On September 24, 2010, Justice Scalia granted a stay, pending a certiorari petition, of a $241 million judgment against Philip Morris brought in Louisiana state court by a class of Louisiana residents. Rejecting several arguments in favor of the stay, Justice Scalia found one persuasive: that defendants were denied due process because the individual class members were not required to prove reliance, even though reliance was an element of the fraud claim plaintiffs asserted. The Louisiana court had held that because the money from the judgment would be used to fund a smoking-cessation program that would benefit the class as a whole, rather than being paid to specific individuals, it was sufficient that the class relied as a whole on the false statements.
Justice Scalia expressed concern that the Louisiana court’s approach would allow individual class members to obtain the benefits of a judgment that they could not have obtained except through the procedural device of a class action, and held that the Supreme Court’s rigorous test for granting a stay was satisfied.
If the Supremes follow through and grant certiorari (which Justice Scalia found “reasonably probable”), the case will be one for class action practitioners to watch. A judgment that requires individual proof of reliance as a matter of due process would affect both state and federal class actions, and would provide defendants with an argument not only to defend against the merits, as in this case, but to argue against class certification.