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Tobacco Class Action Defense Cases-In re Tobacco Cases: California Supreme Court Holds That Federal Law Preempts State Unfair Competition Law (UCL) Class Action Against Tobacco Companies

Class Action Against Tobacco Companies Alleging UCL Claims for Marketing Cigarettes to Minors is Preempted by Federal Cigarette Labeling and Advertising Act (FCLAA) California Supreme Court Holds

In 1994, the California Supreme Court held that a lawsuit against tobacco companies alleging violations of the state’s Unfair Competition Law (UCL), Cal. Bus. & Prof. Code, § 17200 et seq., was not preempted by the Federal Cigarette Labeling and Advertising Act (FCLAA). See Mangini v. R.J. Reynolds Tobacco Co., 7 Cal.4th 1057 (Cal. 1994). In 1998, plaintiffs filed a class action against Phillip Morris, R.J. Reynolds, Lorillard and Brown & Williamson on behalf of minors who “smoked one or more cigarettes” alleging violations of the UCL in that the tobacco companies’ cigarette advertising unlawfully targeted minors: specifically, the class action alleged that defendants “conducted marketing studies to determine how best to induce teenagers ages 13 to 17 to begin smoking,” designed ads to appeal to minors, placed the ads near schools and other areas frequented by teens, and sponsored events that appeal to teens. In re Tobacco Cases II, ___ Cal.4th ___ (Cal. August 2, 2007) [Slip Opn., at 2-3]. Other class actions alleging similar claims followed and were consolidated, and the trial court eventually certified the litigation as a class action. Id., at 3. Defense attorneys moved for summary judgment on the ground that the FCLAA preempted the UCL claims underlying the class action complaint; the trial court granted the defense motion and dismissed the class action. Id., at 3-4. The Court of Appeal affirmed, holding that the U.S. Supreme Court impliedly disapproved Mangini in Lorillard Tobacco Co. v. Reilly, 533 U.S. 525 (2001). The California Supreme Court agreed, reversed its decision in Mangini, and affirmed the dismissal of the class action.

The defense argued that in enacting the FCLAA Congress explicitly preempted state laws concerning tobacco advertising. In re Tobacco Cases II, at 5-6. After analyzing the FCLAA and Lorillard, see id., at 6-14, the California Supreme Court agreed. The court explained at page 17, “Plaintiffs’ unfair competition claim here seeks to impose on defendant tobacco companies a duty not to advertise in a way that could encourage minors to smoke. That is precisely the duty that the United States Supreme Court in Lorillard … held subject to FCLAA preemption because it is necessarily and inherently based on concerns about smoking and health. Accordingly, plaintiffs’ unfair competition claim is preempted, unless it falls within an exception to FCLAA preemption.” The California Supreme Court then rejected plaintiffs’ claim that their class action claims fell within the exception that allows states to “prohibit conduct that constitutes an inchoate crime,” id., finding that the conduct at issue was commercial speech protected by the First Amendment, id., at 18-20.

The California Supreme Court overruled its decision in Mangini, and affirmed the judgment dismissing the class action complaint as preempted by the FCLAA. In re Tobacco Cases II, at 20.

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