In re Tobacco Cases II

240 Cal.App.4th 779

192 Cal.Rptr.3d 881

IN RE TOBACCO CASES II

D065165

Court of Appeal, Fourth District, Division 1, California.

Filed September 28, 2015

Denied December 9, 2015

Robinson Calcagnie Robinson Shapiro Davis, Inc., Mark P. Robinson, Jr., Kevin F. Calcagnie, Scot D. Wilson, Newport Beach; Simon, Peragine, Smith & Redfearn, Robert L. Redfearn, Robert L. Redfearn, Jr., Douglas W. Redfearn, New Orleans, LA; Dougherty, Hildre & Haklar, Donald F. Hildre and Thomas D. Haklar, San Diego, CA, for Plaintiffs and Appellants.

Munger, Tolles & Olson, Gregory P. Stone, Daniel B. Levin, Bethany W. Kristovich Los Angeles, and Martin D. Bern, San Francisco, for Defendant and Appellant.

McCONNELL, P.J.

This action under the unfair competition law (UCL) ( Bus. and Prof.Code, § 17200 et seq . )¹ and the false advertising law (FAL) (§ 17500 et seq.) arises from Philip Morris USA, Inc.'s (Philip Morris) use of terms such as "Lights" and "Lowered Tar and Nicotine" in advertising Marlboro Lights, to indicate they were less unhealthful than Marlboro Reds and other full-flavored cigarettes. The trial court determined Marlboro Lights were no less dangerous than any other cigarettes, Philip Morris knew that, and its advertising was likely to deceive consumers. The court, however, denied plaintiffs' prayer for restitution on the ground they received value from Marlboro Lights apart from the deceptive advertising, and the evidence they submitted in an effort to show the difference between what they paid for Marlboro Lights and the value they actually received ( In re Vioxx Class of Cases (2009) 180 Cal.App.4th 116, 131 [103 Cal.Rptr.3d 83] ( Vioxx )) was incompetent and inadmissible.

On appeal, plaintiffs do not challenge the court's finding that they received value from Marlboro Lights or its rejection of their evidence on consumer losses. Rather, they contend the court erred as a matter of law by determining the only measure of restitution in a UCL products action is the measure set forth in Vioxx . Plaintiffs assert value is immaterial, and they were not required to show any loss attributable to the deceptive advertising, because as an alternative measure the court had discretion to order Philip Morris to make a full refund of consumer expenditures, or its profits thereon, exclusively for the purpose of deterrence.

Plaintiffs also contend the court abused its discretion by denying injunctive relief on the ground of mootness. While a federal court opinion ( U.S. v. Philip Morris USA, Inc. (D.D.C.2006) 449 F.Supp.2d 1 ( Philip Morris I ), affirmed in relevant part in U.S. v. Philip Morris USA, Inc. (D.C.Cir.2009) ), and federal legislation ( 21 U.S.C. § 387k(b)(2)(A)(i) & (ii) ) have already enjoined tobacco companies' use of the objectionable descriptors, plaintiffs assert the matter is not moot because Philip Morris continues to market the cigarettes, now called Marlboro Gold, in light-colored packs, which ostensibly signifies they are less dangerous than Marlboro Reds or other cigarettes sold in dark-colored packs. Additionally, plaintiffs assert the court erred by denying them declaratory relief, awarding Philip Morris $764,552.73 in costs as the prevailing party under Code of Civil Procedure section 1032 , and denying them sanctions under Code of Civil Procedure section 2033.420 for Philip Morris's failure to make admissions.

We conclude all of plaintiffs' points lack merit, and thus we affirm the judgment. Plaintiffs ignore well-established law on each point, and opt instead to rely on broad language from inapposite opinions. "Language used in any opinion is of course to be understood in the light of the facts and the issue then before the court, and an opinion is not authority for a proposition not therein considered." ( Ginns v. Savage (1964) 61 Cal.2d 520, 524, fn. 2 [39 Cal.Rptr. 377, 393 P.2d 689] .)

Philip Morris has filed a protective cross-appeal, challenging the propriety of class treatment. Philip Morris agrees the appeal should be dismissed if we affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

This action has a tortuous procedural history, but given the issues on appeal only a brief summary is required. The original complaint was filed in 1997 against several tobacco companies, but eventually Philip Morris was the only remaining defendant. The action was coordinated with several other actions under the caption In re Tobacco Cases II and assigned to Judge Ronald Prager.

In 2001, a seventh amended complaint was filed, which alleged that Philip Morris violated the UCL ( § 17200 et seq . ) and the FAL (§ 17500 et seq.) through, among other things, its advertising of Marlboro Lights.² The court certified a class consisting of California residents who smoked cigarettes between 1993 and 2001 and were exposed to Philip Morris's advertising. In 2004, the court ruled that the Marlboro Lights issue was preempted by federal statute.

In November 2004, the voters approved Proposition 64, an initiative measure to amend the standing requirements for UCL actions. Under the new section 17204, a private UCL claim may be pursued "by a person who has suffered injury in fact and has lost money or property as a result of the unfair competition." The court decertified the class on the ground the question of "whether class members could satisfy the standing requirements of Proposition 64 required individual inquiries." Before Proposition 64, a UCL action could be brought by "any person acting for the interests of itself, its members or the general public." (Former § 17204.)

In 2009, the California Supreme Court reversed the decertification order. ( Tobacco II, supra, 46 Cal.4th at p. 329 , 93 Cal.Rptr.3d 559, 207 P.3d 20.) Tobacco II holds that section 17204's standing requirements apply only to the class representative, and "that Proposition 64 was not intended to, and does not, impose section 17204's standing requirements on absent class members in a UCL class action where class requirements have otherwise been found to exist." ( Tobacco II, at p. 324 , 93 Cal.Rptr.3d 559, 207 P.3d 20.) On remand, the trial court reinstated the Marlboro Lights claim in response to the United States Supreme Court's opinion in Altria Group, Inc. v. Good (2008) 555 U.S. 70 [172 L.Ed.2d 398, 129 S.Ct. 538] .

In 2011, plaintiffs filed the operative 11th amended complaint (complaint), with five named plaintiffs. One of them withdrew, and in 2012 the court ruled that only one of the remaining four, Trina Watton, had standing to represent the class with respect to the Marlboro Lights claim. The court "redefined the class objective as: ‘All people who, at the time they were residents of California, smoked in California between January 1, 1998, and April 23, 2001, one or more Marlboro Lights cigarettes manufactured by Philip Morris ..., and who were exposed to defendant's marketing and advertising activities in California.’ "

In 2013, a bench trial was held over approximately 10 weeks. The court determined Philip Morris's advertising of Marlboro Lights was deceptive within the meaning of the UCL. The court found that the descriptors "Lights" and "lowered tar and nicotine" indicated Marlboro Lights delivered less tar and nicotine to smokers, and were thus less harmful than full-flavored cigarettes such as Marlboro Reds. However, Philip Morris's own research from as early as the 1970's "revealed that, as actually smoked, ... Lights provided no significant reduction in the amount of tar and nicotine ingested by most smokers." The court explained that "[i]n reality, ... to make up for the reduced tar and nicotine ... most smokers compensated by various means such as increasing the number of cigarettes smoked, the frequency of puffing, the degree of inhalation, and smoking more of the rod." Philip Morris executives admitted they knew Marlboro Lights "were just as harmful as Marlboro Reds and other full-flavored cigarettes but failed to disclose this information to consumers." After the class period, Philip Morris "placed onserts on 55 million packs of Marlboro Lights sold in California which truthfully stated that Marlboro Lights did not reduce the likelihood of disease and did not offer any health benefits."³

The court, however, denied plaintiffs' prayer for restitution for lack of competent evidence of any loss attributable to the deceptive advertising. The court, relying on Vioxx, determined that since plaintiffs received value from Marlboro Lights apart from the deceptive advertising, the proper measure of restitution was the difference between the price paid and the actual value received. ( Vioxx, supra, 180 Cal.App.4th at p. 131 , 103 Cal.Rptr.3d 83.)

The court rejected Watton's claim she purchased Marlboro Lights based exclusively on the advertising, because she admitted in cross-examination that she continued to purchase them for six years after learning they were no less harmful than Marlboro Reds or other full-flavored cigarettes.⁴ The court also noted it heard extensive deposition testimony from absent class members, and "[a]pparently, most smokers who learned that Marlboro Lights were no healthier than Marlboro Reds believed Marlboro Lights ... still provided reasonable value for the price they paid." Numerous absent class members expressly admitted their purchases of Marlboro Lights were wholly unrelated to health issues and were based on factors such as taste and smoothness, or their purchases were initially health related, but like Watton they continued to smoke Marlboro Lights many years after learning the truth.

The court noted that in an effort to calculate a price/value differential, plaintiffs relied exclusively on an online "conjoint survey" designed and conducted by Joel Steckel, Ph.D. Dr. Steckel asked 652 participants to choose between hypothetical cigarette products based on four features: taste, price, health risks, and pack type. He used "off-the-shelf Sawtooth software to generate 10,000 draws, or estimated choices, based on each [par...