Pearson v. Philip Morris, Inc., 358 Or. 88

Background

Two named plaintiffs sued Philip Morris under Oregon’s Unlawful Trade Practices Act (UTPA), seeking class certification for ~100,000 Oregon purchasers of Marlboro Lights (1971–2001), alleging the label “lowered tar and nicotine” misrepresented that the cigarettes were inherently lower in tar/nicotine.
Marlboro Lights achieved lower FTC‑machine yields via ventilated filters; actual human yields vary because smokers can cover vents, puff differently, or smoke more, producing titration/compensation effects known to the industry and publicized over time.
Plaintiffs pressed only their “inherently light” theory at certification: that Marlboro Lights were represented as inherently lower regardless of smoking method, and class members paid for that characteristic but did not receive it; they sought economic damages (refund or diminished value).
The trial court denied class certification, finding individual issues (ascertainable loss and causation/reliance) overwhelmingly predominated and that defendant’s statute‑of‑limitations defense would require individual inquiries.
The Oregon Court of Appeals reversed, concluding ascertainable loss and reliance could be litigated with classwide proof; the Oregon Supreme Court granted review.
The Supreme Court reversed the Court of Appeals and affirmed denial of class certification, concluding plaintiffs failed to show predominance of common issues given the record and nature of the UTPA private‑claim elements.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether common issues predominate for class certification (ORCP 32 B(3))	Plaintiffs: common misrepresentation and uniform labeling permit inference of classwide answers (reliance and loss); class action is superior.	Philip Morris: purchaser motivations and yields vary widely; individual inquiries (reliance, loss, SOL) will predominate.	Held: Trial court correctly found individual issues predominate; class certification denied.
Ascertainable loss — diminished value theory	Plaintiffs: the ‘‘inherent lightness’’ feature has market value; class suffered diminished value (difference between represented and actual product).	Philip Morris: Lights always sold at same price as regulars; no market evidence of higher value for an inherently light product; plaintiffs offered no expert proof at certification.	Held: Diminished‑value theory not viable on record; absent pricing or expert proof, no classwide inference of diminished value.
Causation / Reliance for purchase‑price refund theory	Plaintiffs: reliance may be inferred circumstantially from uniform labeling and marketing; common proof can show classwide reliance.	Philip Morris: reliance is subjective; purchasers bought for varied reasons; evidence demonstrates heterogeneous beliefs and motives; thus individualized inquiries necessary.	Held: Where remedy sought is refund of purchase price, causation requires proof that misrepresentation caused purchase (reliance); plaintiffs failed to show reliance can be proved by common evidence.
Statute of limitations and individualized defenses	Plaintiffs: SOL defenses can be handled post‑liability; initial liability determination is central.	Philip Morris: 30‑year class period and publicized information mean many claims may be time‑barred; SOL will require individualized proof of discovery.	Held: Trial court correctly considered SOL as part of predominance inquiry; SOL defense raises many individual issues that weigh against class treatment.

Key Cases Cited

Bernard v. First Nat’l Bank, 275 Or. 145 (court explained predominance inquiry requires trial court factfinding and may defeat class certification when individual states of mind are in issue)
Newman v. Tualatin Dev. Co., 287 Or. 47 (addressed reliance and individualized inquiry risks in consumer class context)
Scott v. Western Int’l Surplus Sales, Inc., 267 Or. 512 (permitting jury inference of diminished value where packaging misrepresented product features)
Strawn v. Farmers Ins. Co., 350 Or. 336 (discussed circumstances where classwide circumstantial proof of reliance may create a jury question)
Weigel v. Ron Tonkin Chevrolet Co., 298 Or. 127 (UTPA damages analysis—diminished value/purchase‑price distinctions)
Derenco v. Benj. Franklin Fed. Sav. & Loan, 281 Or. 533 (contrast case where common issues predominated based on record)
Hurt v. Midrex Division, 276 Or. 925 (example where common knowledge among employees justified class treatment)