Dahl v. R.J. Reynolds Tobacco Co.

• Decision Date: 04 December 2007
• Docket Number: No. A05-1539.,A05-1539.
• Citation: 742 N.W.2d 186
• Parties: Michael S. DAHL, individually and on behalf of all others similarly situated, et al., Appellants, v. R.J. REYNOLDS TOBACCO COMPANY, et al., Respondents.
• Court: Minnesota Court of Appeals

742 N.W.2d 186

Michael S. DAHL, individually and on behalf of all others similarly situated, et al., Appellants, v. R.J. REYNOLDS TOBACCO COMPANY, et al., Respondents.

No. A05-1539.

Court of Appeals of Minnesota.

December 4, 2007.

Kay Nord Hunt, Phillip A. Cole, Ehrich L. Koch, Lommen, Abdo, Cole, King & Stageberg, P.A., Minneapolis, MN, and Gale D. Pearson, Martha K. Wivell, Stephen J. Randall, Pearson, Randall & Schumacher, P.A., Minneapolis, MN, for appellants.

Lori Swanson, Attorney General, Mark B. Levinger, Assistant Attorney General, St. Paul, MN, for amicus curiae State of Minnesota.

William L. Davidson, Richard A. Lind, Sara J. Lathrop, Lind, Jensen, Sullivan & Peterson, P.A., Minneapolis, MN, and James S. Simonson, Brian L. McMahon, Gray, Plant, Mooty, Mooty & Bennett, P.A., Minneapolis, MN, for respondents.

Considered and decided by DIETZEN, Presiding Judge; TOUSSAINT, Chief Judge; and HALBROOKS, Judge.

OPINION

DIETZEN, Judge.

Appellants challenge the district court's order dismissing their claims, arguing (1) the claims are not expressly preempted by the Federal Cigarette Labeling and Advertising Act (FCLAA); and (2) the claims are not implicitly preempted by Federal Trade Commission (FTC) oversight of tar and nicotine claims in cigarette advertising. Because the district court erred in concluding that appellants' claims are expressly preempted by the FCLAA, and because we conclude that they are not implicitly preempted, we reverse and remand.

FACTS

Respondents R.J. Reynolds Tobacco Company and R.J. Reynolds Tobacco Holdings, Inc. are engaged in the business of manufacturing, marketing, distributing, and selling cigarettes, including "lowered tar" filtered cigarettes under the brand names Camel Lights and Winston Lights, throughout the United States. Appellant Michael Dahl claims that he "has purchased and consumed, on average[,] approximately two packs a day of Camel Lights cigarettes in the State of Minnesota for a period of approximately [20] years." Appellant David Huber claims that he "has purchased and consumed approximately [one-half] pack to one pack a day of Camel Lights, Winston Select, Winston `No additives' or Winston Lights for approximately the past ten years."

The complaint alleged, among other things, that respondents "sold and packaged Camel Lights and Winston Lights as `light' and as having decreased tar and nicotine," that they represented that they are light, that is, lower tar and nicotine than regular cigarettes, and that the representation is "deceptive and misleading and constitute[s] unfair business practices." The complaint set forth specific examples of false and misleading representations, which include:

a. Falsely and/or misleadingly representing that their product is "light" and/or delivers lowered tar and nicotine in comparison to regular cigarettes; [and]

b. Describing the product as light when the so-called lowered tar and nicotine deliveries depended on deceptive changes in cigarettes design and composition that dilute the tar and nicotine content of smoke per puff as measured by the industry standard testing apparatus, but not when used by the consumer[.]

Appellants assert causes of action for common law intentional fraud and misrepresentation; unjust enrichment; and violations of the Minnesota Consumer Fraud Act, Minn.Stat. §§ 325F.68-325F.70 (2006), the Minnesota Unlawful Trade Practices Act, Minn.Stat. §§ 325D.09-325D.16 (2006), the Minnesota Uniform Deceptive Trade Practices Act, Minn.Stat. §§ 325D.43-325D.48 (2006), and the Minnesota False Statement in Advertisement Act, Minn.Stat. § 325F.67 (2006).

Respondents moved to dismiss appellants' claims on the grounds of express and implied preemption under the FCLAA, 15 U.S.C. § 1331 (2000), and the United States Constitution. The district court granted respondents' motion, holding that appellants' claims are expressly preempted by the FCLAA. This appeal follows.

ISSUES

I. Did the district court err in concluding that appellants' state-law claims are expressly preempted by the FCLAA?

II. Are appellants' claims implicitly preempted by the FTC oversight of tar and nicotine claims in cigarette advertising?

ANALYSIS

I.

Appellants argue that the district court erred in determining as a matter of law that their claims were preempted by the FCLAA. We review a dismissal under rule 12 of the Minnesota Rules of Civil Procedure de novo to determine whether the complaint sets forth a legally sufficient claim for relief. Bodah v. Lakeville Motor Express, Inc., 663 N.W.2d 550, 553 (Minn. 2003). In doing so, we consider only the facts alleged in the complaint, accepting those facts as true and construing all reasonable inferences in favor of the nonmoving party. Id.; Marquette Nat'l Bank v. Norris, 270 N.W.2d 290, 292 (Minn.1978). Whether federal law preempts state law is generally an issue of law reviewed de novo. Martin ex rel. Hoff v. City of Rochester, 642 N.W.2d 1, 9 (Minn.2002); see Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516, 112 S.Ct. 2608, 2617, 120 L.Ed.2d 407 (1992).

A. The Federal Cigarette Labeling and Advertising Act

The FCLAA is "a comprehensive federal scheme governing the advertising and promotion of cigarettes." Lorillard Tobacco Co. v. Reilly, 533 U.S. 525, 541, 121 S.Ct. 2404, 2414, 150 L.Ed.2d 532 (2001). The FCLAA was enacted in 1965 after the Surgeon General concluded that "[c]igarette smoking is a health hazard of sufficient importance in the United States to warrant appropriate remedial action." Id. at 542, 121 S.Ct. at 2415 (quotation omitted). The purpose of the act was (1) to adequately inform the public about the hazards of cigarette smoking; and (2) to protect the national economy from interference due to diverse, nonuniform, and confusing cigarette labeling and advertising regulations with respect to the relationship between smoking and health. Id. at 542-43, 121 S.Ct. at 2415. The FCLAA mandated that packages of cigarettes have printed on the package the following warning label: "Caution: Cigarette Smoking May Be Hazardous to Your Health." Id. at 543, 121 S.Ct. at 2415 (quotation omitted). "The FCLAA also required the Secretary of Health, Education, and Welfare (HEW) and the Federal Trade Commission (FTC) to report annually to Congress about the health consequences of smoking and the advertising and promotion of cigarettes." Id. As passed in 1965, section 5 of the FCLAA, captioned "Preemption," provided that:

(a) No statement relating to smoking and health, other than the statement required by [ ] this Act, shall be required on any cigarette package.

(b) No statement relating to smoking and health shall be required in the advertising of any cigarettes the packages of which are labeled in conformity with the provisions of this Act.

Federal Cigarette Labeling and Advertising Act, Pub.L. No. 89-92, 79 Stat. 282, 283 (1965); see also Cipollone, 505 U.S. at 514, 112 S.Ct. at 2616 (discussing original preemption language).

The FCLAA was amended in 1969. Reilly, 533 U.S. at 544, 121 S.Ct. at 2416. One of the amendments changed the mandated label on cigarette packages to read: "Warning: The Surgeon General Has Determined That Cigarette Smoking Is Dangerous to Your Health." Id. (quotation omitted). The 1969 amendments also changed the language of section 5(b) to read:

(b) No requirement or prohibition based on smoking and health shall be imposed under State law with respect to the advertising or promotion of any cigarettes the packages of which are labeled in conformity with the provisions of this Act.

Public Health Cigarette Smoking Act of 1969, Pub.L. No. 91-222, 84 Stat. 87, 88 (1970); see also Cipollone, 505 U.S. at 515, 112 S.Ct. at 2617.¹

B. The Federal Preemption Doctrine

The preemption doctrine stems from the Supremacy Clause of the United States Constitution, which provides that the laws of the United States "shall be the supreme law of the land ... anything in the Constitution or laws of any state to the contrary notwithstanding." U.S. Const. art. VI, cl. 2. The ultimate touchstone of federal preemption is congressional intent. Gade v. Nat'l Solid Wastes Mgmt. Ass'n, 505 U.S. 88, 96, 112 S.Ct. 2374, 2381, 120 L.Ed.2d 73 (1992). And preemption may be express or implied. Fid. Fed. Sav. & Loan Ass'n v. de la Cuesta, 458 U.S. 141, 152-53, 102 S.Ct. 3014, 3022, 73 L.Ed.2d 664 (1982).

Although the doctrine of preemption is firmly rooted, appellants correctly assert that there is a "presumption against preemption." See, e.g., CSX Transp., Inc. v. Easterwood, 507 U.S. 658, 668, 113 S.Ct. 1732, 1739, 123 L.Ed.2d 387 (1993). "The presumption against preemption is a necessary requirement for a properly functioning and well-balanced federal system." Harbor Broad., Inc. v. Boundary Waters Broadcasters, Inc., 636 N.W.2d 560, 564 n. 1 (Minn.App.2001). The burden of demonstrating preemption rests with the defendant. See Silkwood v. Kerr-McGee, Corp., 464 U.S. 238, 255, 104 S.Ct. 615, 625, 78 L.Ed.2d 443 (1984).

C. The Preemptive Effect of the FCLAA

Both parties acknowledge that the United States Supreme Court holding in Cipollone v. Liggett Group, Inc., addresses whether state-law damages claims are preempted by the FCLAA. See Cipollone, 505 U.S. at 508-09, 112 S.Ct. at 2614-15.² In Cipollone, the Court considered whether the FCLAA's preemption clause barred a state-law suit for damages brought by a smoker who had allegedly developed lung cancer from the defendants' cigarettes. Id. The smoker asserted a number of common-law causes of action, including strict liability, negligent failure to warn, breach of express warranty, fraudulent misrepresentation, and civil conspiracy. Id. at 509-10, 112 S.Ct. at 2614. The Court concluded that the preemptive scope of the FCLAA is governed entirely by the express language in section 5 of the act. Id. at 517, 112 S.Ct. at 2618.

A plurality of the Court held that common-law claims were neither uniformly preempted nor uniformly...