U.S. Court of Appeals for the Second Circuit

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Second Circuit addresses class actions and RICO

April 03, 2008

The Second Circuit agreed with the Chamber that the trial court erroneously certified a class of plaintiffs who argued they were deceived into believing that “light” cigarettes were healthier than “full-flavored” cigarettes. The Second Circuit reversed the trial court and decertified the class in part because the plaintiffs’ fraud claims under RICO require individualized proof of reliance, injury and damages, and therefore the proposed class action was not an appropriate vehicle to address those claims.

U.S. Chamber files amicus brief

December 26, 2006

NCLC urged the Second Circuit to vacate the trial court’s grant of class certification to plaintiffs raising RICO claims. The plaintiffs allege that, while each “light” cigarette contains less nicotine and tar than non-light cigarettes, the products do not deliver less tar and nicotine to users because users compensate by smoking additional cigarettes. In its brief, NCLC argued that the district court did not apply the rigorous analysis required under Federal Rule of Civil Procedure 23(b)(3). Rule 23(b)(3) requires, among other things, individualized showings of reliance, causation, and injury. In addition, NCLC explained that affirming the district court’s decision could expand civil RICO liability well beyond its intended purpose to address the effect of illicit activities on legitimate businesses. (This case was formerly known as Schwab, et al. v. Philip Morris USA Inc., et al.)

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