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http://laws.findlaw.com/3rd/991931.html |
Filed May 17, 2001
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 99-1931
JESSE BROWN, REV., ON BEHALF OF HIMSELF AND
ALL MEMBERS OF THE UPTOWN COALITION FOR
TOBACCO CONTROL AND HEALTH; AARON ELEAZER;
PANSY SMITH; ELLEN IRVING; NATIONAL ASSOCIATION
OF AFRICAN AMERICANS FOR POSITIVE IMAGERY , INC.,
Appellants
v.
PHILIP MORRIS INC.; BROWN AND WILLIAMSON
TOBACCO CORPORATION; B.A.T. INDUSTRIES;
LORILLARD TOBACCO COMPANY INC.; THE AMERICAN
TOBACCO COMPANY; UNITED STATES TOBACCO
COMPANY; THE COUNCIL FOR TOBACCO RESEARCH
U.S.A., INC.; THE TOBACCO INSTITUTE, INC.;
SMOKELESS TOBACCO COUNCIL, INC.; HILL &
KNOWLTON, INC.; RJR NABISCO HOLDINGS CORP .; R.J.
REYNOLDS TOBACCO COMPANY; LIGGETT GROUP INC.;
LIGGETT & MYERS TOBACCO COMPANY
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civil Action No. 98-cv-05518)
District Judge: Honorable John R. Padova
Argued January 19, 2001
Before: ROTH and BARRY, Cir cuit Judges, and
SHADUR,* District Judge
_________________________________________________________________
* Honorable Milton I. Shadur, District Court Judge for the Northern
District of Illinois, sitting by designation.
(Opinion filed: May 17, 2001)
Bruce M. Ludwig, Esquire (Argued)
William R. Adams, Jr., Esquire
(Argued)
Sheller, Ludwig & Badey
1528 Walnut Street, 3rd Floor
Philadelphia, PA 19102
Black & Adams
123 S. Broad Street, Suite 1820
Philadelphia, PA 19109
Attorneys for Appellants
Jeffrey G. Weil, Esquire (Ar gued)
Michael F. R. Harris, Esquire
Matthew S. Miner, Esquire
Alan C. Promer, Esquire
Dechert, Price & Rhoads
1717 Arch Street
4000 Bell Atlantic Tower
Philadelphia, PA 19103
Attorneys for Philip Morris
Incorporated
Christopher S. D'Angelo, Esquire
Montgomery, McCracken, Walker &
Rhoads
123 South Broad Street
Philadelphia, PA 19109
Attorneys for B.A.T. Industries
Howard M. Klein, Esquire
William J. O'Brien, Esquire
Conrad, O'Brien, Gellman & Rohn
1515 Market Street, 16th Floor
Philadelphia, PA 19102
Attorneys for Lorillard Tobacco
Company
2
Stephen J. Imbriglia, Esquire
Hecker, Brown, Sherry & Johnson
18th & Arch Streets
1700 Two Logan Square
Philadelphia, PA 19103
Attorneys for US Tobacco
Company
Patrick W. Kittredge, Esquire
Kittredge, Donley, Elson, Fullem &
Embrick
421 Chestnut Street, 5th Floor
Philadelphia, PA 19106
Attorneys for the Council for
Tobacco Research, U.S.A., Inc.
Wilbur L. Kipnes, Esquire
Schnader, Harrison, Segal & Lewis
1600 Market Street, suite 3600
Philadelphia, PA 19103
Attorneys for Smokeless Tobacco
Council, Inc.
Richard L. Kremnick, Esquire
Blank, Rome, Comisky & McCauley
One Logan Square
Philadelphia, PA 19103
Attorneys for Hill & Knowlton, Inc.
Daniel F. Kolb, Esquire
Anne B. Howe, Esquire
Davis, Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
Attorneys for RJR Nabisco
Holdings
3
Edward C. Schmidt, Esquire
Jones, Day, Reavis & Pogue
500 Grant Street, 31st Floor
Pittsburgh, PA 15219
Morton F. Daller, Esquire
Daller, Greenberg & Dietrich
7111 Valley Green Road
Valley Green Corporate Center
Fort Washington, PA 19034
Attorneys for R.J. Reynolds
Tobacco
J. Kurt Straub, Esquire
Jonathan W. Hugg, Esquire
One Penn Center, 19th Floor
Obermayer, Rebmann, Maxwell &
Hippel
1617 John F. Kennedy Boulevard
One Penn Center, 19th Floor
Philadelphia, PA 19103
Attorneys for Liggett Group, Inc.,
and Liggett & Myers Tobacco
OPINION OF THE COURT
ROTH, Circuit Judge:
Mentholated tobacco products apparently pose greater
health risks than non-mentholated ones. Plaintif fs, a group
of African-Americans, brought a civil rights action,
contending that, with this knowledge, defendant tobacco
companies have targeted the marketing of mentholated
tobacco products at African-Americans.
Plaintiffs, who designate themselves the "Black Smokers,"
are the Rev. Jesse Brown, the Uptown Coalition for Tobacco
Control and Healing, Aaron Eleazar , Pansy Smith, Ellen
Irving, and the National Association of African Americans
for Positive Imagery, Inc. They brought this civil rights
action on behalf of a class of all living Black Americans who
have, since 1954, purchased or consumed mentholated
4
tobacco products. They named as defendants the tobacco
companies: Philip Morris, Inc., R.J. Reynolds T obacco
Company, RJR Nabisco Holdings Corporation, Br own &
Williamson Tobacco Corporation, B.A.T . Industries, the
American Tobacco Company, Lorillard T obacco Company,
Inc., Liggett & Myers Tobacco Company, Liggett Group Inc.
and United States Tobacco Company; the non-pr ofit
organizations supported by the tobacco-industry: the
Tobacco Institute, Inc., the Council for T obacco Research --
U.S.A., Inc., and Smokeless Tobacco Council, Inc.; and the
public relations firm Hill & Knowlton, Inc. Black Smokers
contend that each of the defendants has unlawfully
engaged in targeted marketing and sales of mentholated
tobacco products to African-Americans on the basis of their
race in violation of the civil rights statutes codified at 42
U.S.C. SS 1981, 1982, 1983 and 1985(3). Black Smokers
also assert a cause of action against defendants under
Bivens v. Six Unknown Federal Narcotics Agents , 403 U.S.
388, 91 S.Ct. 1999 (1971), and the Fifth Amendment to the
United States Constitution, arguing that defendants should
be considered federal actors by virtue of the federal
regulatory scheme to which the tobacco industry is subject.
The District Court granted defendants' motion to dismiss
for failure to state a claim. We will affirm that decision. We
agree with the District Court that Black Smokers'
allegations of racially targeted marketing of mentholated
tobacco products cannot, in the absence of any disparity
between the products sold to African-Americans and the
products sold to others, constitute a deprivation of contract
or property rights actionable under SS 1981 or 1982. We
also concur with the District Court that ther e is no
allegation that defendants are state actors to support the
S 1983 claim and that defendants cannot be r egarded as
federal actors as is required to maintain the claims under
Bivens and the Fifth Amendment. Although we agree with
the District Court that Black Smokers failed to state a
claim under S 1985(3), we need not reach the further
question whether SS 1981 and 1982 claims can, as a matter
of law, support a claim under S 1985(3). As the District
Court noted, even assuming arguendo that Black Smokers
could properly premise a S 1985(3) cause of action on a
5
violation of SS1981 and 1982, they have failed to state a
claim under SS 1981 and 1982.
I. FACTS
In their Second Amended Complaint, Black Smokers
allege that the defendants have unlawfully tar geted African-
Americans with billboard, magazine, and other types of
advertising in order to promote the sale to and
consumption by African-Americans of various mentholated
tobacco products. It is not disputed that the tobacco
industry has designed certain menthol cigarettes
specifically to appeal to African-American consumers,
including R.J. Reynolds' "Uptown," a high tar , high nicotine
menthol cigarette.1 Black Smokers contend, and defendants
do not dispute, that medical research has demonstrated
that mentholated tobacco products pose gr eater health
risks than non-mentholated ones, including an incr eased
incidence of cancers of the lung and pharynx. It is not
disputed that, although African-Americans account for only
10.3% of the U.S. population, they account for a
significantly greater share of menthol cigarette smokers.
Black Smokers cite reports fixing the per centage of African-
American menthol smokers at, variously, 31%, 61.5% and
66%. Apparently relying upon the 31% figure, defendants
claim that a significant majority (69%) of menthol cigarette
smokers are not African-Americans and that Black
Smokers admit that fact. In addition to the allegation of
racially targeted marketing, Black Smokers also charge
defendants with "intentional racial discrimination" and a
"conspiracy of deception and misrepr esentation against the
African American public."
Black Smokers also accuse defendants of "a massive
conspiracy to mislead the Black American public r egarding
the safety of menthol tobacco products." Black Smokers
identify three courses of conduct underlying the purported
conspiracy: "(1) acting in concert to repr esent falsely that
their menthol tobacco products are safe for African
Americans to use; (2) engaging in a concerted campaign to
_________________________________________________________________
1. The Uptown brand was withdrawn from the market by R.J. Reynolds
in 1990 as a result of negative national publicity.
6
saturate the African American community with danger ous,
defective and hazardous tobacco products, which Tobacco
Industry knew caused harm, in violation of the civil and
constitutional rights of African Americans; and (3)
misrepresenting, suppressing, distorting, and confusing the
truth about the health dangers of mentholated tobacco
products." Notwithstanding these allegations, Black
Smokers apparently concede in their opening appellate brief
that African-Americans demonstrated their pr eference for
menthol cigarettes before defendants initiated targeted
advertising. In their reply brief and at oral argument,
however, Black Smokers denied making such a concession
and asserted that defendants created the African-American
preference for menthol cigarettes. Black Smokers did not
allege in their opening appellate brief that defendants
interfere with the right of African-Americans to purchase
non-menthol cigarettes or that menthol cigar ettes are not
marketed and sold to persons other than African-
Americans. However, in their reply brief and at oral
argument, Black Smokers made the surprising statement
that they "do not concede that Black Americans ar e free to
purchase non-menthol cigarettes."
Black Smokers do not contend that the menthol
cigarettes marketed and sold to African-Americans are
themselves different from those sold to whites or other
persons. Additionally, Black Smokers do not aver that
African-Americans receive information about menthol
cigarettes that differs in any respect from the information
provided to others. However, in their r eply brief and at oral
argument, Black Smokers made another surprising claim --
that while defendants suggest to African-Americans in
advertising that menthol cigarettes are healthier than non-
menthol cigarettes, are of high quality, enhance the
smoker's image, and are glamorous, pr estigious and
socially acceptable, "none of these sales messages or terms
are targeted to white consumers." Black Smokers agree,
however, that defendants have employed tar geted marketing
(e.g., advertising using African-American models and
athletes) to sell non-menthol cigarettes such as Camel,
Lucky Strike, Kent and Eve. In addition, no party to the
instant litigation alleges that defendants pr ovide any
consumers with warnings concerning the additional health
7
risks posed by menthol cigarettes in comparison to non-
mentholated tobacco products.
Black Smokers filed this action in the United States
District Court for the Eastern District of Pennsylvania on
October 19, 1998. A month later, Black Smokers filed a
First Amended Class Action Complaint correcting the
caption. By leave of the court, Black Smokers filed a
Second Amended Complaint on December 9, 1998, in or der
to add claims purportedly arising under the Fifth and
Fourteenth Amendments to the United States Constitution
and 42 U.S.C. S 1985(3). On January 8, 1999, defendants
filed a motion to dismiss the Second Amended Complaint.
The District Court granted the motion to dismiss on
September 23, 1999. Jesse Brown et al. v. Philip Morris,
Inc., et al., No. Civ. A. 98-5518, 1999 WL 783712 (E.D. Pa.
Sept. 22, 1999). Black Smokers filed a timely Notice of
Appeal on October 19, 1999.
II. JURISDICTION AND STANDARD OF REVIEW
The District Court had subject matter jurisdiction
pursuant to 28 U.S.C. SS 1331, 1343(a)(1), (3) and (4), and
1332. We have appellate jurisdiction pursuant to 28 U.S.C.
S 1291. We exercise plenary r eview over the District Court's
dismissal of a complaint for failure to state a claim
pursuant to Fed.R.Civ.P. 12(b)(6). Gallas v. Supreme Court
of Pennsylvania, 211 F.3d 760, 768 (3d Cir. 2000). We must
accept as true all of the factual allegations in the complaint
as well as the reasonable inferences that can be drawn
from them. Moore v. Tartler, 986 F.2d 682, 685 (3d Cir.
1993). We may dismiss the complaint only if it is clear that
no relief could be granted under any set of facts that could
be proved consistent with the allegations. Hishon v. King &
Spaulding, 476 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59
(1984).
III. DISCUSSION
A. REGULATING TOBACCO PRODUCTS
A brief summary of the federal regulation of the tobacco
industry is a necessary prerequisite to a discussion of
8
Black Smokers' civil rights claims. Manufactur ers of
cigarettes are subject to the Federal Cigarette Labeling and
Advertising Act of 1965 and its successor, the Public Health
Cigarette Smoking Act of 1969, 15 U.S.C. S 1331, et seq.
(together, the Labeling Act). The Labeling Act provides a
comprehensive program of federal r equirements addressing
the labeling and advertising of cigarettes and preempts
certain state law damages actions relating to smoking and
health which challenge the adequacy of warnings on
cigarette packages or the propriety of a manufacturer's
advertising or promotion of cigarettes. See Cipollone v.
Liggett Group, Inc., 505 U.S. 504, 511, 112 S.Ct. 2608
(1992). In Cipollone, the Supreme Court was called upon to
determine the contours of the federal pr eemption of state
law actions under the Labeling Act. The Court held that (i)
the 1965 Act does not preempt state law damages actions
in general; (ii) the 1969 Act does preempt claims based on
a failure to warn and on the neutralization of federally
mandated warnings to the extent that such claims rely on
omissions or inclusions in a manufacturer's advertising or
promotions; and (iii) the 1969 Act does not pr eempt claims
based on express warranty, intentional fraud and
misrepresentation, or conspiracy. See Cipollone v. Liggett,
505 U.S. at 530-31.
B. CIVIL RIGHTS CLAIMS: SECTIONS 1981 AND 1982
Section 1981, which prohibits racial discrimination in the
making and enforcement of contracts and pr operty
transactions, provides:
All persons within the jurisdiction of the United States
shall have the same right in every State and T erritory
to make and enforce contracts, to sue, be parties, give
evidence, and to the full and equal benefit of all laws
and proceedings for the security of persons and
property as is enjoyed by white citizens, and shall be
subject to like punishment, pains, penalties, taxes,
licenses and exactions of every kind, and to no other.
42 U.S.C. S 1981(a). Section 1981 is derived from the Civil
Rights Act of 1866 and from the reenactment of Section 1
of the 1866 Act in 1870. Mahone v. Waddle , 564 F.2d 1018,
9
1030 (3d Cir. 1977), citing Runyon v. McCrary, 427 U.S.
160, 168-70 & n.8; Civil Rights Act of 1866, ch. 31, section
I, 14 Stat. 27, reenacted, Civil Rights Act of 1870, ch. 114
SS 16, 18, 16 Stat. 144, codified at 42 U.S.C. SS 1981, 1982.
The legislative history of the 1866 Act makes clear
Congress's intent to enact "sweeping legislation
implementing the thirteenth amendment to abolish all the
remaining badges and vestiges of the slavery system."
Mahone v. Waddle, 564 F.2d at 1030. As a result, the
current statute rests not only on the Fourteenth
Amendment but also on the Thirteenth Amendment to the
Constitution. Runyon v. McCrary, 427 U.S. at 190 (Stevens,
J., concurring).
Section 1982, which prohibits racial discrimination in
transactions relating to real and personal property,
provides:
All citizens of the United States shall have the same
right, in every State and Territory, as is enjoyed by
white citizens thereof to inherit, purchase, lease, sell,
hold, and convey real and personal property.
42 U.S.C. S 1982. Like S 1981, S 1982 is a Reconstruction
statute enacted to effectuate the aims of the Thirteenth and
Fourteenth Amendments to the Constitution. Because of
the historic interrelationship between the two statutes,
courts have consistently construed them together . See
Saunders v. General Services Corp., 659 F .Supp. 1042,
1063 (E.D. Va. 1987), citing Tillman v. Wheaton-Haven
Recreation Association, 410 U.S. 431 (1973); McCrary v.
Runyon, 427 U.S. 160 (1976).
Although not identical, the requisite elements of claims
under SS 1981 and 1982 are quite similar . In neither case
need a plaintiff allege state action on the part of the
defendant. See Stirgus v. Benoit, 720 F.Supp. 119 (N.D. Ill.
1989) (S 1982). In order to state a claim under S 1981, a
plaintiff "must allege facts in support of the following
elements: (1) [that plaintiff] is a member of a racial
minority; (2) intent to discriminate on the basis of race by
the defendant; and (3) discrimination concer ning one or
more of the activities enumerated in the statute[,] which
includes the right to make and enforce contracts. . . ."
10
Yelverton v. Lehman, No. Civ. A. 94-6114, 1996 WL 296551,
at *7 (E.D. Pa. June 3, 1996), aff 'd mem., 175 F.3d 1012
(3d Cir. 1999). In order to bring an action under S 1982, a
plaintiff "must allege with specificity facts sufficient to show
or raise a plausible inference of 1) the defendant's racial
animus; (2) intentional discrimination; and 3) that the
defendant deprived plaintiff of his rights because of race."
Garg v. Albany Indus. Dev. Agency, 899 F . Supp. 961, 968
(N.D.N.Y. 1995), aff 'd, 104 F.3d 351 (Table), 1996 WL
547184 (2d Cir. Sept. 26, 1996). See also Shaare Tefila
Congregation v. Cobb, 481 U.S. 615, 616-17, 107 S.Ct.
2019 (1987).
Accepting as true the facts alleged in the complaint, we
conclude that Black Smokers have not alleged a claim
cognizable under either S 1981 or S 1982. Black Smokers do
not make the sort of claim that is most readily actionable
under the statute: that they have been deprived by
defendants of the right to contract for, pur chase, own or
use either menthol or non-menthol cigarettes. Black
Smokers do not aver that defendants have engaged in a
discriminatory refusal to deal with African-Americans with
respect to either menthol or non-menthol cigar ettes. Nor do
Black Smokers claim that defendants have dealt with
customers on differing terms on the basis of race; Black
Smokers concede that defendants sell menthol cigar ettes to
African-Americans at the same price and on the same
terms as such products are of fered to whites. Significantly,
Black Smokers do not allege that the mentholated tobacco
products sold to African-Americans differ from those sold to
whites. Furthermore, at no place in their submissions do
Black Smokers argue any disparities with r espect to the
marketing or sales of non-menthol tobacco pr oducts on the
basis of race. Consequently, it is difficult to understand
Black Smokers' allegations to constitute a deprivation of
contract or property rights actionable underSS 1981 or
1982. Indeed, Black Smokers' complaint appears instead to
present quite the opposite situation. Defendants are alleged
to encourage the consumption by African-Americans of
certain of their products: mentholated cigar ettes, snuff, and
chewing tobacco.
The question at the heart of Black Smokers' SS 1981 and
1982 claims, then, is whether such encouragement is
11
unlawful under the civil rights statutes. At the outset, we
note that neither party has alerted us to the existence of
any authority standing for the proposition that an
encouragement to deal is actionable under such statutes.
Some authority does exist in support of the notion that
targeting consumers for sales of defective pr oducts on the
basis of race is actionable under SS 1981 and 1982. For
example, in Roper v. Edwards, 815 F .2d 1474 (11th Cir.
1987), a case cited by Black Smokers, the Court of Appeals
for the Eleventh Circuit suggests that a cause of action
under S1981 exists where a burial vault manufacturer
made targeted sales of defective burial vaults to Black
consumers. Although the case was brought by white
plaintiffs who were inadvertently sold a defective vault, and
although the Court of Appeals ultimately rejected plaintiffs'
claims on other grounds, Black Smokers corr ectly argue
that the Eleventh Circuit did not reject the cause of action.
Nevertheless, Roper is readily distinguishable from the case
at bar because unlike Roper, which involved deceptive sales
to African-Americans of products that dif fered from those
sold to whites, this case concerns identical products;
defendants sell the same menthol cigarettes to everyone.
One might argue that if racially directed marketing of
menthol cigarettes resulted in a situation in which virtually
all mentholated tobacco products were consumed by
African-Americans and substantially all non-mentholated
tobacco products by others, that case might come within
the sweep of Roper. However, Black Smokers have not
alleged such a situation.
In order to salvage their S 1981 claims, Black Smokers
resort to several alternative theories of recovery. First, they
suggest that defendants' advertisements for menthol
cigarettes constitute express warranties containing
misrepresentations and false statements. This argument
seems to constitute a claim of breach of expr ess warranty,
intentional fraud or misrepresentation. Although it is true
that the Labeling Act does not preempt such an action,
Cipollone v. Liggett, 505 U.S. at 526-529, 530-31, Black
Smokers fail to make sufficiently detailed allegations with
respect to any of these potential causes of action. Black
Smokers imply in their submissions, and asserted at oral
12
argument, that defendants fail to disclose the increased
health risks of menthol cigarettes and that the African-
American community suffers damages as a r esult of its
higher consumption of mentholated tobacco pr oducts.
Although that claim may be factually true, it is not
actionable. The Supreme Court has held that the 1969 Act
preempts claims based on a failure to war n and on the
neutralization of federally mandated warnings to the extent
that such claims rely on omissions or inclusions in
advertising or promotions. Cipollone v. Liggett, 505 U.S.
504, 530-531.
Second, Black Smokers attempt to raise a claim of
segregated market exploitation by arguing that defendants'
practices fall within the ambit of segregated housing cases
such as Clark v. Universal Builders, Inc., 501 F.2d 324 (7th
Cir. 1973). This claim also fails on both factual and legal
grounds. In the segregated housing cases, unlike the
instant case, the defendants sold houses to Black
purchasers on substantially differ ent and more onerous
terms than to others, effectively cr eating two separate,
racially-segregated markets. See, e.g., Clark v. Universal
Builders, 501 F.2d at 328. Black Smokers, however, point
to no such disparities in the sale of mentholated tobacco
products, apart from the generalized allegation that African-
Americans are more likely than others to buy mentholated
tobacco products as a result of tar geted advertising.
Moreover, even if Black Smokers' segr egated market
exploitation claims were cognizable on the facts alleged, we
must reject them on procedural grounds. It does not appear
that Black Smokers advanced such claims in the District
Court; arguments asserted for the first time on appeal are
deemed to be waived and consequently are not susceptible
of review in this Court absent exceptional cir cumstances
(e.g., the public interest requir es that the issues be heard
or manifest injustice would result from the failure to
consider such issues). See, e.g., United States v. Anthony
Dell'acquilla Enter. & Subsidiaries, 150 F.3d 329, 335 (3d
Cir. 1998) (citations omitted); United Parcel Serv. Inc. v.
International Brotherhood of T eamsters, 55 F.3d 138, 140
n.5 (3d Cir. 1995). No such exceptional cir cumstances are
apparent here.
13
Third, Black Smokers assert that defendants' targeted
marketing practices violate the "full and equal benefit"
clause of S1981, which provides that "[a]ll persons within
the jurisdiction of the United States shall have the same
right in every State and Territory . . . to the full and equal
benefit of all laws and proceedings for the security of
persons and property as is enjoyed by white citizens . . .."
42 U.S.C. S 1981(a). Again, we must reject Black Smokers'
"full and equal benefit" claims because they do not appear
to have been raised in the District Court and no exceptional
circumstances suggest review of such claims
notwithstanding Black Smokers' failure to ar gue them
previously. United States v. Anthony Dell'acquilla Enter. &
Subsidiaries, 150 F.3d at 335 (citations omitted). Moreover,
even if we were to consider them, such "full and equal
benefit" claims would fail in light of a substantial line of
authority holding that only state actors can be sued under
the "full and equal benefit" clause of S1981. Mahone v.
Waddle, 563 F.2d 1018, 1029 (3d Cir. 1977); Sheppard v.
Dickstein, Shapiro, Morin & Oshinsky, 59 F.Supp.2d 27, 30
n.1 (D.D.C. 1999) (dictum); Lewis v. J.C. Penney Co., 948
F.Supp. 367, 371 (D.Del. 1996) (citations omitted); Sterling
v. Kazmierczak, 983 F.Supp. 1186, 1192 (N.D. Ill. 1997). As
we explain in Sections III C and D, infra, the defendants in
the instant case cannot be regarded as federal or state
actors.
Notwithstanding Black Smokers' arguments to the
contrary, their complaints essentially constitute
discriminatory advertising claims. Black Smokers virtually
admit as much when they characterize their claims as
allegations of discriminatory targeting in sales of allegedly
defective products. Although Black Smokers ar gue that
their claims resemble racial profiling and racially-motivated
prepayment cases, all such fact patterns are
distinguishable from the instant case because they involve
either a naked, racially-motivated restriction on dealing or
a race-based variation of the terms of the contract at issue.
Consequently, Black Smokers' claims remain
fundamentally allegations of discriminatory advertising and
are not therefore cognizable underSS 1981 or 1982.
Even in the context of housing discrimination -- arguably
a paradigmatic example of the rights Congress sought to
14
protect under the Civil Rights Acts -- ample authority
exists in support of the proposition that discriminatory
advertising is not actionable under SS 1981 and 1982. See
Jones v. Alfred H. Mayer Co., 392 U.S. 409, 413, 88 S.Ct.
2186 (1968) (noting that S1982 does not pr ohibit
"advertising or other representations that indicate
discriminatory preferences"); Span v. Colonial Village, Inc.,
899 F.2d 24, 35 (D.C. Cir. 1990) (holding that SS 1981 and
1982 do not prohibit real estate advertisements indicating
discriminatory preferences); Saunders v. General Services
Corp., 659 F.Supp. 1042 (E.D. Va. 1987) (declining to apply
SS 1981 or 1982 to racially discriminatory advertising for
rental housing); Ragin v. Steiner, Clateman and Assocs.,
714 F.Supp. 709, 713 (S.D.N.Y. 1989) (same in context of
cooperative apartment complex).
C. SECTION 1983
42 U.S.C. S 1983 provides a cause of action against any
"person who, under color of any statute, or dinance,
regulation, custom, or usage, of any State or T erritory or
the District of Columbia, subjects, or causes to be
subjected" any person to the deprivation of any right
protected by federal law or the United States Constitution.
Unlike SS 1981 and 1982, S 1983 is derived from the Civil
Rights Act of 1871, which was enacted to enfor ce the
Fourteenth Amendment. Mahone v. Waddle , 564 F.2d 1018,
1031 (3d Cir. 1977). Moreover, the Act of 1871, unlike the
Act of 1866, is addressed only to the state and to those
acting under color of state authority. Id. (citations omitted).
It is well established that liability under S 1983 will not
attach for actions taken under color of federal law. Bethea
v. Reid, 445 F.2d 1163, 1164 (3d Cir . 1971). In light of the
fact that Black Smokers have not alleged that defendants
are state, rather than federal actors, the District Court
properly granted defendants' motion to dismiss as to Black
Smokers' S 1983 claims.
D. THE BIVENS AND FIFTH AMENDMENT CLAIMS
The controlling question with respect to Black Smokers'
claims under Bivens, supra, and the federal Constitution is
15
whether defendant tobacco companies should be r egarded
as federal actors. In Bivens, the Supr eme Court found that
a damages claim arose under the federal Constitution
where a federal agent acting under color of federal authority
violated the Fourth Amendment. Id. A Bivens action, which
is the federal equivalent of the S 1983 cause of action
against state actors, will lie where the defendant has
violated the plaintiff 's rights under color of federal law.
Alexander v. Pennsylvania Dep't of Banking, No. Civ. 93-
5510, 1994 WL 144305, at *3 (E.D. Pa. April 21, 1994).
Black Smokers also make "direct constitutional" claims
under the Fourteenth and Fifth Amendments. As the
District Court noted in its opinion, the Fourteenth
Amendment only applies to actions of the states and not to
the federal government; therefore, the District Court
properly granted defendants' motion to dismiss the
Fourteenth Amendment claims. For Black Smokers' Bivens
and Fifth Amendment claims to succeed, Black Smokers
must establish that defendants are federal actors. Because
defendants' conduct cannot properly be r egarded as federal,
these claims must fail.
In order to determine whether the conduct of a private
party should be attributed to the federal gover nment,
courts apply the "state action" analysis set forth by the
Supreme Court in Lugar v. Edmonson Oil Co. , 457 U.S. 922,
937-42, 102 S.Ct. 2744 (1982). The Supreme Court
succinctly summarized the two-part test of Lugar in its
decision in Edmonson v. Leesville Concrete, 500 U.S. 614,
620, 111 S.Ct. 2077 (1991). There, the Court stated that
Lugar requires courts to ask "first whether the claimed
constitutional deprivation resulted from the exercise of a
right or privilege having its source in [federal] authority . . .
and second, whether the private party charged with the
deprivation could be described in all fairness as a [federal]
actor." Leesville Concrete, 500 U.S. at 620 (applying Lugar)
(citations omitted). Citing American Mfrs. Mut. Ins. Co. v.
Sullivan, 526 U.S. 40, 119 S.Ct. 977 (1999), Black Smokers
argue that their claims satisfy the first pr ong of Lugar
insofar as defendants had acted "with knowledge of and
pursuant to" the statute in question: the Labeling Act. This
argument is unavailing because it fails to allege a
deprivation of a right protected by the Constitution.
16
Moreover, the averment that defendants should be
subject to the mandates of the Constitution because their
activities have been allegedly approved by the federal
government through defendants' compliance with the
Labeling Act is unconvincing. The mere fact that a tobacco
company has complied with the requirements of a federal
law cannot suffice to transform it into a federal actor any
more than the compliance of a myriad of private enterprises
with federal law and administrative regulations could of
itself work such a transformation.2 Additionally, because
the alleged wrongdoing (the targeted advertising of
mentholated tobacco products to African-Americans) is not
required by the Labeling Act, it is difficult to view such
targeted advertising as federal action by defendants which
can serve as the basis for a Bivens action.
The second requirement of the Lugar analysis -- that the
private party could in all fairness be r egarded as a federal
actor -- may be met under one of three interr elated theories
of government action: (i) the "public function" test, (ii) the
"close nexus" test and (iii) the "symbiotic relationship" test.
In addition, Black Smokers discern in case law a fourth,
more synthetic "totality of the circumstances" test, the
existence of which is doubtful, as we explain infra. In order
to determine which test should be applied to a given set of
facts, courts must investigate carefully the circumstances
of each case. See Burton v. Wilmington Parking Authority,
365 U.S. 715, 722, 81 S.Ct. 856 (1961); Community Med.
Center v. Emergency Med. Services, 712 F .2d 878, 880 (3d.
Cir. 1983) (citations omitted). Regar dless of what test is
ultimately applied, the object of the inquiry is to determine
whether a private entity has exercised powers traditionally
reserved exclusively to the government, Jackson v.
Metropolitan Edison Co., 419 U.S. 345, 352, 95 S.Ct. 449
(1974), or whether "the defendant exercised power
possessed by virtue of [federal] law and made possible only
because the wrongdoer is clothed in the authority of
[federal] law." Groman v. T ownship of Manalapan, 47 F.3d
628, 639 n.17 (3d. Cir. 1995) (citations omitted).
The gravamen of the "public function" test is whether the
_________________________________________________________________
2. See our discussion of the "public function" test in this Section, infra.
17
government is effectively using the private entity in
question to avoid a constitutional obligation or to engage in
activities reserved to the government. See Goussis v.
Kimball, 813 F.Supp. 352, 357 (E.D. Pa. 1993). We cannot
agree with Black Smokers' assertion that defendants'
actions satisfy the "public function" test. The "public
function" test is the most rigorous of the inquiries. In Blum
v. Yaretsky, 457 U.S. at 1004-5, the Supreme Court
stressed that the traditionally public function must be the
"exclusive prerogative of the [gover nment]," id. (citation
omitted). Courts generally emphasize this "exclusivity"
requirement and thus seldom find that high standard to
have been satisfied. Mark v. Borough of Hatboro, 51 F.3d
1137, 1142 (3d. Cir. 1995). Even in cases involving
arguably semi-public functions, such as pr oviding utility
services, see Jackson v. Metropolitan Edison Co., supra, or
furnishing remedial education to high school students, see
Rendell-Baker v. Kohn, 457 U.S. 830, 102 S.Ct. 2764
(1982), the Supreme Court has declined to characterize
such activities as government functions for purposes of the
public function analysis.
In the case at bar, the action complained of is the lawful
sale and marketing of a legal, albeit federally r egulated,
consumer product: a private rather than public, and a
fortiori not "exclusively" public, function. Even if the
activities at issue extended, as Black Smokers suggest,
beyond the mere marketing and sale of mentholated
tobacco products to the testing and labeling of such
products, Black Smokers' argument would fail because it
would not meet the exclusivity requirement under the
public function test. Given that many products, including
mentholated tobacco, are tested, marketed and labeled by
their manufacturers, often in accordance with applicable
regulatory requirements, such activities cannot be
characterized as the exclusive prerogative of the
government. As the District Court noted, it is simply
inaccurate to suggest that the testing, labeling and
marketing of cigarettes is the exclusive pr ovince of the
federal government. Finally, Black Smokers' averment that
defendants' compliance with various federal labeling
requirements transforms defendants into government
actors is without support in applicable case law. Such
18
propositions have been flatly rejected by the Supreme Court
on several occasions; see American Mfrs. Mut. Ins. v.
Sullivan, 526 U.S. 40 (1999); Blum v. Y aretsky, 457 U.S. at
1004; Jackson v. Metropolitan Edison Co ., 419 U.S. 345,
350 (1974) (holding that the fact that a business is subject
to government regulation does not by itself convert the
business's action into that of the government).
Black Smokers' allegations that defendants' actions
satisfy the "close nexus" test under the gover nment action
analysis are also unavailing. As with the public function
analysis, Black Smokers apparently discer n the purported
nexus between the private action complained of and the
federal government in the operation of the Labeling Act.
They assert that the Labeling Act encourages tobacco
manufacturers to conceal the dangers of mentholated
cigarettes, mandates inadequate warnings on such
products and preempts most tort actions against
defendants. However, because the Labeling Act does not
compel, influence or encourage the actions upon which this
suit is based -- the targeted marketing of menthol
cigarettes to African-Americans -- but rather only requires
the disclosure of certain risks on tobacco pr oduct
packaging, defendants' conduct in compliance with the
Labeling Act does not create the "close nexus" necessary for
a finding of state action. See Rendell-Baker v. Kohn, 457
U.S. 830 (1982); American Mfrs. Mut. Inc. Co. v. Sullivan,
526 U.S. at 52; Goussis v. Kimball, 813 F .Supp. at 357.
Additionally, Black Smokers' "close nexus" ar gument is
defective to the extent that it does not allege the violation
of a federal right, a prerequisite under that analysis. See
Goussis v. Kimball, 813 F.Supp. at 357.
Black Smokers' attempt to classify this case under the
"symbiotic relationship" category of state action cases is
similarly tenuous. In the seminal, albeit somewhat
idiosyncratic, case of Burton v. Wilmington Parking Auth.,
supra, the Supreme Court held that a cof fee shop, which
leased property located in a government owned parking
garage, was integrated with the parking facility as an
organic part of the government operation and was party to
a mutually beneficial relationship with the government. Out
of these facts arose the "symbiotic r elationship test," which
19
asks whether the government has "insinuated itself into a
position of interdependence" with the defendant. Burton v.
Wilmington Parking Auth., 365 U.S. at 725.
Black Smokers' allegations concerning defendants'
relationship with the federal government prove both too
little and too much; and in any case, they scar cely suffice
to make out a "symbiotic relationship" within the meaning
of Burton. Black Smokers aver that (i) the government
benefits from its relationship with defendants by virtue of
collecting "enormous tax revenues" from the tobacco
industry and (ii) the interests of the gover nment and
defendants are "explicitly intertwined" under the terms of
the Labeling Act, id. While these aver ments are
undoubtedly true, they are inadequate to demonstrate
government action. Virtually all enterprises are subject to
tax collection and, to varying degrees, to r egimes of
administrative regulation; were these attributes sufficient to
satisfy the test of Burton, substantially all businesses in the
country would effectively become federal actors. See
Hadges v. Yonkers Racing Corp., 918 F .2d 1079, 1082 (2d
Cir. 1990). Moreover, although Burton retains much of its
precedential value, it should be noted that the Supreme
Court has recently cast some degree of doubt upon that
decision. In American Mfrs. Mut. Ins. Co. v. Sullivan, supra,
which reversed our finding that certain private insurance
companies were to be regarded as state actors under
Burton, the Supreme Court noted that " Burton was one of
our early cases dealing with `state action' under the
Fourteenth Amendment, and later cases have r efined the
vague `joint participation' test embodied in that case." Id.,
526 U.S. at 57 (citations omitted).3
_________________________________________________________________
3. We recently applied the doctrine of Burton, as refined by the Supreme
Court in Moose Lodge No. 107 v. Irvis, 407 U.S. 163, 92 S.Ct. 1965
(1972), in Crissman v. Dover Downs Entertainment Inc., No. 00-5178, ___
F.3d ___ (2001). The instant case is distinguishable from Crissman
because in the latter case, which involved state-licensed harness racing
and related gambling activities, state involvement extended far beyond
regulation and revenue collection. In Crissman, the harness racing
operator functioned as the state's agent with r espect to video lottery
operations and was obligated to enforce a state statute relating to
harness racing. See Crissman, ___ F.3d at ___ - ___ [Section III]. Such an
agency relationship coupled with law enfor cement authority confers
upon the operator attributes of government sovereignty wholly absent in
the federal government's regulation of tobacco manufacturers.
20
Finally, Black Smokers contend that an expansive, fact-
oriented "totality of the circumstances" approach to the
question of government action exists wholly apart from the
three inquiries discussed supra and that such an approach
is grounded in Third Circuit cases such as Sullivan v.
Barnett, 139 F.3d 158 (3d Cir . 1998), rev'd 526 U.S. 40
(1999), and Mark v. Borough of Hatbor o, 151 F.3d 1137 (3d.
Cir. 1995). Although our cases place "the factual context in
which the case arises," Sullivan v. Bar nett, 139 F.3d at 170,
at the heart of the government action analysis, such
emphasis constitutes no more than proper adherence to the
methodology set forth in the government action cases
discussed supra and consequently cannot be said to
represent a novel development in or distinct branch of
government action doctrine.
Purporting to use this asserted "totality of the
circumstances" test as the basis of their r emaining
government action analysis, Black Smokers compare the
instant case to Edmonson v. Leesville Concr ete, 500 U.S.
614 (1991). Leaving aside the question whether the federal
courts have ever explicitly recognized Black Smokers'
"totality of the circumstances" appr oach, the facts of the
instant case are readily distinguishable from those of
Edmonson. In Edmonson, the Supreme Court held that
lawyers' use of peremptory challenges was pursuant to a
course of government action and consequently that any
racially discriminatory use of such challenges violates
jurors' equal protection rights. Edmonson v. Leesville
Concrete, 500 U.S. at 622-23. The sine qua non of the
Court's decision in Edmonson was the pr esence of
government involvement so pervasive in the context of the
challenged actions as to render such actions virtually
inseparable from the participation of the gover nment. The
Edmonson Court therefore emphasized that peremptory
challenges "simply could not exist" without the
government's "significant participation." Id. at 622. The
Court went on to characterize the jury as "a quintessential
government body, having no attributes of a private actor,"
id. at 624, and to note that peremptory challenges are
performed in the context of an inar guably "traditional
government function": trial by jury. Id . By contrast, in the
instant case, the federal government does not in any
21
manner design, mandate or approve the alleged racially
targeted advertising of which Black Smokers complain,
notwithstanding the fact that such advertising is subject to
certain requirements and restrictions set forth in the
Labeling Act. Black Smokers' insistence at oral ar gument
that the preemption of certain categories of tort actions by
the Labeling Act in some way constitutes the exer cise of a
traditional government function or significant governmental
participation within the meaning of Edmonson is also
without support in applicable precedent; indeed, such
preemption provisions are commonplace in federal product
safety and information disclosure legislation. See, e.g.,
Federal Hazardous Substances Act, 15 U.S.C. 1261 et seq.,
note (b)(1)(A); Moss v. Parks Corp., 985 F .2d 736, 739-41
(4th Cir. 1993) (construing preemption provision of Federal
Hazardous Substances Act). Moreover , the marketing and
advertising practices of defendants, including their research
and safety testing activities, are functions typical of various
private enterprises and, even in light of the federal
regulation to which such activities are subject under the
Labeling Act and other legislation, are difficult to regard as
"traditional government function[s]" within the meaning of
Edmonson.
E. SECTION 1985(3) CLAIM
Black Smokers' 42 U.S.C. S 1985(3) claims ar e deficient
in several respects and consequently may be disposed of
relatively quickly. Section 1985(3) provides, in pertinent
part:
If two or more persons in any State or T erritory
conspire, or go in disguise on the highway or on the
premises of another, for the purpose of depriving,
either directly or indirectly, any person or class of
persons of the equal protection of the laws, or of equal
privileges and immunities under the laws; . . .[and] in
any case of conspiracy set forth in this section, if one
or more persons engaged therein do, or cause to be
done, any act in furtherance of the object of such
conspiracy, whereby another is injured in his person or
property, or deprived of having and exer cising any right
or privilege of a citizen of the United States, the party
22
so injured or deprived may have an action for r ecovery
of the damages, occasioned by such injury or
deprivation, against any one or more of the
conspirators.
42 U.S.C. S 1985(3). In general, the conspiracy provision of
S 1985(3) provides a cause of action under rather limited
circumstances against both private and state actors. In
order successfully to bring an action underS 1985(3) for
private conspiracy, a plaintiff must show, inter alia, "(a)
that a racial or other class-based invidious discriminatory
animus lay behind the coconspirators' actions, (b) that the
coconspirators intended to deprive the victim of a right
guaranteed by the Constitution against private impairment,
and (c) that that right was consciously targeted and not
just incidentally affected." Spencer v. Casavila, 44 F.3d 74,
77 (2d Cir. 1994) (citation omitted); see also Tilton v.
Richardson, 6 F.3d 683, 686 (10th Cir. 1993) (holding that
the same elements are required forS1985(3) claims against
private actors). In order to prevent the use of S1985(3) as a
general federal tort law, courts have been car eful to limit
causes of action thereunder to conspiracies that deprive
persons of constitutionally protected rights, privileges and
immunities "that are protected against private, as well as
official encroachment." Libertad v. W elch, 53 F.3d 428, 446-
50 (1st Cir. 1995).
It is well established that S 1985(3) does not itself create
any substantive rights; rather, it serves only as a vehicle for
vindicating federal rights and privileges which have been
defined elsewhere. See Great Am. Fed. Sav. & Loan Ass'n v.
Novotny, 442 U.S. 366, 376, 99 S.Ct. 2345 (1979).
Moreover, in the context of actions br ought against private
conspirators, the Supreme Court has thus far r ecognized
only two rights protected under S 1985(3): the right to be
free from involuntary servitude and the right to interstate
travel. See Bray v. Alexandria Women's Health Clinic, 506
U.S. 263, 278, 113 S.Ct. 753 (1993); Caswell v. The
Morning Call, Inc., No. Civ. A. 95-7081, 1996 WL 560355,
at *6 (E.D. Pa. Sept. 30, 1996); Welch v. Board of Dirs. of
Wildwood Golf Club, 877 F.Supp. 955, 959 (W.D. Pa. 1995).
The instant case is distinguishable from the cases cited
above because Black Smokers assert the deprivation of a
23
different type of rights: those of pr operty and contract.
Additionally, the District Court correctly observed that
because such rights -- which entail freedom from
discrimination by a private actor -- are statutorily enacted,
rather than of purely constitutional pr ovenance, they
cannot be vindicated under S 1985(3).
Black Smokers attempt to salvage their S 1985(3) claims
by arguing that defendants' alleged violations of SS 1981
and 1982 may support a claim under S 1985(3). In light of
the overwhelming preponderance of authority on the
question, this argument, too, must fail. Contrary to Black
Smokers' claims, Bray does not support the proposition
that SS 1981 or 1982 claims can form the basis of a
S 1985(3) claim or the notion that the contract and property
rights protected by SS 1981 and 1982 fall within the
category of "involuntary servitude" violations that may
support a S 1985(3) claim. Isolated authority from the
District Court for the District of Columbia does exist in
support of the theory that a S 1985(3) claim may be based
on a S 1981 claim. See Johnson v. Gr eater Southeast
Community Hospital Corp., 903 F.Supp. 140, 153-154, citing
Alder v. Columbia Historical Society, 690 F .Supp. 9 (D.D.C.
1988); Thompson v. Int'l Assoc. of Machinists , 580 F.Supp.
662 (D.D.C. 1984). The great weight of pr ecedential
authority, however, supports the traditional limitation of
S 1985(3) to questions of interstate travel and involuntary
servitude and does not suggest that SS 1981 or 1982 claims
in general may form the basis of a S 1985(3) action. See,
e.g., Sanders v. Prentice-Hall Corp. , 178 F.3d. 1296 (Table),
1999 WL 115517, at *2 (6th Cir. Feb. 8, 1999); Libertad v.
Welch, 53 F.3d 428, 447 n.15 (1st Cir. 1995); Tilton v.
Richardson, 6 F.3d 683, 686 (10th Cir. 1993). We need not,
however, resolve the question whether violations of SS 1981
and 1982 can support a S 1985(3) claim because Black
Smokers have failed to state a claim under eitherS 1981 or
S 1982.4 The District Court therefore correctly dismissed
Black Smokers' claims under S1985(3).
_________________________________________________________________
4. See Section III B, supra.
24
IV. CONCLUSION
For the foregoing reasons, we will affir m the decision of
the District Court in all respects. The District Court
correctly held that Black Smokers' claims of racially
targeted advertising and marketing of mentholated tobacco
products were inadequate to state a cause of action under
42 U.S.C. SS 1981 and 1982. Because Black Smokers do
not demonstrate that defendants should be regar ded as
state actors, the District Court properly dismissed their
claims under 42 U.S.C. S 1983 as well. Finally, we will
affirm the District Court's conclusion that Black Smokers
fail to allege adequately that defendants ar e federal actors
for purposes of claims asserted either pursuant to Bivens or
directly under the federal Constitution and that they fail to
state a cause of action under S 1985(3).
25
SHADUR, District Judge, Dissenting in part:
What has been said in the majority opinion may pr operly
be viewed as having put forth the best possible case for
affirmance of the District Court's dismissal of the Black
Smokers' Second Amended Complaint ("Complaint"). But
that presentation, I believe, has despite itself highlighted
the basic flaws in such a threshold Fed. R. Civ. P. ("Rule")
12(b)(6) dismissal. Accordingly I dissent fr om the portion of
the majority opinion that rejects Black Smokers' claims
under Sections 1981, 1982 and 1985(3) at the thr eshold of
the case.1
Both the panel majority and I necessarily pr oceed from
the seminal statement in Hishon v. King & Spalding, 467
U.S. 69, 73 (1984) of the quite undemanding bur den that
Rule 12(b)(6) imposes on a plaintiff 's complaint:
A court may dismiss a complaint only if it is clear that
no relief could be granted under any set of facts that
could be proved consistent with the allegations. Conley
v. Gibson, 355 U.S. 41, 45-46 (1957).
And the majority opinion also correctly r ecognizes, though
I fear it does not fairly apply, the proposition that all
reasonable inferences that can be drawn fr om the
allegations in the Complaint, as well as the allegations
themselves, must be accepted as true (Moor e v. Tartler, 986
F.2d 682, 685 (3d Cir. 1993)).
Because we deal with a Complaint whose allegations
must thus be credited, there is no need to dwell at length
on the appalling record disclosed by Black Smokers'
pleading. Their 110-page 211-paragraph Complaint does
not comport with the Rule 8(a)(2) requir ement of "a short
and plain statement of the claim showing that the pleader
_________________________________________________________________
1. Because I agree that there is no pr edicate for ascribing state actor or
federal actor status to the tobacco companies or the other defendants, I
concur in the majority's rejection of Black Smokers' claims under Section
1983 and under the Bivens line of authority. And while speaking of the
other defendants, to simplify the ensuing discussion I will refer solely to
the defendant tobacco companies, for in my view any sorting out among
the defendants ought to be done by the district court on remand in light
of what is said here.
26
is entitled to relief," but they can scar cely be faulted for
what would normally be viewed as overkill in light of the
undue judicial skepticism with which their ef fort has been
met. It is sufficient for present purposes to refer to the
substantially higher carcinogenic effects of the tobacco
companies' mentholated products, the use of which an
extensively quoted 1998 Surgeon General's r eport and other
medical research discloses as having led to a much higher
rate of lung cancer, pharyngeal cancer and other
malignancies among Blacks (Complaint PP80-91),
phenomena that had been confirmed by the tobacco
companies' own significant research (which the companies
had suppressed). And the Complaint further alleges that
despite that knowledge, the companies nevertheless
engaged in extensive conduct that adversely impacted on
Black Smokers (id. PP48, 63), even including the actual
design and introduction (though it was then abandoned in
the face of public outrage) of a mentholated pr oduct
expressly for Blacks (id. P45.c).
In that light, where I first part company with the majority
opinion is in its having ruled as a matter of law "that Black
Smokers' allegations of racially targeted marketing of
mentholated tobacco products cannot, in the absence of
any disparity between the products sold to African-
Americans and the products sold to others, constitute a
deprivation of contract or property rights actionable under
SS1981 or 1982." And my departure fr om that
unsupportable proposition flows directly from the straw
man first erected by the majority opinion when it says:
Black Smokers do not make the sort of claim that is
most readily actionable under the statute: that they
have been deprived by defendants of the right to
contract for, purchase, own or use either menthol or
non-menthol cigarettes.
What must be understood instead is that both Section
1981 and Section 1982 are not at all limited by their terms
to the outright deprivation of the Black community's right
to contract. Instead each of those statutes mandates an
equal playing field that is violated by conduct that imposes
different and race-discriminatory conditions (however
created) on the exercise of seemingly comparable
27
contractual rights: Section 1981 guarantees to Black
Smokers "the same right . . . to make . .. contracts . . . as
is enjoyed by white citizens," while Section 1982 assures to
Black Smokers "the same right . . . as is enjoyed by white
citizens . . . to . . . purchase . . . personal property." And
that is the gravamen of the Complaint--that by the tobacco
companies' deliberate and successful targeting of Black
Smokers to persuade them to purchase and smoke the
concededly more dangerous menthol cigar ettes and
smokeless tobacco--conduct whose actionability is akin to
the prohibition of actual "steering" under the Fair Housing
Act--those companies have impaired that equality of rights.
Nor should it avail the tobacco companies to attempt to
trot out "freedom of contract" principles. On the
uncontested allegations of the Complaint, they have
deliberately suppressed the added perils cr eated by the
mentholated products, concealing them fr om Black
Smokers. And it just will not do for the tobacco companies
to argue that they are somehow equal opportunity deceivers
--that they have betrayed Whites and Blacks alike by their
deception. When their alleged concealment of the known
risks (known to them, that is) is coupled with their express
efforts to maximize the sales of mentholated coffin nails
and mentholated smokeless tobacco to Blacks, the
inequality of treatment forbidden by Sections 1981 and
1982 is demonstrated by the fairly-read Complaint.
And this is not at all speculative. Defendants' r epeated
(and it must be said hypocritical) emphasis on the fact that
69% of the mentholated products are used by non-Blacks
is as deceptive as their historical conduct of denying the
extraordinarily harmful effects of nicotine generally and of
menthol in particular. What that repeated emphasis glosses
over is the enormous disparity between the 10+% of the
population represented by Blacks and the Black Smokers'
31%2 consumption of the menthol cigarettes. It will be
recalled that the rule of thumb for demonstrating
discrimination has been recognized in these ter ms for a
_________________________________________________________________
2. As the majority opinion indicates, 31% is the most charitable (to the
tobacco companies) of the numbers reflected by statistics cited in the
Complaint. Other studies put that number as high as 61.5% and 66%.
28
quarter century (Castaneda v. Partida, 430 U.S. 483, 496-
97 n.17 (1976)):
As a general rule for such large samples, if the
difference between the expected value and the observed
number is more than 2 or 3 standard deviations, then
the hypothesis that the difference was random will be
suspect to a social scientist.
Two standard deviations equate to a 5% likelihood of
chance distribution. And by contrast the probability that a
10% versus 31% disparity is a matter of mere chance
represents, as an approximation (and essentially a
conservative one) of the normal distribution, some 7
standard deviations--producing a figur e so small as to
beggar the imagination: 1.28 in a trillion. 3
That extraordinary imbalance (truly an understatement,
for such a huge disparity is almost beyond human
comprehension) really cuts the legs out fr om under the
majority opinion's attempt to distinguish the decision in
Roper v. Edwards, 815 F.2d 1474 (11th Cir. 1987) by
stating:
One might argue that if racially directed marketing of
menthol cigarettes resulted in a situation in which
virtually all mentholated tobacco products wer e
consumed by African-Americans and substantially all
non-mentholated tobacco products by others, that case
might come within the sweep of Roper. However, Black
Smokers have not alleged such a situation.
In real world terms there is no conceptual difference
between the notion that "virtually all mentholated tobacco
products were consumed by African-Americans" and the
situation in which that group's comparative consumption is
so close to 100% of total consumption in the meaningful
statistical sense.
It is surely unreasonable to ascribe such an enormous
disparity to chance rather than to the purposeful steering
that has been alleged by Black Smokers--at a minimum,
_________________________________________________________________
3. That figure is derived from William Knight, Tables of the Normal
Distribution, at http://www.math.unb.ca/~knight/utility/NormTble.htm.
29
they should be allowed their day in court to pr ove that
racial animus may reasonably be inferred from the tobacco
companies' deliberate targeting of African-Americans as
their far-preferred targets of the more dangerous products
at issue. There is no question that even the far, far smaller
but still statistically significant disparity of two standard
deviations suffices to warrant an inference of intentional
discrimination--see, e.g., such cases as Smith v. Xerox
Corp., 196 F.3d 358, 365-66 (2d Cir . 1999).
Nor I suggest will it do (as the tobacco companies have
urged and as the majority opinion has cr edited) to say that
Black Smokers cannot complain about that deliberate
steering because Blacks were already pr edisposed to prefer
the mentholated products. We are after all dealing with the
case at its very outset. Nothing has been shown--because
no opportunity has been given to Black Smokers--as to
whether that preference was itself the pr oduct of the same
kind of improper steering at the outset, or even if not, as to
whether the earlier preference even began to approach (let
alone to account for) the enormous disparity that now
exists (a showing that might for example be accomplished,
again to deal with statistical probabilities, through the
application of multiple regression analysis).
In response to Black Smokers' uncontroverted allegations
about the tobacco companies' purposeful steering of their
known extra-harmful mentholated products to the African-
American market, the majority opinion accepts the
argument that this was no more than conventional
advertising, something that Jones v. Alfr ed H. Mayer Co.,
392 U.S. 409, 413 (1968) characterized as nonactionable
under Section 1982. But Jones v. Mayer, id. said only this
in the course of announcing for the first time that Section
1982 applies to private as well as public racial
discrimination in the sale of property (a statement made in
the course of contrasting that statute with the full-bore
open housing law that was then brand new on the books):
It [Section 1982] does not prohibit advertising or
other representations that indicate discriminatory
preferences.
That sanitization of mere statements of discriminatory
preferences does not control her e, however, for when such
30
discriminatory preferences are translated into
discriminatory action, as is alleged her e (and as we must
credit), the actor cannot fairly be insulated from the impact
of Section 1982 (or of Section 1981) by asserting that its
advertising was a means by which it accomplished that
forbidden end.
Indeed, that is precisely the thrust of the eloquent
opinion by the late Judge Luther Swygert in Clark v.
Universal Builders, 501 F.2d 324 (7th Cir . 1974), which
found support rather than a lack of support in Jones v.
Mayer, but which the majority opinion seeks to distinguish
because the sales of housing to Black purchasers in Clark
were on more onerous terms than the sales to non-Blacks.
But once again I suggest that the attempted distinction is
hollow--that defendants' conduct set out in the Complaint
in this case effectively created the same type of separate,
racially-segregated market as was found actionable in
Clark. Such cases as Village of Bellwood v. Dwivedi, 895
F.2d 1521, 1525, 1529 (7th Cir. 1990) teach that racial
steering is forbidden both by Section 1982 and by the Fair
Housing Act (each of which was implicated ther e)--and of
course Section 1982 is not limited to anti-Black
discrimination in housing, as is the Fair Housing Act.4
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4. Even brief reflection on what Jones v. Mayer did not say, as well as on
what it did say, demonstrates that the majority opinion loads that
opinion's single sentence quoted above with mor e baggage than it can
reasonably carry. Just as there is nothing actionable (for example) in the
seller of clothing deciding that it wishes to expand its market by
depicting Black as well as White models in its clothing ads, so too a
mere indication of racial preferences in advertising is not actionable as
such under Section 1982. But what I believe is just as obviously
prohibited by that statute is using such advertising to deny Blacks the
same treatment as Whites--the rights to contract and to purchase under
the same conditions--by deliberately subjecting Blacks to the far greater
impact of the seriously (often fatally) deleterious effects of the advertised
product--effects well known to but undisclosed by the tobacco
companies. And as for the majority opinion's ef fort to distinguish Clark
v. Universal Builders, it is necessarily appar ent (though it was
undiscussed because not placed into issue ther e) that the Black
purchasers in that case were the victims of sales of substandard housing
--in violation of Section 1982--that had to be accomplished through
advertising. After all, the alternative pr emise of assuming that those
31
Finally, what of the required showing of racial animus? Is
it a defense for the tobacco companies to ur ge that their
pattern of general concealment and deception r eflected
nothing more than a free market desir e to make profit, and
that their targeting of Black Smokers was nothing more
than a desire to maximize those profits because the Blacks
were most vulnerable to the most deleterious pr oducts?
Again, unlawfully discriminatory intent under the
discrimination laws generally has been recognized as
reasonably inferable from far less evidence of disparate
impact--should any different principle apply here? Once
more the tobacco companies' callous indif ference to
smokers' health has been demonstrably more marked
toward Black Smokers--that is the combined ef fect (1) of
the tobacco companies' knowledge (and their concealment
of that knowledge) about the special deadliness of the
mentholated products that they have been marketing and
(2) of their express targeting of those products toward the
African-American community.
It is not of course my purpose to express any conclusion
as to the existence or nonexistence of the pr ohibited intent.
Instead the focus of this opinion is to stress the
requirement that, as with all other factual issues, intent
must be resolved by a factfinding jury (or perhaps by a
judge in the summary judgment context of Rule 56, rather
than at the preliminary pleading stage under Rule 12(b)(6),
where plaintiffs' allegations must be accepted as true). And
to that end I find it particularly poignant that we deal here
with a group of defendants whose industry is centered in
an area where Blacks were once chattels, viewed as
subhuman--again ironically in terms of the present
litigation, chattels whose slave labor was r esponsible in
large part for the economic success of the tobacco industry.
Even though a century and a half has elapsed since that
_________________________________________________________________
sales were spontaneously generated would r equire turning the aphorism
credited to Emerson on its head to read:
If a man can make a worse mouse-trap than his neighbor, though
he builds his house in the woods the world will make a beaten path
to his door.
32
mindset was supposed to have been eliminated by the Civil
War and by the post-War Civil Rights Acts (including
Sections 1981 and 1982), all of us know that the r eality of
racial prejudice has unfortunately long outlived the theory
embodied in those statutes. Whether any such pr ejudice
has been at work here should not, I believe, be resolved on
a threshold determination of the likelihood or unlikelihood
of Black Smokers' ability to prove their allegations in that
respect.
We would do well to remember what Justice O'Connor
(speaking for a unanimous Supreme Court on this issue)
said in rejecting the threshold dismissal of a pro se
prisoner's complaint because of a judicial view that its
allegations were unlikely (Denton v. Her nandez, 504 U.S.
25, 33 (1992)):
Some improbable allegations might properly be
disposed of on summary judgment, but to dismiss
them as frivolous without any factual development is to
disregard the age-old insight that many allegations
might be "strange, but true; for truth is always strange,
Stranger than fiction." Lord Byron, Don Juan, canto
XIV, stanza 101 (T. Steffan, E. Steffan, & W. Pratt eds.
1977).
Black Smokers are surely entitled to no less, where their
factual assertions are so solidly supported (and not in the
least fanciful), and where the perceived problems with their
Complaint really represent skepticism as to their ability to
prove causation and intent--classic issues of fact to be
resolved by a factfinding jury and not by judicial
prescreening.
In sum, I suggest that cutting Black Smokers of f before
they have had the opportunity to demonstrate that they can
deliver as advertised5 in their Complaint does violence to
the fundamental principles of judicial reading of
complaints, as acknowledged both in the majority opinion
and in this dissent. Accordingly, I respectfully dissent in
the respects spoken of here.
_________________________________________________________________
5. Admittedly a bad pun.
33
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
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