Marketplace Report: Suing for 'Light' Smokes
ALEX CHADWICK, host:
Back now with DAY TO DAY. I'm Alex Chadwick. Smokers of light cigarettes are hoping today that a federal judge in Brooklyn, New York, will let them file a class-action suit against tobacco companies. And if the judge says yes, millions of people across this country will be able to seek billions of dollars in damages. MARKETPLACE's Janet Babin joins us. Janet, details about this lawsuit, please.
JANET BABIN: Well, Alex, this is a lawsuit from people who purchased light or low-tar cigarettes over the past 30 years. It was filed back in 2004, and it claims that big tobacco companies like RJ Reynolds and Philip Morris and other deceived these light cigarette smokers by claiming that low-tar cigarettes were less harmful than the more full-bodied types. And the suit claims that the manufacturers knew that the health risks associated with smoking these light cigarettes were about the same as for smoking the regular ones.
CHADWICK: So this suit is already two years old, but wasn't there a prior attempt to get class-action status for light cigarette smokers?
BABIN: There have been in state courts, yes. There have been attempts like this. But in those cases, the tobacco companies successfully argued that the smokers didn't deserve class-action status. An RJ Reynolds spokesman put it this way: class certification is not appropriate when you're talking about individual smokers and health claims. They make their case by arguing that not all light smokers decided to smoke for the same reasons, and they don't take the same length of a drag, and they haven't smoked for the same amount of time, and they don't have the same health effects, so they don't deserve this status.
Now I spoke with Raymond Mathis about why the tobacco companies are trying to avoid this class-action status for the light smokers. He's an analyst with Standard & Poor's, and Mathis says it's just much easier for the tobacco companies to argue these cases on a one-on-one basis.
Mr. RAYMOND MATHIS (Analyst, Standard & Poor's Equity Group): If a smoker was ill, it was their choice to smoke, or the illness might have been caused by something else. If it's a class action, then you get all these things lumped together, and they can't really defend themselves as easily, and the monetary penalties are huge. And just appealing the case would require them to put up billions of dollars in a bond.
BABIN: So the companies will likely be making some of these same arguments today, this time in federal court in Brooklyn.
CHADWICK: And if the companies win again, what then?
BABIN: Well, the analysts, many analysts, especially those who cover Altiris, Philip Morris - they're hopeful that this will be the beginning of the end of these lawsuits or class-action attempts. But there is still this question of the outcome of a U.S. Department of Justice lawsuit regarding light cigarettes. That ruling came in August, and it did find that the tobacco companies mislead smokers by using labels like low tar. But the tobacco companies are appealing that ruling, so it could go on.
Coming up later today on MARKETPLACE, Alex, we're going to tell you about the growing market for moon rocks.
CHADWICK: Thank you, Janet. Janet Babin of public radio's daily business show, MARKETPLACE, produced by American Public Media.