Speaking of Philip Morris ... An Update on the Schwab Class Action and United States v. Philip Morris

by Scott Nelson

As most readers are probably aware (and as previously discussed in this blog by Stephen Gardner last month here), Judge Jack Weinstein of the Eastern District of New York certified a nationwide class action of light cigarette smokers in a RICO/consumer fraud action against the major cigarette manufacturers on September 25, 2006. The order also denied summary judgment and set a trial date of January 22, 2007. For good measure, Judge Weinstein denied certification of his summary judgment ruling for appeal and refused to stay the trial date.

The manufacturers went to the Second Circuit and filed a Rule 23(f) application for interlocutory review of the certification order on October 6, together with an application for a stay of pretrial and trial proceedings pending action on the Rule 23(f) application and resolution of the appeal if the application were granted. The plaintiffs filed oppositions to both motions (I don't have links, but we'll try to find them).

On October 24, Second Circuit Judge Barrington Parker entered an order granting a temporary stay of pretrial and trial proceedings, pending the Second Circuit's decision whether to grant the Rule 23(f) application. Otherwise, he referred the motion for stay pending appeal to the panel (whose identity is as yet unknown) that will decide whether to hear the Rule 23(f) appeal. Then, on October 27, the Second Circuit clerk's office issued a notice to counsel that oral argument on the motion for stay will be heard by the panel on December 5.

Although the scheduled argument is on the motion for a stay, it seems likely that the principal factor determining whether a stay will be granted is whether the court will accept the Rule 23(f) appeal. The case thus presents the somewhat unusual situation of a full oral argument before a court of appeals over whether it will accept an appeal for briefing and argument. That the court is hearing argument on the issue also seems to call into question predictions, such as those of the Wall Street Journal, that review and reversal of Judge Weinstein's ruling by the Second Circuit is inevitable. Meanwhile, the parties evidently won't know whether this massive case will be going to trial in January until December 5 at the earliest.

Meanwhile, on the subject of stays, the D.C. Circuit yesterday granted a stay of Judge Kessler's rulings in United States v. Philip Morris, effectively permitting cigarette companies to continue marketing light cigarettes and engaging in other activities found by Judge Kessler to constitute RICO violations, pending appeal. The panel of Sentelle, Randolph and Tatel said nothing more to justify their ruling than that "Appellants have satisfied the stringent standards required for a stay pending appeal." Well, that explains that.