WASHINGTON (Reuters) - The Supreme Court seemed closely divided as it heard arguments on Monday over whether tobacco firms can be sued under state law for deceptive advertising of "light" cigarettes, a case that could affect some 40 suits around the country seeking billions of dollars.
A lawyer for Altria Group Inc. and its Philip Morris USA unit argued that the Federal Cigarette Labeling and Advertising Act bars such lawsuits, as the justices returned to the bench for the first time since the end of June.
The Bush administration partially supported the argument made by a lawyer for three longtime smokers from Maine who want to proceed with their suit seeking damages from the largest U.S. cigarette maker.
The justices vigorously questioned lawyers for both sides and seemed closely divided, but the court's conservative majority appeared to support the firm's argument that Congress in adopting the law intended to trump or preempt such state court lawsuits.
The class-action tobacco lawsuit claimed the company engaged in unfair and deceptive acts or practices in its representations that certain brands of its cigarettes are "light" or have "lowered tar and nicotine."
It said cigarettes like Marlboro and Cambridge Lights are deceptively designed and marketed, and that a smoker of those brands consumes the same amounts of tar and nicotine as from regular cigarettes.
Theodore Olson, the administration's chief advocate before the Supreme Court during President George W. Bush's first term in office, argued on behalf of the tobacco company.
He said Congress decided it wanted one national source of regulation for advertising of cigarettes and health claims. "National advertising becomes impossible," if states can set different standards, Olson said.
David Frederick, representing the smokers, said Congress did not intend to give cigarette makers immunity for false statements as it adopted the law.
Chief Justice John Roberts said the federal cigarette advertising law specifically covered what companies can say about how their products affect safety and health. "How do you tell it's deceptive or not unless you look at smoking and health?" he asked.
The U.S. Federal Trade Commission in July proposed changing its rules, which for decades allowed the use of "light" and "low tar" in advertising cigarettes. It said the previously used machine-based tests do not provide meaningful information on the amounts of tar and nicotine smokers receive.
Justice Samuel Alito criticized the agency. "You created this whole problem," he said to the government's lawyer. "You have misled everyone who has bought these cigarettes for a long time."
Douglas Hallward-Driemeier, the Justice Department lawyer representing the Federal Trade Commission, said cigarette makers should not be able to benefit from misleading the commission.
Besides Roberts and Alito, Justices Antonin Scalia and Anthony Kennedy asked questions that seemed to support Philip Morris. Justice Clarence Thomas typically asked no questions, but previously has supported the view that federal law takes precedence over state law.
The court's liberals seemed supportive of the smokers.
Justice Ruth Bader Ginsburg appeared concerned that the company's position would also bar lawsuits from a state attorney general and Justice David Souter said state law would be "complimentary" of federal regulation.
A ruling is expected early next year.