Pearson v. Philip Morris, Inc.
257 Or. App. 106
Or. Ct. App.2013Background
- Plaintiffs sued Philip Morris under Oregon’s Unlawful Trade Practices Act (UTPA), alleging Marlboro Lights were marketed as inherently “Light” / "Lowered Tar & Nicotine" though design and smoking behavior could yield comparable tar/nicotine to regulars. Plaintiffs sought class certification for ~100,000 Oregon purchasers (1971–2001).
- Plaintiffs alleged two UTPA theories; the appeal and certification briefing focused on the claim that Marlboro Lights were not inherently light (i.e., an inherent-feature misrepresentation) and thus purchasers suffered ascertainable loss at purchase.
- Trial court denied class certification, concluding individual issues (reliance, causation, actual exposure/damages) predominated, then granted Philip Morris summary judgment on federal preemption grounds.
- On appeal the court held the summary judgment was erroneous in light of Altria Group v. Good and reviewed class-certification issues de novo.
- The appellate court held: (1) plaintiffs can prove ascertainable loss by showing the cigarettes lacked the represented inherent feature and that feature had value, and that element can be proved class-wide; (2) reliance (causation) is required for plaintiffs’ asserted express/half-truth theory, but reliance can be proven on a classwide basis here given uniform, central, unqualified package representations and marketing; (3) common liability issues predominate, so the trial court erred; remand for the trial court to reassess superiority/manageability (including whether a narrower issue-class is preferable).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Federal preemption of state UTPA claims | Altria precludes preemption; state UTPA claims are not preempted | FCLAA preempts claims based on labeling/representations | Trial court’s preemption dismissal reversed in light of Altria; summary judgment erroneous |
| Damages / ascertainable loss (class-wide proof) | Loss occurs at purchase because Marlboro Lights were represented as inherently light but were not; value of that feature can be shown class-wide (willingness-to-pay expert) | Plaintiffs must show actual exposure per smoker (individual smoking behavior); pricing parity with regulars defeats overpayment theory | Held plaintiffs need only prove (1) cigarettes were not inherently light and (2) inherent lightness had value; those are common issues and may be tried class-wide |
| Causation / reliance | Where misrepresentation is a half-truth/omission plaintiffs need not show individual reliance; alternatively, reliance can be inferred class-wide from uniform, central representations and marketing | Plaintiffs’ theory requires proof of actual reliance by each purchaser; many purchasers didn’t rely or were on notice (surveys, press, plaintiff testimony) | Court: reliance is required for plaintiffs’ express/half-truth theory here, but reliance may be proven class-wide because representations were uniform, material, and likely induced at least one purchase by most class members |
| Class superiority / issue-class and manageability | Class treatment is superior; at minimum certify liability issues as an issue class to avoid repetitive proof | Individualized damages, statute-of-limitations, and membership inquiries make class action unmanageable | Predominance: common liability issues predominate; trial court’s denial premised on legal error. Remand for trial court to reconsider superiority/manageability and whether a liability issue-class should be certified |
Key Cases Cited
- Altria Group, Inc. v. Good, 555 U.S. 70 (U.S. 2008) (FCLAA does not preempt state-law claims like plaintiffs’)
- Sanders v. Francis, 277 Or. 593 (Or. 1977) (whether reliance is required under the UTPA depends on the particular unlawful practice alleged)
- Bernard v. First Nat’l Bank, 275 Or. 145 (Or. 1976) (predominance/cohesion test for class certification; defendants cannot defeat class certification by speculative individualized defenses)
- Derenco v. Benj. Franklin Fed. Sav. & Loan, 281 Or. 533 (Or. 1978) (class certification affirmed where record made individual knowledge unlikely)
- Strawn v. Farmers Ins. Co., 350 Or. 336 (Or. 2010) (reliance may be proven class-wide where identical misrepresentations are material/central and class members naturally would rely)
- Scott v. Western Int’l Surplus Sales, 267 Or. 512 (Or. 1973) (ascertainable loss can be inferred when a purchased product lacks a represented feature of value)
- Weigel v. Ron Tonkin Chevrolet Co., 298 Or. 127 (Or. 1984) (ascertainable loss may be shown by evidence that the product was worth less than represented)
- Feitler v. The Animation Celection, Inc., 170 Or. App. 702 (Or. Ct. App. 2000) (UTPA requires proof of unlawful practice, causation, and ascertainable loss; reliance required for affirmative misrepresentations)