Supreme Court Justice Antonin Scalia, in his role as circuit justice for the Fifth Circuit Court of Appeals, has stayed a $270 million tobacco verdict for Louisiana smokers, ruling that the lower court likely erred in failing to require that the plaintiffs show reliance on the tobacco companies advertisements.
A bit of context: each Supreme Court justice also serves as a circuit justice for at least one appellate court, a role that often presents the question of whether a stay should be granted so that the full court can hear an appeal.
The case involves a suit that was brought as a class action on behalf of all Louisiana smokers, accusing several tobacco manufacturers of misleading the public about the addictive effects of nicotine. A Louisiana state court eventually gave the plaintiffs a verdict for a whopping $241 million, plus around $30 million of accumulated interest.
The money was to be paid into an account set up to fund smoking cessation programs.The defendant companies eventually petitioned for a stay pending a writ of certiorari to federal court, which is apparently in the works. Scalia, conceding that the companies bore a heavy burden in showing that such a stay is necessary, nevertheless found that the companies had met that burden.
No reliance, Scalia says
In his opinion, Scalia wrote that, while the tobacco companies had potentially been subjected to many violations of due process, one especially stuck in his craw: in Louisiana, Scalia wrote, a fraud case requires the plaintiff to prove that the plaintiff detrimentally relied on the defendants misrepresentations.
But, according to Scalia, the Louisiana court held that this element need not be proved since the defendants are guilty of a distortion of the entire body of public knowledge regarding tobacco, which the class on a whole relied on.
Consequently, Scalia continued, the [Louisiana] court eliminated any need for plaintiffs to prove, and denied any opportunity for applicants to contest, thatany particular plaintiff who benefits from the judgment (much less all of them) believed applicants distortions and continued to smoke as a result.
Future of class actions
Scalias ruling is certainly a victory for the defendant companies, which previously tried unsuccessfully to get the ruling thrown out by a state court. But his opinion is more noteworthy for its sweeping language regarding class actions in general -- and what it could mean for their future.
The extent to which class treatment may constitutionally reduce the normative requirements of due process is an important question, Scalia wrote, adding that the issue is reflective of what he says is national concern of the abuse of the class action device.
The alleged due process violations to which Scalia refers include the inability to cross-examine every member of the class to ensure that they relied on the defendants advertisements, inaccurate estimations of the classs size, and constant revision of the plaintiffs claim during the course of litigation.
These concerns, along with Scalias prediction that it is significantly possible that the award will be reversed, suggests that the Supreme Court is looking to make sweeping changes in class action law. And a decision making class actions harder to bring would be in line with the courts recent corporate-friendly trend.
That trend came to a head earlier this year, when, in Citizens United v. Federal Election Commission, the court ruled that corporations must be allowed to use general treasury funds to support political candidates, a major shift likely to change the nature of political advertising. That case, which essentially embraced the theory of corporate personhood -- that corporations are subject to the same rights as individual people -- offers a glimpse into class actions under the Roberts court. Its not likely to be pretty for consumers.
