Allegheny General Hospital, et al. v. Philip Morris, Inc., et al.

Plaintiffs, 16 non-profit hospitals tasked under Pennsylvania law with caring for Medicaid and other indigent patients, brought suit against tobacco companies to recover costs, alleging that the defendants had violated Racketeer Influenced and Corrupt Organizations Act (RICO) when they engaged in a conspiracy lasting more than 40 years to manipulate the nicotine content in cigarettes and other tobacco products. The plaintiffs claimed that the defendants deceived and misled the public about the addictive properties of nicotine and the health risks of smoking. As a result, many people used tobacco and developed lung cancer and other tobacco-related illnesses. The Court held that the hospitals lacked quasi-governmental standing; standing to assert antitrust claims; standing to assert RICO claims; proximate cause - required to support fraudulent misrepresentation, fraudulent concealment, negligent misrepresentation and omission, and special duty claims; aiding and abetting; and civil conspiracy claims .  The Court also found that the plaintiffs failed to state a claim of public nuisance, that tobacco companies were not unjustly enriched, and that action for indemnity was unavailable.

Allegheny General Hospital, et al. v. Philip Morris, Inc., et al., 228 F.3d 429, United States Court of Appeals, Third Circuit (2000).

  • United States
  • Oct 6, 2000
  • United States Court of Appeals for the Third Circuit
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Parties

Plaintiff

  • Allegheny General Hospital
  • Allegheny Valley Hospital
  • Armstrong County Memorial Hospital
  • Canonsburg General Hospital
  • Carbon-Schuylkill Community Hospital, Inc., d/b/a Miners Memorial Medical Center
  • Chambersburg Hospital
  • Forbes Regional Hospital
  • Hazleton--St. Joseph Medical Center
  • Lehigh Valley Hospital
  • Muhlenberg Hospital Center
  • Northeastern Pennsylvania Corporation, d/b/a Hazleton General Hospital
  • Saint Luke's Hospital of Bethlehem
  • Saint Luke's--Allentown Campus
  • Saint Vincent Health Center
  • St. Luke's Quakertown Hospital
  • Waynesboro Hospital

Defendant

  • B.A.T Industries, Plc.
  • Brown & Williamson Tobacco Corporation
  • Hill & Knowlton, Inc
  • Liggett Group, Inc.
  • Lorrilard Tobacco Company
  • Philip Morris, Inc.
  • R.J. Reynolds Tobacco Company
  • Smokeless Tobacco Council, Inc.
  • The American Tobacco Company, Inc.
  • The Council for Tobacco Research-USA, Inc.
  • Tobacco Institute, Inc.
  • United States Tobacco Company

Legislation Cited

Related Documents

Type of Litigation

Tobacco Control Topics

Substantive Issues

Type of Tobacco Product

None

"For the record, we believe here that sound public policy argues against proximate cause and standing. When an injury is indirect, remote, and many steps away from the alleged cause, it is unadvisable to allow a case to proceed. See Palsgraf v. Long Island R.R. Co., 162 N.E. 99, 103 (N.Y. 1928) (Andrews, J., dissenting) ("What we do mean by the word `proximate' is that, because of convenience, of public policy, of a rough sense of justice, the law arbitrarily declines to trace a series of events beyond a certain point."). The Hospitals are dangerously close to asserting that they have standing to sue any company that causes a nonpaying patient's disease or illness. For example, could the hospitals sue a group of auto manufacturers for the unreimbursed costs of treating nonpaying patients injured in car accidents, simply by alleging that the manufacturers conspired to keep defective vehicles on the road? See Assoc. of Wash. Pub. Hosp. Dists., 79 F. Supp. 2d at 1226. We doubt that would be in the interests of public policy. It is beyond dispute that the Tobacco Companies have engaged in "decades-long marketing of a product that we now know is demonstrably unsafe." Steamfitters, 171 F.3d at 927. At times, courts have ordered compensation. See, e.g., Amy Driscoll, Jurors Call $145 Billion Tobacco Verdict a `Message'; Florida Panel Members Say Record Award Is Firms' Penalty for Lying, Wash. Post, July 16, 2000, at A2 (a Florida jury returns $145 billion verdict in a class action suit against tobacco companies). We express no view on the propriety of such compensation. We simply hold that, due to the remoteness of the Hospitals' injuries, this third-party suit against the tobacco industry may not proceed."