Curtis v. Altria Group Inc

• Decision Date: 28 December 2010
• Docket Number: A10-215
• Parties: Gregory Curtis, et al., individually and on behalf of all others similarly situated, Appellants, v. Altria Group, Inc., Respondent, Philip Morris, Inc., Respondent.
• Court: Minnesota Court of Appeals

Gregory Curtis, et al., individually and on behalf of all others similarly situated, Appellants,

v.Altria Group, Inc., Respondent, Philip Morris, Inc., Respondent.

A10-215

STATE OF MINNESOTA IN COURT OF APPEALS

Filed December 28, 2010

Affirmed in part, reversed in part, and remanded

Stoneburner, Judge

Hennepin County District Court

File No. 27CV0118042

Kay Nord Hunt, Ehrich L. Koch, Valerie Sims, Lommen, Abdo, Cole, King & Stageberg, P.A., Minneapolis, Minnesota; and

Stephen A. Sheller, Sheller, P.C., Philadelphia, Pennsylvania; and

Martha K. Wivell, Sheller, P.C., Cook, Minnesota; and

Esther E. Berezofsky, Williams, Cuker, Berezofsky, Cherry Hill, New Jersey (for appellants)

Guy Miller Struve, Justin Goodyear, Davis Polk & Wardwell, L.L.P., New York, New York; and

William P. Studer, David P. Graham, Oppenheimer Wolff & Donnelly, L.L.P., Minneapolis, Minnesota (for respondent Altria Group)

George W. Soule, Nathan J. Marcusen, Bowman and Brooke, L.L.P., Minneapolis, Minnesota; and

Mary Vasaly, Maslon Edelman Borman & Brand, L.L.P., Minneapolis, Minnesota; and

Gregory P. Stone, Randall G. Sommer, Munger, Tolles & Olson, L.L.P., Los Angeles, California (for respondent Philip Morris)

Lori Swanson, Attorney General, Benjamin J. Velzen, Assistant Attorney General, St. Paul, Minnesota (for amicus curiae State of Minnesota)

Prentiss Cox, Minneapolis, Minnesota (for amicus curiae Tobacco Control Legal Consortium)

Charles A. Bird, Bird, Jacobsen & Stevens, P.C., Rochester, Minnesota (for amicus curiae Minnesota Association for Justice)

Scott A. Smith, Nilan Johnson Lewis P.A., Minneapolis, Minnesota; and

John H. Beisner, Jessica Davidson Miller, Geoffrey M. Wyatt, Skadden, Arps, Slate, Meagher & Flom, L.L.P, Washington, D.C.; and

Robin S. Conrad, Amar D. Sarwal, National Chamber Litigation Center, Inc., Washington, D.C. (for amicus curiae Chamber of Commerce of the United States of America)

Considered and decided by Stoneburner, Presiding Judge; Klaphake, Judge; and Worke, Judge.

SYLLABUS

1. The "public benefit" required to bring a claim under Minn. Stat. § 8.31, subd. 3a (2008), for injuries caused by violation of consumer-protection statutes is satisfied by evidence that misrepresentations alleged to have violated the law were made to the public at large.

2. Claims under Minn. Stat. § 8.31, subd. 3a, for injuries allegedly caused by intentional, public misrepresentation by a manufacturer about the nature of its product, may satisfy the "public benefit" element required to maintain such an action, even after the government acts to address the same misrepresentations.

3. An individual bringing a civil action for damages or other relief under Minn. Stat. § 8.31, subd. 3 a, is not directly, indirectly, representatively, derivatively, or in any other capacity, an agent or representative of the state.

4. The general rule that fraudulent concealment tolls a statute of limitations applies to statutory consumer-protection claims.

OPINION

STONEBURNER, Judge

In 2001, appellants sued respondents Altria Group Inc. (Altria) (formerly Philip Morris Companies Inc.) and Philip Morris Incorporated (Philip Morris) under Minn. Stat. § 8.31, subd. 3a, ¹ seeking damages and other relief, individually and on behalf of a class, alleging false advertising, consumer fraud, and deceptive trade practices regarding "light" cigarettes in violation of Minnesota consumer-protection statutes. The complaint also asserted claims of common-law fraud and unjust enrichment.

Appellants define the class as "[a]ll persons who purchased Marlboro Lights cigarettes in Minnesota for personal consumption from the first date [respondents] sold Marlboro Lights in Minnesota [1972] through the date of the certification of the class." The complaint alleges that respondents "engaged in misrepresentations, unlawful schemes and courses of conduct intended to induce [appellants and class members] to purchase... Marlboro Lights cigarettes in violation of Minnesota's law[s]" prohibitingconsumer fraud, unlawful and deceptive trade practices, and false advertising, as well as common-law prohibitions against fraud and unjust enrichment.² Altria's 2002 motion to dismiss appellants' claims for lack of personal jurisdiction was denied.

The district court initially denied class certification, but on reconsideration certified the class. The district court denied appellants' motion for partial summary judgment based on the application of collateral estoppel to prevent respondents from challenging findings of fact made in federal litigation concerning Philip Morris's violation of consumer-protection laws. The district court denied respondents' motion for partial summary judgment based on the statute of limitations.

The district court later granted partial summary judgment to respondents, dismissing appellants' cause of action under Minn. Stat. § 8.31, subd. 3 a, for failure to confer a public benefit and, alternatively, as barred by the release in a prior settlement agreement between the state and respondents. The district court also granted respondents' motion to dismiss appellants' unjust-enrichment claim on the pleadings, concluding that because appellants have an adequate legal remedy, they are not, as a matter of law, entitled to equitable relief under an unjust-enrichment theory. In this appeal and related appeals, appellants and respondents challenge all of the rulings of the district court.

FACTS

Background

In the 1950s and 1960s, the public-health community began recommending the use of lower-tar cigarettes because of a reported link between tar and disease. In 1966, a confidential Philip Morris report examined the market potential of a "health cigarette." The report concluded, in part, that (1) smokers were concerned about the relationship of cigarette smoking to health; (2) "[t]he market share of health cigarettes increases rapidly for a brief period during each health scare and quickly stabilizes at a new and higher level of market penetration;" and (3) "[t]he illusion of filtration is as important as the fact of filtration... [, t]herefore any entry should be by a radically different method of filtration but need not be any more effective." The report states that if Philip Morris "could develop a medically and governmentally endorsed 'healthy' cigarette that tasted exactly like a Marlboro, delivered the nicotine of a Marlboro, and was called Marlboro, it would probably become the best selling brand." But the report expressed doubt that the medical profession and the federal government would endorse any cigarette.

In 1967, the Federal Trade Commission (FTC) began using a machine to measure the amount of tar in a cigarette by "smoking" the cigarette using a standardized intensity, duration, and interval between puffs. Data from the FTC's machine showed that, under standardized smoking conditions, "light" cigarettes deliver lower levels of tar than regular cigarettes. Philip Morris advised the FTC that the machine does not replicate human smoking behaviors, which could limit the practical value of test data, but the FTC continued to measure tar with the machine.

In 1971, Philip Morris began manufacturing and marketing Marlboro Lights (Lights). Throughout the 1970s, 1980s, and 1990s, Lights were marketed as having less tar and nicotine than regular Marlboro cigarettes. And the public-health community encouraged the use of low-tar, low-nicotine cigarettes, based in part, on a 1976 American Cancer Society study that found that smokers who smoked low-tar cigarettes were approximately 25% less likely to die from lung cancer than smokers of traditional cigarettes.

In State by Humphrey v. Philip Morris USA, Inc., which settled in 1998, the Minnesota Attorney General sought damages and injunctive relief on behalf of the state for the increased cost of medical care caused by smoking. No. C1-94-8565 (Minn. Dist. Ct. May 8, 1998). Discovery in that case resulted in the disclosure of internal tobaccoindustry documents that had previously been confidential. The settlement (Tobacco Settlement) resulted in billions of dollars in damages being paid to the state, broad injunctive relief controlling various forms of advertising and marketing, and the attorney general being given ongoing power to prevent Philip Morris from engaging in future misrepresentations.

In 2001, the National Cancer Institute reconsidered existing data relating to smoking and health and published "Monograph 13," which stated that "no convincing evidence" exists to show any "important decrease" in disease risks from smoking low-tar, low-nicotine cigarettes. The Monograph 13 authors based their conclusions on formerly confidential internal industry documents that, according to Monograph 13, show "[t]hat the tobacco companies set out to develop cigarette designs that markedly lowered the tarand nicotine yield results as measured by the [FTC] testing method. Yet, these cigarettes can be manipulated by the smoker to increase the intake of tar and nicotine."

Complaint

After the publication of Monograph 13, appellants sued Altria³ and Philip Morris under Minn. Stat. § 8.31, subd. 3 a, which provides a cause of action for damages and other relief for injury due to violation of Minnesota's consumer-protection laws. Appellants sought to represent a class consisting of "[a]ll persons who purchased Marlboro Lights cigarettes in Minnesota for personal consumption from the first date [respondents] sold Marlboro Lights in Minnesota [1972] through the date of the certification of the class."

The complaint asserts that respondents "engaged in misrepresentations, unlawful schemes and courses of conduct intended to induce [appellants and class members] to purchase... [Lights] in violation of Minnesota's laws" prohibiting consumer fraud, unlawful and deceptive trade practices, and false advertising, as well as common-law prohibitions against fraud and unjust enrichment. Appellants initially sought injunctive relief, restitution of the...