Cleary v. Philip Morris Inc.

Decision Date15 November 2011
Docket NumberNo. 10–2960.,10–2960.
Citation656 F.3d 511
PartiesBrian CLEARY, et al., Plaintiffs–Appellants,v.PHILIP MORRIS INCORPORATED, et al., Defendants–Appellees.
CourtU.S. Court of Appeals — Seventh Circuit

OPINION TEXT STARTS HERE

Edward T. Joyce (argued), Attorney, Chicago, IL, for PlaintiffsAppellants.Michele Odorizzi (argued), Attorney, Mayer Brown LLP, James A. Morsch, Attorney, Butler, Rubin, Saltarelli & Boyd, Chicago, IL, Mark A. Belasic, Attorney, Jones Day, Cleveland, OH, Gregory K. Wu, Shook, Hardy & Bacon, Kansas City, MO, Joseph G. Falcone, Chadbourne & Parke, New York, NY, Beth A. Bauer, Attorney, Hepler Broom, Edwardsville, IL, for DefendantsAppellees.Before CUDAHY, MANION, and HAMILTON, Circuit Judges.MANION, Circuit Judge.

This is a class action suit brought against Philip Morris, Inc., and several other tobacco companies and tobacco-related entities. The plaintiffs allege that for years the tobacco companies conspired to conceal the facts about the addictive and dangerous nature of cigarettes by intentionally using incomplete, misleading, or untruthful marketing and advertising. The plaintiffs' putative class consists of Illinois residents who bought or smoked cigarettes, and they seek the disgorgement of the tobacco companies' cigarette revenue under the theory of unjust enrichment. After extensive proceedings, the district court dismissed the case, ruling that the plaintiffs had failed to state a claim upon which relief could be granted. The court entered judgment for the defendants, and the plaintiffs now appeal a variety of issues. We affirm.

I. Background

In 1998, the plaintiffs filed this class action case in Illinois state court against a host of parties in the cigarette business. As amended in 2000, the complaint proposed three different class action claims: (1) an “addiction” claim with a class consisting of all Illinois residents who bought cigarettes during the time period from 1953 to 1965 when the tobacco companies allegedly concealed facts about the addictive nature of cigarettes; (2) a “youth marketing” claim with a class consisting of all Illinois residents who began smoking as minors; and (3) a “lights” claim with a class consisting of all Illinois residents who bought Philip Morris's Marlboro Lights cigarettes. This First Amended Complaint stated causes of action under the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA), 815 ILCS 505, and the common-law doctrine of unjust enrichment.

A year later, the plaintiffs withdrew their request to certify the class in the “lights” claim because there was another class action lawsuit with a similar claim progressing in another Illinois court. Accordingly, the plaintiffs later filed a Second Amended Complaint in 2005, which set out only the “addiction” and “youth marketing” claims. The “lights” claim in the parallel lawsuit ultimately proved unsuccessful before the Illinois Supreme Court. See Price v. Philip Morris, Inc., 219 Ill.2d 182, 302 Ill.Dec. 1, 848 N.E.2d 1 (2005). But in 2008, a United States Supreme Court decision in an unrelated case reopened the door to the possibility of a successful “lights” claim. See Altria Group, Inc. v. Good, 555 U.S. 70, 129 S.Ct. 538, 172 L.Ed.2d 398 (2008). The plaintiffs then filed a Third Amended Complaint in 2009, seeking to reinstate the “lights” claim in this case, along with the still-pending “addiction” and “youth marketing” claims. The new “lights” claim was also expanded to encompass other defendants who made light cigarettes besides Philip Morris, with a larger plaintiff class including all Illinois residents who had purchased and smoked any brand of “low tar,” “light,” or “ultra light” cigarettes in addition to Philip Morris's Marlboro Lights. By this time, the legal theory that the defendants had violated the ICFA had been dropped—presumably because Illinois Supreme Court case law had made class certification under that statute difficult in a case where individual damages and deception were not alleged. See, e.g., Avery v. State Farm Mut. Auto. Ins. Co., 216 Ill.2d 100, 296 Ill.Dec. 448, 835 N.E.2d 801, 850 (2005) (deception and actual damages are elements of a cause of action under the ICFA). Thus, only a theory of unjust enrichment remained.

One of the new “lights” defendants named in the case, Lorillard Tobacco Company, removed the suit to federal court under the Class Action Fairness Act of 2005 (CAFA), 28 U.S.C. § 1332(d). The plaintiffs moved to remand the case, arguing that the “lights” claim related back to the First Amended Complaint filed nine years earlier, and so a new window for a removal was not opened. The district court denied the motion, finding that the claim against Lorillard did not relate back and the removal was proper. Then, after ruling that any claim against Lorillard was time-barred, the district court dismissed it from the case. The plaintiffs subsequently argued that since Lorillard was the reason for the case's removal to federal court and since it was now no longer a party to the suit, the case should be returned to state court. The district court denied the request.

After Lorillard was dismissed, the other defendants in the “lights” claim moved for dismissal, arguing that the claims against them were also time-barred. The plaintiffs conceded that all of the “lights” defendants besides Philip Morris should be dismissed; they argued, however, that their claim against Philip Morris was still viable for every brand of “light” or “low tar” cigarette manufactured by Philip Morris. Philip Morris disagreed, contending that since Marlboro Lights was the only brand of cigarettes mentioned in the First Amended Complaint, only that claim should go forward. Ultimately, the district court restricted the “lights” claim only to the Marlboro Lights brand. Later, the district court also dismissed the “youth marketing” claim as time-barred.

In 2010, the plaintiffs filed a Fourth Amended Complaint reflecting the prior changes in the case. This final version of the complaint alleged only the “addiction” claim and the “lights” claim: the “addiction” claim proposed a class consisting of all Illinois residents who purchased or consumed the defendants' tobacco products during the time when the defendants had deceptive marketing, and the “lights” claim proposed a class of all Illinois residents who purchased or consumed Philip Morris's Marlboro Lights cigarettes. Both classes' claims were based solely on the theory of unjust enrichment. Essentially, the plaintiffs' argument was that the defendant tobacco companies knowingly and intentionally concealed the truth from consumers about cigarettes' addictiveness and health problems (the “addiction” claim), and about the tar and nicotine found in Marlboro Lights (the “lights” claim)—and that it was through this wrongful behavior that the defendants were unjustly enriched. The plaintiffs explicitly disavowed any need to allege that they were deceived or injured by the defendants' actions. Instead, they argued that the violation of their right as consumers to know the truth about cigarettes and the egregious behavior of the tobacco companies were sufficient to support their cause of action. And they claimed that the principles of justice, equity, and good conscience would be violated if the defendants kept their earnings. Thus all the revenue from cigarette sales should be disgorged. 1

The defendants filed a motion to dismiss the Fourth Amended Complaint, arguing that the unjust enrichment theory failed as a matter of law. The district court granted the defendants' motion and dismissed the case with prejudice. The plaintiffs then filed a motion for reconsideration, but the district court denied the motion. This appeal followed.

II. Analysis

In its brief on appeal, the plaintiffs contest several decisions made by the district court. We will first briefly address two minor decisions: (1) the court's decision not to remand the case to state court once the defendant Lorillard was dismissed; and (2) the court's decision not to expand the “lights” claim to other brands manufactured by Philip Morris besides Marlboro Lights. Then we will address the main issue on appeal: the district court's holding that the plaintiffs' unjust enrichment claim failed to state a claim upon which relief could be granted.

A. Remand to State Court

The first issue raised by the plaintiffs in their appellate brief is whether the district court erred in not remanding the case to state court once the defendant Lorillard—the diverse party whose presence in the suit was the reason for removal to federal court—was dismissed from the case. At oral argument, counsel for plaintiffs conceded that the district court properly had jurisdiction over the case. Counsel then stated that the district court could have exercised its discretion and remanded the case to state court, but that it did not do so—and counsel seemed to indicate that it was abandoning this issue on appeal.

Counsel is correct to abandon this issue, as the district court committed no error. A federal court's jurisdiction under CAFA is determined at the time of removal. In re Burlington N. Santa Fe Ry. Co., 606 F.3d 379, 380 (7th Cir.2010). Here, there was no question that the case was properly removed under CAFA. And “nothing filed after removal affects jurisdiction.... [L]ater changes that compromise diversity do not destroy jurisdiction.” Id. at 380–81; see also Braud v. Transp. Serv. Co., 445 F.3d 801, 808 (5th Cir.2006) ([I]t is the ‘action,’ not claims against particular defendants, that is removable, so the subsequent dismissal of the removing defendant cannot render the entire lawsuit improperly removed.”). Therefore, the district court properly retained jurisdiction of the case after Lorillard was dismissed, and it is not erroneous for the district court to decline to remand the case to state court.

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