In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 06-1756
MICHAEL KELLY, as Administrator of the Estate
of EVERETT KELLY, deceased and PATTI KELLY,
Plaintiffs-Appellants,
v.
MARTIN & BAYLEY, INC., d/b/a HUCK’S CONVENIENCE
STORE and PHILIP MORRIS INC.,
Defendants-Appellees.
____________
Appeal from the United States District Court
for the Southern District of Illinois.
No. 05 C 409—David R. Herndon, Judge.
____________
ARGUED SEPTEMBER 18, 2006—DECIDED SEPTEMBER 19, 2007
____________
Before BAUER and WILLIAMS, Circuit Judges.Œ
PER CURIAM. Everett Kelly smoked between twenty and
thirty Marlboro Lights cigarettes every day for thirty
Œ
Judge Rovner recused herself after oral argument and has not
participated in the decision of this case. The decision is being
issued by a quorum of the panel. See 28 U.S.C. § 46(d).
2 No. 06-1756
years and consequently died of lung cancer.1 Martin &
Bayley, Inc. is a corporation that conducts business under
the name Huck’s Convenience Store (“Huck’s”) in Madison
County, Illinois, where Kelly lived. Huck’s sold Marlboro
Lights, which were manufactured by the other defendant
here, Philip Morris USA, Inc. (“Philip Morris”). Kelly
sued Huck’s and Philip Morris in the Circuit Court of
Madison County, Illinois, alleging that every pack of
Marlboro Lights was labeled “Lights” and marked “Low-
ered Tar and Nicotine,” even though Marlboro Lights did
not contain any less tar or nicotine than regular Marlboro
cigarettes.2 Instead, Kelly alleged, Marlboro Lights
delivered more toxins to smokers than regular Marlboro
cigarettes would have delivered. Kelly asserted that
Philip Morris knowingly misrepresented the Marlboro
Lights product in order to induce smokers like Kelly to
switch to Marlboro Lights (when those smokers were
otherwise inclined to quit smoking) by causing those
smokers to believe they would receive less tar and less
nicotine and therefore would reduce the risk of contract-
ing smoking-related illnesses. Kelly’s state court suit
alleged claims for negligence, product liability, fraud under
the Illinois Consumer Fraud and Deceptive Trade Prac-
tices Act, breach of express warranty, and breach of
implied warranty, all under Illinois law.
Philip Morris preferred to proceed in federal court. The
judges and juries of Madison County, Illinois have a
1
Michael Kelly is the son of Everett Kelly and is the admin-
istrator of his father’s estate. Patti Kelly is Everett Kelly’s
widow. For the purposes of this opinion, we need not distinguish
among them. We will therefore refer to the plaintiffs collectively
as “Kelly.”
2
For the purposes of this appeal, the interests of Philip Morris
and Huck’s are identical and so we will refer to the defendants
collectively as Philip Morris.
No. 06-1756 3
reputation (in some circles) of being friendly to plaintiffs
and hostile to defendants. The county has been designated
by the American Tort Reform Foundation as a “Judicial
Hellhole®” for defendants for many years.3 The organiza-
tion recently upgraded the county’s status to “purgatory,”
noting, though, that “civil defendants still shiver at the
prospect of facing a lawsuit in Madison County.” See Judi-
cial Hellholes 2006, at p. iv. Apparently, Philip Morris,
a giant among cigarette manufacturers, a company that
has enjoyed the highest revenues, income, volume and
market share of any cigarette maker in the United States
for each of the last twenty years,4 shivered at the possibil-
ity of facing this suit in Madison County. The company
stretched to find a way to remove this state law action to
federal court. It settled on 28 U.S.C. § 1442(a)(1), a stat-
ute that allows removal to federal court of suits against
“The United States or any agency thereof or any officer (or
any person acting under that officer) of the United States
or of any agency thereof, sued in an official or individual
capacity for any act under color of such office or on account
of any right, title or authority claimed under any Act
of Congress for the apprehension or punishment of crimi-
nals or the collection of the revenue.” This provision is
commonly known as the “federal officer removal statute.”
3
The American Tort Reform Foundation is a not-for-profit
organization whose stated purpose is to educate the public
about how the American civil justice system operates, the role of
tort law in that system, and the impact of tort law on the private,
public and business sectors of society. Judicial Hellholes®
2006, http://www.atra.org/reports/hellholes/report.pdf, at p. ii
(last visited Aug. 29, 2007) (hereafter “Judicial Hellholes 2006”).
Its “Judicial Hellholes®” report purports to identify “areas of
the country where the scales of justice are out of balance.”
4
The company had net revenues of $18.5 billion in 2006.
http://www.philipmorrisusa.com/en/about_us/pm_usa_overview
.asp (last visited Aug. 29, 2007).
4 No. 06-1756
Philip Morris argued that as a heavily regulated ciga-
rette manufacturer, in testing its cigarettes for tar and
nicotine, it was “acting under” an officer of the United
States, namely the Federal Trade Commission (“FTC”).
The FTC, Philip Morris contended, requires the use of a
single test method for measuring cigarette tar and nicotine
yields, and has controlled precisely what cigarette manu-
facturers can and cannot say about the results. The FTC
has dictated the testing protocol, established a special
test laboratory, conducted the testing itself for more than
twenty years, transferred that testing responsibility to a
cigarette industry laboratory under continuing FTC
supervision, reported the results to Congress and the
public as the FTC’s own official data, and specified all
permissible uses of the test results in cigarette advertising,
including the use of descriptors such as “lowered tar and
nicotine” and “lights.” As a result, Philip Morris argued,
the company was acting under a federal officer and was
entitled to present its defenses in a more friendly federal
court. Philip Morris pointed to a favorable result
it received in the Eighth Circuit in a virtually identical
case, where plaintiffs brought state court actions against
Philip Morris for injuries caused by the plaintiffs’ con-
sumption of “light” cigarettes. See Watson v. Philip Morris
Cos., 420 F.3d 852 (8th Cir. 2005), rev’d, 127 S. Ct. 2301
(2007) (hereafter “Watson I”). Philip Morris removed that
Arkansas action to federal court using the federal officer
statute and the Eighth Circuit affirmed. The district court,
relying heavily on the Eighth Circuit’s opinion in Watson
I, denied Kelly’s motion to remand to the Madison County
court. The district court agreed that Philip Morris was
acting under a federal officer in testing and labeling its
cigarettes, and found removal was proper under section
1442(a). At the time the instant case was briefed and
argued in our court, a petition for certiorari was pending
in the Supreme Court for Watson I.
No. 06-1756 5
The Supreme Court granted the petition for certiorari
and unanimously rejected Philip Morris’s federal officer
argument as being contrary to the statute’s language,
context, history and purposes. See Watson v. Philip Morris
Cos., Inc., 127 S. Ct. 2301, 2305-08 (2007) (hereinafter
“Watson II”). The Court first considered the history of
the federal officer statute, which was enacted near the
end of the War of 1812. The Court noted that the war
was not popular in New England, where shipowners
filed many state-court claims against federal customs
officials who were attempting to enforce a trade embargo
with England. Id. at 2305. The initial version of the fed-
eral officer removal statute was enacted in “an attempt
to protect federal officers from interference by hostile
state courts.” Id. (quoting Willingham v. Morgan, 395 U.S.
402, 405 (1969)). Congress enacted another version of the
statute in the early 1830’s after South Carolina passed a
“Nullification Act declaring federal tariff laws unconstitu-
tional and authorizing prosecution of the federal agents
who collected the tariffs.” Id. Again, the purpose of the
removal statute was to allow federal officers a chance to
defend themselves in a forum that recognized the authority
of federal law in cases where the state courts were hostile
to federal law. Id.
Shortly after the Civil War, Congress enacted another
federal officer removal statute, permitting removal of suits
against any federal revenue officer or any person acting
under or by authority of a revenue officer on account of any
act done under color of office. Watson II, 127 S. Ct. at
2305. The statute allowed persons acting under revenue
officers to remove cases to federal court only where those
persons were engaged in acts for the collection of taxes. Id.
In 1948, Congress modified the statute by removing the
limitation to the revenue context. With the exception of
one more modification following the Supreme Court’s
decision in International Primate Protection League v.
6 No. 06-1756
Administrators of Tulane Educational Fund, 500 U.S. 72
(1991), that 1948 version of the federal officer removal
statute remains in effect today. Congress expanded the
statute to include all federal officers, but “it nowhere
indicated any intent to change the scope of words, such as
‘acting under,’ that described the triggering relationship
between a private entity and a federal officer.” Id.
After considering the history of the law, the Court then
reviewed its own precedent interpreting the various
versions of the federal officer removal statute and con-
cluded that the statute’s basic purpose “is to protect the
Federal Government from the interference with its ‘opera-
tions’ that would ensue were a State able, for example, to
‘arres[t]’ and bring ‘to trial in a State cour[t] for an alleged
offense against the law of the State,’ ‘officers and agents’
of the Government ‘acting . . . within the scope of their
authority.’ ” Watson II, 127 S. Ct. at 2306 (quoting
Willingham, 395 U.S. at 406). The Court noted that state
court proceedings may reflect local prejudice against
unpopular federal laws or federal officials, that states
hostile to the federal government may impede enforcement
of federal law and delay federal revenue collection, and
that states might deprive federal officials of a forum in
which they could assert federal immunity defenses. Id.
Some of the same considerations apply to private persons
who are assisting federal officials in the execution of
their duties. Id. at 2307.
The Court then turned to the language of the statute
and considered the meaning of “acting under,” the part of
the statute on which Philip Morris relied in Watson I and
on which the company relies in the instant case. Looking
to the dictionary definition of these words, the Court
commented that the phrase “acting under” must refer to a
relationship that involves “subjection, guidance, or con-
trol.” Watson II, 127 S. Ct. at 2307. In light of precedent
and the purpose of the statute, the Court concluded that
“the private person’s ‘acting under’ must involve an effort
No. 06-1756 7
to assist, or to help carry out, the duties or tasks of the
federal superior. . . . [T]he help or assistance necessary to
bring a private person within the scope of the statute does
not include simply complying with the law.” Id. (emphasis
in original; internal citations omitted). The Court noted
that a company complying with federal regulations does
not usually face a significant risk of state-court prejudice,
and a state-court lawsuit against this sort of company
is not likely to prevent federal officials from taking the
steps necessary to enforce federal laws. “Nor is such a
lawsuit likely to deny a federal forum to an individual
entitled to assert a federal claim of immunity.” Id. at 2307-
08. The Court concluded:
The upshot is that a highly regulated firm cannot
find a statutory basis for removal in the fact of
federal regulation alone. A private firm’s compli-
ance (or noncompliance) with federal laws, rules,
and regulations does not by itself fall within the
scope of the statutory phrase “acting under” a
federal “official.” And that is so even if the regula-
tion is highly detailed and even if the private
firm’s activities are highly supervised and moni-
tored. A contrary determination would expand the
scope of the statute considerably, potentially
bringing within its scope state-court actions filed
against private firms in many highly regulated
industries. Neither language, nor history, nor
purpose lead us to believe that Congress intended
any such expansion.
Id. at 2308 (internal citation omitted).
The Court also rejected a number of arguments that
Philip Morris raised in Watson I and raises again here, but
we need not dwell any further on the matter. Philip
Morris argued in its brief that the Eighth Circuit re-
viewed “essentially the same record” that the company
presented to the district court here. Brief of Defendants-
8 No. 06-1756
Appellees at 2-3. Philip Morris also characterized Watson
I as “materially identical” to the instant case, id. at 24,
and stated that Kelly’s allegations are “functionally identi-
cal” to Watson’s, id. at 53. Philip Morris also contended
that Kelly’s complaint is not distinguishable from the
complaint in Watson I. Id. We accept Philip Morris’s
concessions that Kelly’s case is, for the purposes of juris-
diction, indistinguishable from Watson I. Given that the
Supreme Court unanimously rejected Philip Morris’s
materially identical arguments in a functionally identical
case where the company presented the courts with essen-
tially the same record, we find the Supreme Court’s
decision in Watson II controlling. We therefore reverse the
judgment of the district court and remand the case so that
it can be returned to the Madison County court from
whence it came.
REVERSED AND REMANDED.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—9-19-07