Pearson v. Philip Morris, Inc., CC 0211–11819

• Court: Supreme Court of Oregon
• Writing for the Court: LINDER, J.
• Citation: 358 Or. 88,361 P.3d 3
• Parties: Marilyn C. PEARSON and Laura Grandin, individually and on behalf of all similarly situated persons, Respondents on Review, v. PHILIP MORRIS, INC., aka Philip Morris USA, Inc., a foreign corporation, Petitioner on Review, Philip Morris Companies, Inc., aka Altria Group, Inc., a foreign corporation, Defendant.
• Docket Number: CA A137297,SC S061745.,CC 0211–11819
• Decision Date: 22 October 2015

358 Or. 88
361 P.3d 3

Marilyn C. PEARSON and Laura Grandin, individually and on behalf of all similarly situated persons, Respondents on Review,
v.
PHILIP MORRIS, INC., aka Philip Morris USA, Inc., a foreign corporation, Petitioner on Review,
Philip Morris Companies, Inc., aka Altria Group, Inc., a foreign corporation, Defendant.

CC 0211–11819
CA A137297
SC S061745.

Supreme Court of Oregon.

Argued and Submitted June 23, 2014.
Decided Oct. 22, 2015.

William F. Gary, Harrang Long Gary Rudnick, P.C., Eugene, argued the cause and filed the briefs for petitioner on review. With him on the briefs was Sharon A. Rudnick.

Scott A. Shorr, Stoll Stoll Berne Lokting & Shlachter PC, Portland, argued the cause and filed the brief for respondent on review. With him on the brief was Charles S. Tauman, Charles S. Tauman PC, Portland.

Phil Goldsmith, Portland, filed the brief for amicus curiae Oregon Trial Lawyers Association.

Opinion

LINDER, J.

358 Or. 90

Plaintiffs are two individuals who purchased Marlboro Light cigarettes in Oregon. Defendant Philip Morris is the company that manufactures, markets, and sells Marlboro Lights. Plaintiffs brought this action under Oregon's Unlawful Trade Practices Act

361 P.3d 8

(UTPA),¹alleging that defendant misrepresented that Marlboro Lights would deliver less tar and nicotine than regular Marlboros and that, as a result of that misrepresentation, plaintiffs suffered economic losses. Plaintiffs did not bring the action to remedy only their own claimed losses, however. Rather, they moved to certify a class consisting of approximately 100,000 individuals who had purchased at least one pack of Marlboro Lights in Oregon over a 30–year period—from 1971 to 2001. The trial court denied plaintiffs' motion after concluding that individual inquiries so predominated over common ones that a class action was not a superior means to adjudicate the putative class's UTPA claim.

On appeal, in a divided en bancdecision, a majority of the Court of Appeals disagreed with the trial court's predominance assessment, concluding that the essential elements of the UTPA claim could be proved through evidence common to the class. Pearson v. Philip Morris, Inc.,257 Or.App. 106, 172, 306 P.3d 665 (2013). The majority remanded to the trial court to reconsider whether, without the trial court's predominance assessment, a class action was a superior means of litigating the class claims. Id.We allowed defendant's petition for review. On review, the parties' arguments frame several issues for our resolution, including the appropriate standards for determining whether common issues predominate for purposes of the class action certification decision, and what a private plaintiff in a UTPA case of this nature must prove.²As we will explain, we conclude

358 Or. 91

that the trial court properly denied class certification, and accordingly, we reverse the contrary decision of the Court of Appeals and remand to the trial court for further proceedings on the individual plaintiffs' claims.³

I. BACKGROUND

A. Development and Labeling of Marlboro Lights

In the 1950s, governmental and health organizations began to publicize information about the link between lung disease and tar and nicotine in cigarette smoke, which in turn gave rise to increasing concerns among the public about the dangers of smoking cigarettes.⁴In an effort to capitalize on those growing health concerns, cigarette manufacturers introduced new varieties of cigarettes that they advertised as delivering lower levels of tar and nicotine. Although

361 P.3d 9

the public health community generally supported the idea of offering smokers low tar and nicotine alternatives, no accepted or approved method for measuring the tar and nicotine yields of cigarettes existed. Thus, “low” and “lower” tar and nicotine claims by cigarette manufacturers could not be substantiated. The Federal Trade Commission (FTC), which regulates the cigarette manufacturing industry,

358 Or. 92

therefore initially prohibited cigarette manufacturers from marketing their cigarettes based on low tar and nicotine claims.

Eventually, however, the FTC devised a standardized method for measuring tar and nicotine yields of cigarettes. The “FTC method” used a machine that captured and analyzed substances that were drawn into the machine as it “smoked” a cigarette. The machine regulated variables such as the placement of the cigarette in the machine, the volume of each “puff,” the frequency of puffs, and the portion of the cigarette smoked. In 1967, the FTC instructed cigarette manufacturers that they could represent their cigarettes as having lower tar than regulars if, and only if, the cigarette had a tar yield of 15 milligrams or less as measured by the FTC method.

The lowered tar and nicotine levels measured by the FTC method did not necessarily reflect reality for human smokers, however. The FTC was aware of that fact. Indeed, in hearings that the FTC held before adopting its testing method, the tobacco industry expressed concerns that, due to considerable variations in individual smoker behavior, the FTC's method did not, and could not, measure the amount of tar and nicotine that smokers actually inhale. When the FTC adopted its mechanical test method, it issued a press release acknowledging the limitations of that testing method and in particular acknowledging that its test could not accurately gauge the amount of tar and nicotine that even an “average” smoker will draw from a cigarette. The FTC explained that it nevertheless was adopting its mechanical test, because it provided a “reasonable standardized method” of measuring tar and nicotine yields that was “capable of being presented to the public” in a “readily understandable” manner.

In 1971, after the FTC adopted its method of measuring tar and nicotine yields, defendant introduced Marlboro Lights to the market. At the time, Marlboro Lights tested below the 15 milligram tar-yield limit using the FTC method. Defendant therefore permissibly could—and did—label and advertise Marlboro Lights as “lowered tar and nicotine” cigarettes.

358 Or. 93

To accomplish the lowered yields as measured by the FTC method, defendant did not decrease or alter the tobacco content of Marlboro Lights. Instead, defendant perforated the cigarette filter with microscopic holes that allowed extra air to be drawn into the smoke passing through it, which diluted the smoke, thereby delivering less tar and nicotine. As already noted, the way that the FTC's machine smoked a cigarette carefully controlled such variables as the placement of the cigarette in the machine, the number and volume of puffs taken, and the portion of the cigarette smoked. Under those controlled mechanical conditions, Marlboro Lights achieved the yields that permitted defendant, consistently with federal regulations, to claim that Marlboro Lights had lowered tar and nicotine levels. In actual practice, however, smokers could easily defeat the design. In particular, smokers could cover the air holes in the cigarette's filter, which would produce a more concentrated smoke stream with greater amounts of tar and nicotine than with the holes uncovered. Smokers also could take more frequent puffs, hold the smoke in their lungs for a longer period of time, and smoke more of the cigarette itself.⁵And smokers could smoke more cigarettes.

361 P.3d 10

A principal reason why smokers might—either consciously or unconsciously—smoke Marlboro Lights in a way that defeats their design is to achieve a higher level of nicotine in their blood than the cigarettes would otherwise

358 Or. 94

deliver. Nicotine is a stimulant, one to which smokers become addicted or habituated. The nature of nicotine significantly increases the probability that smokers will alter their behavior (i.e.,by blocking air holes, taking deeper and more frequent puffs, smoking farther down the cigarette, or smoking more cigarettes) for either of two reasons. One is that smokers—even ones who have never smoked any other brand or variety of cigarette—will desire a higher stimulant effect than the “light” cigarettes would otherwise deliver (the phenomenon of altering smoking behavior for that reason is termed “titration”). The other reason arises for smokers who switch from regular-strength cigarettes to so-called “light” ones. Those individuals often have become habituated to a particular level of nicotine and, to satisfy their craving for that level, they alter how they smoke a lowered tar and nicotine cigarette (a phenomenon termed “compensation”). In either of those circumstances, the amount of tar and nicotine delivered to a smoker will be higher than the amount measured by the FTC method and potentially will be the same as the amount that a smoker would obtain by smoking a regular cigarette.

B. Plaintiffs' UTPA Claims

That brings us to plaintiffs' UTPA claims. Plaintiffs alleged, and maintained that they would prove, that from the time that defendant introduced Marlboro Lights to the market, defendant was well aware of the compensation and titration phenomena. According to...