Case Information
*2 Before GARWOOD, DeMOSS, and DENNIS, Circuit Judges.
DeMOSS, Circuit Judge:
Several Plaintiffs, seeking class status, sued numerous tobacco manufacturer and trade association Defendants, alleging negligence, strict liability, fraud, misrepresentation, breach of *3 warranty, antitrust violations, negligent and intentional entrustment, public nuisance, unjust enrichment, aggravated assault, Federal Racketeer Influenced and Corrupt Organization Act (RICO) violations, and Deceptive Trade Practices Act (DTPA) violations. The district court severed Plaintiff Hughes’ claims into a separate suit so it could proceed to resolution on the merits.
The Defendants sought dismissal on the pleadings in the
severed case
Hughes v. Tobacco Institute
, asserting that § 82.004
of the Texas Practices and Remedies Code barred all Hughes’ claims.
The Defendants’ motion was based in large part on this Court’s
opinion in
Sanchez v. Liggett & Myers, Inc.
,
On May 8, 2000, the district court granted the Defendants’ motion to dismiss Hughes’ claims. The court also sua sponte dismissed the claims in Cole v. Tobacco Institute , the suit from which Hughes had been severed, on the same grounds. The Plaintiffs from both suits appeal here. For the reasons expressed below, we AFFIRM the district court’s judgment.
I. STANDARD OF REVIEW
Any party may move for judgment on the pleadings after the
pleadings are closed. F ED R. IV P. 12(c). We review rule 12(c)
dismissals de novo .
St. Paul Mercury Ins. Co. v. Williamson
, 224
F.3d 425, 440 n.8 (5th Cir. 2000). “[T]he central issue is
whether, in the light most favorable to the plaintiff, the
complaint states a valid claim for relief.”
Id
. Pleadings should
be construed liberally, and judgment on the pleadings is
appropriate only if there are no disputed issues of fact and only
questions of law remain.
Voest-Alpine Trading USA Corp. v. Bank of
China
,
The district court, when presiding over a diversity case, must
apply the law of the forum state.
Erie R.R. Co. v. Tompkins
, 304
U.S. 64, 78 (1938). And the court is “bound to apply the law as
interpreted by the state’s highest court.”
Texas Dep’t of Hous. &
Cmty. Affairs v. Verex Assurance, Inc.
,
II. T EX . C IV . P RAC . & R EM . C ODE § 82.004
In 1993, the Texas Legislature enacted § 82.004, which limits product liability actions against manufacturers and sellers of allegedly defective products. Specifically, it provides:
(a) In a products liability action, a manufacturer or seller shall not be liable if:
(1) the product is inherently unsafe and the product is known to be unsafe by the ordinary consumer who consumes the product with the ordinary knowledge common to the community; and
(2) the product is a common consumer product intended for personal consumption, such as sugar, castor oil, alcohol, tobacco, and butter, as identified in Comment i to Section 402A of the Restatement (Second) of Torts.
(b) For purposes of this section, the term “products liability action” does not include an action based on manufacturing defect or breach of an express warranty.
T IV P RAC . & R EM . C ODE § 82.004. Another section defines a “products liability action” as:
any action against a manufacturer or seller for recovery of damages arising out of personal injury, death, or property damage allegedly caused by a defective product whether the action is based in strict tort liability, strict products liability, negligence, misrepresentation, breach of express or implied warranty, or any other theory or combination of theories.
T IV P RAC . & R EM . C ODE § 82.001.
A. JUDICIAL INTERPRETATIONS OF § 82.004
No Texas Court has had occasion to apply § 82.004 in a tobacco
suit. However, in
Sanchez
, this Court concluded, as a matter of
first impression, that § 82.004 bars claims premised on the harmful
or addictive nature of tobacco, including those brought as claims
for fraud, misrepresentation, breach of implied warranty, DTPA
violations, and conspiracy.
In
Harris v. Phillip Morris Inc.
,
The district court held that our
Sanchez
decision precluded
“most of [P]laintiffs’ claims as they arise from personal injury or
death caused by a defective product.” We agree. Under and
its progeny, § 82.004 bars the Plaintiffs’ negligence, strict
liability, fraud, misrepresentation, negligent and intentional
*7
entrustment, public nuisance, unjust enrichment, assault, and DTPA
claims because they are all predicated on a product-defect theory.
,
The district court did correctly recognize that some of the Plaintiffs’ claims are unaffected by § 82.004's limitation on liability. Specifically, the court found that the Plaintiffs’ breach of warranty claim survived because it is expressly exempted by the statute, and that the Plaintiffs’ RICO and antitrust claims survived because a state statute cannot preempt federal law. However, the court went on to hold that each of these remaining claims failed for reasons other than the preclusive effect of § 82.004. We agree.
1. Plaintiffs’ RICO Claim
The Plaintiffs assert a RICO claim based on the predicate
offenses of assault and injury to a child, elderly individual or
disabled individual. T P EN ODE § 22.02 & 22.04. To prevail in
a RICO suit, a plaintiff must demonstrate an injury to business or
property. 18 U.S.C. § 1964(c);
Sedima S.P.R.L. v. Imrex Co.
, 473
U.S. 479, 496 (1985) (“[T]he plaintiff only has standing if, and
can only recover to the extent that, he has been injured in his
business or property.”). The phrase “injury to business or
property” excludes personal injuries.
Reiter v. Sonotone Corp.
,
2. Plaintiffs’ Antitrust Claim
The Plaintiffs next assert an antitrust claim, contending that the Defendants entered into an agreement to restrain free competition by coordinating tobacco research on the safety of tobacco and other products such as the “safer cigarette.” They also allege that the Defendants entered into a “gentleman’s agreement” to suppress independent research and to hide any negative results. As a result of this conspiracy, Plaintiffs claim that information on the dangers of smoking and addition was suppressed, that safer cigarettes and products were not developed, and that cigarette prices increased as a result.
Factors relevant to determining whether a plaintiff has
established antitrust standing include: (1) the causal connection
between the alleged antitrust violation and harm to the plaintiff;
(2) an improper motive; (3) the nature of the plaintiff’s alleged
injury and whether the injury was of a type that Congress sought to
redress with the antitrust laws (antitrust injury), (4) the
directness with which the alleged market restraint caused the
asserted injury; (5) the speculative nature of the damages; and (6)
the risk of duplicative recovery or complex apportionment of
damages. See
Sullivan v. Tagliabue
,
First is the risk of duplicative recovery and complexity in apportioning damages. Section 4 of the Clayton Act limits recovery to individuals who have been “injured in their business or property by reason of anything forbidden in the antitrust laws.” 15 U.S.C. § 15(a) . . . . [I]n Illinois Brick Co. v. Illinois , [the Court] limited antitrust standing to plaintiffs who purchased directly from the antitrust violators. 431 U.S. 720, 729-35 (1977). The Court held that determining the extent of damages as divided between direct and indirect consumers would involve evidentiary complexities and uncertainties which would prolong and complicate proceedings rendering them ineffective.431 U.S. at 732 . Another consideration was the risk of duplicative recovery. Allowing consumers who purchased goods from distributors who could bring their own suits would result in two sets of plaintiffs recovering from the defendant for the same acts. In the present case, this factor weighs heavily against standing.
. . . .
The second factor which weighs heavily against finding antitrust standing is whether the type of injury alleged was intended to be remedied by antitrust law; that is whether the plaintiffs have suffered an antitrust injury. . . . The Ninth Circuit has determined that this requires the injured party to be a participant in the same market as the alleged malefactors. Parties whose injuries, though flowing from that which makes the defendant’s conduct unlawful, are experienced in another market do not suffer antitrust injury. Individual smokers do not buy cigarettes from manufacturers, but from retailers who in turn buy from distributors thus the plaintiffs are at least one step removed from market in which the manufacturer defendants participate. Since the plaintiffs have not shown they were direct purchasers, *10 this factor weights heavily against finding antitrust standing.
The court finds that these factors alone preclude a finding of antitrust standing The plaintiffs’ antitrust claims are therefore dismissed on the basis of the pleadings.
(Citations and footnote omitted.) We are persuaded by the district court’s reasoning. The Plaintiffs’ antitrust claims were properly dismissed on the pleadings.
3. Plaintiffs’ Breach of Warranty Claim
In support of their breach of warranty claim, the Plaintiffs assert that the Defendants made knowingly false statements as to the health dangers of smoking and the addictive qualities of nicotine through advertising and public statements. The Plaintiffs claim these statements formed the “basis of the bargain” for themselves and others in both starting and continuing to smoke. Specifically, Plaintiffs point to statements Defendants made from 1954 to 1994.
As the district court correctly noted, any statement made before May 5, 1993 is barred by limitations. [1] Thus, the only *11 relevant representation relied upon by the Plaintiffs is a 1994 statement by major cigarette manufacturer executives before the House Subcommittee on Health and the Environment of the Committee on Energy and Commerce, that nicotine is not addictive. [2] The Plaintiffs contend that, despite this statement in 1994, the Defendants have known cigarettes were addictive since the early 1960s.
An express warranty is “[a]ny affirmation of fact or promise
made by the seller to the buyer which relates to the goods and
becomes part of the basis of the bargain.” T B US & OM . C ODE
2.313(a)(1);
American Tobacco Co. v. Grinnell
,
The Plaintiffs’ breach of express warranty claims against the
remaining Defendants necessarily fail as well. Defendants’
statements before Congress were made forty-two years after the
Plaintiffs became addicted to cigarettes. Thus, these statements
cannot have formed the “basis of the bargain” for the Plaintiffs’
initial purchase of cigarettes. See generally
Grinnell
, 951 S.W.2d
*12
at 436 (explaining that “basis of the bargain” is analogous to the
common law “reliance” element). And, to the extent Plaintiffs’
argument rests on the contention that they continued to smoke in
reliance on the Defendants’ 1994 statement, we agree with the
district court that “any express warranty within the limitations
period was negated by the common knowledge that smoking is
addictive and dangerous to one’s health.” Cf.
Allgood
,
III. PLAINTIFFS’ CONSTITUTIONAL CHALLENGES
Finally, the Plaintiffs contend that this Court’s
interpretation of § 82.004 is unconstitutional. First, they argue
that our interpretation violates the open court’s provision of the
Texas Constitution. The open courts provision provides that “[a]ll
courts shall be open, and every person for a injury done him, in
his lands, goods, person or reputation, shall have remedy by due
course of law.” T ONST . art. I, § 13. To establish an open
court’s violations, the plaintiff must establish that (1) he or she
has a well-established, cognizable common law cause of action that
is being abrogated or restricted, and (2) that restriction of the
claim is unreasonable or arbitrary when balanced against the
statute’s purpose.
Diaz v. Westphal
, 941 S.W.2d 96, 100 (Tex.
*13
1997). The district court concluded that the Plaintiffs failed to
establish the first prong, i.e. that they had a well-established,
cognizable common-law claim that § 82.004 abrogated or restricted.
We agree. As recently as 1996, this Court labeled a product
liability action premised on the addictive nature of cigarettes as
a “novel and wholly untested theory.”
Castano v. American Tobacco
Co.
,
Lastly, the Plaintiffs argue that § 82.004 violates the Due Process clauses of the United States and Texas Constitutions. Specifically, the Plaintiffs argue that ’s interpretation of § 82.004 is unreasonable and arbitrary because it, in effect, grants tobacco manufacturers immunity from suit in the state of Texas.
*14
Since no fundamental right is implicated here, § 82.004 need
only be rationally related to the stated legislative purpose.
Texas Workers’ Comp. Comm’n v. Garcia
,
IV. PLAINTIFFS’ MOTION TO CERTIFY QUESTIONS TO THE SUPREME COURT
OF TEXAS
As an alternative to their urging this Court to reexamine Sanchez , the Plaintiffs have requested that we certify several questions to the Texas Supreme Court. Specifically, they assert that we should ask the court (1) whether this Court correctly interpreted Texas law in , and (2) whether the Sanchez *15 interpretation of § 82.004 violated the Texas Constitution.
The Texas Constitution allows federal appellate courts to
certify questions to the Texas Supreme Court if no Texas Supreme
Court authority is on point. T EX . ONST . art. V, § 3-c; see also
T R. A PP P. 58.1. However, certification is not “a proper
avenue to change our binding precedent.”
Jefferson v. Lead Indus.
Ass’n, Inc.
,
A. THE SANCHEZ QUESTION
A panel of this Court interpreted § 82.004 in
Sanchez
, and two
other panels followed that interpretation in
Harris
and
Davis
.
Absent a “subsequent state court decision or statutory amendment
which makes this Court’s decision clearly wrong,” this Court will
deny this and any future motion to certify questions related to the
correctness of our decision.
Lee
,
B. THE CONSTITUTIONALITY QUESTION
We likewise decline to certify the question of the constitutionality of our interpretation of § 82.004 in . “Absent genuinely unsettled matters of state law, we are reluctant to certify” because we “do not lightly abdicate our mandate to decide issues of state law when sitting in diversity.” Jefferson , 106 F.3d at 1247-48. The ability to certify questions is a valuable tool, but we are cautious to avoid its overuse “lest we wear out our welcome.” Transcontinental Gas Pipeline Corp. v. Transportation Ins. Co. , 953 F.2d at 623 (5th Cir. 1992). The tests for determining the constitutionality of a statute are developed enough in Texas for us to apply these tests with confidence. Thus, certification is inappropriate.
IV. CONCLUSION
Having carefully reviewed the entire record of this case, and having fully considered the parties’ respective briefing on the issues of these appeals, we find no error in the district court’s judgment. Accordingly, we AFFIRM.
Notes
[1] This suit was filed on May 5, 1997, and the applicable statute
of limitations is four years. T B US & OM . C ODE § 2.725(a)-(b).
The Plaintiffs have not alleged that the Defendants made any
specific representation about future performance, which can, in
certain circumstances, extend the time frame for bringing suit on
an express warranty. See
id
.;
Cornerstones Mun. Util. Dist. v.
Mansanto Co.
,
[2] The district court correctly concluded that most of the other “representations” cited by the Plaintiffs were insufficient to constitute express warranties.
[3] We do not necessarily agree with the
Harris
Court’s dicta that
the Texas Products Liability Act does not violate the open courts
provision simply because it does not preclude manufacturing defect
and express warranty claims. See
Harris
,