Bergeron v. Philip Morris, Inc.
| Decision Date | 08 June 2000 |
| Docket Number | No. 99 CV 6142.,99 CV 6142. |
| Citation | 100 F.Supp.2d 164 |
| Parties | David B. BERGERON; Mark L. Erlich; Anthony J. Graziano; Thomas Harrington; Simon James; Kirk Fordyce; Lawrence Morrisroe; David Wallace; David Woodman; William J. Sullivan; Stephan A. Adamic; George Bidgood; Theodore H. Brodie; Donald Colavecchio; Thomas J. Gunning; Michael Shaughnessy; and Christopher Topps on behalf of themselves and all other similarly situated Trustees of health care funds, Plaintiffs, v. PHILIP MORRIS, INCORPORATED; Philip Morris Companies, Inc.; R.J. Reynolds Tobacco Company; RJR Nabisco, Inc.; Brown & Williamson Tobacco Corporation; British American Tobacco Co., Ltd.; BATUS Holdings Inc.; B.A.T. Industries P.L.C.; Lorillard Tobacco Company; Lorillard Corporation; Loews Corporation; The American Tobacco Company; American Brands, Inc.; Liggett Group Inc.; Liggett & Myers, Inc.; The Brooke Group, Limited; Hill & Knowlton, Inc.; The Council for Tobacco Research-U.S.A., Inc.; and The Tobacco Institute, Inc., Defendants. |
| Court | U.S. District Court — Eastern District of New York |
Melvyn I. Weiss, Michael C. Spencer, Beth A. Kaswan, Milberg Weiss Bershad Hynes & Lerach LLP, New York City, Robert J. Connerton, John McN. Broaddus, Connerton & Ray, Washington, DC, for plaintiffs.
Barbara Robbins, Steven M. Barna, Peter C. Hein, Wachtell, Lipton, Rosen & Katz, New York City, Steven C. Bennett, Jones, Day, Reavis & Pogue, New York City, Paul F. Stecker, Phillips, Lytle, Hitchcock, Blaine & Huber, L.L.P., Buffalo, NY, for defendants Philip Morris, Inc. & Philip Morris Companies.
Steven C. Bennett, Jones, Day, Reavis & Pogue, New York City, for defendant R.J. Reynolds Tobacco Co.
Marjorie Press Lindblom, Kirland & Ellis, New York City, for defendants R.J.R. Nabisco, Inc., BATUS Holdings Inc., American Tobacco Co. and American Brands, Inc.
Garyowen P. Morrisroe, David A. Wallace, Chadbourne & Parke, L.L.P., New York City, for defendant British American Tobacco, Co.
Joseph M. McLaughlin, Simpson, Thacher & Bartlett, New York City, for defendant B.A.T. Industries, PLC.
Gary Long, Shook, Hardy & Bacon, L.L.P., Kansas City, MO, Alan Mansfield, Greenberg Traurig, New York City, for defendants Lorillard Tobacco Co., Lorillard Corp. and Loews Corp.
Aaron H. Marks, Kasowitz, Benson, Torres & Friedman, LLP., New York City, for defendants Liggett Group, Inc., Liggett & Myers, Inc, and Brook Group, Limited.
Bruce M. Ginsberg, Davis & Gilbert, New York City, for defendant Hill & Knowlton, Inc.
Harry Zirlin, Debevoise & Plimpton, New York City, for defendant Council for Tobacco Research-USA, Inc.
Anthony R. Mansfield, Charles M. Miller, Seward & Kissel, New York City, for defendant Tobacco Institute, Inc.
TABLE OF CONTENTS
I INTRODUCTION .......................................... 166
II FACTUAL ALLEGATIONS ................................... 166
III STANDARD FOR DISMISSAL ................................ 168
IV CHOICE OF LAW ......................................... 169
A. Principles ......................................... 169
B. Application ........................................ 170
C. Massachusetts' Statute ............................. 171
D. New York's Act ..................................... 172
V CONCLUSION ............................................ 172
Plaintiffs, trustees of the Massachusetts State Carpenters Health Benefits Fund ("Fund"), bring this action in their fiduciary capacity for damages suffered by the Fund due to "past and ongoing deceptive acts and practices and false advertising" by the major tobacco product manufacturers and related entities ("Tobacco"). Compl. ¶ 1. Plaintiffs seek recovery under New York's Consumer Protection Act. See N.Y.Gen.Bus.Law §§ 349-350. Competence is premised on diversity. See 28 U.S.C. § 1332(a)(1).
Allegedly, Tobacco engaged in deceptive conduct and false advertising that "had the effect of sustaining high levels of smoking among ... Fund participants," resulting in smoking-related diseases for which the Fund expended "millions of dollars in excess health care costs." Compl. ¶ 62. A substantial portion of this conduct is said to have either initiated or occurred in New York. See Compl. ¶¶ 149, 155.
Defendants have moved for dismissal on three grounds. See Fed.R.Civ.P. 12(b)(6). They argue the following: 1) New York's choice-of-law principles require application of Massachusetts' Unfair and Deceptive Trade Practices Statute rather than New York's Consumer Protection Act; 2) even if New York's Consumer Protection Act applies, it does not provide recovery for derivative injuries such as those the Fund alleges; and 3) even if the New York Act covers derivative injuries, the Fund is not within the class of persons protected by the Act.
Defendants are likely correct on the first ground, that the Massachusetts' Statute governs, making it unnecessary at this time to reach the remaining issues arising under the New York Act. Defendants' motion for dismissal is nonetheless denied; further discovery is necessary to aid final resolution of the conflicts issue. The complaint will be construed to state claims under comparable provisions of the Massachusetts' Statute. See Fed.R.Civ.P. 8(f).
According to plaintiffs, today it is beyond dispute that cigarette smoking can lead to cancer, pulmonary diseases, and coronary heart disease. See Compl. ¶ 9. Cigarette smoking causes more than 85% of all lung cancer. It is responsible for at least 30% of all deaths from cancer and more than 80% of deaths from pulmonary diseases such as emphysema and bronchitis. See Compl. ¶ 9(a) & (b). It is also one of the three leading causes of coronary heart disease. See id. ¶ 9(c).
It is plaintiffs' contention that Tobacco has long known of the lethal health effects of cigarette smoking, but nonetheless "engaged in a decades long scheme to create and perpetuate a false and deceptive `controversy' about whether their products cause cancer and other diseases and are addictive." Compl. ¶ 2. As plaintiffs put it, "[t]he net effect [of Tobacco's conduct] ... has been to convey the message that intensive scientific research has uncovered no reliable evidence about the real health effects of smoking." Compl. ¶ 6.
Plaintiffs identify five categories of deceptive and unlawful conduct: (1) denying the addictiveness of cigarettes; (2) manipulating nicotine levels; (3) creating the appearance of an "open controversy" regarding health effects of smoking; (4) marketing cigarettes to teenagers; and (5) co-opting organized labor to deny smoking hazards.
Plaintiffs allege a substantial portion of this deceptive conduct was orchestrated and carried out in New York. In particular, plaintiffs cite the role that the Council for Tobacco Research (CTR), Tobacco's New York based trade organization, played in furthering the alleged national conspiracy regarding smoking. Plaintiffs also rely on the fact that Hill & Knowlton, Inc., an international public relations firm based in New York City, played an "active role in the [Tobacco] conspiracy ... by aiding the circulation and/or publication of many false statements of the tobacco industry attributable to the ... Council for Tobacco Research." Compl. ¶ 33.
Founded in 1954, the CTR was initially called the Tobacco Industry Research Committee (TIRC). See Compl. ¶ 69(a). All six of the major cigarette manufacturers were original members except for Liggett. See Compl. ¶ 61. In 1964, Liggett joined and the name was officially changed to CTR. See id.
According to plaintiffs, the formation of the TIRC was a result of the conspiracy. The presidents of the leading tobacco companies gathered in the Plaza Hotel in New York City on December 15, 1953. See Compl. ¶ 60. The meeting was coordinated by Hill and Knowlton to discuss recent disclosures about the dangers of cigarette smoking and to form an association "specifically charged with ... public relations" for the Tobacco industry as a whole. See Compl. ¶ 60(e).
On January 4, 1954, the formation of TIRC was announced "with newspaper advertisements placed in virtually every city with a population of 50,000 or more, reaching a circulation of more than 43 million Americans." Compl. ¶ 63. Among other claims, the announcement stated:
• We are pledging aid and assistance to the research effort into all phases of tobacco use and health" (Compl.¶ 63(g));
• (Compl.¶ 63(h));
• (Compl.¶ 63(j)).
Plaintiffs contend that this and similar promises of "full disclosure and objective scientific research" by Tobacco regarding CTR's activities were "never fulfilled." Compl. ¶ 68. Rather, the CTR undertook research only "to aid the industry in its public relations and litigation battles" while "[r]esearch that would serve to confirm health risks of smoking was altered, destroyed, or concealed." Compl. ¶ 68.
Plaintiffs identify the following deceptive acts and practices of Tobacco operating through the CTR which occurred in New York:
• On November 22, 1977 CTR hosted a meeting in New York attended by representatives of the various tobacco companies during which CTR proposed grants for research on the effects of nicotine on the central nervous system (CNS). The tobacco companies rejected the proposal for fear to do so would "dig[] [their] own grave," Compl. ¶ 123, and instead "worked out a `compromise' whereby Jacob Medinger & Finnegan ("Jacob Medinger"), CTR's law firm in New York ..., would `pre-screen' all proposed CNS studies before submission to the independent scientists on CTR's Scientific...
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