Writing for a unanimous panel, Second Circuit Judge John M. Walker, Jr, today gave half a dozen or more reasons why the district court shouldn’t have certified a class of "light" cigarette smokers. They included that:
- The fraud claims under the Racketeer Influenced and Corrupt Organizations Act of 1970 required each class member to prove that he or she "relied" on false information about the health risks of smoking "light" cigarettes.
- No presumption of reliance applies in this case.
- Each class member also had to show "loss causation" — that the mistruths about light cigs led them to suffer some kind of compensable harm — because some of them might have bought and inhaled even if they knew the truth.
- RICO doesn’t allow benefit of the bargain damages.
- The plaintiffs’ methodologies for computing overpayment don’t stand up.
McLaughlin v. Am. Tobacco Co., No. 06-4666 (2d Cir. Apr. 3, 2008).
The first point caught Blawgletter’s eye. Avid readers — thanks mom and dad! — will recall that the Supreme Court has before it a case that will decide that very issue: Does RICO require proof of reliance? Post here, amicus brief yonder.