Here in Brooklyn, at the United States District Court for the Eastern District of New York, attorney Michael Hausfeld is fighting for the very life of his Schwab case.
The main part of the morning was taken up with Hausfeld’s attempt to prove to Judge Weinstein that the Schwab class should be certified. The class of smokers, he argued, were cheated in their expectations of a safer cigarette, and had not received the value they had thought.
Michael Hausfeld sought to show that:
The tobacco defendants Pitched the idea that lights were safe, the public believed that pitch, and the market shifted as the public, driven by health concerns, believed what the industry wanted them to believe, and bought light cigarettes as a safer alternative, Oftentimes in lieu of quitting. The market shifted as the industry intended, creating a vast market in “lights” among consumers, who otherwise would have quit “in droves.”
Hausfeld sought to avoid Defendants’ requirement to poll every smoker to see if they relied on their statements by pointing to aggregated marketing data, often from the industry itself, which seemed to accept that people went to lights for health concerns, not for taste–in fact, one industry document said that, “”Lights as a descriptor has distinct perception of . . . an expectation of low tar and nicotine delivery with an additional second expectation of reduced taste.”
Judge Weinstein said he was “troubled” by several aspects, the central one being how to quantify not only the number of smokers involved in the class–those who took up smoking lights because they believed the industry’s (mis)representations and believed them to be safer, but the specific amount of damages, what the smokers have lost. Other cigarettes cost about the same, so what did smokers lose since they paid the same anyway?
Hausfeld came at the issue from a different perspective, that smokers thought they were paying for a value they didn’t receive, ie, more safety. If they were going to not receive that value, then they would have paid less for a cigarette that didn’t taste very good–as much as 80% less, Hausfeld said.
Apparently Hausfeld was envisioning a world in which smokers didn’t think lights had any harm-reduction value at all, and in such a world, smokers certainly wouldn’t pay much for a bad-tasting cigarette, and therefore lights would occupy a bottom-rung market niche–much like the cut-rate generics do today.
I’m not sure if this got across to Judge Weinstein, who seemed politely obstreperous.
Weinstein said that the ability to reliably quantify the damages to smokers is central to whether the case goes forward or not.
Hausfeld felt that “conjoint analysis” and aggregate marketing data (since 1971) is sufficient to determine these damages.
Weinstein also was troubled by whether smokers were getting value of a sorts even by just the “illusion” of safety, as they get value from feeling like a movie star, even though they knew deep down the illusion was false.
Hausfeld’s whole point, however, is that smokers _did_ buy what the industry wanted them to buy–that lights were safer. He backed this up with numerous quotes from industry documents and Judge Kessler’s decision.