WASHINGTON, Feb. 17 2005 – LAWFUEL – The Law News Network — A major financial analyst for the tobacco industry notified the firm’s clients recently that S. 5, the business- backed Class Action Fairness Act passed by the Senate last week and rushing through the U.S. House of Representatives now is “positive” news for the
tobacco industry — confirming what bill opponents have said, that it will
lock many consumers out of court. The bill, dubbed the Corporate Fraud
Promotion Act by opponents, would move many consumer class action lawsuits
from state courts to overcrowded federal courts against the wishes of federal
and state judges, in many cases closing the courthouse doors to defrauded or
injured groups of consumers.
“The practical effect of the change could be that many cases will never be
heard, which might also be positive for tobacco companies,” writes analyst
Bonnie Herzog of Citigroup/Smith Barney in a corporate Industry Note.
“Federal judges, facing overburdened dockets and ambiguities about applying
state laws in a federal court, often refuse to grant standing to class action
plaintiffs. Therefore, tobacco stocks have rallied on this favorable news
given that this bill could have a positive impact on potential future tobacco
litigation.”
Consumer class action cases are traditionally brought to seek redress for
corporate fraud and wrongdoing, such as environmental damage, wage and hour
violations, and faulty or malfunctioning products. Last year, Philip Morris
was found guilty of marketing its “light” cigarettes as being safer than
regular cigarettes, which the company knew to be untrue for 30 years, and yet
continued to sell them to millions of people.
“The bill will deprive citizens of a state of the right to have their
cases heard in their own courts, further overburden the federal court and make
it more difficult for tobacco companies to be held accountable for years of
misleading Americans about the dangers of tobacco,” said Matthew L. Myers,
president, Campaign for Tobacco-Free Kids and a member of the Coalition to
Preserve Access to Justice. “The tobacco industry does not need more
protection against citizen suits. If anything, citizens need more protection
against tobacco industry wrongdoing.”
S. 5, which passed the Senate last week, is expected to pass easily in the
House. President Bush has said he will sign the bill. The U.S. Chamber of
Commerce has been lobbying heavily for the bill and has even become a
financial supporter of a daily newspaper that pushes the anti-class action
position.
“Industry analysts for big tobacco are already popping champagne corks at
the class action bill’s likely effects: denying groups of consumers the
ability to have their day in court,” said Sally Greenberg of Consumers Union
and a member of the Coalition to Preserve Access to Justice. “This bill is a
fraud. Far from simply offering consumers another forum, it is intended to
block class actions altogether.”
