Watson v. Philip Morris Companies, Inc.

Since the Supreme Court is only deciding whether Philip Morris can properly demand to have this action heard in federal court under 28 U.S.C. § 1442(a), it will not reach the merits. A ruling in Philip Morris’s favor would necessarily mean that the Court endorses the notion that the FTC regulates the tobacco industry so heavily as to remove most if not all discretion from conforming conduct by tobacco defendants, and that could prove an important point for Phillip Morris in defending this suit and other actions around the country. As evidence of the ramifications of this suit on others involving Philip Morris, one need only look at the language employed by them in a response to a briefing submitted by the Solicitor General: “The Department of Justice is currently involved in litigation against respondent, in which one of the central issues is the FTC's regulatory history with respect to low yield cigarettes.” Respondent’s Brief in Response to Brief for the United States as Amicus Curiae 1.

But even a complete victory before the Supreme Court for Philip Morris would mean it still has to defend itself against this class action in a federal court. Should the Supreme Court reverse the Eighth Circuit, then Watson and Lawson’s lawsuit will go forward in Arkansas state court. Does that matter? Why so much litigation to decide whether this lawsuit goes forward in state or federal court? For starters, there is research supporting the conventional wisdom that defendants who remove cases to federal court win those cases much more frequently than those who must defend in state court or who were originally sued in federal court. See Clermont & Eisenberg, Do Case Outcomes Really Reveal Anything About The Legal System? Win Rates and Removal Jurisdiction, 83 Cornell L. Rev. 581 (1998). On top of that, defendants who lose in federal court, especially in jury trials, have a much more favorable reversal rate than plaintiffs. Clermont & Eisenberg, Anti-Plaintiff Bias in the Federal Appellate Courts, 84 Judicature 128 (2000). Of course, the parties are not crafting their legal arguments with reference to these very practical ramifications on the likely outcome; but, instead, the issues they identify turn on the division of labor between state and federal courts as created by the Constitution.

The Madisonian Compromise

Since the very founding of our country and the creation of our national judicial system, Congress deemed state courts fully capable of hearing legal claims arising under both state and federal law. Fallon, et al., Hart & Wechsler’s The Federal Courts and the Federal System 6 – 14 (3d Ed. 2003). Indeed, that belief is at the very heart of the Madisonian Compromise: in lieu of creating a system where federal courts heard only federal claims and state courts heard only state claims, the founding fathers agreed that while there would be just one national Supreme Court, the already-existing individual state courts would be deemed competent to hear both state and federal claims. Id. Article Three of the Constitution gives Congress the power to establish lower federal courts, but does not mandate their existence. U.S. Const. art. III, § 1.

Such a “compromise” both prevented Congress from having to create additional lower federal courts, and also recognized the inherent value that state courts have as protectors of federal rights. See Hamilton, Federalist No. 81. After all, the rationale went, the states were all members of the newly created federal system and had as much interest in enforcing the nation’s new federal rights as any other court would. See id.

Today, although the doctrines driving both state and federal jurisdiction have evolved over time, and the complexity of today’s jurisdictional rules belies the elegant simplicity of that original compromise, one principle of our legal system remains clear: our nation holds a fundamental belief in the inherent competence of state courts to hear federal claims.

The Federal Officer Removal Statute

Unfortunately, history demonstrates that this presumption of state court competence has not always been justified. At times, state courts have refused to enforce or uphold unpopular federal laws, despite their clear obligation to do so. See Fallon et al. at 908 – 910. For example, during the War of 1812, the courts of states who opposed the war refused to enforce an embargo on England that was part of the war effort. Brief for Petitioners at 3. In those cases, private shipowners filed harassing lawsuits against federal customs collectors attempting to enforce the embargo, and state courts began to side with the shipowners and against the federal officials who enforced the national interest. Id. In reaction to this kind of state court behavior which was blatantly hostile to federal interests (and which, unfortunately, would be repeated throughout history), Congress enacted the first “federal officer removal statute” in 1815—and such a statute has existed continuously, in one form or another, since that date. Id.; see also Fallon et al. at 908 n.8.

The federal officer removal statute essentially ensures that when a federal official is sued while acting under color of that federal office, he or she is entitled to remove that lawsuit to federal court. Fallon, et al. at 908 – 910. In turn, such removal is expected to ensure a fair outcome of the litigation, if not a favorable one, for the federal official. Id. In theory, then, the statute promises nothing more than a fair forum to the federal officer.

In light of the history of the statute, a claim that Philip Morris, a for-profit tobacco company, would be eligible to avail itself of a statute’s promise of a fair forum to a federal official seems, at first glance, laughable. But the Eighth Circuit, applying precedent and the four-part test there developed, reached the conclusion that the FTC’s regulation of the tobacco industry was so pervasive and comprehensive that Philip Morris could take advantage of federal officer removal because it was “acting under” strict guidance from the FTC. 420 F.3d at 855 - 64.