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Price v. Philip Morris12/15/2005
* This `voluntary agreement' was a substitute for a formal rule." Watson, 420 F.3d at 859. Regarding the consent orders, the court of appeals opined that the consumer fraud class action "directly implicates the enforcement and wisdom of the FTC's tobacco policies" as explained in the 1971 consent order. Watson, 420 F.3d at 862.
In this case, the court concludes:
"The issue addressed by the Watson court-whether removal to federal court was proper-has no bearing on the present case. However, the federal district court's detailed analysis does support our conclusion that specific authorization for the use of the disputed descriptors may be found in consent orders rather than in formally promulgated trade regulation rules of the FTC." Slip op. at 67.
I respectfully disagree.
I note with great interest that removal actions "have been brought in other jurisdictions, and courts have generally declined to permit Philip Morris to remove, concluding that the FTC did not exercise direct and detailed control over the acts for which it was being sued." Paldrmic, 327 F. Supp. 2d at 966. Indeed, the federal district courts in Paldrmic and Virden candidly acknowledged the contrary holding of the district court in Watson. Paldrmic, 327 F. Supp. 2d at 966 n.2; Virden, 304 F. Supp. 2d at 846. Likewise, the court of appeals in Watson candidly acknowledged the contrary holding of the district courts. Watson, 420 F.3d at 857-59. Although the district court's reasoning in Watson was affirmed on appeal, Watson was the only district court to hold that the FTC "regulated" the use of the disputed descriptors to such a degree as to qualify for federal officer removal jurisdiction.
The Virden and Paldrmic courts recognized that Philip Morris has never acted as an agent or an employee of the federal government. Virden, 304 F. Supp. 2d at 846. "At most, it [Philip Morris] is a private corporation doing business in a regulated industry." Paldrmic, 327 F. Supp. 2d at 968. Indeed, in the court of appeal's decision in Watson, a member of that panel concurred "to emphasize that our decision today should not be construed as an invitation to every participant in a heavily regulated industry to claim that it, like Philip Morris, acts at the direction of a federal officer merely because it tests or markets its products in accord with federal regulations." Watson, 420 F.3d at 863 (Gruender, J., concurring). The concurring judge believed that "in most instances, a contract, principal-agent relationship, or near- employee relationship with the government will be necessary to show the degree of direction by a federal officer necessary to invoke removal under 28 U.S.C. ยง1442(a)(1)." Watson, 420 F.3d at 863 (Gruender, J., concurring). However, because the concurring judge viewed the level of FTC regulation of the cigarette industry as "extraordinary," he opined that "this is a rare case in which federal officer jurisdiction is appropriate even in the absence of a contract, principal-agent relationship, or near-employee relationship with the government." Watson, 420 F.3d at 864 (Gruender, J., concurring).
However, as the Virden court concluded: "The indicia of federal control present in cases finding federal officer removal jurisdiction are wholly lacking here." Virden, 304 F. Supp. 2d at 846. In Paldrmic, the court found that Philip Morris did not establish that its use of the disputed descriptors "was mandated by the FTC." Paldrmic, 327 F. Supp. 2d at 966. Both courts focused on the voluntary nature of the 1970 agreement. According to the Virden court, "the most that can be said is that the FTC has been impliedly regulating the tobacco industry through its tacit acceptance of a volunt
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