Posted 11:25 PM by Howard Bashman

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December 16, 2008

Supreme Court Ruling Bucks Pre-emption Trend; Despite FTC, Makers of Light Cigarettes Can Face State Deceptive Practices Claims

By Lawrence Hurley
Daily Journal Staff Writer
WASHINGTON - In its first major decision of the term, the U.S. Supreme Court ruled Monday that federal law does not prevent plaintiffs from filing state deceptive practices claims against light cigarette manufacturers.

The 5-4 ruling saw the liberal members of the court prevail, with Justice John Paul Stevens authoring the majority opinion. Altria v. Good, 2008 DJDAR 18257.

The decision marks a departure from the recent trend of the court finding pre-emption language in congressional statutes. The most prominent example of this was an important medical device case from last term that was referred to repeatedly during oral argument in October. Riegel v. Medtronic, 128 S.Ct. 999 (2008).

The question before the justices was whether federal law pre-empts state law claims concerning the false advertising of low tar cigarettes. The close nature of the outcome is perhaps no surprise, as the last time the court addressed the scope of the Federal Cigarette Labeling and Advertising Act - the statute in question - it was badly split. Cipollone v. Liggett Group Inc., 505 U.S. 504 (1992).

On that occasion, a plurality of four, including the court's current swing vote, Justice Anthony Kennedy, agreed that the act pre-empted some state law claims but not others.

"It's important that the court reaffirmed Cipollone," said David Frederick of Washington-based Kellogg, Huber, Hansen, Todd, Evans & Figel, who represented the plaintiffs. The case represents "one step on a multi-step journey" to evaluate when federal pre-emption applies, he added.

Altria Group Inc., the parent company of Philip Morris, argued there was a so-called "express pre-emption" provision in the labeling statute that explicitly mandated that federal law prevented plaintiffs from making state law claims.

If that was the case, it would have prevented a group of Maine residents from pursuing a state law claim that the cigarette manufacturer violated the Maine Unfair Trade Practices Act by labeling some cigarettes as "light," even though it has been proven that low tar cigarettes are not any less harmful than normal cigarettes.

After plaintiffs filed a class action lawsuit in federal court in 2005, Altria stressed that it had no control over the labeling concerning tar and nicotine content, which is regulated by the Federal Trade Commission.

The lower court in Maine bought the argument and granted Altria's motion for summary judgment in 2006. But, the 1st U.S. Circuit Court of Appeals reversed a year later.

In affirming the appeals court, Stevens was joined by Justices David H. Souter, Ruth Bader Ginsburg, Stephen Breyer, and, crucially, Kennedy.

The justices remanded the case back to the district court in Maine, where the merits of the plaintiffs' claim will be addressed.

Stevens conceded that there are express pre-emption provisions in the labeling act but concluded that they do not apply to deceptive practices claims.

The law simply regulates what health warning language should be included on packaging and prevents states from adapting it, he wrote.

"Although both of the act's purposes are furthered by prohibiting states from supplementing the federal prescribed warning, neither would be served by limiting the states' authority to prohibit deceptive statements in cigarette advertising," Stevens added.

Justice Clarence Thomas wrote a dissenting opinion in which he was joined by Chief Justice John G. Roberts Jr., Antonin Scalia, and Samuel A. Alito Jr.

Thomas criticized the majority for relying on the plurality decision in Cipollone.

"The court's fidelity to Cipollone is unwise and unnecessary," he wrote.

Lower courts need a "clear test" in order to correctly interpret Congress' intent to expressly pre-empt state claims, Thomas added.

In his view, based on Scalia's dissent in Cipollone, a close reading of the labeling statute leads to only one conclusion: any lawsuit alleging injury relating to use of cigarettes is pre-empted.

Altria also had a secondary "implied pre-emption" argument, in which the company claimed that even if express pre-emption was not in the statute, there was enough evidence to suggest that Congress implied that state law was pre-empted.

But even Roberts and Scalia hinted strongly at the oral argument that such an argument was a waste of time.

Altria's lawyer, Gibson Dunn & Crutcher's Theodore B. Olson, barely addressed it and Thomas did not reach the issue in his dissent.

David Vladeck, a professor at Georgetown Law Center who filed a brief in support of the plaintiffs, said he was not surprised at the outcome.

Olson was relying on Kennedy reversing his vote against pre-emption in Cipollone, he said.

The decision shows that "the battle lines are pretty clearly drawn" when it comes to pre-emption, Vladeck added.

It's unclear whether the decision has any bearing on the other major pre-emption case on the docket, which focuses on whether federal law prevents plaintiffs from filing state lawsuits on drug liability claims. Wyeth v. Levine, 06-1249.

That case is distinct from Good because it focuses solely on implied pre-emption arguments and involves a different statute.

In a statement on Monday's decision, Philip Morris declared that it would continue to fight the dozens of state lawsuits it faces over its light cigarettes.

"We continue to view these cases as manageable, and the company will assert many of the strong defenses used successfully in the past to defend against this very type of case," said Murray Garnick, the firm's senior vice president and associate general counsel.

Posted 11:20 PM by Howard Bashman

DAILY JOURNAL NEWSWIRE ARTICLE
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© 2008 The Daily Journal Corporation.
All rights reserved.

Posted with permission. This file cannot be downloaded from this page. The Daily Journal's definition of reprint and posting permission does not include the downloading, copying by third parties or any other type of transmission of any posted articles.

December 16, 2008

High Court Lets 9th Circuit Sentencing Decision Stand

By Lawrence Hurley
Daily Journal Staff Writer
WASHINGTON - Hundreds of convicted prisoners in California could have the chance to seek new sentences after the U.S. Supreme Court declined Monday to revisit the state's sentencing laws.

A leading sentencing expert suggested, however, that the impact may not be as great as prosecutors contend.

At issue was whether the Supreme Court's decision in 2007 - holding that California's upper-term sentencing procedure was unconstitutional - could be applied retroactively. Cunningham v. California, 127 S. Ct. 856.

Earlier this year, the 9th U.S. Circuit Court of Appeals held that it could because Cunningham was simply a direct application of the Supreme Court's 2004 holding that also limited judges' ability to hand down enhanced sentenced on facts not found by a jury. Blakely v. Washington, 542 U.S. 296.

The defendant in the 9th Circuit case, Frank Butler, was eligible for re-sentencing because, although he was sentenced before Cunningham was decided, it was after Blakely came down, the appellate court ruled. Curry v. Butler, 08-517.

The Supreme Court's refusal to intervene Monday means that the 9th Circuit's decision is left to stand.

In the state's brief, Deputy Attorney General Lawrence M. Daniels said the 9th Circuit's decision "is forcing re-litigation in federal court of hundreds of additional upper-term sentences, which will result in many additional re-sentencings in state court."

Davina Chen, the deputy public defender who represents Butler, said Monday she wasn't sure exactly how many cases will be affected.

She added that even if defendants do win a re-sentencing hearing, that doesn't necessarily mean their sentences will be reduced.

That's because in the aftermath of the recent Supreme Court decisions, the California Legislature passed new sentencing laws that give judges the discretion to impose the same high sentences as long as they do not contravene Blakely.

"It's a victory because they can get another sentence," Chen said. "But when they go back to California [courts] they may or may not get a lower sentences."

Her hope is that state court judges "follow the spirit and not just the letter" of the recent re-appraisals of sentencing law when they impose new sentences, she added.

Sentencing expert Douglas Berman, a professor at the Moritz College of Law at Ohio State University, was skeptical of the state's assertion as to the amount of extra work the 9th Circuit's decision creates.

It's questionable whether the application of Cunningham will have "profound ripple effects the system can't deal with," he said.

Posted 10:45 PM by Howard Bashman

DAILY JOURNAL NEWSWIRE ARTICLE
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© 2008 The Daily Journal Corporation.
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Posted with permission. This file cannot be downloaded from this page. The Daily Journal's definition of reprint and posting permission does not include the downloading, copying by third parties or any other type of transmission of any posted articles.

December 1, 2008

Power Station Case Generating Heat In Monterey Bay

By Lawrence Hurley
Daily Journal Staff Writer
WASHINGTON - The delicate issue of how the government should weigh environmental interests against those of big business comes before the U.S. Supreme Court this week.

The justices will consider what kind of economic analysis the federal government can undertake when deciding how much energy companies have to spend to update water intake mechanisms for power plants so they meet environmental standards, Entergy v. Riverkeeper, 07-588, PSEG Fossil v. Riverkeeper, 07-589, and Utility Water Act Group v. Riverkeeper, 07-597.

Although the consolidated case, scheduled for argument Tuesday, comes out of the New York-based 2nd U.S. Circuit Court of Appeals, it could have a dramatic impact on the opposite side of the country.

Or - to be more specific - in Monterey Bay.

That's where the Moss Landing power station has been operating for the last half-century.

The owners of the plant are currently locked in a similar dispute that is heading to the state Supreme Court, Voices of the Wetlands v. California State Water Resources Control Board, 2007 DJDAR 18432.

The relevance of Riverkeeper to the Moss Landing case is shown by the fact that the California court, which has already accepted the case, has deferred action until the U.S. Supreme Court issues its decision.

At issue is whether the Clean Water Act allows the U.S. Environmental Protection Agency to use a cost-benefit analysis when ordering energy companies to retrofit water intake mechanisms.

"It's important as a matter of deciding the role dollars and cost consideration should play in charting environmental policy," said Richard Frank, executive director of the California Center for Environmental Law and Policy at UC Berkeley School of Law.

The debate over the use of cost-benefit analysis in environmental regulatory decisions has raged for years. In essence, it attempts to calculate the value of environmental interests into a dollar figure that can then be balanced against the cost to the industry of a particular regulation.

The EPA has successfully used cost-benefit analysis to enforce other sections of the Clean Water Act, much to the frustration of environmentalists, who believe it does not give sufficient weight to environmental interests.

The dispute in Riverkeeper arose when various environmental groups, including New York-based Riverkeeper Inc., challenged the EPA's implementation in 2004 of a new rule that requires existing power stations to retrofit their water intake mechanisms.

In its January 2007 decision, the 2nd Circuit, in a blow to the energy industry, held that a cost-benefit analysis was not the appropriate way of calculating environmental interests.

Riverkeeper focuses on Section 316(b) of the Clean Water Act, which regulates the mechanisms power plants use to siphon off water for use in cooling systems.

Since the EPA promulgated rules to enforce the regulation in 1976, it has allowed officials to make cost-benefit analyses on a case-by-case basis.

That means that energy companies can argue in certain circumstances that the cost of adopting the latest technology is prohibitive.

The 2nd Circuit concluded that the Clean Water Act does not allow the EPA to make cost-benefit analyses when it comes to the intake structures.

Rather, the agency is required to make a "cost effectiveness" analysis.

The court defined this as a cost that can be "reasonably borne" by the industry but is limited to "less expensive technology that achieves essentially the same results" as the most expensive technology available.

Under this definition, the EPA would not have the discretion to rule that the costs are too high to make any changes.

The Bush administration has sided with the energy companies, arguing that there is nothing in the Clean Water Act to suggest that the EPA cannot use a cost-benefit analysis.

"The court of appeals erred by attempting to micro-manage the agency's exercise of its broad statutory discretion," Solicitor General Gregory Garre wrote in his brief.

The government maintains that it's up to the EPA to decide what analysis it uses.

Entergy's lead counsel, Elise N. Zoli, wrote in her brief that the 2004 rule and 2nd Circuit decision combined create "a regime under which the nation's existing electricity supply may be forced to shut down during lengthy retrofits."

Opposing the energy companies and the federal government are Riverkeeper, other environmental groups and several states that were involved in the litigation before the 2nd Circuit, including New York, Massachusetts, and Rhode Island.

The Moss Landing case, in state court because the State Water Resources Control Board has the delegated authority from the EPA to issue Clean Water Act permits for power plants, touches upon largely the same arguments.

As Berkeley's Frank put it, the board is "directly confronting the same cost-benefit issue involved in the Entergy case."

The California dispute centers on the attempt by the owners of Moss Landing to seek a new Clean Water Act permit.

From 1998 to 2006 the plant was owned by Charlotte, N.C.-based Duke Energy Corp.; it is now owned by Houston, Texas-based Dynegy, Inc.

The water resources board used a cost-benefit analysis, concluding that a new intake system would add $12 million to $13 million to retrofit the water intake system.

But, the board calculated that the environmental benefit of the updated system would be worth between $4.68 million and $9.75 million and concluded that the cost was "wholly disproportionate" to the environmental benefit and allowed the plant owners to use older equipment instead.

In December 2007, the 6th District Court of Appeal upheld the water resources board's decision. The importance of Riverkeeper to the California case is underlined in various amicus briefs filed in the U.S. Supreme Court case.

Voices of the Wetlands, the environmental group that is the plaintiff in the California case, filed one, authored by Stanford Law School Professor Deborah A. Sivas.

She said in an interview that the importance of the case in California goes way beyond Moss Landing. Owners of the other 18 active coastal plants in the state will also be watching closely. Many of those plants are aging and need to be refurbished, if not rebuilt altogether, Sivas added.

There have been signs that some of the plant owners have been willing to incorporate the latest, more expensive technology for their intake systems, but if the Supreme Court endorses cost-benefit analysis, "it will open the door to all the California coastal plants to do that," she said.

Also weighing in on Riverkeeper is the California Council for Environmental and Economic Balance, an industry group that includes owners of California plants among its members.

San Francisco-based Pillsbury Winthrop Shaw Pittman partner Kevin M. Fong, the group's attorney, argues that in California in particular, with its history of energy shortages, "a site-by-site cost-benefit analysis is essential" because the state's coastal plants generate nearly half of the energy produced in the state.

Adopting a different type of analysis could be disastrous, Fong maintains.

"Enormous costs would be imposed on individual plants, leading to a likely loss of generating capacity and widespread economic disruption resulting from an energy deficit," he wrote in his brief.

Pro-industry lawyers point hopefully to the court's decision last month to uphold the U.S. Navy's right to conduct operations off the coast of California despite the threat to marine mammals. Winter v. Natural Resources Defense Council, 2008 DJDAR 16797.

Steven G. Giesler, an attorney with the Sacramento-based Pacific Legal Foundation, a conservative public interest law firm that filed an amicus brief in support of the energy companies, believes the ruling showed the court's willingness to consider environmental interests in the same way as it would any other party.

To that end, it could be "a hopeful harbinger of what the court will decide" in Riverkeeper, Giesler said.

Sivas, meanwhile, doesn't appear too hopeful her side will prevail.

"It will probably be a close call," she said.