Court rules in S. American tobacco suits

By MICHAEL KIRKLAND, UPI Legal Affairs Correspondent  |  April 26, 2002 at 2:28 PM
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WASHINGTON, April 26 (UPI) -- A federal appeals court in Washington Friday handed a minor victory to four South American governments in their lawsuits to recover damages from the big tobacco companies.

A federal trial judge had ordered the suits filed by Venezuela, Ecuador and two Brazilian states be transferred to state court -- where damages are likely to be higher if the case ever goes to trial and there are less barriers to filing such a suit in the first place -- rather than federal court.

Friday the appeals court panel refused a request by the companies to stop the transfer from federal court to state court.

The appeals court panel said it did not have the jurisdiction to reverse the trial judge -- who was only following federal law -- and said the companies could not "bootstrap" their way into federal court from state court by citing federal rules.

"Whether a litigant has standing to sue may present a threshold issue for a federal court," the appeals court said, "but our doctrines of prudential standing are of no moment in a state court, the jurisdiction of which is not similarly limited to what is granted by an act of the legislature. The companies may not bootstrap their way into a federal court with a claim that the plaintiffs' standing would be an issue had the plaintiffs originally filed their lawsuits in a federal court ... "

Despite the minor victory Friday for all four suits, only two are still pending. Two were dismissed in state court while the companies appealed, and the remaining two must still survive a motion for dismissal at the state level.

A number of foreign governments or their subdivisions have sued a total of 15 tobacco companies in Florida state court.

"Specifically, the Republics of Venezuela and of Ecuador, the Brazilian States of Mato Grosso Do Sol, Goias, and Espirito Santo, and the Russian Federation filed nearly identical complaints in ... Miami-Dade County," the appeals court said. "They advanced at least 10 distinct theories of liability, such as fraud, negligence, and unjust enrichment, and sought compensation from the companies for the costs of treating persons suffering from diseases associated with tobacco use.

"Twenty-nine other foreign states or subdivisions have filed similar actions -- not now before us -- in state and federal courts around the United States," the appeals court said.

The four suits under review by the appeals court were transferred from state court to federal court in Miami on a motion by the tobacco companies. Then the Judicial Panel on Multidistrict Litigation, a body of the federal courts, consolidated the suits brought by Venezuela and three other foreign states and transferred them to the U.S. federal court in Washington.

On a parallel track in Washington, Guatemala's separate lawsuit was dismissed for failing to state a viable federal claim against the companies. Federal judges have since dismissed several of the foreign cases for the same reason.

However, a federal judge transferred the Venezuela case to Florida state court, saying that the Venezuelan government had failed to state a federal claim. The judge later transferred the cases filed by Ecuador, Espirito Santo and Goias to the same Florida state court "for the reasons stated" in Venezuela.

While the case has been argued on appeal, a Florida judge has dismissed the suits by Venezuela and Espirito Santo. The suits filed by Ecuador and by Goias are still pending before the Florida court.

A federal judge has not yet acted on separate suits brought by Russia and the Brazilian state of Mato Grosso.

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