Phillip Morris Uses Prop 64 To Sink Suit Accusing Company of Lying to Consumers, Marketing Cigarettes to Kids

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Tobacco Giant Gave $200K to Prop 64

Santa Monica — Phillip Morris used Proposition 64 to have a class action lawsuit charging the tobacco giant with marketing tobacco to minors and deceiving consumers about the health effects of “light” cigarettes decertified this week. Phillip Morris contributed $200,000 to pass Proposition 64, which big industry proponents claimed would not apply retroactively or to pending suits before the November election.

Proposition 64 proponents also told the public that the initiative was aimed at stopping baseless suits against small businesses, not legitimate consumer protection cases against big business. It is, however, the initiative’s large corporate donors that are aggressively seeking to dismiss unfair business competition lawsuits, like the Phillip Morris case, filed against them prior to the election, according to consumer advocates.

Phillip Morris gave $200,000 to Proposition 64 to avoid accountability for marketing tobacco to kids and lying about the health dangers of cigarettes,” said Carmen Balber, consumer advocate with the Foundation for Taxpayer and Consumer Rights (FTCR). “These attacks by Phillip Morris and more than 100 other big corporations on pending unfair business competition suits are the tip of the iceberg revealing that Prop. 64 is the greatest threat to consumer, public health and environmental protections in decades.”

A San Diego County court dissolved the class in the Phillip Morris case, putting Californians who joined forces to take on the tobacco company at a severe disadvantage if the decision stands. California law holds that initiatives cannot be applied retroactively unless the measure’s language explicitly states it is retroactive. Proposition 64 does not, but defense attorneys have seized upon a procedural argument that process changes can be applied retroactively, and some judges have agreed. California Courts of Appeal have issued conflicting decisions on Prop 64‘s application to pending cases and the issue will ultimately be decided by the California Supreme Court.

Prop 64 proponents explicitly told voters that the initiative would not stop public health and consumer protection cases and would not be retroactive, but now the very same companies who funded the campaign are attacking already filed lawsuits to protect the public health and the consumer,” said FTCR President Jamie Court.

Over 100 Consumer and Public Health Cases Have Been Challenged.

Suits against at least 15 corporations that gave $2.2 million to the Prop 64 campaign have been challenged. Courts that turned away attempts to eliminate pending cases with Proposition 64 (and the amounts defendants gave to Prop 64) include:

– Californians for Disability Rights v Mervyns, 1st Dist. Court of Appeal — Store aisles too narrow for disabled shoppers.
– Center for Biological Diversity v FPL — Windmills without necessary technology upgrades are killing the protected golden eagle and other birds.
– Krumme v Mercury ($50,000) — Mercury‘s insurance “brokers” claimed to work independently for their customers but actually worked for the insurance company.
– Twomey v Hansen — Unpaid overtime and wrongful termination.

Cases in which Proposition 64 was applied retroactively include:

– Benson v Kwikset, 4th Dist. Court of Appeal — Company claimed locks made in Mexico were all-American made.
– Foundation Aiding the Elderly v Covenant Care — Nursing homes fail to meet minimum nurse staffing requirements.
– Branick v Downey Savings & Loan, 2nd Dist. Court of Appeal — Consumers overcharged real estate fees.
– Lytwyn v Frys, 2nd Dist. Court of Appeal — Customer deceived and poorly served after buying computer product.
– Goodwin v Anheuser-Busch and Miller Brewing Co. ($125,000) — Targeting new alcoholic products at, and marketing to, minors.
– United Policyholders v Willis — Consumers charged hidden insurance fees.

Cases facing pending challenges under Proposition 64 include:

– Privacy Rights Clearinghouse v Albertsons, et al ($352,000*) — Supermarket pharmacy illegally shared patients’ private medical information with drug companies.
– Diaz v Fresno Dodge ($9,800) — Car dealer hid bank and financing fees from buyers.
– California Consumer Health Care Council v Aetna ($25,000) — Health insurer falsely told medical negligence victims they had waived their right to trial by jury.
– Utility Consumers’ Action Network v SBC; UCAN v Cingular Wireless; Woods v Cingular Wireless ($35,000) — Deceptive advertising of international calling rates; overcharging wireless customers international rates for domestic calls; unilaterally changing wireless contract terms.
– Jones v Citigroup ($100,000) — Bank failed to disclose charges to credit card customers.
– Wilson v Brawn — Company added fraudulent “insurance” charge to all mail order purchases.
– Turner v UnumProvident Corp — Unfair disability insurance claims process and fraudulent marketing.
– Poulson v Daily News — Newspaper threatens “collection measures” to obtain payment for continued service that was not ordered.
– Pacific Shore Funding v Kairouz; Pacific Shore Funding v Miller — Failure to make required loan disclosures.
– Wilens v JP Morgan — Bank failed to disclose charges to credit card customers.
– Litalien v General Electric Capital Corp — Unlawful overcharges by lender on commercial leases.

* Including California Grocers Association, and pharmaceutical company plaintiffs that participated in the marketing scheme: AstraZeneca, Pfizer, Aventis, Wyeth and GlaxoSmithKline.


Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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