laws, the Court did note that Philip Morris USA was acting pursuant to “… considerable regulatory detail and supervision….”

Philip Morris USA has long maintained that Congress and the FTC created a comprehensive regulatory scheme for marketing "low tar" and "Lights" cigarettes and, that these types of class actions are pre-empted by federal law or exempted from state consumer fraud laws.  Many courts have so held and today’s decision adds further support to those rulings.
The company previously asked that the Watson case be dismissed on the basis of preemption and the consumer fraud exemption.  The company now looks forward to presenting its arguments before the Arkansas state court.

The case is Watson v. Philip Morris USA Inc.
     

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