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Eastern States Health & Welfare Fund v. Philip Morris, Inc.

Other Lower Courts

March 3, 2000

Eastern States Health & Welfare Fund et al., Plaintiffs,
v.
Philip Morris, Inc., et al., Defendants. (And Nine Other Actions.)

Page 639

COUNSEL

Wachtell, Lipton, Rosen & Katz, New York City (Peter C. Hein, Barbara Robbins and Ben M. Germana of counsel), for Philip Morris, Inc., defendant.

Jones, Day, Reavis & Pogue,

Page 640

New York City (Steven C. Bennett and Michael S. Chernis of counsel), for R.J . Reynolds Tobacco Co. and others, defendants.

Kirkland & Ellis, New York City (Marjorie Press Lindblom and Peter A. Bellacosa of counsel), for American Tobacco Company and another, defendants.

Simpson Thacher & Bartlett, New York City (Mark Cunha and Adam Stein of counsel), and Chadbourne & Parke, New York City (Thomas J. McCormack and Robert Pruyne of counsel), for B.A .T . Industries, PLC, and another, defendants.

Kasowitz, Benson, Torres & Friedman, New York City (Michael M. Fay of counsel), for Liggett & Meyers Inc., defendant.

Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, New York City (Alan E. Mansfield of counsel), for Lorillard Tobacco Co., Inc., defendant.

Skadden, Arps, Slate, Meagher & Flom L. L. P., New York City (Peter J. McKenna and Mark S. Cheffo of counsel), for United States Tobacco Co., defendant.

Debevoise & Plimpton, New York City (Steven Klugman of counsel), for The Council for Tobacco Research-U.S .A ., Inc., defendant.

Seward & Kissell, New York City (Anthony Mansfield of counsel), for The Tobacco Institute, Inc., defendant.

Jacob, Medinger & Finnegan, L. L. P., New York City (Barry S. Schaevitz of counsel), for Smokeless Tobacco Council, Inc., defendant.

Davis & Gilbert, New York City (Bruce Ginsberg of counsel), for Hill & Knowlton, Inc., defendant.

Meyer, Suozzi, English & Klein, P. C., Mineola (Michael Ciaffa of counsel), and Zwerling, Schachter & Zwerling, L. L. P., New York City (Dan Drachler of counsel), for Eastern States Health & Welfare Fund and others, plaintiffs.

Levy, Ratner & Behroozi, P. C., New York City (Metra Behroozi of counsel), and David Paul Horowitz, New York City, for Local 1199 National Benefit Fund for Human Services Employees, plaintiff.

OPINION

Charles Edward Ramos, J.

Defendants Philip Morris, Inc., R.J . Reynolds Tobacco Co., RJR Nabisco Holding Corp., RJR Nabisco, Inc., American Tobacco Company, Brown & Williamson Tobacco Corp., B.A .T . Industries, PLC, British American Tobacco Company, Ltd., Liggett & Myers Inc., Lorillard Tobacco Co., Inc., United States Tobacco Co., The Council for Tobacco Research-U.S .A ., Inc., The Tobacco Institute, Inc., Smokeless Tobacco Council, Inc., and Hill & Knowlton, Inc. (collectively, Defendants) move to dismiss the instant action (1) pursuant to CPLR 3211 (a) (7)

Page 641

for failure to state a cause of action; (2) pursuant to CPLR 3211 (a) (5) on Statute of Limitations grounds; and (3) pursuant to CPLR 3211 (a) (10) for failure to join necessary parties. [1] In addition, defendant B.A .T . Industries, PLC (B.A .T .) moves to dismiss the action as against it on the ground that there is a lack of personal jurisdiction.

Background

These related tobacco litigation actions are brought by 14 different health and welfare benefit trust funds that operate in New York State (collectively, the Funds). [2] The Funds provide health care benefits for employees covered by collective bargaining agreements with various employers. The Funds operate subject to the Taft-Hartley Act (29 U.S.C. § 141 et seq.) and the Employee Retirement Income Security Act (29 U.S.C. § 1001 et. seq. [ERISA]). Pursuant to these statutes, the Funds' assets are held in trust for the purpose of providing benefits to participants and beneficiaries.

In bringing this litigation, the Funds seek to recover money the Funds paid for medical bills incurred by their participants and beneficiaries who suffer from alleged tobacco-caused diseases. These actions are based upon the allegations that Defendants (1) deliberately deceived and misled, and continue to deceive and mislead, the Funds, the participants, and their beneficiaries concerning the adverse health consequences of tobacco products; (2) secretly manipulated and continue to manipulate the nicotine levels in tobacco products to insure addiction; and (3) continue to conspire to keep safer tobacco products from the Funds' participants and beneficiaries. [3]

The first 12 causes of action, alleging torts committed directly against the Funds themselves, are fraud, antitrust violations, deceptive trade practices, false advertising, intentional and

Page 642

negligent breach of special duty, negligence, negligent product design, strict liability, negligent and intentional entrustment, indemnity, and public nuisance.T he Funds claim that the Defendants' alleged conduct regarding tobacco use resulted in the Funds' failure to take actions to discourage smoking. To the extent that the participants or beneficiaries would seek recompensation for medical benefits paid, the Funds assert a subrogation claim in their 13th cause of action.

After the Funds filed their complaints, Defendants removed the case to the United States District Court for the Southern District of New York on the ground, inter alia, that the Funds' subrogation claim arose under federal law. The federal court granted the Funds' motion to remand the case to this Court, accepting the Funds' representation that their complaint relies solely on state law. (See, Eastern States Health & Welfare Fund v Philip Morris, Inc., 11 F.Supp.2d 384, 399 [SD N.Y. 1998].) The instant motions followed.

Discussion

In now moving to dismiss the action, Defendants put forth a panoply of arguments. The first contention is that the Funds' 1st through 12th causes of action fail to state a cause of action due to a lack of proximate cause, as the injuries allegedly suffered by the Funds are remote and indirect. Accordingly, Defendants contend the Funds have no rights of action. As for the subrogation cause of action, Defendants argue that because the Funds are ERISA ...


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