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Schwab v. Philip Morris USA, Inc.

United States District Court for the Eastern District of New York

September 25, 2006, Decided

No. 04-CV-1945 (JBW)

Opinion

 [*1013]  MEMORANDUM & ORDER

JACK B. WEINSTEIN, Senior United States District Judge:

TABLE OF CONTENTS

Introduction

Allegations

Burden of Proof

Class Certification

Summary Judgment

Sources of Proof

Overview of the Conspiracy and Fraud

Other "Light" Cigarette Fraud Actions

Racketeer Influenced and Corrupt Organizations Act

Violation of Criminal RICO

Conduct of a Racketeering Enterprise (§ 1962(c))

Enterprise

Conduct

Racketeering activity

Pattern

Conspiracy (§ 1962(d))

Cofacredit

Supreme Court precedent

Subsequent decisions of the Second Circuit and district

courts

Other circuits

Conclusion on conspiracy requirements

Injury to Property

Defendants' Motion for Summary Judgment on Injury

Proprietary injury

Personal injury

Conclusion on Injury

Causation and Reliance

Factual causation

Proximate causation

Reliance

Reliance is required

Role of reliance

(a) Direct reliance

(b) Third-party reliance

Transaction causation and loss causation

Defendants' Motion for Summary Judgment on Causation

Reliance

Plaintiffs' claims of reliance

Reliance showing required in this case

Plaintiffs have demonstrated reliance

Indirect purchaser rule

Illinois Brick

Inapplicability of Illinois Brick rule

Conclusion on Causation

Computation of Total Damages

Plaintiffs' Models

"Loss of market" model

"Loss of value" model

"Price impact" model

Practice under common law

Practice under securities law

1933 Act

1934 Act

(a) Explicit rights of action

(b) Implied rights of action

Practice under antitrust law

Application of Law to Facts

Appropriate measure

Degree of precision required

Equitable Relief

Conclusion on Computation of Total Damages

Statute of Limitations

Accrual

Equitable tolling

Procedural History

Application of Law to Facts

Actual knowledge

Imputed knowledge

Class counsel's knowledge

Class members' knowledge

Separate accrual

Equitable tolling

Conclusion on Statute of Limitations

Collateral Estoppel

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449 F. Supp. 2d 992 *; 2006 U.S. Dist. LEXIS 73196 **

BARBARA SCHWAB et al., individually and on behalf of all others similarly situated, Plaintiffs, v. PHILIP MORRIS USA, INC., R.J. REYNOLDS TOBACCO CO., BROWN & WILLIAMSON TOBACCO CORP., LORILLARD TOBACCO CO., LIGGET GROUP, INC., AMERICAN TOBACCO CO., ALTRIA GROUP, INC., BRITISH AMERICAN TOBACCO (INVESTMENTS) LTD., Defendants.

Notice:  [**1]  [EDITOR'S NOTE: PART 1 OF 16. THIS DOCUMENT HAS BEEN SPLIT INTO MULTIPLE PARTS ON LEXIS TO ACCOMMODATE ITS LARGE SIZE. EACH PART CONTAINS THE SAME LEXIS CITE.]

Subsequent History: Reversed by, Class certification denied by McLaughlin v. Am. Tobacco Co., 522 F.3d 215, 2008 U.S. App. LEXIS 7093 (2d Cir. N.Y., Apr. 3, 2008)

Prior History: Schwab v. Philip Morris USA, Inc., 2006 U.S. Dist. LEXIS 11047 (E.D.N.Y., Mar. 20, 2006)

Disposition:  The manufacturers' motion for partial summary judgment as to the smokers' claims for equitable relief was granted; the manufacturers' summary judgment motions were otherwise denied. The smokers' motion for class certification was granted. The court declined to certify an interlocutory appeal or to stay proceedings.

CORE TERMS

cigarettes, defendants', plaintiffs', smokers, damages, conspiracy, causation, predicate act, smoking, lights, purchaser, tar, enterprise, summary judgment, commit, Brick, certification, Appeals, mail, fraudulent, wire fraud, misrepresentations, indirect, cases, class action, tobacco, target, costs, summary judgment motion, class certification

Constitutional Law, The Judiciary, Jurisdiction, General Overview, Governments, Courts, Authority to Adjudicate, Civil Procedure, Trials, Jury Trials, Bill of Rights, Fundamental Rights, Trial by Jury in Civil Actions, Preliminary Considerations, Justiciability, Equity, Maxims, Remedy Principle, Special Proceedings, Class Actions, Certification of Classes, Prerequisites for Class Action, Summary Judgment, Entitlement as Matter of Law, Burdens of Proof, Nonmovant Persuasion & Proof, Judgments, Evidentiary Considerations, Movant Persuasion & Proof, Appropriateness, Province of Court & Jury, Evidence, Relevance, Relevant Evidence, Antitrust & Trade Law, Racketeer Influenced & Corrupt Organizations, Claims, Fraud, Criminal Law & Procedure, Racketeering, Racketeer Influenced & Corrupt Organizations Act, Elements, Private Actions, Scope, Remedies, Fraud, Wire Fraud, Fraud Against the Government, Mail Fraud, Inchoate Crimes, Conspiracy, Torts, Concerted Action, Civil Conspiracy, Remedies, Elements, Causation, Causation in Fact, Proximate Cause, Types of Damages, Compensatory Damages, Measurements, Damages, Real Property Law, Just Compensation, Property Valuation, Fraud & Misrepresentation, Actual Fraud, Securities Law, Civil Liability Considerations