IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

MARY A. CARROLL and BETTY C.
LYNN, on behalf of themselves and all
Others similarly situated,

Plaintiffs,
v. C.A. No. 03C-08-l67 AML
PHILIP MORRIS USA, INC., a Foreign
Corporation, f/l</a PHILIP MORRIS
INCORPORATED,

Defendant.

\_/\/\./\_/\./\/\./\/\/\/\/\./

Submitted: February 3, 2017
Decided: May 30, 2017

OPINION

Philip M. Finestrauss, Esquire, PHILIP M. FINESTRAUSS, P.A., Wilmington,
Delaware; Stephen R. Fine, Esquire, LAW OFFICES OF STEPHEN R. FINE,
Manchester, New Hampshire; Finis E. Williarns, III, Esquire, FINIS E.
WILLIAMS, III, ESQUIRE, Concord, New Hampshire; Attorneysfor Plaintif]%.

Donald E. Reid, Esquire, MORRIS, NICHOLS, ARSHT & TUNNEL,

Wilmington, Delaware; John C. Massaro, Esquire and David E. Kouba, Esquire,
ARNOLD & PORTER LLP, Washington, DC.; Attorneysfor Defendant.

LeGROW, J.

A long-time smoker of “light” cigarettes seeks to hold the tobacco company
that sold the cigarettes liable for economic harm allegedly suffered by the plaintiff
and members of a purported class that, if certified, Would comprise smokers Who
purchased “light” cigarettes from the defendant Confronted With a series of
decisions in other jurisdictions denying class certification for similar claims, the
plaintiff attempts to distinguish this case on the basis of her allegation that, not
only Were the cigarettes in question not “safer” than regular cigarettes, they
potentially Were more harmful due to the mutagenicity of the tar consumers
ingested When smoking them.

The following is only the barest of summaries: the plaintiff contends the
defendant, Philip Morris USA, Inc. (“Philip Morris”), fraudulently concealed from
consumers and public health agencies that the company’s popular cigarettes,
Marlboro Lights, “potentially” Were more dangerous than full-flavored cigarettes
The plaintiff urges the Court to certify a class consisting of Delaware residents
Who smoked Marlboro Lights. Philip Morris contends class certification is not
appropriate in this case because, among other reasons, the class is not ascertainable
and individual issues predominate over those susceptible of common proof. Philip
Morris also seeks summary judgment in its favor on the basis that federal law

expressly preempts the plaintiffs claims. Finally, Philip Morris seeks to strike the

expert report and conclusions proffered by the plaintiffs expert, Dr. Marvin
Goldberg.

There are two key questions in this case. First, does the plaintiffs allegation
that Marlboro Lights potentially were more dangerous than full-flavored cigarettes
sufficiently distinguish this case from the numerous cases concluding “lights”
claims are not amenable to class certification? Second, does a federal law
regulating labeling and advertising for cigarettes preempt the plaintiffs state law
claims for consumer fraud? For the reasons that follow, l deny the motion for
summary judgment as to preemption because the plaintiffs claims arise from a
state law imposing a general duty not to deceive, not a law creating requirements
or prohibitions regarding smoking and health. l also deny the motion for class
certification because individual issues involving causation and fact of injury
predominate over the common issues. Finally, l conclude the motion to strike is
moot in light of my ruling on the motion for class certification My reasoning

folloWs.

FACTUAL AND PROCEDURAL BACKGROUND

The parties vigorously dispute certain of the plaintiffs factual allegations,
but none of those factual disputes are material to resolving the three motions
pending before the Court.

A. The Development of “Light” or “LoW-Yield” Cigarettes

The plaintiff, Mary Carroll,l filed this action alleging Philip Morris violated
the Delaware Consumer Fraud Act (“DCFA”)2 and unjustly enriched itself by
marketing and selling its Marlboro Light cigarettes In order to understand Ms.
Carroll’s claims, and the basis on which she seeks certification of the class, it is
necessary to have at least a cursory understanding of the development of the
market for “light” or “low-yield” cigarettes.

By the mid-to-late l950s, concerns were beginning to rise about the health
effects of smoking, particularly the ingestion of tar and nicotine. Those concerns
reached a crescendo in 1964, when the United States Surgeon General publicly
condemned cigarettes, announcing that the death rate among smokers was 70%
higher than that among non-smokers3 Even before the Surgeon General’s

warning, Philip Morris internally had begun researching and developing a cigarette

 

' On November 20, 2015, Plaintiff Betty C. Lynn voluntarily was dismissed from serving as
class representative due to medical reasons. D.I. l 13.

2 6 Del. C. § 2513.

3 Pl.’s Opening Br. Support Mot. Class Cert. Ex. 2.

3

intended to deliver less tar and nicotine while maintaining a flavor that appealed to
4
consumers
That research led Philip Morris ultimately to brand and market “Marlboro
Lights,” which were introduced to consumers in 1971. According to the
company’s promotional plan, Marlboro Lights were to be marketed to those
consumers who were “becoming increasingly aware of tar and nicotine contents in
cigarettes and . . . [were] searching for [a cigarette] with low tar and nicotine

”5 Although advertisers were not permitted to represent to

content and full flavor.
consumers that low-yield cigarettes were safer or reduced the health hazards of
smoking, the parties agree that, at the time Marlboro Lights were introduced,
doctors and public health advocates were advising people to quit smoking or, at a
minimum, switch to a low-yield cigarette.6

Plaintiff contends that Philip Morris designed Marlboro Lights to test as
delivering lower nicotine and tar on the “FTC Method,” which was the standard

testing machine the industry used to measure tar and nicotine output.7 Guidance

from the FTC, issued in 1966, permitted advertisers to make statements to

 

4 Id. at. EX. 3.

5 Id. at Ex. 4 at 853.

6See, e.g. Id. at EX. 5 at4,7,9,15,18,27.

7 The machine also at times was referred to as the “Cambridge Filter Method.”

4

consumers regarding the tar and nicotine yields of cigarettes, provided such
statements were based on results of the FTC Method.8

B. The Health Effects of “Light” or “LoW-Yield” Cigarettes

Philip Morris designed Marlboro Lights with an increased number of
ventilation holes in the filter, thereby reducing the amount of tar and nicotine that
registered on the machine during the FTC Method testing. Plaintiff alleges, with
record support, that the amount of tar and nicotine delivered to consumers by a
Marlboro Light cigarette often differs from the amount the FTC Method registered
because of the variability in individual smokers’ behavior. Put differently, Plaintiff
argues that, although Marlboro Lights delivered less tar and nicotine in machine
testing, the filter on a cigarette is not the exclusive factor in determining how much
of those ingredients a smoker actually ingests. There is Substantial evidence,
which Philip Morris does not dispute, that a consumer can modify, or
“compensate” for, a low-yield cigarette in various ways, including covering
ventilation holes, inhaling more deeply, or smoking more cigarettes9 This
compensation may deliver to the consumer a different level of tar and nicotine than
the FTC Method indicated.

Long-term studies of smokers using “light” or “low-yield” cigarettes,

including investigations into consumers’ compensatory smoking behavior, led the

 

8 Pl.’s Opening Br. Support Mot. Class Cert. Ex. 12 at l.
gsee id_ atExs. 10, ii.

United States Department of Health and Human Services to issue its “Smoking and
Tobacco Control Monograph 13” regarding the “Risks Associated with Smoking

”'0 The report

Cigarettes with Low Machine-Measured Yields of Tar and Nicotine.
concluded, among other things, that: “Measurements of tar and nicotine yields
using the FTC [M]ethod do not offer smokers meaningful information on the

”' l Consistent with

amount of tar and nicotine they will receive from a cigarette.
those findings, in 2008 the FTC rescinded its 1966 guidance permitting companies
to market cigarettes as “light” or “low-yield” based on the FTC Method. The
FTC’s guidance precluded companies from including in advertisements any
implication that tar or nicotine yields for a cigarette were based on a testing
method the FTC endorsed12

Plaintiff also contends that, contrary to the suggestion that Marlboro Lights
are less dangerous than full-flavored cigarettes, Marlboro Lights’ ventilation

system actually increased the potential toxicity of the cigarette, making Marlboro

Li hts otentiall more muta enic than re ular ci arettes.13 Plaintiff asserts that
g P y g g g

 

'Old. at EX. ii.

“ 1a atEX. ii ar 10.

12 1a ar Ex. 12 at 16-17.

'3 Ia'. at 12-19 & Exs. 18-20, 23. Much of this argument relies upon testimony offered by a
former Phillip Morris employee, Dr. William Farone, who was the Director of Applied Research
for Phillip Morris USA, Inc. Dr. Farone testified in an Illinois state court action against Phillip
Morris to the effect that the company knew that “when you dilute a cigarette . . . you would
increase its relative toxicity.” This Court previously ruled that, although Dr. Farone is unwilling
to testify as an expert in this case, his previous testimony is admissible under D.R.E. 804. See

6

Philip Morris knew Marlboro Lights were “potentially more dangerous” than full-
flavored cigarettes, but concealed this knowledge for decades from both consumers
and public health agencies Philip Morris vigorously contests this contention, but
that factual dispute presently is not before the Court. For purposes of the pending
motions, I will assume that Marlboro Lights potentially were more dangerous than
full-flavored cigarettes due to the mutagenicity of the tar. Plaintiff also concedes,
however, that Marlboro Lights were not more dangerous to all smokers because
that question ultimately depends on the amount and type of tar ingested.14 Thus,
Plaintiff uses the phrase “potentially more dangerous.”

This is the heart of Plaintiff s case, at least as she frames it for purposes of
the pending motions: the purported class suffered an economic injury by
purchasing Marlboro Lights, a brand of cigarette they believed was less dangerous
but that actually potentially was more dangerous than a full-flavored cigarette
brand, and consumers made that purchase because Philip Morris fraudulently
concealed the facts regarding the potential increased risk Marlboro Lights posed.

C. The Development of Federal Labeling Requirements

According to Philip Morris, Plaintiff s fraudulent concealment theory must

be considered within the framework of federal law regarding cigarette labeling and

 

Holmes v. Philip Morris USA, Inc., 03C-08-167 JTV (Del. Super. Jan. 2, 2014) (ORDER); D.I.
55.
"‘ shields Dep. 123, 243.

advertising The warnings cigarette companies are required to give about their
product, and the advertisements they are permitted to publish, became a matter of
federal regulation in the mid-l960’s, shortly before Marlboro Lights were
introduced to the market. The Federal Cigarette Labeling and Advertising Act (the
“Labeling Act”)15 established “a comprehensive Federal program to deal with
cigarette labeling and advertising with respect to any relationship between smoking
and health.”16 The Labeling Act was intended to both adequately inform the public
about “adverse health effects of cigarette[s]” and protect commerce and the
economy from “diverse, nonuniform, and confusing cigarette labeling and
advertising regulations.”17

The Labeling Act expressly included a preemption provision. Section 5(b)
of the Labeling Act pertinently provides “[n]o requirement or prohibition based on
smoking and health shall be imposed under State law with respect to the
advertising or promotion of any cigarettes the packages of which are labeled in

conformity with the provisions of this chapter.”]8

 

'515 U.s.C. §§ 1331-1341 (1965) (amended 1984).

'6 la § 1331.

'71¢1.§1331(1)~(2).

'8 Id. § 1334( b). This section of the Labeling Act frequently is referred to by the United States
Supreme Court and other federal courts as “Section 5(b).” I follow that custom for clarity and
consistency.

D. Dr. Goldberg’s Report and Smokers’ Brand Decisions

In addition to the factual dispute regarding Marlboro Lights’ potential
increased risk and Philip Morris’s alleged concealment of that risk, causation also
will be an important factual issue at trial, specifically whether the members of the
purported class would not have purchased Marlboro Lights but for that fraudulent
concealment Plaintiff asserts that causation may be inferred in this case based on
the logical inference that, all things being equal, no person knowingly would
purchase a cigarette that was more dangerous From that premise, Plaintiff argues
that, had Philip Morris not concealed from consumers and public health agencies
its purported knowledge that Marlboro Lights potentially were more dangerous
than full-flavored cigarettes, Marlboro Lights never would have been marketed for
sale. In support of her causation argument, Plaintiff offers the expert report of
Marvin E. Goldberg, Ph.D, whom Philip Morris has moved to strike as an expert in
this case.

Dr. Goldberg’s report examines the development of the market for low-
yield, high-filtration cigarettes and offers his expert opinion that, “had Philip
Morris not concealed that Marlboro Lights are potentially more dangerous than
regular cigarettes, it most probably would have never attempted to market

Marlboro Lights at all, and certainly would not have marketed Marlboro Lights as

a safer cigarette, but it did.”19 Dr. Goldberg explores data and research regarding
the reasons for smokers’ brand and cigarette-type decisions and concludes that
smokers chose to smoke low-yield cigarettes for health reasons, even if they later
justified those decisions for other reasons, such as taste.20

Philip Morris, on the other hand, offers evidence it contends precludes a
class-wide inference, specifically evidence that individual consumers’ reasons for
choosing a particular brand and type of cigarette vary widely. For example, Philip
Morris cites testimony given by individual smokers who listed their reasons for
choosing Marlboro Lights, many of which had nothing to do with the cigarette’s

low-yield or a belief that it was “safer.”Z'

Philip Morris also relies on testimony of
several smokers who began smoking Marlboro Lights despite believing they
potentially were more dangerous than full-flavored cigarettes, along with others
who continued smoking Marlboro Lights after filing suit against Philip Morris on
the basis that Marlboro Lights potentially were more dangerous than Marlboro
Reds or similar types of cigarettes22 Furthermore, Philip Morris relies on a

number of surveys conducted in the last 40 years, all of which indicate that less

than half of smokers chose to smoke low-yield cigarettes because they believed

 

19 Goldberg Rep. 24.

2014 at 10_24.

21 See Def.’s Opp’n Mot. Class Cert. 17 (citing Ex. 48 at 27, 30, 61; Ex. 49 at 54-56; Ex. 50).
22 see Def.’s opp’n Mot. Class Cert. 16-17 n.i3 (citing E.~<s. 48, 49, 51 ).

10

them to be less harmful.23 Finally, Philip Morris points out that the market for
Marlboro Reds did not decline substantially after low-yield cigarettes were
introduced, notwithstanding Plaintiff s argument that for many decades smokers
were led to believe that full-flavored cigarettes were more dangerous than low-
yield cigarettes

E. The Proposed Class Definition(s)

Plaintiff s proposed class definition evolved in response to arguments Philip
Morris raised over the course of extensive24 briefing. Plaintiff now offers two
alternative definitions of the class In her opening brief, Plaintiff offered the
following proposed definition of the class (the “Consumer Class Definition”):

All residents of Delaware who purchased Marlboro Lights cigarettes

in the State of Delaware for personal consumption during the Class

Period . . . . The class period commences on the first date that the

defendants [sic] placed their Marlboro Lights cigarettes into the

stream of commerce in Delaware, and runs until the date on which the

Court certifies this suit as a class action. Not included within the

Class definition are individuals who are directors and officers of the

Defendants [sic] or their affiliates Also[] excluded is any trial judge
who may preside over this action.25

 

23 See Def.’s Opp’n Mot. Class Cert. 18 (citing Ex. 61 (A Stua'y omeokers’ Habil‘s & Attitua'es
with Special Emphasz's on Low Tar Cigarettes, The Roper Organization Inc., May 1976); Ex. 62
(Teenage Attl`ludes & Practices Survey, Publl`c Use Data Tape, 1993); Ex. 63 (Declaration of
Expert Report ol` David W. Stewart, Ph.D. 111 36-39)).

24 The parties submitted five briefs on the issue of class certification, along with several letters
providing “`Supplemental authority” on that issue.

5 Pl.’s Opening Br. Support Mot. Class Cert. 2-3; Pl.’s Reply Br. Support Mot. Class Cert. 34-
35. Plaintiff first proposed a class definition expressly excluding individuals with personal
injury claims from smoking. In response to claim preclusion issues Phillip Morris raised,
Plaintiff removed that personal injury exclusion from the proposed Consumer Class Definition.

ll

In response to arguments Philip Morris raised that residents purporting to
qualify under the Consumer Class Definition would need to offer individual proof
of their membership in the class, Plaintiff offered a proposed alternative definition,
which was based on Philip Morris’s Marlboro Miles Program (the “Miles
Program”), an incentive-based promotional campaign that allowed consumers to
collect “Miles” that were printed on Marlboro cigarette packaging26 Those Miles
could be exchanged for merchandise27 The company operated that program
between 1992 and 2006.28 A consumer redeeming Miles was required to fill out a
form identifying the consumer’s “regular” brand of cigarette. The Miles
themselves also were color-coded based on the type of Marlboro package from
which they originated Although Philip Morris shredded the paper “Miles” once
they were redeemed for merchandise, the company maintained its “Adult Tobacco
Consumer Database” of individuals who redeemed Miles when the program was
active. That database includes the tobacco consumer’s mailing address and the
brand (if any) the consumer identified as their current or preferred brand.29

Plaintiff therefore contends that, even if the Consumer Class Definition fails

because it would require individual proofs by each person claiming membership in

 

26 Pl.’s Reply Br. Support Mot. Class Cert. Ex. 59.

271d. at Ex. 58.

28 Pl.’s Am. SLu‘-Sur Reply Br. Support Alt. Class Definition 5 n.4.
29 Pl.’s Sur-Sur chly Br. Support Alt. Class Del'inition F,x. l.

12

the class, the following alternative class definition (the “Marlboro Miles Class
Definition”) resolves that issue:30

All Delaware residents who purchased for personal consumption
Marlboro Lights cigarettes in the State of Delaware who are identified
in defendant’s Adult Tobacco Consumer Database as having a
Delaware address when ordering Marlboro Miles (“Miles”)
merchandise and who reported smoking Marlboro Lights during the
Miles program and prior to or at the time of ordering Miles
merchandise.

The class period commences on the first date that defendant placed its
Marlboro Lights cigarettes into the stream of commerce in Delaware
which had imprinted on the packages of the Marlboro Lights
cigarettes Marlboro Miles Program proof of purchase miles, and runs
until the latest date on which the defendant or its designated agent
received order forms with Marlboro Miles proof of purchase miles to
obtain merchandise to be shipped to a recipient with a Delaware
address Not included within the Class definition are individuals who
are directors and officers of the defendant or their affiliates Also[]
excluded is any trial judge who may preside over this action.31

ANALYSIS

There are three motions presently pending before the Court: (1) Philip
Morris’s Motion for Summary Judgment Based on Federal Preemption, (2)
Plaintiffs Motion for Class Certification, and (3) Philip Morris’s Motion to Strike
Dr. Goldberg’s Expert Report. I address each motion below.

I. Philip Morris’s Motion for Summary Judgment

 

30 The Marlboro Miles Class Definition set forth here is a revised alternative class definition;
Plaintiff first proposed a class definition based on the Marlboro Miles Program in her Reply
Brief in Support of her Motion for Class Certification and then revised that definition in her Sur-
Sur Reply Brief based on additional discovery about the program received from Phillip Morris
See Pl.’s Reply Br. 48-49; Pl.’s Sur-Sur Reply Br. Support Alt. Class Definition 4-5.

31 Pl.’s Sur-Sur Repiy Br. Support Alt. Class Definitian 4-5.

13

Philip Morris argues it is entitled to summary judgment in this action
because Plaintiff s claims are preempted by the Labeling Act, specifically the
language in Section 5(b) that prohibits any State law that imposes a “requirement
or prohibition based on smoking and health . . . with respect to the advertising or

33

promotion of any cigarettes . . . . The parties’ contentions do not implicate any
disputed factual issues, but instead require the Court to determine the scope of
preemption under Section 5(b).

A. The Parties’ Contentions

Philip Morris initially raised federal preemption in this case in 2006, which
Plaintiff resisted on the basis that her claims were not grounded, as Philip Morris
contended, on concealment or a failure to wam, but rather on fraudulent
misrepresentations Philip Morris made regarding Marlboro Lights Philip Morris’s
motion was stayed pending resolution of the United States Supreme Court’s
decision in Altria Group, Inc. v. Gooa’, 32 which addressed the scope of preemption
under Section 5(b). After the Court’s decision in Good, Philip Morris did not
pursue its summary judgment motion on the basis of federal preemption, agreeing

that preemption was not available “to the extent that [P]laintiffs claims mirror

those in Gooa’.”33

 

22 555 U.s. 70 (2008).
33 Def.’s Opening Br. Support Mot. Summ. J. 4.

14

After Plaintiff filed her Motion for Class Ceitification, however, Philip
Morris renewed its federal preemption argument, asserting: Plaintiff s theory of the
case had “drastically change[d]”34 because she no longer was relying on Philip
Morris’s affirmative misrepresentations but instead was relying on a theory that
Philip Morris concealed, suppressed, or omitted the material fact “that the
increased filter ventilation in Marlboro Lights make them potentially more
dangerous than regular cigarettes.”35 According to Philip Morris, this distinction is
material because, under Gooa’, Section 5(b) preempts fraudulent concealment
claims, but not fraudulent misrepresentation claims Plaintiff resists this
characterization of Good and its related cases, urging that the relevant analysis is
whether the state law on which the claim is based “constitutes a ‘requirement or
prohibition based on smoking and health . . . imposed under State law with respect
to . . . advertising or promotion.”’36

B. Federal Preemption: an Overview

Under the Supremacy clause of the United States Constitution, state law is
preempted by federal law when (1) Congress expresses a clear intent to preempt

state law in enacting a federal statute, or (2) Congress intends, through

comprehensive legislation, to occupy an entire field of regulation and has left no

 

34
Id.

35 Pl.’s Opening Br. Support Mot. Class Cert. 22.

36 Pl.’s Resp. Br. Opp. Mot. Summ. J. 4-5 (quoting Cl`pollone v. Liggett Grp., Inc., 505 U.S. 504,

523-24 (1992)).

15

37 Here, the parties agree Congress

room for the states to supplement federal law.
expressly intended the Labeling Act to preempt state law. The question, quite
simply, is the scope of that preemption.

In resolving that question, the Court must be guided by the principle that
there is a presumption against preemption To avoid “unintended encroachment”
on a state’s authority, “a court interpreting a federal statute pertaining to a subject
traditionally governed by state law will be reluctant to find pre-emption. Thus, pre-
emption will not lie unless it is ‘the clear and manifest purpose of Congress.”’38
Because of this presumption against preemption, this Court must “fairly but . . .
narrowly” construe the language in Section 5(b).39 The defendant bears the burden
of demonstrating preemption,40 and congressional intent is the “ultimate
touchstone” of the analysis41

C. The United States Supreme Court’s Interpretation of Section 5(b)

In construing Section 5(b), I am bound by the United States Supreme

Court’s interpretation of the clause. That Court has interpreted Section 5(b) on two

 

37 O’Malley v. Boris, 742 A.2d 845, 848 (Del. 1999) (citing Capl'tal Cities Cable, Inc. v. Crl'sp,
467 U.S. 691, 699 (1984)).

38 CSX Transp., Inc. v. Easterwood, 507 U.S. 658, 663-64 (1993) (quoting Rice v. Sam'a Fe
Elevator Corp., 331 U.S. 218, 230 (1947)); see also Bates v. Dow Agrosciences LLC, 544 U.S.
431, 449 (2005).

39 t‘:pa:lo.»w. 505 us at 523_

40 Dahf v. R..f. Re}»nolcts Tr)hucco Cr_)., 742 N.W.2d 186 192 (Minn. Ct. App. Dec. 4, 2007).

4' code v. Nm '1 sand Wa.\-n».§- Mgmr. Ass ’n, 505 U.s. 33, 96 (1992).

16

42 and Altrl`a Group, Inc. v.

relevant occasions: Cipollone v. Liggett Group, lnc.
Gooa’.43 ln Cipollone, the named plaintiff alleged she developed lung cancer as a
result of smoking cigarettes44 She brought a series of claims against the
defendants, including that the defendants: (l) failed to provide adequate warnings
about the health consequences of smoking (the “failure to warn claims”), (2)
neutralized, through their advertisements the federally mandated warning labels on
cigarettes (the “neutralization claims”), (3) possessed, but “ignored and failed to
act upon” medical and scientific data indicating cigarettes were hazardous to
consumers’ health, and (4) conspired to defraud by depriving the public of that
medical and scientific data.45 The defendants contended the Labeling Act
preempted all those claims

A plurality of the Supreme Court concluded some, but not all, of the claims
were preempted. First, the plurality rejected the plaintiffs argument that Section

5(b) did not preempt common law claims and instead only applied to statutory

enactments The Court reasoned that the phrase “no requirement or prohibition” in

 

42 505 U.s. 504 (1992).

43 555 U.S. 70 (2008). The Supreme Court also addressed Section 5(b) in Lorl`llam' Tobacco Co.
v. Rei`lly, 533 U.S. 525 (2001). In Reilly, the Court concluded Section 5(b) preempted state
regulations that sought to restrict the location of cigarette advertisements The Court later
explained that Rel'lly did not alter its analysis in Cipollone and that Rez'lly is consistent with
Cipollone because the regulations in Reilly were targeted regulations intended to restrict cigarette
advertisements in certain locations, rather than general zoning regulations applicable to all
advertisements See Gooa', 555 U.S. at 83-84.

44<.‘:;;0;1.'»1¢` 505 U.s. 504.

45 md at 50<)..10.

17

Section 5(b) “sweeps broadly and suggests no distinction between positive

”46 The plurality concluded, however, that not all

enactments and common law.
common law actions were preempted and that no “familiar subdivision of
common-law claims” were subject to, or escaped from, preemption Rather, the
plurality identified the “central inquiry” as the nature of the predicate duty on

which each claim is based:

[W]e ask whether the legal duty that is the predicate of the common-
law damages action constitutes a “requirement or prohibition based on

smoking and health . . . imposed under State law with respect to . . .
advertising or promotion,” giving that clause a fair but narrow
1'eading.47

Applying this “predicate duty” analysis to the claims at issue in Cipollone,
the plurality concluded the plaintiffs failure to warn and neutralization claims
were preempted by Section 5(b) to the extent those claims were based on a
statutory or common law requirement or prohibition with respect to advertising or
promotion The plurality explained that, to the extent the plaintiffs claims would
require the defendants to provide additional or clearer warnings, those claims were
preempted, but the claims were not preempted to the extent they relied on the
defendants’ testing or research practices, or other actions unrelated to advertising

- 48
or promotion

 

46 la ar 521.
47 1a at 523-24.
48 Id. 31524-25, 527-28.

18

As to the plaintiffs fraud claims, which included claims that the defendants
both falsely represented and concealed material facts, the plurality reasoned those
claims largely were not preempted because the predicate duty was a general duty
not to deceive, not one based on “smoking and health.” The plurality similarly
concluded the plaintiffs conspiracy to defraud claims were not preempted, The
plurality explained:

Section 5(b) pre-empts only the imposition of state-law obligations
“with respect to the advertising or promotion” of cigarettes
Petitioner‘s claims that respondents concealed material facts are
therefore not pre-empted insofar as those claims rely on a state-law
duty to disclose such facts through channels of communication other
than advertising or promotion Thus, for example, if state law obliged
respondents to disclose material facts about smoking and health to an
administrative agency, § 5(b) would not pre-e.mpt a state-law claim
based on a failure to fulfill that obligation

Moi‘eover, petitioner's fraudulent-misrepresentation claims that do
arise with respect to advertising and promotions (most notably claims
based on allegedly false statements of material fact made in
advertiseinents`) are not pre-empted by § 5(b). Such claims are
predicated not on a duty “based on smoking and health” but rather on
a more general obligation the duty not to deceive. This understanding
of fraud by intentional misstatement is appropriate for several reasons
First, in the 1969 Act, Congress offered no sign that it wished to
insulate cigarette manufacturers from longstanding rules governing
fraud. To the contrary, both the 1965 and the 1969 Acts explicitly
reserved the FTC‘s authority to identify and punish deceptive
advertising practices_an authority that the FTC had long exercised
and continues to exercise. See § 5(c) of the 1965 Act; § 7(b) of the
1969 Act; see also nn. 7, 9, supra This indicates that Cc)ngi'es.s'
intended the phrase “relating to smoking and health (which was

19

essentially unchanged by the 1969 Act) to be construed narrowly, so
as not to proscribe the regulation ofa'eceptive advel”tising.4)

Philip Morris reads this Cipollone passage narrowly, arguing the Court
concluded that fraudulent concealment claims, such as those alleged by Plaintiff in
this case, are preempted unless they “rely on a state-law duty to disclose such facts
through channels of communication other than advertising or promotion.” ln
contrast, Philip Morris contends, affirmative inisrepresentations' contained in
advertisements or promotions are not preempted under Cipollone.

ln the wake of Cipollone, courts applying the plurality"s opinion and the
“‘predicate duty” standard diverged on whether Section 5(b) preempted fraudulent
concealment claims50 v1\/lany couits, at least implicitly, rejected the interpretation
of the case that Philip Morris urges here. For example_, in Shepard v. Philip
Morris, Inc., the United States District Court for the l\/liddle District of Florida,
applying Cipo/lone, concluded that the plaintiffs’ fraudulent concealment claims
were not preempted by Section 5(b) because those claims were based on a duty not
to deceive and were distinct from failure to warn claims, which were preempted,il

The Court of Appeals of Minnesota reached a similar conclusion in Dahl v. R.J.

 

49 la ar 528-29 (emphasis added).

50 sea e.g. shepard v, Ph:zzp Mams, lnc., 1998 WL 34064515, at *3 (M.D. Fia. Apr. 28, 1998)
(citing cases demonstrating split among federal courts regarding fraudulent concealment claims);
see also Dahl, 742 N.W.2d at 194 (noting a split among the federal circuit Courts of Appeal as to
whether fraud claims surrounding use of the terms “light” or “low tar” in cigarette advertising
are preempted by Seclion 5(b)).

5' shepara, 1998 WL 34062515.

20

Reyno/ds Tobacco Co., holding that the plaintiffs’ fraudulent concealment claims
were not preempted under Section 5(b) and Ci})ollone.52 Similarly, the Sixth
Circuit Court of Appeals in Glassner v. R.J. Reynolds Tohacco Co. held that the
plaintiffs claims for misrepresentation and concealment were preempted to the
extent they were based on a duty to issue clearer or additional warnings, but not to
the extent they were based on a general “duty not to deceive.”53

Other courts disagreed, however, and this split among the circuits54
prompted the Supreme Court in Good to again address the scope of Section 5(b).55
The plaintiffs in Good brought claims against tobacco companies that sold “light”
or “low-yield” cigarettes, alleging claims for fraudulent misrepresentation and
concealment on the basis, among other things, that: “‘Li-ght’ cigarettes are in fact
more harmful because . . . their unique design features produce[] smoke that is
more mutagenic per milligram of tar than the smoke of regular cigarettes.”56 A
majority of the Supreme Court adopted Cipollone as the correct interpretation of
Section 5(b) and held that Cipollone was “directly applicable” to the plaintiffs’

7

fraud claims5 The Good Court held that the plaintiffs’ fraud claims alleged a

 

52 742 N.W.2d ar i94.

55 223 F.3d 343_. 349 rem Cir. 2000).

54 .sa». e.g. alarm \,»_ Bmwi»,- & Wi'ii:amson Tobacco Corp., 479 F.3d 383, 392-93 (5th cir. 2007).
55 c;aad, 555 u.s. 70.

55 1a at 72-74.

57 la ar 74.

21

breach of the duty not to deceive and therefore were not preempted,58 The Court
explained that the Maine Unfair Trade Practices Act, under which the plaintiffs’
fraud claims arose, said nothing about smoking or health and therefore was “a
general rule that creates a duty not to deceive,” rather than a rule respecting
smoking or health.59

Following Good, a lack of uniformity remains among courts that have
considered whether fraudulent concealment claims are preempted by Section 5(b).
ln Pooshs v. Phillip Morris USA, Inc., the United States District Court for the
Northern District of California held that the plaintiffs claims for fraudulent
concealment were preempted to the extent they were based on statements in
advertisements or promotions because such claims were “indistinguishable” from a
failure to warn claim.60 The Supreme Court of Appeals of West Virginia reached a
similar conclusion in In re Tobacco Litigation, holding that the plaintiffs’
fraudulent concealment claims were preempted under Section 5(b) because those
claims alleged the defendants should have disclosed concealed information through
advertisements and promotions61 Both the Pooshs and In re Tobacco Litigation

courts adopted the narrow reading of Cipollone advanced by Philip Morris in this

 

55 la ar 82

5‘2 1a at 84.

50 2014 WL 6789886, ar *15-16 (N.D. Cal. Dec. 2, 2014).
5' 2014 WL 5545853, ar *7 (W. va 2014).

22

case, namely that fraudulent concealment claims only escape preemption if they
“allege concealment in some channel other than advertising or promotion.”62

Other courts, however, have held that fraudulent concealment claims are not
preempted ln Grill v. Philip Morris USA, lnc., the United States District Court for
the Southern District of New York held that the plaintiffs fraudulent concealment
claims were not preempted, among other reasons, because they were “not
predicated on a duty based on smoking and health, but rather on the more general

duty not to deceive.”63

ln the similarly named, but unrelated case Grills v. Philip
Morris USA, lnc., the United States District Court for the Middle District of
Florida held that the plaintiffs claims that the defendants “deliberately concealed
material facts from the public” were similar to those in Cipollone and Good and
were not preempted even to the extent they were based on allegedly false
statements in advertisements64 ln both cases, the district courts rejected a narrow
reading of Cipollone, focusing on the predicate duty analysis, rather than on
whether the misrepresentation or concealment stemmed from an advertisement or
promotion65

These cases form the landscape from which this Court must determine

whether Section 5(b) preempts Plaintiff s claims that Philip Morris violated the

 

52 m re Tobacco Liiig., 2014 WL 5545853, ar *7 (W. va. 2014) (citing Cipolione, 505 U.s. at
528):_ see al.\'o l’or)slrs, WL 6789886_. at *15-16 (N.D. Cal. Dec. 2, 2014).

55 053 r. supp. 2d 431, 491 (s.r). N.Y. 2009).

““ 645 1'»'. supp 2d 1101 1113(1\4.1). F1a2009).

55 see ia m 1 1 13-19; aaa 053 1=‘. supp 2d 31491-92.

23

DCFA and unjustly was enriched by fraudulently concealing the truth about the
health risks associated with Marlboro Lights

D. Plaintiff’s Claims are Not Preempted.

As the United States Supreme Court itself has acknowledged, the standard
announced in Cipollone and adopted by the majority in Good lacks a degree of

”66 ln my view, however, the predicate duty standard, as

“theoretical elegance.
applied by the Court in Cipollone and Good, lends itself only to one conclusion:
Plaintiff s claims are not preempted,

lt reasonably cannot be argued that the DCFA is a “requirement or
prohibition” based on “smoking and health.” To the contrary, it is a codification of
a general duty not to deceive consumers and applies to all manufacturers and
sellers of any product. Philip Morris argues, however, that this Court should draw
a distinction similar to that drawn in Pooshs and In re Tobacco Litigatz`on, namely
that although fraudulent misrepresentations may not be preempted, claims for
fraudulent concealment cannot be distinguished from failure to warn claims and
therefore are preempted

That argument, however, is inconsistent with Cipollone and Good. With all

respect for the courts in Pooshs and In re Tobacco Litigation, l believe their

reading of Cipollone is too narrow and cannot be reconciled with the “predicate

 

55 Good, 555 U.s. at 84_

24

duty” standard developed by the Cz`pollone plurality and adopted in Good. To
focus narrowly on whether the concealment or misrepresentation occurred in an
advertisement or promotion is to ignore the limitation in Section 5(b) regarding
whether the requirement or prohibition relates to smoking or health. Moreover, the
fact that fraudulent concealment claims often could be pleaded as failure to warn
claims does not, as the Pooshs and ln re Tobacco Litigatl`on courts seem to
conclude, support a conclusion that the concealment claims are preempted The
Supreme Court in Good expressly acknowledged this possibility, but concluded it
was immaterial to the preemption analysis67

The conclusion Philip Morris urges also draws an artificial distinction
between fraudulent concealment and fraudulent misrepresentation claims ln the
context of cases such as this, identifying a clear line between a claim of fraudulent
misrepresentation and one of concealment nearly is impossible. Perhaps for that
reason, the Cipollone plurality addressed those claims as one, concluding they
were not preempted The DCFA draws no distinction between affirmative
misrepresentations and fraudulent concealment, but instead designates both as

violations of state law. The “slight” distinction between concealment and

 

67 Id. at 82 n.9 (“[R]espondents' allegations regarding petitioncrs' usc of the statements `light`
and ‘lowered tar and nicotine" could also support a warning neutralization claim. But
respondents did not bring such a claim, and the fact that they could have does not. as petitioners
suggest elevate form over substance 'l`here is nothing new in the recognition that the same
conduct might violate multiple proscriptions.").

25

misrepresentation previously has been acknowledged by this Court.68 Drawing a
distinction between misrepresentation and concealment for purposes of delineating
the scope of preemption under Section 5(b) is both inconsistent with Supreme
Court precedent and unworkable in practice.

Applying the predicate duty analysis to this case, both the concealment
claims and the misrepresentation claims at issue arise from a duty not to deceive.
Those claims therefore are not preempted For all the foregoing reasons, Philip
Morris’s Motion for Summary Judgment is DENIED.

II. Plaintiff’s Motion for Class Certif`ication

Having concluded Plaintiffs claims are not preempted, this Court must
determine whether this case may proceed as a class action Plaintiff has moved to
certify the class under Superior Court Civil Rule 23. The parties do not dispute
the applicable rule and its interpretation as a general matter, though they
vigorously dispute its application in this case. Rule 23 provides, in pertinent part:

Rule 23. Class actions.

(a) Requisites to class action. One or more members of a
class may sue or be sued as representative parties on behalf of all only
if (l) the class is so numerous that joinder of all members is

 

68 Wolstenholme v. Hygienic Exterml`nating Co., 1988 WL 90575, at *3 (Del. Super. Aug. l9,
1988) (“[T]he difference between fraudulent misrepresentation and fraudulent concealment
based upon a representation is slight indeed.”); Lock v. Schreppler, 426 A.2d 856, 859 (Del.
Super. 1981) (noting the “minor differences” between fraudulent misrepresentation and
fraudulent concealment); see also Stephenson v. Capano Dev., Inc., 462 A.2d 1069, 1074 (Del.
1983) (“[F]raud does not consist merely of overt misrepresentations lt may also occur through
deliberate concealment of material facts . . . .”).

26

impracticable, (2) there are questions of law or fact common to the
class, (3) the claims or defenses of the representative parties are
typical of the claims or defenses of the class, and (4) the
representative parties will fairly and adequately protect the interests of
the class

(b) Class actions maintainable An action may be
maintained as a class action if the prerequisites of paragraph (a) are
satisfied, and in addition:

(3) The Court finds that the questions of law or fact common to
the members of the class predominate over any questions affecting
only individual members, and that a class action is superior to other
available methods for the fair and efficient adjudication of the
controversy.

Thus, consideration of a motion for class certification under Rule 23 requires
a two-step analysis First, the Court must determine that all four elements of Rule
23(a) are satisfied, namely: (l) numerosity, (2) commonality, (3) typicality, and (4)
adequacy.69 lf the requirements of subsection (a) are met, the Court then must
determine whether one of the “disjunctive requirements” of subsection (b) is met.70
Plaintiff contends this case meets the requirements of subsection (b)(3) because
common questions of fact and law predominate over individual questions and a
class action would be a superior means of adjudicating the controversy.

In reaching its determination regarding whether a case meets the

prerequisites of Rule 23, this Court must engage in a “rigorous analysis,” rather

 

55 mi capital Grp., ina v. Bennzng, 897 A.2d 172, 178 (Dei. 2006).
25 1a 31 1?9.

27

than relying solely on the parties’ pleadings.7' The plaintiff bears the burden of
establishing that all the elements of the rule are satisfied72

A. The Parties’ Contentions

Plaintiff contends the elements of Rule 23(a) are met, pointing out that the
following common questions of law and fact “should ultimately be determinative
of the outcome of this action:” (1) whether Philip Morris violated the DCFA by
“concealing, suppressing[,] and/or omitting the material fact . . . that the increased
filter ventilation in Marlboro Lights made Marlboro Lights potentially w
dangerous than regular cigarettes”; (2) whether Philip Morris’s violation of the
DCFA caused the members of the class to sustain economic damages; and (3)
whether Philip Morris’s conduct warrants imposing punitive damages73 Plaintiff
further contends her claims are typical of the claims of the class because they
“arise from [Philip Morris’s] same course of conduct and are based on the same
legal theory as the claims of all other class members.” She argues she adequately

can represent the class because her attorneys are experienced in class actions

 

2‘ Gen. ret Co. v. Faicon, 457 U.s. 147, 161 (19821.

72 Garrett v. Zon Capital P’rs, L.P, 2011 WL 5579112, at *2 (Del. Ch. Nov. 10, 2011). There
does not appear to be any case law in Delaware defining the burden of proof a plaintiff bears in
establishing any facts necessary to a class certification determination According to a treatise on
class actions, most federal courts are moving toward adopting a preponderance of the evidence
standard William B. Rubenstein, Newberg on Class Actz`ons § 7:21 (5th ed. 2016). The Third
Circuit expressly adopted that standard in In re Hydrogen Peroxide, 552 F.3d 305, 309 (3d Cir.
2008). Because l base my decision on undisputed facts, whether preponderance of the evidence
is the appropriate standard under Ru|e 23 is not material to my resolution of l’laintil`fs Motion.

73 Pl.’s Opening Br. Support Mot. Class Cert. 22 (quoting Second Am. Compl. 1|1139-40`).

28

generally and tobacco litigation particularly and because her interests are aligned
with all other class members

As to Rule 23(b)(3), Plaintiff contends the common issues identified above
will predominate over any individual issues Plaintiff urges that resolving these
claims through a class action would be significantly more efficient than
adjudicating a multitude of individual actions and that class certification may be
the only means by which these claims can be advanced because the potential
recovery of any one class member would not justify maintaining an action
Finally, Plaintiff argues this case is distinct from actions in other jurisdictions that
have denied class certification because those cases were premised on a contention
that a tobacco company fraudulently misrepresented that a low-yield cigarette was
less dangerous than a full-flavored cigarette, while this case asserts a claim that
Philip Morris fraudulently concealed that Marlboro Lights potentially are more
dangerous than a full-flavored cigarette.

Philip Morris responds that a class cannot be certified in this case because
“[i]nherently individual issues concerning causation, injury, damages, class
membership, and affirmative defenses would remain for each class member.”74
Philip Morris argues each class member individually would need to prove

causation because the Court cannot infer reliance by the class given the variable

 

74 Def.’s Opp’n Mot. Class Cert. 22.
29

reasons consumers choose a particular brand or type of cigarette Philip Morris
similarly argues that individual proof would be necessary to establish fact of injury
for each class member because even Plaintiff concedes Marlboro Lights are not
more dangerous for all consumers and receiving a cigarette that “potentially” is
more dangerous is not actual injury. Philip Morris also contends Plaintiff cannot
prove out-of-pocket loss on a class-wide basis because the evidence Plaintiff
offers namely Dr. Goldberg’s expert opinion, does not establish class-wide loss

Finally, although it was not the focus of the parties’ briefs or arguments
Philip Morris asserts the Motion for Class Certification should not be granted
because: (i) would-be class members would need to offer individual proofs to
establish membership in the class; (ii) Philip Morris’s affirmative defenses require
individual proofs as to each class member; (iii) the amount of damages suffered by
each class member could require mini-trials for each individual; (iv) class action is
not a superior means of resolving these claims; and (v) Plaintiff s claims are not
typical of the class and she is not an adequate representative

The only Rule 23 element Philip Morris does not dispute is numerosity, i.e.,
that the class is so numerous that joinder of all its members would be
impracticable The focus of the parties’ arguments and my analysis is on the

elements of commonality and predominance with respect to causation and fact of
injury.

30

B. Commonality and Predominance Generally

The element of commonality under Rule 23(a) and the requirement for
predominance of common issues under Rule 23(b) require a similar, though
distinct analysis The elements often are analyzed together, with particular focus
on predominance75 To meet the requirement of commonality, Plaintiff must
establish that “there are questions of law or fact common to the class.”76 That
element, however, does not merely mean that the class claims involve one or more
common questions or that the class members all suffered a violation of the same
law.77 Rather, the class members’ claims must be based on “a common contention
. . . that is capable of classwide resolution-which means that determination of its
truth or falsity will resolve an issue that is central to the validity of each one of the

»’78

claims in one stroke Raising a common question is not enough to satisfy

commonality; a plaintiff must establish that a class action could “generate common

answers apt to drive the resolution of the litigation.”79

 

75 Johnson v_ GE1co Cas. CO. (Johnson 1), 673 F. supp. 2d. 255, 272 (D. Dei. 2009) (citing in
re Wui_')‘c'irin .S'r)diwn An!itrzrst Litig.. 391 F.3d 516, 528 (3d Cir. 2004)).

25 super Ct. Civ. 11.23(31(2).

27 irrii-Mii.»-r ssi-ss ms ii Di.ires, 564 U.s. 338, 349 (2011). Aiihough nor binding cases
interpreting Fed. R. Civ. P. 23 are persuasive because the federal rule virtually is identical to the
Superior Court rule See Nottingham P’rs v. Dana, 564 A.2d 1089, 1094 (Del. 1989) (citing
Ho{j‘iitciii 1). Cohen, 538 A.2d 1096, 1097 (Del. 1988) (“ln those instances where our present rule
is exactly the same as the Federal rule, it is desirable to follow the interpretation placed upon it
by the Federal C ourts especially where those Courts have been so nearly unanimous in their
rulings unless some good reason appears for adopting a contrary consti'uction.")).

25 Diik.;»s, 504 U.s. 338 ar 350.

79 Id. (quoting Richard A. Nagareda, Class Certification in the Age of Aggregate Proof, 84
N.Y.U. L. Rev. 97, 131-132 (2009)).

31

The requirement in Rule 23(b)(3) for common issues to predominate over
individual issues is similar to the question of commonality, but “much more

9380

demanding Predominance requires a finding that issues common to the class

dominate individual issues The element is not met where the “essential elements

”8‘ In determining whether an

of the cause of action require[] individual treatment
element will be resolved through individual or common treatment, the Court must
consider the nature of the evidence that will resolve the issue82

C. Causation

Philip Morris argues that, even if Plaintiff can establish the company
fraudulently concealed information from the class the question of causation will
require individual treatment and precludes a finding of commonality or
predominance Plaintiff brings two claims against Philip Morris: one for allegedly
violating the DCFA and one for unjustly enriching itself. The DCFA provides in
pertinent part:

The act, use or employment by any person of any deception, fraud,

false pretense, false promise, misrepresentation, or the concealment,

suppression, or omission of any material fact with intent that others

rely upon such concealment, suppression or omission, in connection
with the sale, lease or advertisement of any merchandise, whether or

 

55 smith s Hersuit»s__ 2003 WL 1580603, ai *10 (Dsi. super. Jan. 31, 2003) (siiaiisns emitted).

5‘ Neiiriaii v. Mei-i-i/i Lynch, Piei-¢-s, Fenner & swan lnc., 259 F.3d 154, 172 (3d cir. 2001)
(citation omitted).

52 rdi-gsr v. mci Bank, FsB, 285 F.R.D. 308, 321 (D. Dei. 2012).

32

not any person has in fact been misled, deceived or damaged thereby,
is an unlawful practice83

Plaintiff claims Philip Morris concealed information regarding the mutagenicity of
tar in Marlboro Lights and that the class suffered economic harm as a result of this
conduct Plaintiff similarly alleges Philip Morris unjustly was enriched by its
fraudulent concealment Unjust enrichment is “the unjust retention of a benefit to
the loss of another, or the retention of money or property of another against the
fundamental principles of justice or equity and good conscience”84 To prevail in a
claim for unjust enrichment, Plaintiff must prove: (1) an enrichment, (2) an
impoverishment, (3) a relation between the enrichment and the impoverishment,
(4) the absence of justification, and (5) the absence of a remedy provided by law.85
Plaintiff concedes causation is an essential element of both her claims86 She

contends she can establish causation through a class-wide inference, which she

 

83 6 Del. C. § 2513(a). A private cause of action exists under the statute Young v. Joyce, 351
A.2d 857(1)1:1. 1975);61')0!. C. §2525.

54 erer tai-a v. items c waiving aunt inc., 539 A.2d 1060, 1062 (Dei. 1988) (citing 66 Am. Jur.
2d lt’e.s'fi!tr!ir)n & implied (.'ontrac.'.\' § 3, at 945 (1973)).

44 Neinee v. Slirader, 991 A.2d 1120_. 1130 (Del. 2010).

55<.'¢”»1-6)/\.». Phiii,ii Morris Us/i. iii¢-., c../.\. NO. 03c_08-167 AML,si31;4-12(D61. super Dec.
9, 2016) (TRANSCRIPT) (hereinafter “Tr.”); see also Stephenson, 462 A.3d at 1077 (“A
plaintiff . . . may recover for any injury resulting from the direct and natural consequences of his
acting on the strength of the defendant’s statement.”); Crowell Corp. v. Himont USA, Inc., 1994
WL 762663, at *4 (Del. Super. Dec. 8, 1994) (“Under the [DCFA], all damages proximately
caused by and naturally flowing from a violation of the Act are recoverable.”); Republic of
Panama v. Am. Tobacco Co., 2006 WL 1933740, at *8 (acknowledging that proximate cause
typically is not an element of unjust enrichment, but finding that “in the tort setting, an unjust
enrichment claim is essentially another way of stating a traditional tort claim” and that an unjust
enrichment claim must fail when there is no proof of causation for the tort claim); Cleary v.
Philip Morris Inc., 656 F.3d 511, 518-19 (7th Cir. 2011) (holding that a plaintiff advancing an
unjust enrichment claim must show a detriment and “significantly, a connection between the

33

argues this Court may draw from the logical syllogism that no one knowingly
would buy or consume a more dangerous cigarette87 ln addition to pure logic,
Plaintiff relies on Dr. Goldberg, who opines in his report that the Marlboro Lights
brand would have been “completely unmarketable and valueless from its inception
had Philip Morris not concealed that Marlboro Lights were potentially more

”88

dangerous than regular cigarettes Relying on Dr. Goldberg and logic, Plaintiff
argues that, had Philip Morris not concealed information regarding the potential
increased risk posed by the mutagenicity of the tar in Marlboro Lights the
company never would have marketed the product in the first place and no member
of the class would have purchased those particular light cigarettes

ln my view, Plaintiff is not entitled to a class-wide inference of causation for
a number of reasons namely because (1) a consumer’s reason for choosing to
smoke a particular brand varies widely and is not based exclusively, or even

predominantly, on health considerations (2) Dr. Goldberg’s opinion does not

support a conclusion that no market for Marlboro Lights would have been created

 

detriment and the defendant’s retention of the benefit” and concluding that the plaintiff
consumers could not pursue an unjust enrichment claim without evidence that they would have
acted differently if the defendants had not concealed information regarding ci garettes).

87 lt is important to note that a consumer need not prove reliance on fraudulent omissions or
misrepresentations in order to sustain a claim under the DCFA. 6 Del. C. § 2513; Warfarin, 391
F.3d at 528-29. lt is settled, however, and Plaintiff does not dispute, that she must establish a
causal relationship between the omissions or misrepresentations and the injuries to the class See
6 Del. C. § 2525; Johnson v. GEICO Cas. Co. (Johnson II), 310 F.R.D. 246, 253 (D. Del. 2015).
At various times particularly during oral argument the parties used language that appeared to
conflate reliance and causation l avoid the term reliance here because it is not a required
element of Plaintiffs claim, but rather the manner by which Plaintiff seeks to prove causation

55 Goidbei-g Rep. 22.

34

had the fraudulent omissions not occurred; and (3) the record does not support the
logical syllogism Plaintiff proffers

First, courts generally decline to infer class-wide causation in consumer
fraud cases.gq The reasoning, perhaps is obvious: unlike securities fraud actions
where a “fraud-on-the-market” inference often in drawn, the sheer variability in the
reasons people engage in a consumer transaction makes a class-wide inference
inadvisable.90 Apart from consumer transactions in which there only is one reason
a consumer would purchase the product in question, or select one brand or product
over another, individual issues of causation typically preclude any finding that

91

common issues predominate in consumer class actions As the Oregon Supreme

 

89 See, e.g. Yarger, 285 F.R.D. at 327-28 (citing/lubrey v. Sanders, 346 F. App’x 847, 849-50
(3d Cir. 2009) (rejecting application of fraud-on-the-market theory for common law fraud
claims); Gaffz`n v. Teledyne, lnc., 611 A.2d 467, 474 (Del. 1992) (stating that fraud-on-the-
market presumption of reliance is not available in common law fraud actions and that “A class
action may not be maintained in a purely common law fraud case since individual questions of
law or fact, particularly as to the element of justifiable reliance, will inevitably predominate over
common questions of law or fact”); McLaughlin v. Am. Tobacco Co., 522 F.3d 215, 223 (2d Cir.
2008) (refusing to apply “presumption of reliance” in putative class action where defendants had
conducted “national marketing campaign,” noting that “reliance on the misrepresentation [ ]
cannot be the subject of general proof’); Castano v. Am. Tobacco Co., 84 F.3d 734, 745 (5th
Cir.1996) (“[A] fraud class action cannot be certified when individual reliance will be an
issue.”); In re Nearontin Mktg., Sales Practices & Prods. Liab. Lz`tt`g., 257 F.R.D. 315, 326 (D.
Mass. 2009) (discussing “courts' general unwillingness to permit a presumption of
reliance/causation in consumer fraud cases"")).

90 See Yarger, 285 F.R.D. at 327-328; Poulos v. Caesars World, Ine., 379 F.3d 654 (9th Cir.
2004); Cohen v. Implant Innovactions, Inc., 259 F.R.D. 617, 628 (S.D. Fla. 2008); Pearson v.
Philip Morris, Inc., 361 P.3d 3, 31 (Or. 2015); Stern v. Philip Morris USA, Inc., 2007 WL
4841057 (N.J. Super. Ct. Nov. 16, 2007) (App’x Unreported Opinions Cited Pl.’s Reply Br.
Support Mot. Class Cert., Ex. 10).

91 (..`ompare War_'farin, 391 F.3d 516 (finding that causation could be determined on a class-wide
basis in a case involving a generic pharmaceutical product that was the bioequivalent and
therapeutic equivalent of the brand name product), with Marcus v. BMW of N. Am., LLC, 687

35

Court recently explained in another case involving Marlboro Lights a class-wide
inference cannot be drawn where it would require a large number of consumers to
have the same subjective state of mind:
For at least some commodities the only logical explanation for a
consumer’s purchase may be that the product has-or is represented to
have-an essential quality, without which it would be worthless . . .
This is not that kind of case. Rather, this is a more typical consumer
transaction, one that involves consumer choices that implicate states

of mind, perceptions beliefs and conscious and subconscious
. . 92
motivations

The record in this case supports the conclusion that smokers select a
particular type or brand of cigarette for a variety of reasons and that health-related
reasons are not even the predominant force driving a consumer’s choice The
testimony offered by putative class representatives in other cases involving low-
yield cigarettes as well as market surveys indicate that consumers select brands
and types of cigarettes for reasons such as taste, peer-influence, perceived health

benefits and the cigarette’s delivery. Decisions in other jurisdictions have reached

 

F.3d 583 (3d Cir. 2012) (finding no inference of causation could be drawn in a case contending
the defendant fraudulently misrepresented and omitted material information regarding run-flat
tires). ln support of her inference of causation argument here, Plaintiff relied in part on the
District of Delaware’s decision in Johnson 1, 673 F. Supp. 2d 255, in which the District Court of
Delaware concluded that predominance and commonality were met in a consumer fraud case
under the DCFA. Johnson I is distinguishable on two independent grounds First, the class later
was decertified by the court because, among other reasons individual issues regarding loss
causation precluded a finding of predominance Johnson II, 310 F.R.D. at 253. Second, as the
District Court’s decertification decision points out, the original decision certifying the class
relied on a mistaken conclusion that causation was not a necessary element of proof under the
DCFA. See Johnson I, 673 F. Supp. 2d at 276 n.14; Johnson II, 310 F.R.D. at 253.

52 Pears@n, 361 P.3d ai 31.

36

a similar conclusion in cases involving motions to certify a class in a challenge to
misrepresentations regarding low-yield cigarettes93

The second reason Plaintiff is not entitled to an inference of causation is that
Dr. Goldberg’s report does not, as Plaintiff contends support the inference Even
if l assume Dr. Goldberg’s report is admissible notwithstanding Philip Morris’s
Motion to Strike, the report does not sustain the conclusion that Philip Morris
could not have marketed Marlboro Lights but for the fraudulent omissions
Marlboro Lights were introduced into the market in 1971. Plaintiff conceded at
oral argument that Philip Morris had knowledge in the mid-1970s at the earliest,
that the mutagenicity in the tar of Marlboro Lights made them potentially more
dangerous than Marlboro Reds.94 By then, the market for Marlboro Lights already
existed What would have happened to that market if Philip Morris had made
public its research about mutagenicity is another question altogether, but not one
that Dr. Goldberg’s opinion squarely addresses at least not to the point that this
Court may draw an inference that the market immediately would have ceased

buying Marlboro Lights

 

93 See, e.g. McLaaghlin v. Am. Tobacco Co., 522 F.3d 215, 225-26 (2d Cir. 2008); Pearson, 361
P.3d at 31; Davies v. Philip Morris U.S.A., Inc., 2006 WL 1600067, at *3 (Wash. Super. Ct. May
26, 2006). Plaintiff argues these cases are distinguishable because they challenged
representations that low-yield cigarettes are less dangerous than full-flavored cigarettes rather
than omissions that low-yield cigarettes potentially are more dangerous than full-flavored
cigarettes As explained below, that distinction does not support the logical inference Plaintiff
urges upon the Court.

54 Tr. 17.

37

Third, and relatedly, Plaintiff is not entitled to an inference of causation
because the remainder of the record does not support the logical conclusion
Plaintiff advances Although there is facial appeal to Plaintiffs argument that no
rational person knowingly would purchase a more dangerous cigarette, the record
demonstrates otherwise For decades consumers were told that full-flavored
cigarettes were more dangerous than low-yield cigarettes but many consumers
continued to buy full-flavored cigarettes including Marlboro Reds Plaintiff
attempts to dismiss this evidence by arguing the risk posed by Marlboro Reds (the
amount of tar) is different than the potential risk posed by Marlboro Lights (the
mutagenicity of the tar) and therefore the history of Marlboro Reds is not
relevant95 That argument, however, misses the point: the history regarding
Marlboro Reds defeats Plaintiffs “rational consumer” argument and confirms that
consumers’ cigarette choices are based on multiple factors The reason why
Marlboro Reds were perceived to be more dangerous or potentially more
dangerous than Marlboro Lights does not lessen the relevance of this evidence to
Plaintiffs rational consumer argument As the Oregon Supreme Court succinctly
put it:

[S]moking is in many ways an irrational choice When a
consumer’s choice to engage in activity or buy a product

involves irrational motivations it is all but patent that
individual inquiries will be required to determine why the

 

95 See Pl.’s Reply Br. Support Mot. Class Cert. 26.
38

individual members of a large class make the choices
they make96

Finally, even if Plaintiff was entitled to a class-wide presumption of
causation, that presumption is rebuttable Philip Morris would be entitled to
present evidence that losses suffered by members of the class were not causally
linked to the alleged fraudulent concealment (that is that individual class members
did not choose Marlboro Lights for health reasons). That defense itself would
present individual issues that would predominate over the common issues Plaintiff
identifies97

Accordingly, although Plaintiff has identified certain issues susceptible of
common proof _ such as Philip Morris’s knowledge and alleged concealment, as
well as the issue of whether Marlboro Lights potentially are more mutagenic than
regular cigarettes - individual issues regarding causation (and fact of injury, as
discussed below) preclude any finding that the common issues predominate over
individual issues

D. Fact of Injury

ln addition to causation, Plaintiff also must prove actual loss or “fact of

injury,” in order to sustain her claims for violation of the DCFA and unjust

 

55 Pearson, 361 P.3d at 31.

97 Davies, 2006 WL 1600067, at *3 (finding that, even if the plaintiffs were entitled to a
presumption of causation, the presumption was rebuttable and the defendant would be entitled to
challenge “each and every class member as to his or her reasons for buying light cigarettes”
thereby defeating any finding of commonality or predominance).

39

enrichment98 Although the need for individual proof regarding the amount of
damages ordinarily will not defeat class certification, the fact of injury is an
element of liability and the need for individual proof of that element may preclude
any finding of predominance99 “Where proof of fact of damages requires
evidence concerning individual class members the common questions of fact
become subordinate to the individual issues thereby rendering class certification
problematic.”loo

There are two types of economic harm recognized under Delaware law in
cases involving consumer fraud, including claims arising under the DCFA.'Ol
Here, Plaintiff contends that the class suffered “out-of-pocket” damages because
the actual value of the Marlboro Lights was less than what members of the putative
class paid for them. Plaintiff contends that, but for Philip Morris’s fraud, Marlboro
Lights would have been worthless and all class members therefore suffered an

102

economic loss by paying for a valueless product Plaintiff contends that out-of-

 

98 See Pl.’s Opening Br. Support Mot. Class Cert. 32 (acknowledging the need to prove fact of
injury for both claims); Young, 351 A.2d at 859 (“[T]he individual consumer harmed by a
violation of [the DCFA] [is] allowed to recoup any actual losses suffered as a result of fraud or
deception practiced against him.”); Nemec, 991 A.2d at 1130 (holding that impoverishment and a
connection between the enrichment and impoverishment are necessary to sustain a claim for
unjust enrichment`}.

55 mr captain 89? A.3d at 1?9.

'5" 1a st 120 (qiisiing noting i.-. eni-ads aml iiic., 784 N.E.2d 151 (ohis ct App. 2003)).

'5' sis;iiii»as-im__ 462 A.3d st 1076 a n.4.

m i’l.`s Opening Br. Support Mot. (`Iass Cert. 40-42.

40

pocket loss is sufficient to establish fact of injury and that Dr. Goldberg’s expert
report is common proof of such injury. 103

There are two problems with Plaintiffs contention that fact of injury can be
established with common evidence in this case: (1) Plaintiffs claim relies on
“potential” harm; and (2) the record does not support a conclusion that Marlboro
Lights were valueless First, the injury Plaintiff asserts is based on her contention
that Marlboro Lights “potentially” were more dangerous than full-flavored
cigarettes This “potential” for increased harm, however, is not the same as actual
harm. Plaintiffs expert, Dr. Peter Shields concedes that Marlboro Lights were not
more harmful for all consumers104 Rather, assuming the tar from Marlboro Lights
was in fact more mutagenic than the tar from a full-flavored cigarette, the relative
risk of harm to the consumer still depends on the amount of tar the consumer
ingested Those consumers who did not suffer any increased harm did not suffer
any economic loss In other words similar to the analysis above regarding
causation, whether any member of the putative class suffered any injury depends
on an analysis of each smoker’s behavior and whether they suffered any increased
danger by smoking Marlboro Lights Most other courts that have considered the

issue have reached the same conclusion: consumer fraud claims relating to low-

 

103 lai
‘54 shieids Dep. 123, 243.

41

yield cigarettes are not amenable to class certification because of the need for
individualized proof regarding fact of injury. 105

Plaintiff attempts to circumvent this weakness by arguing that the
“potential” increased harm posed by Marlboro Lights is itself the injury. That is
Plaintiff contends Marlboro Lights were valueless because they were more
dangerous than full-flavored cigarettes when their sole purpose for being
introduced into the market was that they were less dangerous106 Plaintiff again
relies on “1ogic” and Dr. Goldberg’s opinion that Marlboro Lights never would
have been introduced to the market had Philip Morris been forthcoming with its
information regarding the mutagenicity of the tar in Marlboro Lights As set forth
above, however, in the discussion regarding causation, this analysis fails because
(1) it relies on an assumption regarding smokers’ behavior and choices that is not
supported and in fact is contradicted by the record; and (2) Dr. Goldberg’s opinion
is unreliable on the introduction-to-market point

Put simply, the record does not support the conclusion or inference that a
cigarette that may be more dangerous to consumers has no market value; the

evidence of Marlboro Reds’ steady market share during the decades that full-

 

'55 see Mcraughiin, 522 F.3d 215; Lawrence v. Philip Morris UsA, Inc., 53 A.3d 525 (N.H.
2012); Philip Morris USA, Inc. v. Hines, 883 So.2d 292 (Fla. Dist. Ct. App. 2003); Stern, 2007
WL 4841057.

'06 To reiterate, Plaintiff s complaint seeks only economic damages Plaintiff does not seek to
recover for personal injury or emotional harm associated with the mutagenicity of Marlboro
Lights

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flavored cigarettes were described as more dangerous is more than enough proof to
defeat any class-wide inference on that point lnstead, individual inquiry will be
necessary to determine what each individual consumer would have done had Philip
Morris not allegedly concealed information regarding the mutagenicity of the tar in
Marlboro Lights

For the foregoing reasons 1 conclude Plaintiff has not met her burden under
Rule 23(b)(3) to show that common issues predominate over individual issues and
the motion to certify the class therefore is DENIED.

III. Philip Morris’s Motion to Strike

Having denied Plaintiff s Motion for Class Certification, the issue of the
admissibility of Dr. Goldberg’s report largely is moot Large portions of Dr.
Goldberg’s report may be unnecessary in view of my decision on class
certification To the extent consumers including Plaintiff, pursue individual
claims against Philip Morris and retain Dr. Goldberg, the Court then may address
his report’s admissibility with a more focused understanding of the scope of his
opinion and its relation to the issues in each particular case.

CONCLUSION

For the foregoing reasons Defendant’s Motion for Summary Judgment is

DENIED, Plaintiff s Motion for Class Certification is DENIED, and Defendant’s

Motion to Strike is DENIED as moot.

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