Lawrence v. Philip Morris USA, Inc.

164 N.H. 93

53 A.3d 525

Karen L. LAWRENCE

v.PHILIP MORRIS USA, INC.

No. 2011–574.

Supreme Court of New Hampshire.

Argued: June 7, 2012.

Opinion Issued: Aug. 21, 2012.

Douglas, Leonard & Garvey, P.C., of Concord (Charles G. Douglas and Jason R.L. Major on the brief), and Korein Tillery LLC, of St. Louis, Missouri and Chicago, Illinois (Stephen M. Tillery and Maximilian C. Gibbons on the brief, and Mr. Tillery orally), for the plaintiff.

McLane, Graf, Raulerson & Middleton, P.A., of Manchester (Wilbur A. Glahn, III, on the brief and orally), and Arnold & Porter LLP of New York, New York, and Washington, D.C. (Philip Curtis and another on the brief), for the defendant.

DALIANIS, C.J.

This is an interlocutory appeal from an order of the Superior Court (Smukler, J.) that certified a class represented by the plaintiff, Karen L. Lawrence, consisting of "all individuals who purchased Marlboro Lights cigarettes in New Hampshire from January 1, 1995, until the date of trial." See Sup.Ct. R. 8. The superior court transferred a single question for our review:

Did the Superior Court err in its application of New Hampshire law when it granted Plaintiff's Motion for Class Certification?

We answer this question in the affirmative and reverse the trial court's certification order.

I. Background

We accept the statement of the case and facts as presented in the interlocutory appeal statement and rely upon the record for additional facts as necessary. See Rainville v. Lakes Region Water Co., 163 N.H. 271, 273, 37 A.3d 403 (2012). The plaintiff alleges that she purchased and consumed Marlboro Lights cigarettes (Lights) from approximately 1975 until February 2001. She alleges that the defendant, Philip Morris USA, Inc. (Philip Morris), by using the name "Lights" and describing the cigarettes as "Lowered Tar & Nicotine," violated the New Hampshire Consumer Protection Act (CPA). See RSA ch. 358–A (2009 & Supp.2011). These descriptions, she contends, falsely represented that Lights would deliver less tar and nicotine than other cigarettes.

The plaintiff alleges that the filters of Lights had ventilation holes that diluted the tar and nicotine delivered per puff as measured by smoking machines. She alleges that Philip Morris specifically designed Lights to "pass" the machine tests while delivering to human smokers the same amount of tar and nicotine delivered by regular Marlboro cigarettes (Regulars). The plaintiff thus argues that the product Philip Morris actually sold, a cigarette that delivered the same levels of tar and nicotine as a regular Marlboro, was worth less than the product Philip Morris promised, a cigarette that delivered less tar and nicotine.

She seeks actual and statutory damages based upon this difference in value. She does not seek personal injury damages.

The plaintiff initiated this action in March 2002. In November 2010, pursuant to RSA 358–A:10–a, which allows class representation in CPA claims, the trial court certified a class represented by the plaintiff, consisting of all individuals who purchased Lights in New Hampshire from the date they were first introduced into New Hampshire's stream of commerce until the date of trial. The trial court later adjusted the class period so that it began on January 1, 1995. The only issue before us is whether the trial court properly certified this class.

II. Analysis

A. Standard of Review

Philip Morris argues that the trial court erred by certifying the class because common issues of law or fact do not predominate over questions affecting only individual class members. See RSA 358–A:10–a, II(e)(3). In deciding this question, because the parties do not argue otherwise, we assume, without deciding, that our case law discussing the predominance requirement for classes certified under Superior Court Rule 27–A applies. See Petition of Bayview Crematory, 155 N.H. 781, 785–86, 930 A.2d 1190 (2007) (acknowledging that Rule 27–A(a)(2) combines the requirement that the proposed class share at least one significant question of law or fact in common and the requirement that common issues predominate).

To satisfy the predominance test, the issues common to the proposed class must outweigh the issues that are particular to the individual class members. Id. at 785, 930 A.2d 1190. The test's purpose is to promote economies of time, effort, and expense and to promote uniformity of decision as to persons similarly situated. Id. at 785–86, 930 A.2d 1190. "To achieve these pragmatic goals, the trial court must consider how the case will be tried by identifying the substantive issues that will control the outcome of the case, assessing which issues will predominate, and determining whether those issues are common to the class." Id. at 786, 930 A.2d 1190.

Thus, the trial court must go beyond the facts alleged in the pleadings to understand the claims, defenses, relevant facts, and applicable substantive law and meaningfully determine the certification issues. Cantwell v. J & R Props. Unlimited, 155 N.H. 508, 512, 924 A.2d 355 (2007). This rigorous analysis requires that the trial court receive enough evidence, by affidavits, documents, or testimony, to be satisfied that the plaintiff has met each class certification requirement. Id. at 512–13, 924 A.2d 355. The trial court must employ its discretion, however, to avoid transforming certification proceedings into "protracted mini-trial[s] of substantial portions of the underlying litigation." Id. at 512, 924 A.2d 355 (quotation omitted).

We will not overturn orders granting or denying class certification absent an unsustainable exercise of discretion. Petition of Bayview Crematory, 155 N.H. at 784, 930 A.2d 1190. A trial court unsustainably exercises its discretion when a relevant factor deserving of significant weight is overlooked, or "when an improper factor is accorded significant weight, or when the court considers the appropriate mix of factors, but commits a palpable error of judgment in calibrating the decisional scales." Id. (quotation omitted). Within this rubric, a trial court necessarily exceeds the limits of its discretion when its decision or judgment depends upon an incorrect view of the law. Id. And, a trial court's answer to an abstract legal question, even though made in the course of reaching a generally discretionary judgment, engenders de novo review. Id. Finally, because the trial court in this case relied only upon a paper record and "all of the documents from below are available for our perusal, we ... give less than ordinary deference to the trial court's factual findings." Hillside Assocs. of Hollis v. Maine Bonding & Cas. Co., 135 N.H. 325, 330, 605 A.2d 1026 (1992).

B. Individual Issues Regarding Injury Predominate

"This is not the first attempt at certification of a class of purchasers of light cigarettes." In re: Light Cigarettes Mktg. Sales Prac. Litig., 271 F.R.D. 402, 413 (D.Me.2010) (citing cases). Of the courts that have considered the issue, "[e]leven of the thirteen denied class certification; two granted it." Id. The two courts that granted class certification employed less rigorous class-certification standards than New Hampshire law requires. Compare Cantwell, 155 N.H. at 512–13, 924 A.2d 355 (court must go beyond facts alleged in pleadings), with Craft v. Philip Morris Companies, Inc., 190 S.W.3d 368, 382–85 (Mo.Ct.App.2005) (assuming truth of plaintiff's allegations and legal conclusions); compare RSA 358–A:10–a, II(e)(3) (requiring that common legal or factual issues predominate), with Aspinall v. Philip Morris Companies, Inc., 442 Mass. 381, 813 N.E.2d 476, 479, 492 (2004) (certifying class under Massachusetts consumer protection statute), and Moelis v. Berkshire Life Ins. Co., 451 Mass. 483, 887 N.E.2d 214, 220 (2008) (explaining that Massachusetts consumer protection statute "does not require that common issues predominate over individual ones").

In this case, Philip Morris argues that individual issues about injury will predominate because not all class members were injured by its representations about Lights, and determining which class members were, in fact, injured, will require individual proof and inquiries. Philip Morris asserts that class members who were exposed to publicly disseminated information about the tendency of smokers to "compensate" when smoking light cigarettes, thereby obtaining the same amount of tar and nicotine as when smoking regular cigarettes, cannot show that they were deceived by Philip Morris's representations and, therefore, cannot show injury. See Beckstead v. Nadeau, 155 N.H. 615, 620, 926 A.2d 819 (2007) (trial court unsustainably exercised discretion by granting defendants' motion for directed verdict based upon finding that plaintiffs failed to introduce sufficient evidence of deceit). These class members, Philip Morris reasons, received exactly what they expected—a cigarette that was capable of delivering the same levels of tar and nicotine as a regular cigarette—and, therefore, sustained no injury. Cf. Cleary v. Philip Morris USA, Inc., 265 F.R.D. 289, 292–93 (N.D.Ill.2010) (denying class certification upon lack of typicality because of "likelihood that some significant proportion of class members experienced no injury at all").

Philip Morris contends that individual inquiries will be necessary to determine the extent of each class member's knowledge about the " compensation" phenomenon—that is, the tendency of smokers of light cigarettes to inhale more deeply, hold the smoke in their lungs longer, or cover up the ventilation holes in the cigarette paper or filter, in order to receive the same amount of tar and nicotine as when smoking Regulars. Because of the likelihood that numerous class members were exposed to information about the compensation phenomenon, individual inquiries will predominate, Philip Morris argues, and, therefore, class certification is improper. See Light Cigarettes Mktg. Sales Prac. Litig., 27l F.R.D. at 421 (individual inquiries related...