Brown v. Brown & Williamson Tobacco Corp. ( 2007 )

United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
February 14, 2007
FOR THE FIFTH CIRCUIT
_____________________ Charles R. Fulbruge III
Clerk
No. 06-30130
_____________________
LOUANA BROWN; RANDY FRIEDRICH,
Plaintiffs - Appellees,
versus
BROWN & WILLIAMSON TOBACCO CORPORATION; ET AL.,
Defendants,
BROWN & WILLIAMSON TOBACCO CORPORATION,
Defendant - Appellant.
_____________________
No. 06-30311
_____________________
JACK SULLIVAN; JEFFREY IGUESS; KEITH SONGER;
LESTER JOSEPH, JR.,
Plaintiffs - Appellees,
versus
PHILIP MORRIS USA INC.,
Defendants,
PHILIP MORRIS USA INC.,
Defendant - Appellant.
_________________________________________________________________
Appeals from the United States District Court
for the Western District of Louisiana, Lake Charles
USDC No. 2:03-CV-995
_________________________________________________________________
Before JOLLY, HIGGINBOTHAM, and DENNIS, Circuit Judges.
E. GRADY JOLLY, Circuit Judge:
In this appeal, relating broadly to the marketing of “Lights”
cigarettes, we consider the pre-emptive scope of the Federal
Cigarette Labeling and Advertising Act (“the Labeling Act”), 15
U.S.C. § 1331 et seq.. The appellants (“Manufacturers”), Brown &
Williamson Tobacco Corporation (“Brown & Williamson”) and Philip
Morris, Inc. (“PM USA”), challenge the district court’s partial
denial of their motion for summary judgment. Manufacturers contend
that the district court erred when it ruled that the Labeling Act
does not expressly pre-empt the Plaintiffs’ state law claims for
redhibition, breach of express and implied warranties, and
fraudulent misrepresentation and concealment. Furthermore, they
argue that the district court erred when it declined to apply the
doctrine of implied conflict pre-emption to the Plaintiffs’ state
law claims. We hold that the district court erred in finding that
Plaintiffs’ claims, as presented at summary judgment, are not
expressly pre-empted by the Labeling Act. Consequently we reverse
and remand, directing the district court to enter a judgment
dismissing all claims with prejudice.
I.
On March 28, 2003, Plaintiffs filed their Petition for Damages
against PM USA, asserting claims under the Louisiana Unfair Trade
Practices and Consumer Protection Act (“LUTPA”) and for
redhibition, breach of express and implied warranties, and
fraudulent misrepresentation. Plaintiffs claimed that they were
deceived by the company’s marketing into believing that smokers of
2
light cigarettes consume lower tar and nicotine, and that light
cigarettes are safer than “regular cigarettes.” On April 24, 2003,
Plaintiffs filed their Petition for Damages against Brown &
Williamson, alleging the same claims. Plaintiffs seek to represent
a worldwide class of persons who purchased at least a single pack
of defendants’ light cigarettes (“Lights”) in Louisiana since 1971.
They seek to recover “economic damages” as measured by “the
difference between the value the product would have had at the time
of sale if the representations about them had been true and the
actual value to the consumer of the product in question,
considering the true nature of the product.” Plaintiffs do not
claim that they have been injured by smoking and do not seek to
recover for any illnesses allegedly caused by Lights.
The Manufacturers removed the respective cases to federal
court, and moved for summary judgment, arguing that Plaintiffs’
claims are barred by express and implied pre-emption. The
Manufacturers also argued that the LUPTA claims were barred by La.
Rev. Stat. Ann § 51:1406(4), which exempts from liability under the
LUPTA “[a]ny conduct that complies with section 5(a)(1) of the
Federal Trade Commission Act [15 U.S.C. 45(a)(1)].”
On August 13, 2005, the district court granted summary
judgment with respect to Plaintiffs’ LUTPA claim against PM USA,
but rejected PM USA’s express pre-emption arguments with respect to
the remaining claims. On September 14, 2005, the district court
entered the same order with respect to Brown & Williamson. The
3
Manufacturers moved for reconsideration, arguing that the district
court had not addressed their conflict pre-emption argument and
that reconsideration was appropriate in the light of Watson v.
Philip Morris Cos., 420 F.3d 852 (8th Cir. 2005). On December 2,
2005, the court denied reconsideration and certified its pre-
emption rulings for interlocutory appeal under 28 U.S.C. § 1292(b).
We granted Manufacturers’ petitions for review and consolidated the
cases.
This appeal presents questions of law that are reviewed de
novo. Hart v. Bayer Corp., 199 F.3d 239, 243 (5th Cir. 2000)
(“This court reviews de novo a district court’s conclusions on
questions of law.”); Frank v. Delta Airlines Inc., 314 F.3d 195,
197 (5th Cir. 2002) (“Preemption by federal law of a common law
cause of action is a question of law reviewed de novo.”).
II.
The Manufacturers’ pre-emption claims must be considered
against the backdrop of a long history of federal cigarette
advertising regulation.1 In 1964, the Surgeon General issued a
report concluding that smoking causes lung cancer. Congress
responded by enacting the Labeling Act through which it sought to
“establish a comprehensive Federal program to deal with cigarette
1
The Manufacturers presented a regulatory history in support
of their motion for summary judgment. Plaintiffs did not dispute
any of the facts relating to the regulatory history, and thus they
are deemed admitted. Templet v. Hydrochem, Inc., 367 F.3d 473, 480
(5th Cir. 2004)(citing Uniform Local Rule 56.2).
4
labeling and advertising with respect to any relationship between
smoking and health.” 15 U.S.C. § 1331. The Act had two stated
goals: first, to provide the public with adequate information
about “any adverse health effects of cigarette smoking by inclusion
of warning notices on each package ... and in each advertisement”;
and second, to prevent the national economy from being “impeded by
diverse, nonuniform, and confusing cigarette labeling and
advertising regulations....” Id. To promote these dual goals,
Congress specified the precise warning that manufacturers must
place on all packages and forbade any other state regulation
requiring any other “statement relating to smoking and health ...
on any cigarette package.” Pub. L. No. 89-92 § 5(a). In 1969,
Congress amended the Labeling Act to “expand[] the pre-emption
provision with respect to the States, and at the same time, ...
allow[] the FTC to regulate cigarette advertising.” This amendment
precluded states from imposing any “requirement or prohibition
based on smoking and health ... with respect to the advertising or
promotion of any cigarettes.”
In 1966, the FTC developed its own testing method (“FTC
method”) and made it the official test for tar and nicotine level
measurements. The test is conducted by a machine that smokes every
cigarette in the same manner. Beginning in 1967, all advertised
tar and nicotine yields had to be substantiated by the FTC method.
The FTC is aware that the test method does not measure the actual
amount of tar and nicotine that smokers receive, but has concluded
5
that the test provides a reasonably standardized method of
presenting tar and nicotine yields in a way that can be readily
understood by the public. In 1970, the FTC accepted an agreement
from the manufacturers, in lieu of rulemaking, that yield
measurements be disclosed in all non-permanent advertising in a
standardized form. The FTC has repeatedly reevaluated the FTC
method, but has thus far chosen not to modify it because (1)
epidemiological studies show that persons who smoke cigarettes with
lower tar as measured by the FTC method are less likely to get
smoking-related diseases than those smoking higher tar cigarettes;
and (2) it concluded that the only way to avoid consumer confusion
was to continue to rely on a single, uniform testing standard.
Since the adoption of the FTC method, the FTC has directed
that any representations about tar and nicotine measurements must
be substantiated by FTC method results. Following an enforcement
action against a manufacturer for stating that certain brands were
“lower” in tar when the claim was not substantiated by the FTC
method, the FTC declared that it would permit use of descriptive
terms, i.e., “light” or “low-tar,” if their use was substantiated
by FTC method results. The FTC has defined low tar cigarettes as
those that measure 15 milligrams or less of tar, per the FTC
method. In 1992, the FTC launched an investigation focused
specifically on whether terms like “lights” or “low tar” were
deceptive and should be banned and reaffirmed that such terms were
not deceptive if substantiated by FTC method results. In 1997, the
6
FTC reopened its investigation of whether the term “Lights” is
deceptive to consumers and whether a new methodology should be
adopted, but no conclusion has been reached. Despite the
apparently acknowledged weaknesses in the FTC method, therefore, it
remains the federal mandated standard for cigarette testing.
III.
In the light of the FTC’s extensive involvement in regulating
cigarette advertising, the Manufacturers argue that the district
court erred in finding that Plaintiffs’ state law claims for
redhibition, breach of express and implied warranties, and fraud
are not expressly or impliedly pre-empted by the Labeling Act.
Plaintiffs, relying primarily on the Supreme Court decision in
Cipollone v. Liggett Group, Inc., 505 U.S. 504 (1992), argue that
the Labeling Act does not pre-empt all state common law claims.
The treatment of this particular set of claims presents a question
of first impression in this circuit.
The pre-emption provision of the Labeling Act provides that:
“[n]o requirement or prohibition based on smoking and health shall
be imposed under State law with respect to the advertising or
promotion of any cigarettes the packages of which shall be labeled
in conformity with the provisions of this chapter.” 15 U.S.C.
§1334(b). In Cipollone, the Supreme Court considered the extent to
which this provision pre-empted state common law actions against
cigarette manufacturers. 505 U.S. at 521. Concluding that
Congress did not intend to exclude all common law claims from the
7
reach of the statute’s pre-emption provision, and noting the
“strong presumption against pre-emption,” id. at 523, a plurality
of the Court held that in determining whether a particular claim is
pre-empted, the court must “ask whether the legal duty that is the
predicate of the common-law damages action constitutes a
‘requirement or prohibition based on smoking and health’ ...
imposed under State law with respect to ... advertising or
promotion ....” Id. at 524. The plurality then applied this test
to each of the petitioner’s claims and concluded that the 1969 Act
pre-empted “petitioner’s claims based on a failure to warn and the
neutralization of federally mandated warnings to the extent that
those claims rely on omissions or inclusions in respondents’
advertising or promotions” but did not “pre-empt petitioner’s
claims based on express warranty, intentional fraud and
misrepresentation, or conspiracy.” Id. at 531.
The test and the analysis of the state law claims garnered
only four votes.2 Although we are not bound to follow a test
supported only by a plurality of the justices, this court has
previously adopted the Cipollone test in MacDonald v. Monsanto Co.,
27 F.3d 1021, 1024 (5th Cir. 1994), and we are therefore bound by
our own circuit precedent. Cipollone is also widely followed in
other circuits. See, e.g., Rivera v. Philip Morris, Inc., 395 F.3d
2Justices Scalia and Thomas would have found all of the
petitioner’s state common law claims pre-empted, Cipollone, 505
U.S. at 544, while Justices Blackmun, Kennedy, and Souter would
have found none of the claims pre-empted. Id. at 531.
8
1142 (9th Cir. 2005); Spain v. Brown & Williamson Tobacco Corp.,
363 F.3d 1183 (11th Cir. 2004); Glassner v. R.J. Reynolds Tobacco
Co., 223 F.3d 343 (6th Cir. 2000); Philip Morris Inc. v.
Harshbarger, 122 F.3d 58 (1st Cir. 1997). The question on appeal,
therefore, is whether the district court erred in finding that none
of Plaintiffs’ state law claims are predicated on a legal duty,
which constitutes a requirement or prohibition based on smoking and
health imposed under State law with respect to advertising or
promotion. We address each claim in turn.
A. Redhibition
Plaintiffs plead redhibition under the Louisiana Civil Code
Article 2520, et seq., alleging that Lights are defective in
failing to deliver less harmful toxins than regular cigarettes, and
that had Plaintiffs known of the defect, they would not have
purchased them.3 The Manufacturers contend that the redhibition
3
“Redhibition is a civil law action brought on account of
some defect in a thing sold, seeking to void the sale on grounds
that the defect renders the thing either useless or so imperfect
that the buyer would not have originally purchased it.” Good v.
Altria Group, Inc., 436 F. Supp. 2d 132, 150 n.27 (D. Me. 2006)
(citing Black’s Law Dictionary 1282 (7th ed. 1999)).
Under the Louisiana Civil Code Article 2520:
The Seller warrants the buyer against
redhibitory defects, or vices, in the thing
sold.
A defect is redhibitory when it renders the
thing useless, or its use so inconvenient that
it must be presumed that a buyer would not
have bought the thing had he known of the
defect. The existence of such a defect gives
9
claim is a repackaged “failure to warn” claim. They assert that
Plaintiffs’ claim is premised on the allegation that the cigarette
manufacturers failed to disclose, in their labeling and in their
advertising, the alleged “defect” in light cigarettes -- that is
that Lights fail to deliver less harmful toxins than regular
cigarettes. Because liability could have been avoided, had the
manufacturers further warned consumers of the “defect” in Lights,
the Manufacturers argue that under Cipollone this claim is pre-
empted.
The district court rejected the Manufacturers’
characterization of the redhibition claim, noting that defendants
“ignore[] the fact that instead of changing [the] labeling, [they]
could possibly have designed a light cigarette that would actually
deliver less tar and nicotine into the hands of the customer.” On
this basis, the district court held that:
Plaintiffs are not asking [Defendants] to
change [their] labeling. Plaintiffs are
seeking an action in redhibition because the
product itself was defective. The FTC method
of testing gave lower tar and nicotine
measurements than what each light cigarette
actually delivered to the human smoker. Hence
a buyer the right to obtain rescission of the
sale.
A defect is redhibitory also when, without
rendering the thing totally useless, it
diminishes its usefulness or its value so that
it must be presumed that a buyer would still
have bought it but for a lesser price. The
existence of such a defect limits the right of
a buyer to a reduction of the price.
10
the product was not reasonably fit for its
intended purpose – to deliver lower tar and
nicotine. Because this cause of action does
not impose a requirement or prohibition based
on smoking and health with respect to
advertising or promotion, it is not preempted
by the Labeling Act.
The district court’s language is not inconsistent with that of the
plurality in Cipollone, which noted that § 5(b) “does not generally
pre-empt state-law obligations to avoid marketing cigarettes with
manufacturing defects or to use a demonstrably safer alternative
design for cigarettes.” Cipollone, 505 U.S. at 523 (internal
quotation marks omitted). Assuming without deciding that the
district court accurately determined that the Plaintiffs’ “design
defect” theory is a valid redhibition claim, some redhibition
claims might survive the pre-emptive reach of the Labeling Act
because the remedy sought might not necessarily implicate
Manufacturers’ marketing and advertising with respect to the
relationship between smoking and health.4
4
The Manufacturers argue that all redhibition claims are
failure to warn claims. They cite three cases in support of this
proposition. In Klem v. E.I. DuPont Nemours & Co., 19 F.3d 997(5th Cir. 1994), the court did find that the plaintiffs’
redhibition claim “essentially duplicate[s] plaintiffs’ failure to
warn to claim”; however, that seems to be how the plaintiffs framed
their claim, not a necessary quality of redhibition claims
generally. Id. at 1003 (“Plaintiffs contend, in the alternative,
that DuPont had a duty to warn, or not to mislead by implication
and that the breach of duty sounded in negligence, redhibition, and
other areas of law”). Similarly, in Allstate Ins. Co. v. Spectrum
Group, No. 97-2615, 1998 WL 690927 (E.D. La. Oct. 2, 1998), the
plaintiffs had “abandoned their claims for design and manufacturing
defects, and ... focused on their inadequate warnings and
redhibition claims. Id. at *1. In the final case, In re Airbags
Product Liability Litigation, 7 F. Supp. 2d 792 (E.D. La. 1998),
11
Even accepting the district court’s generous characterization
of the pleadings, however, a review of the record indicates that
the Plaintiffs introduced no summary judgment evidence in support
of a redhibition claim, in the nature of a design defect,
sufficient to create a material issue of fact. See Austin v. Will-
Burt Co., 361 F.3d 862, 866 (5th Cir. 2004) (A “nonmovant, to avoid
summary judgment as to an issue on which it would bear the burden
of proof at trial, may not rest on the allegations of its
pleadings, but must come forward with proper summary judgment
evidence sufficient to sustain a verdict in its favor on that
issue.”). At best, Plaintiffs have made the conclusory allegation
that Lights are defective because the Manufacturers could have
created a cigarette that delivered less tar and nicotine to the
smoker. Yet, they have provided no evidence to suggest that this
is even possible.5 We therefore find that Plaintiffs failed to
the court did note that “Plaintiffs contention that the sun visor
warnings were inadequate is weakened and preempted by National
Highway Traffic Safety Administration Regulations....” Id. at 798.
However, the Court rejected the redhibition claims under a
different test, finding that a reasonably prudent buyer would have
been aware of the alleged defect prior to sale. Id. at 799. In
short, none of the cited authority provides conclusive support for
Manufacturers’ argument that redhibition claims are necessarily
equivalent to failure to warn claims; however, we need not decide
this issue of Louisiana state law here because we dismiss the claim
on other grounds.
5
Their own deposition testimony would actually point to the
contrary conclusion, given that each witness testified to having
changed his or her own smoking behavior in order to receive the
same levels of nicotine and tar from Lights as they had from
regular cigarettes. Plaintiffs offered no evidence to suggest that
Lights could be designed to defeat such compensation by smokers.
12
meet their burden at summary judgment, and dismiss their
redhibition claim with prejudice.
B. Fraudulent Misrepresentation and Suppression
Plaintiffs plead intentional misrepresentations or
suppressions as to the true effect of Lights on smokers’ health.
Plaintiffs alleged that the Manufacturers marketed light cigarettes
as being safer than regular brands, when in fact they are actually
more harmful. They claim that the Manufacturers’ fraud vitiates
their consent as to the purchase of Lights and therefore that they
are entitled to rescission of all sales of Lights.
The Cipollone Court held that some common law fraud claims are
not pre-empted by the Labeling Act because they are based on a
general duty not to deceive, not on “smoking and health.” The
Court explained that Plaintiffs’ concealment claims were not pre-
empted to the extent that such claims
rely on a state-law duty to disclose such
facts through channels of communication other
than advertising and promotion. Thus, for,
example, if state law obliged respondents to
disclose material facts about smoking and
health to an administrative agency, § 5(b)
would not pre-empt a state-law claim based on
a failure to fulfill that obligation.
Moreover, petitioner’s fraudulent
misrepresentation claims that do arise with
respect to advertising and promotion (most
notably claims based on allegedly false
statements of material fact made in
advertisements) are not pre-empted by § 5(b).
Such claims are predicated not on a duty
“based on smoking and health” but rather on a
more general obligation[,] the duty not to
deceive.
13
Cipollone, 505 U.S. at 528-29. Relying on this language, the
district court held that “Plaintiff’s [sic] claims of fraudulent
misrepresentation to the extent that they allege a false
representation or concealment of material fact are not preempted by
the Labeling Act.”
While the district court correctly stated the test for
identifying those fraud claims that survive pre-emption, it erred
in applying this test to Plaintiffs’ claims. After Cipollone,
cigarette manufacturers, under certain circumstances, may be held
liable for fraud under state law for affirmative misrepresentations
of material fact or for the concealment of material facts.
Plaintiffs here have adequately alleged neither.
1.
Plaintiffs’ sole basis for claiming affirmative misstatement
in this case is that the Manufacturers used the FTC-approved terms
“lights” and “lowered tar and nicotine” in their labeling and
advertising to promote their products. While claims based on
“fraud by intentional misstatement” are not pre-empted because
Congress did not intend to “insulate” manufacturers from state
liability for affirmative lies, Cipollone, 505 U.S. at 529, the
use of FTC-approved descriptors cannot constitute fraud.
Cigarettes labeled as “light” and “low-tar” do deliver less tar and
nicotine as measured by the only government-sanctioned methodology
for their measurement. In fact, the Manufacturers are essentially
forbidden from making any representations as to the tar and
14
nicotine levels in their marketing about tar that are not based on
the FTC method.6 The terms “light” and “lowered tar and nicotine”
cannot, therefore, be inherently deceptive or untrue.
Plaintiffs seem to recognize that assigning liability solely
on the basis of the FTC descriptors would be problematic. They
therefore argue that the descriptors, although accurate under the
FTC method, are misleading because they suggest that Lights are
less harmful than full-flavor cigarettes. The Cipollone Court held
that the Labeling Act pre-empts these “implied misrepresentation”
claims, which arise from statements or imagery in marketing that
misleadingly downplay the dangers of smoking, and thus minimize or
otherwise neutralize the effect of the federal mandated safety
warnings. Cipollone, 505 U.S. at 527. The Court explained that as
these claims are “predicated on a state-law prohibition against
6
As the Eighth Circuit said in Watson v. Philip Morris
Companies, Inc.:
The FTC has made it clear that it has not
found any other testing method adequate and
will consider advertising to be “deceptive” if
it deviates from the [FTC] Method. In an
advisory opinion rejecting one company’s offer
to advertise a tar level higher than the most
recent [FTC Method] results, the FTC explained
that consumers could be confused if a company
were to advertise tar levels that differed
from the published [FTC Method] results. That
statement, along with others, sent a clear
signal to the tobacco companies that they
would risk a deceptive advertising claim if
they failed to advertise tar and nicotine
levels in accordance with the [FTC Method].
420 F.3d 852, 860 (8th Cir. 2005).
15
statements in advertising or promotional materials that tend to
minimize the health hazards of smoking,” any “[s]uch ...
prohibition ... is merely the converse of a state-law requirement
that warnings be included in advertising and promotional
materials.” Id. (emphasis in original).
To hold that the Manufacturers’ use of the FTC-approved terms
relating to the FTC-approved measurement system constitutes
affirmative misstatement under State law would directly undermine
the entire purpose of the standardized federal labeling system and
most courts have been reluctant to find liability on this basis.
In Good v. Altria Group, Inc, 436 F. Supp. 2d 132 (D. Me. 2006),
the district court faced a claim similar to that presented here.
The court first noted that except for the use of the FTC
descriptors, the
record ... is devoid of any affirmative
misstatement. Thus, the Plaintiffs point to
no ... representation [by the Defendant] about
light cigarettes inconsistent with what the
FTC condoned; no evidence [that the Defendant]
ever affirmed that light cigarettes were good
for you, were healthy, or would not cause the
host of physical problems listed on every
package; no evidence that any descriptors [the
Defendant] applied to [its light cigarettes]
contravened what the FTC and Congress knew the
tobacco companies as a group and [the
Defendant] in particular were saying about
these cigarettes.
Id. at 152 (emphasis in original). The court went on to consider
“what is it the Plaintiffs would have had [the Defendant] say about
light cigarettes that it did not say,” id., and concluded that to
16
“respond to Plaintiffs’ concerns, [the Defendant] would have to
tell the public that the FTC Method test, though accurate in the
laboratory, was inaccurate in real life,” id., a message that would
directly contravene the entire federal cigarette advertising
scheme.
What the Good opinion makes clear is that to impose state
liability on the basis of the Manufacturers’ use of the FTC
mandated terms is necessarily to impose a state requirement or
prohibition on cigarette advertising as it relates to the
relationship between cigarettes and health. As a California state
court concluded, in considering a similar set of claims:
While [plaintiffs] insist that their Lights
case does not depend on a finding of whether
the Surgeon General’s mandated warning is
adequate, logic ... dictates otherwise ....
because it is obvious that Defendants’ alleged
deception respecting their use of the term
“Light” as part of the brand name of
cigarettes that actually contain less tar and
nicotine ... could easily be corrected by
requiring an additional warning on the
packages to the effect that Light cigarettes
can be more hazardous than regular cigarettes
due to smoker compensation. Hence, in the
context of the Federally regulated field of
cigarette advertising, the gravamen of
Plaintiffs’ Light claim is that the warnings
mandated by Congress are inadequate with
respect to Light cigarettes.
In re Tobacco Cases II, 2004 WL 2445337, at * 21 (Cal. Super. Aug.
4, 2004)(superseded on other grounds by In re Tobacco II Cases, 146
P.3d 1250 (Cal. Nov 1, 2006)). See also Dahl v. R. J. Reynolds
Tobacco Co., 2005 WL 1172019, at * 11-12 (D. Minn. 2005). But see,
17
Schwab v. Philip Morris USA, Inc., 449 F. Supp. 2d 992, 1294
(E.D.N.Y. 2006) (holding that plaintiffs’ misrepresentation claim
under the Illinois Consumer Fraud Act based on defendants’ use of
the terms “Lights” and “Lowered Tar and Nicotine” is “wholly
unrelated to any failure to warn claim and, therefore, not
preempted.”).
We find the reasoning of the majority of courts compelling,
and therefore hold that by the express terms of the pre-emption
clause, and under the Court’s test in Cipollone, fraudulent
misrepresentation claims based on the use of FTC-approved
descriptors are pre-empted.
2.
The Cipollone Court also recognized a second category of
unpre-empted misrepresentation claims -- those based on fraudulent
concealment of material facts. The Court differentiated between
claims based on failures to disclose through advertising and
marketing, which are pre-empted, and failures to disclose through
“other channels,” which are not. Again, while the district court
recognized that some concealment claims may avoid pre-emption, it
erred in finding such a claim here.
In considering fraudulent concealment claims, most courts have
held that any state law claim that would require additional
communication between companies and consumers is pre-empted by the
Labeling Act. Johnson v. Brown & Williamson Tobacco Corp., 122 F.
Supp. 2d 194, 201 (D. Mass. 2000) (holding that any communication
18
from a cigarette manufacturer to the public constitutes advertising
or promotion); Sonnenreich v. Philip Morris, Inc., 929 F. Supp.
416, 419 (S.D. Fla. 1996) (holding that comunication by cigarette
manufacturers to their customers of the dangers of smoking is an
advertising or promotional campaign); Lacey v. Lorillard Tobacco
Co., 956 F. Supp. 956, 962 (N.D. Ala. 1997) (“[A] claim that a
defendant has a duty to disclose additional information concerning
cigarette ingredients unavoidably attacks defendants’ advertising
and promotion”); Griesenbeck v. Am. Tobacco Co., 897 F. Supp. 815,
823 (D.N.J. 1995) (“A company’s attempt to notify its mass market
of anything, whether a danger warning or a marketing effort, is
considered ‘advertising or promotion’ under the general usage of
those terms, and a state cannot impose requirements on such
activities without running afoul of the clear language of
Cipollone.”). Because a concealment claim relies, by its nature,
on an unfulfilled duty to disclose additional information, it would
seem unavoidably to impose a state law requirement as to marketing
and advertising related to smoking and health.
In advancing their fraudulent concealment claim, Plaintiffs
rely primarily on Rivera v. Philip Morris, 395 F.3d 1142 (9th Cir.
2005), in which the Ninth Circuit held that the plaintiffs’ failure
to warn and fraudulent concealment claims were not pre-empted by
the Labeling Act. The Rivera panel determined that Nevada’s common
law duty requiring manufacturers to advise consumers of their
products’ dangers does not specify that those disclosures be made
19
through marketing and advertising, and held therefore, that “[a]
trier of fact could find that [the cigarette manufacturer] had an
obligation to warn consumers of the health risks of smoking outside
of packaging, advertising, and promoting.” Id. at 1149. While
noting that many courts had previously held that “any claim
requiring public release or disclosure of information is
necessarily related to advertising and promotion,” the court
rejected this reading as inconsistent with Cipollone and with the
Labeling Act. Id. at 1148-49. The court decided instead that by
preserving some common law claims, the Cipollone plurality
“envisioned continued avenues of research for cigarette
manufacturers to perform [their duty to communicate smoking and
health information] through means other than the rigorously
controlled avenues of advertising, promotion, and packaging.” Id.We consider this general holding of the Rivera court
unreasonable. We cannot accept that the Congress meant to create
a system in which cigarette manufacturers have the duty both to
conform their advertising and marketing to strict federal standards
and simultaneously to undercut these representations through other
“means,” as yet undefined. We therefore join the majority of
courts in holding that any state law claim that would require
additional communication between companies and consumers is pre-
empted by the Labeling Act.
The Rivera panel also upheld the fraudulent concealment claim
on the more limited and specific basis that the defendant could
20
have met its state law obligation to disclose material facts by
making such disclosures to the industry-established Tobacco
Industry Research Committee, analogizing to the Supreme Court’s
example of an unpre-empted state law obligation to make disclosures
to a state agency. Id. at 1149-50. Because the exemption of this
state law duty from the reach of §5(b) pre-emption finds explicit
support in Cipollone, and because disclosure to the government, and
possibly to other entities such as trade organizations, does not
fall within the common-sense meaning of advertising and marketing,
to the extent that a fraudulent concealment claim relies on this
type of failure to disclose, it may not be pre-empted. We see no
need to decide this issue at present, however, as Plaintiffs have
not addressed either the source of this obligation under Louisiana
state law, nor its factual underpinnings in their pleadings or in
their brief -- nor are either of these issues discussed by the
district court.
We conclude, therefore, that the district court erred in
finding that Plaintiffs’ claim of fraudulent concealment was not
pre-empted.
C. Breach of Express and Implied Warranties
Plaintiffs allege that the Manufacturers marketed light
cigarettes to induce Plaintiffs into believing that in purchasing
them, they were avoiding certain health risks. Plaintiffs assert
that Manufacturers breached their express and implied warranties of
fitness because light cigarettes were not fit for the purpose for
21
which they were marketed. The district court concluded that
Plaintiffs’ express and implied warranty claims were not pre-empted
by the Labeling Act. Again, we disagree.
1.
Cipollone indicates that in some circumstances, claims for
breach of express warranty may not be pre-empted by the Labeling
Act. In reaching this conclusion, the Cipollone Court reasoned
that:
[w]hile the general duty not to breach
warranties arises under state law, the
particular “requirement ... based on smoking
and health ... with respect to the advertising
or promotion [of] cigarettes” in an express
warranty claim arises from the manufacturer’s
statement in its advertisements. In short, a
common-law remedy for a contractual commitment
voluntarily undertaken should not be regarded
as a “requirement ... imposed under State law”
within the meaning of § 5(b).
Cipollone, 505 U.S. at 526 (alterations in original). Relying on
this language, and without reference to the allegations pled, the
district court concluded that Plaintiffs’ express warranty claim
was not pre-empted.
Because the complaint is not explicit in how its claim avoids
pre-emption, and because the district court provided no explanation
as to the relevant Louisiana law, nor any discussion of the factual
basis of Plaintiffs’ claim, we can only conclude that the
Plaintiffs have failed to properly allege a breach of express
warranty under Louisiana law. The record indicates, however, that
the sole basis for this claim is Manufacturers’ use of the FTC-
22
sanctioned terms and measurements in their advertising. We
therefore consider as a preliminary matter whether breach of
express warranty can ever be claimed on the basis of the
Manufacturers’ use of these descriptors.
The analysis here mirrors our earlier discussion of the
Plaintiffs’ fraud claims. The use of FTC-approved descriptors,
based on the FTC method, cannot be inherently deceptive. To
conclude that it is deceptive would be to hold the Manufacturers
liable for the inadequacies of the federal testing method, an
outcome other courts have declined to accept. See, e.g., Johnson
v. Philip Morris, 159 F. Supp. 2d 950, 953 (S.D. Tex. 2001)
(holding that “[d]efendants’ warranty ... cannot conceivably extend
to the validity of a government sanctioned testing method”); Eiser
v. Brown & Williamson Tobacco Corp., 2006 WL 933394, at * 7 (Pa.
Super. Ct. Jan 18, 2006) (manufacturer “did not expressly warrant
that [low tar] cigarettes were a safe alternative to other brands
or that smoking [low tar] cigarettes reduced the risk of
contracting lung cancer” where it “accurately advertised the fact
that [this brand of cigarettes] was lowest in tar and nicotine
among all brands tested under the FTC method”); Burton v. R.J.
Reynolds Tobacco Co., 884 F. Supp. 1515, 1527-28 (D. Kan. 1995)
(finding that plaintiffs’ evidence did not support their contention
that defendants had expressly warranted that smoking cigarettes
does “not present any significant health consequences.”); Rodarte
v. Philip Morris Co., 2003 WL 23341208 at * 6 (C.D. Cal. June 23,
23
2003) (finding that plaintiff failed to allege breach of express
warranty when the only basis of his claim was that defendant had
marketed cigarettes as lower in tar and nicotine).
We thus conclude that an express warranty claim arising solely
out of the use of descriptors based on the FTC method is pre-
empted. In Cipollone, where the plaintiff was permitted to proceed
with his express warranty claim, the plaintiff had produced
advertisements explicitly stating that there was “proof” that that
brand of cigarettes “never ... did you any harm.” Cipollone v.
Liggett Group, Inc., 893 F.2d 541, 549 (3d Cir. 1990). The
defendant in that case was held liable for the additional
representations that it made with respect to the safety of its
products, not for its use of the FTC-approved descriptors. We
therefore hold that the district court erred in finding that
Plaintiffs’ express warranty claim is not pre-empted by the
Labeling Act.
2.
The district court also held that Plaintiffs’ claims based on
alleged breach of implied warranty are not pre-empted. This
holding finds no support in the Cipollone opinion. As Plaintiffs
failed to explain the basis of this claim in their pleadings or to
argue in support of this claim on appeal, and as the district court
failed to provide any discussion of the pre-emption analysis with
respect to the claim in its order, we will not consider it for the
24
first time here. We therefore hold that this claim is dismissed
with prejudice.
IV.
For the foregoing reasons, we reverse the judgment of the
district court and remand with directions to enter a judgment
dismissing all claims with prejudice.
REVERSED AND REMANDED FOR ENTRY OF JUDGMENT.
25