88 October 22, 2015 No. 42

IN THE SUPREME COURT OF THE

STATE OF OREGON

Marilyn C. PEARSON

and Laura Grandin,

individually and on behalf of

all similarly situated persons,

Respondents on Review,

v.

PHILIP MORRIS, INC.,

aka Philip Morris USA, Inc.,

a foreign corporation,

Petitioner on Review,

and

PHILIP MORRIS COMPANIES, INC.,

aka Altria Group, Inc., a foreign corporation,

Defendant.

(CC 0211-11819; CA A137297; SC S061745)

On review from the Court of Appeals.*

Argued and submitted June 23, 2014.

William F. Gary, Harrang Long Gary Rudnick, P.C., 

Eugene, argued the cause and filed the briefs for petitioner 

on review. With him on the briefs was Sharon A. Rudnick.

Scott A. Shorr, Stoll Stoll Berne Lokting & Shlachter PC, 

Portland, argued the cause and filed the brief for respondent 

on review. With him on the brief was Charles S. Tauman, 

Charles S. Tauman PC, Portland.

Phil Goldsmith, Portland, filed the brief for amicus curiae

Oregon Trial Lawyers Association.

Before Balmer, Chief Justice, Kistler, Walters, Linder, 

Brewer, and Baldwin, Justices, and DeVore, Justice pro 

tempore.**

______________

** Appeal from Multnomah County Circuit Court, Janice R. Wilson, Judge. 

257 Or App 106, 306 P3d 665 (2013).

** Landau, J., not participating.
Cite as 358 Or 88 (2015) 89

LINDER, J.

The decision of the Court of Appeals on class certification and issue class certification is reversed. The trial court 

order denying class certification and issue class certification 

is affirmed. The case is remanded for further proceedings on 

the named plaintiffs’ individual claims.

Walters, J., concurred and filed an opinion.

Case Summary: In an Unlawful Trade Practices Act action against the company that manufactures and sells Marlboro Light cigarettes, plaintiffs alleged 

that they had suffered economic losses as a result of defendant’s representation 

that Marlboro Lights had “lowered tar and nicotine” than regular cigarettes. 

Plaintiffs moved to certify the action as a class action, based on a class consisting 

of all persons who had ever purchased a package of Marlboro Lights in Oregon. 

After a hearing on the motion, the trial court denied class certification, holding 

that individual inquiries so predominated over those that were common to the 

class that a class action was not superior to other methods for adjudicating the 

putative class members’ claims. ORCP 32 B. The trial court also denied plaintiffs’ 

alternative motion for issue class certification under ORCP 32 G. After holding 

that the essential elements of the UTPA claims could be proved through evidence 

common to the class, the Court of Appeals reversed the denial of the class certification motion and remanded to the trial court to reconsider whether a class 

action would be the superior method for adjudicating the claims. Held: The trial 

court correctly concluded that issues central to plaintiffs’ UTPA claims and to 

defendant’s defense required individual inquiries, that individual issues therefore predominated over common issues, and that a class action therefore was not 

superior to other methods for adjudicating class members’ claims; the trial court 

did not abuse its discretion in denying issue class certification.

The decision of the Court of Appeals on class certification and issue class certification is reversed. The trial court order denying class certification and issue 

class certification is affirmed. The case is remanded for further proceedings on 

the named plaintiffs’ individual claims.
90 Pearson v. Philip Morris, Inc.

LINDER, J.

Plaintiffs are two individuals who purchased 

Marlboro Light cigarettes in Oregon. Defendant Philip 

Morris is the company that manufactures, markets, and 

sells Marlboro Lights. Plaintiffs brought this action under 

Oregon’s Unlawful Trade Practices Act (UTPA),1

 alleging 

that defendant misrepresented that Marlboro Lights would 

deliver less tar and nicotine than regular Marlboros and 

that, as a result of that misrepresentation, plaintiffs suffered economic losses. Plaintiffs did not bring the action 

to remedy only their own claimed losses, however. Rather, 

they moved to certify a class consisting of approximately 

100,000 individuals who had purchased at least one pack 

of Marlboro Lights in Oregon over a 30-year period—from 

1971 to 2001. The trial court denied plaintiffs’ motion after 

concluding that individual inquiries so predominated over 

common ones that a class action was not a superior means 

to adjudicate the putative class’s UTPA claim.

On appeal, in a divided en banc decision, a majority 

of the Court of Appeals disagreed with the trial court’s predominance assessment, concluding that the essential elements of the UTPA claim could be proved through evidence 

common to the class. Pearson v. Philip Morris, Inc., 257 Or 

App 106, 172, 306 P3d 665 (2013). The majority remanded 

to the trial court to reconsider whether, without the trial 

court’s predominance assessment, a class action was a superior means of litigating the class claims. Id. We allowed 

defendant’s petition for review. On review, the parties’ arguments frame several issues for our resolution, including the 

appropriate standards for determining whether common 

issues predominate for purposes of the class action certification decision, and what a private plaintiff in a UTPA case 

of this nature must prove.2

 As we will explain, we conclude 

1 The UTPA is codified at ORS 646.605 to 646.656. The specific provisions 

under which plaintiffs brought this action are cited and discussed later.

2 As we later discuss, as an alternative to class certification, plaintiffs also 

sought certification of an “issue class”—that is, a class for purposes of resolving 

one or more elements of, but not the entire, UTPA claim. The trial court denied 

issue class certification, and the Court of Appeals remanded for reconsideration 

of that ruling as well. On review, both parties renew their arguments in that 

regard. We consider whether the trial court correctly declined to certify an issue 

class after first determining if it correctly denied full class certification.
Cite as 358 Or 88 (2015) 91

that the trial court properly denied class certification, and 

accordingly, we reverse the contrary decision of the Court of 

Appeals and remand to the trial court for further proceedings on the individual plaintiffs’ claims.3

I. BACKGROUND

A. Development and Labeling of Marlboro Lights

In the 1950s, governmental and health organizations began to publicize information about the link between 

lung disease and tar and nicotine in cigarette smoke, which 

in turn gave rise to increasing concerns among the public 

about the dangers of smoking cigarettes.4

 In an effort to 

capitalize on those growing health concerns, cigarette manufacturers introduced new varieties of cigarettes that they 

advertised as delivering lower levels of tar and nicotine. 

Although the public health community generally supported 

the idea of offering smokers low tar and nicotine alternatives, no accepted or approved method for measuring the tar 

and nicotine yields of cigarettes existed. Thus, “low” and 

“lower” tar and nicotine claims by cigarette manufacturers 

could not be substantiated. The Federal Trade Commission

(FTC), which regulates the cigarette manufacturing industry,

3 Plaintiffs unsuccessfully applied to the Court of Appeals for an interlocutory appeal of the order denying class certification under ORS 19.225. After the 

interlocutory appeal was denied, the trial court proceeded with the UTPA claims 

of the two named plaintiffs and granted summary judgment for defendant on the 

ground that plaintiffs’ UTPA claims were preempted by federal law. Plaintiffs 

appealed that judgment, challenging both the denial of the motion for class certification and the grant of summary judgment. While that appeal was pending, the 

United States Supreme Court decided Altria Group, Inc. v. Good, 555 US 70, 129 

S Ct 538, 172 L Ed 2d 398 (2008), which held that federal law does not preempt 

state claims based on the false advertising of cigarettes. On appeal, defendant 

conceded that the grant of summary judgment on federal preemption grounds 

was error in light of Altria. The case therefore must be remanded to the trial 

court for further proceedings on the individual plaintiffs’ claims.

4 Because this case arises on a motion for class certification, the facts in 

the record have been developed for that specific purpose, and do not necessarily 

reflect the factual record that would be made at trial on either the class claims 

or the claims of the individual plaintiffs. The parties do not dispute many of the 

facts that we recite by way of general background. The parties do, however, disagree on certain other facts—and the inferences to be drawn from those facts—

that the trial court considered in deciding the extent to which plaintiffs’ claims 

would entail common or individualized inquiries. We take up those disputes, and 

the respective roles of the trial and appellate courts in resolving contested facts 

of that kind, in our later analysis of class certification issues.
92 Pearson v. Philip Morris, Inc.

therefore initially prohibited cigarette manufacturers from 

marketing their cigarettes based on low tar and nicotine 

claims.

Eventually, however, the FTC devised a standardized method for measuring tar and nicotine yields of cigarettes. The “FTC method” used a machine that captured and 

analyzed substances that were drawn into the machine as it 

“smoked” a cigarette. The machine regulated variables such 

as the placement of the cigarette in the machine, the volume of each “puff,” the frequency of puffs, and the portion of 

the cigarette smoked. In 1967, the FTC instructed cigarette 

manufacturers that they could represent their cigarettes as 

having lower tar than regulars if, and only if, the cigarette 

had a tar yield of 15 milligrams or less as measured by the 

FTC method.

The lowered tar and nicotine levels measured 

by the FTC method did not necessarily reflect reality for 

human smokers, however. The FTC was aware of that fact. 

Indeed, in hearings that the FTC held before adopting its 

testing method, the tobacco industry expressed concerns 

that, due to considerable variations in individual smoker 

behavior, the FTC’s method did not, and could not, measure the amount of tar and nicotine that smokers actually 

inhale. When the FTC adopted its mechanical test method, 

it issued a press release acknowledging the limitations of 

that testing method and in particular acknowledging that 

its test could not accurately gauge the amount of tar and 

nicotine that even an “average” smoker will draw from a 

cigarette. The FTC explained that it nevertheless was 

adopting its mechanical test, because it provided a “reasonable standardized method” of measuring tar and nicotine 

yields that was “capable of being presented to the public” in 

a “readily understandable” manner.

In 1971, after the FTC adopted its method of 

measuring tar and nicotine yields, defendant introduced 

Marlboro Lights to the market. At the time, Marlboro Lights 

tested below the 15 milligram tar-yield limit using the FTC 

method. Defendant therefore permissibly could—and did—

label and advertise Marlboro Lights as “lowered tar and nicotine” cigarettes.
Cite as 358 Or 88 (2015) 93

To accomplish the lowered yields as measured by the 

FTC method, defendant did not decrease or alter the tobacco 

content of Marlboro Lights. Instead, defendant perforated 

the cigarette filter with microscopic holes that allowed extra 

air to be drawn into the smoke passing through it, which 

diluted the smoke, thereby delivering less tar and nicotine. 

As already noted, the way that the FTC’s machine smoked 

a cigarette carefully controlled such variables as the placement of the cigarette in the machine, the number and volume of puffs taken, and the portion of the cigarette smoked. 

Under those controlled mechanical conditions, Marlboro 

Lights achieved the yields that permitted defendant, consistently with federal regulations, to claim that Marlboro 

Lights had lowered tar and nicotine levels. In actual practice, however, smokers could easily defeat the design. In particular, smokers could cover the air holes in the cigarette’s 

filter, which would produce a more concentrated smoke 

stream with greater amounts of tar and nicotine than with 

the holes uncovered. Smokers also could take more frequent 

puffs, hold the smoke in their lungs for a longer period of 

time, and smoke more of the cigarette itself.5

 And smokers 

could smoke more cigarettes.

A principal reason why smokers might—either 

consciously or unconsciously—smoke Marlboro Lights in a 

way that defeats their design is to achieve a higher level of 

nicotine in their blood than the cigarettes would otherwise 

5 The trial court aptly captured the difference between more typical consumer products, where their contents dictate what a consumer ingests, and a 

product such as a cigarette, where consumer behavior significantly affects what 

is ingested:

“With a product such as milk or bread, one is concerned mainly with 

what the item contains. With regard to tar and nicotine from a cigarette, 

one’s main concern is not so much with what the unlit cigarette contains as 

what it yields when smoked. A cup of milk contains a certain amount of fat 

regardless of whether it is sipped or gulped. The fat content does not vary 

depending on whether the consumer uses a straw or drinks straight from the 

carton. The tar and nicotine yield of a cigarette, however, depends not only 

upon what is contained in the unlit tobacco in the column, but upon the way 

the cigarette is smoked. The yield can vary with the depth of puff taken, frequency of puffs and how far down the column the cigarette is smoked. If the 

cigarette has a filter with holes that allow air in to dilute the smoke as it is 

drawn into the smoker’s mouth, the yield will also be changed if the smoker 

covers some or all of the holes with his or her mouth or fingers.”

(Emphasis in original.)
94 Pearson v. Philip Morris, Inc.

deliver. Nicotine is a stimulant, one to which smokers 

become addicted or habituated. The nature of nicotine significantly increases the probability that smokers will alter 

their behavior (i.e., by blocking air holes, taking deeper and 

more frequent puffs, smoking farther down the cigarette, or 

smoking more cigarettes) for either of two reasons. One is 

that smokers—even ones who have never smoked any other 

brand or variety of cigarette—will desire a higher stimulant 

effect than the “light” cigarettes would otherwise deliver (the 

phenomenon of altering smoking behavior for that reason 

is termed “titration”). The other reason arises for smokers

who switch from regular-strength cigarettes to so-called 

“light” ones. Those individuals often have become habituated to a particular level of nicotine and, to satisfy their 

craving for that level, they alter how they smoke a lowered 

tar and nicotine cigarette (a phenomenon termed “compensation”). In either of those circumstances, the amount of tar 

and nicotine delivered to a smoker will be higher than the 

amount measured by the FTC method and potentially will 

be the same as the amount that a smoker would obtain by 

smoking a regular cigarette.

B. Plaintiffs’ UTPA Claims

That brings us to plaintiffs’ UTPA claims. Plaintiffs 

alleged, and maintained that they would prove, that from 

the time that defendant introduced Marlboro Lights to the 

market, defendant was well aware of the compensation and 

titration phenomena. According to plaintiffs, defendant 

understood the likelihood that many human smokers of 

Marlboro Lights would not obtain the benefit of “lowered tar 

and nicotine” that the labeling appeared to offer. In fact, 

plaintiffs intended to prove that defendant purposefully 

chose an “elastic” tar and nicotine delivery design—that is, 

one subject to manipulation by the smoker—to give Marlboro 

Lights smokers the illusion of lowered tar and nicotine while 

allowing them to obtain the higher levels of nicotine that 

they potentially craved. Defendant, for its part, was prepared to dispute many of plaintiffs’ assertions, including 

that defendant deliberately designed Marlboro Lights to 

pass the FTC’s method, while permitting smokers to readily 

defeat that design. What defendant did not dispute, however, is that it did not, until 1990, qualify its “lowered tar 
Cite as 358 Or 88 (2015) 95

and nicotine” representation by explaining or warning that 

the amounts of tar and nicotine that Marlboro Lights deliver 

to a smoker could vary depending on how the cigarette is 

smoked. And when defendant began to give that disclaimer 

in 1990, it did so in its print advertising of Marlboro Lights; 

defendant did not provide that added information on the cigarette packages themselves.6

Based on the design and marketing of Marlboro 

Lights, the two named plaintiffs in this case brought this 

action seeking economic damages for themselves and an estimated class of 100,000 individuals who purchased Marlboro 

Lights in Oregon over a 30-year period. In their complaint, 

plaintiffs set forth two UTPA claims. Both claims alleged that 

defendant represented Marlboro Lights as having characteristics that they do not have, in violation of ORS 646.608(1)(e)

(making such representations unlawful). The two claims, 

however, were premised on different factual theories.

Plaintiffs’ first claim asserted that, contrary to 

defendant’s “lowered tar and nicotine” representation, 

Marlboro Lights did not deliver lowered tar and nicotine to 

smokers, but instead delivered the same levels as regular 

cigarettes.7

 In that claim, plaintiffs asserted that they and 

the class suffered economic losses because they paid for lowered tar and nicotine cigarettes that did not in fact deliver 

lower levels of tar and nicotine than regular cigarettes.

Plaintiffs’ second claim was not premised on the 

amount of tar and nicotine that Marlboro Lights were represented to and would deliver. Instead, it was based on what 

6 To explain more fully: Starting in 1990, defendant added a statement to its 

Marlboro Lights print advertisements to the effect that tar and nicotine delivery 

might vary depending on how the cigarette was smoked. After this action and 

others elsewhere in the country were filed, defendant placed “onserts” on some

Marlboro Lights packages that also provided that information. Defendant did so 

only briefly. Soon after that, defendant removed the “lowered tar and nicotine” 

statement from Marlboro Lights packages entirely.

7 In particular, plaintiffs alleged:

“Defendant engaged in an unlawful trade practice within the meaning 

of ORS 646.608(1)(e) by representing that its cigarettes * ** would deliver to 

plaintiff and other Marlboro Light smokers less tar and nicotine than defendant’s regular * ** cigarettes. In fact, as defendant well knew, plaintiff and 

other class members would actually receive the same tar and nicotine from 

Marlboro Light cigarettes as from defendant’s [regular] cigarettes.”
96 Pearson v. Philip Morris, Inc.

defendant allegedly represented about Marlboro Lights’ 

“inherent” design:

“Defendant * * * represent[ed] that its * ** ‘light’ cigarettes were inherently lower in tar and nicotine than defendant’s regular cigarettes, no matter how they were smoked. 

In fact, as defendant well knew, whether a smoker actually 

received lower tar and nicotine depended on several factors, 

such as whether the smoker covered ventilation holes in the 

cigarette, the number of puffs taken on each cigarette, and 

the amount of each cigarette smoked, none of which defendant disclosed to any plaintiff or class member. Defendant 

both affirmatively misrepresented that its ‘light’ cigarettes 

would inherently deliver low tar and nicotine, and failed 

to disclose that, in order to receive lower tar and nicotine, 

the smoker would have to smoke the ‘light’ cigarettes in a 

particular way.”

In their second claim, plaintiffs further alleged that they 

and the class members suffered ascertainable losses because 

they paid for cigarettes that they believed were inherently 

lower in tar and nicotine than defendant’s regular cigarettes—that is, lower in tar and nicotine no matter how they 

were smoked—but received cigarettes that would deliver 

lowered tar and nicotine only if smoked in a particular way. 

For both claims, plaintiffs requested “[e]conomic damages 

for purchase price refund or diminished value, in an amount 

to be proved at trial.”

In answer to the complaint, defendant denied most 

of plaintiffs’ allegations. Defendant also asserted numerous 

affirmative defenses, including that the claims of the named 

plaintiffs and putative class members were barred by the 

one-year statute of limitations for private UTPA claims. See 

ORS 646.638(6) (claim must be brought one year from discovery of unlawful conduct).

Shortly after defendant filed its answer, plaintiffs 

moved under ORCP 32 C(1) for class certification of the entire 

action.8

 In the alternative, plaintiffs sought certification of 

8 ORCP 32 C(1) provides, in relevant part:

“As soon as practicable after the commencement of an action brought as a 

class action, the court shall determine by order whether and with respect to 

what claims or issues it is to be so maintained and shall find the facts specially and state separately its conclusions thereon.”
Cite as 358 Or 88 (2015) 97

“common issues” under ORCP 32 G—so-called, “issue class” 

certification.9

 Defendant opposed both the class and issue 

class certification requests. Among other arguments that it 

advanced in opposition, defendant urged that several of the 

issues central to defendant’s liability on plaintiffs’ claims 

could not be tried based on evidence common to the class 

members as a whole, but instead would require individual 

inquiries. Relevant to plaintiffs’ first UTPA claim, defendant 

produced studies, expert opinion, and other evidence to show 

that smoking behavior—and the phenomena of titration and 

compensation—vary widely from one smoker to another, 

with the result that, for many smokers, Marlboro Lights in 

fact do deliver lower levels of tar and nicotine than regular cigarettes. Relevant to plaintiffs’ second UTPA claim, 

defendant likewise submitted studies, expert opinion, and 

even deposition testimony from one of the named plaintiffs 

to demonstrate that many consumers do not believe that 

lowered tar and nicotine cigarettes are healthier to smoke 

and purchase Marlboro Lights for reasons unrelated to their 

possible health benefits. Defendant argued that it was entitled to probe individual class members’ perceptions of the 

product and reasons for buying it to determine whether, as 

alleged, those individuals paid for Marlboro Lights based on 

a representation that they had a characteristic or quality 

that they in fact did not have.

Finally, as relevant to defendant’s statute of limitations defense, defendant pointed out that the plaintiff in a 

UTPA action has only one year from discovery of the unlawful practice to file a claim. ORS 646.638(6). As relevant both 

to that affirmative defense and to plaintiffs’ second UTPA 

claim, defendant produced evidence that, beginning in the 

1970s and at times throughout the 30-year class period, 

health organizations and the lay press publicized the health 

risks of lowered tar and nicotine cigarettes. Those articles 

challenged the notion that “light” cigarettes were healthier 

to smoke than regular cigarettes, principally on the basis 

that smoker behavior often readily defeated the lower tar 

9 ORCP 32 G provides: “When appropriate an action may be brought or 

ordered maintained as a class action with respect to particular claims or issues. 

Each subclass must separately satisfy all the requirements of this rule except for 

subsection A(1).”
98 Pearson v. Philip Morris, Inc.

and nicotine designs of the cigarettes. Defendant also relied 

on defendant’s print advertising from 1990 forward, which 

contained express disclaimers to the effect that tar and nicotine delivery might vary depending on how the cigarette 

was smoked. Defendant argued that many of the 100,000 

estimated class members who purchased Marlboro Lights 

in Oregon could have had actual knowledge of the express 

advertising disclaimers and public media reports well before 

July 2001 (one year before this action was filed), which 

would bar their claims. Defendant urged that litigation of 

its affirmative statute of limitations defense would therefore 

also require highly individualized inquiries and could not be 

litigated based on evidence common to the class as a whole.

At the hearing on plaintiffs’ motion for certification, in the face of defendant’s evidentiary submissions, 

plaintiffs pressed only their second claim—that defendant, 

by labeling Marlboro Lights as “lowered tar and nicotine” 

cigarettes, had represented that they were “inherently” 

lower in tar and nicotine than regular cigarettes (i.e., lower 

regardless of how they are smoked).10 Plaintiffs maintained 

that, to prove their UTPA claim, they did not have to show 

that they and the class members bought Marlboro Lights 

because defendant represented them to have “lowered tar 

and nicotine”—that is, plaintiffs did not have to show that 

purchasers relied on the representation. Rather, plaintiffs’ 

position was that it was enough that defendant represented 

Marlboro Lights to be inherently lower in tar and nicotine, 

that plaintiffs and the class members bought them (regardless of why they bought them), and that what plaintiffs and 

10 Plaintiffs appeared to abandon their first claim for purposes of class certification in light of defendant’s evidence that the amount of tar and nicotine 

delivered to individual smokers varied significantly, and was frequently less than 

the amount that a smoker would obtain by smoking regular cigarettes. The same 

and similar evidence produced by defendant in this case has caused the overwhelming majority of courts throughout the country to reject class certification 

where the claim is that most or all smokers received the same amount of tar 

and nicotine as they would have by smoking regular cigarettes. See, e.g., Phillips 

v. Philip Morris Companies, Inc., 298 FRD 355, 362 (2014) (citing cases); In re 

Light Cigarettes Marketing Sales Practices Litigation, 271 FRD 402, 413 (2010) 

(same). Those courts have reasoned that the evidence of individual variations in 

the amount of tar and nicotine that “lights” smokers ingest is sufficient to demonstrate that the issue is not a common one, but instead requires individual inquiries. See, e.g., Phillips, 298 FRD at 364-65 (discussing evidence and concluding 

individual inquiries predominate).
Cite as 358 Or 88 (2015) 99

the class members bought lacked the characteristic of being 

inherently light. Alternatively, plaintiffs argued that defendant’s evidentiary submissions were flawed in various ways, 

and that the trial court should conclude that the representation of Marlboro Lights as inherently lower in tar and 

nicotine was a substantial factor in every class member’s 

decision to purchase them. Under that alternative theory, 

plaintiffs’ theory was that every class member had suffered 

an economic loss because they did not get what they believed 

they were buying.

C. The Trial Court and Court of Appeals Decisions

At the conclusion of the hearing on the class certification motion, the trial court took the matter under advisement, later issuing a written opinion to explain its denial of 

the motion. The trial court ultimately determined that “individual issues vastly predominate over the common issues 

of law and fact” and, because of that, a class action was not 

a superior means for resolving the putative class members’ 

individual claims. As earlier noted, the Court of Appeals disagreed with the trial court’s assessment that individual issues 

predominate over common ones, and reversed and remanded 

on that basis. Although we discuss more detailed aspects of 

the trial court’s and the Court of Appeals’ rationales in our 

analysis of the issues, an overview of their respective opinions provides context for the issues before us on review.

1. Trial Court’s Decision

In declining to certify the class, the trial court first 

examined the elements of plaintiffs’ UTPA claim. To recover 

damages in a private action based on an alleged unlawful 

trade practice, a plaintiff must suffer “an ascertainable loss 

of money or property *** as a result of” the alleged unlawful 

trade practice. ORS 646.638(1). The trial court determined 

that plaintiffs’ class claim depended on proof that, first, 

plaintiffs and the class members suffered an ascertainable 

loss of money or property, and second, their loss was caused 

by—that is, was “as a result of”—the alleged unlawful trade 

practice, which in this case was the “lower tar and nicotine” 

representation. Both elements of plaintiffs’ claim, the trial 

court concluded, would require individualized inquiries of 

the class members.
100 Pearson v. Philip Morris, Inc.

With respect to ascertainable loss, the trial court 

rejected the plaintiffs’ argument that the mere fact that 

a product differs from how it is represented per se makes 

it less valuable. The court observed that some products, 

if not as represented, could in fact be more valuable than 

they would otherwise be (such as a stone represented to be 

cubic zirconia that is in fact a real diamond). With respect to 

Marlboro Lights, the evidence before the trial court was that 

they had always been priced the same as Marlboro regulars. 

Thus, Marlboro cigarettes cost the same with or without the 

feature of being lower in tar and nicotine. Given that evidence, the trial court concluded that it could not be inferred 

that purchasers overpaid for Marlboro Lights on the basis 

that they were not inherently lower in tar and nicotine. 

Although plaintiffs represented that they would be able to 

present expert testimony at trial that an “inherently” light 

cigarette had special economic value, thus making Marlboro 

Lights worth less because they did not in fact have that 

inherent characteristic, plaintiffs did not come forward 

with that expert evidence to support their motion for class 

certification. Left with only ordinary market inferences to 

draw and the lack of any price difference between Marlboro 

Lights and regulars, the trial court found no basis to infer 

that purchasers of Marlboro Lights, as a group, suffered an 

ascertainable loss of money based on the fact of their purchase, without more.

Without a viable theory of that kind, the trial court 

concluded that the issue of ascertainable loss would require 

extensive individualized inquiries. The court emphasized, 

and quoted from, defendant’s expert evidence that “the vast 

majority” of “light” cigarette smokers titrate or compensate 

“only partially” on a per-cigarette basis. On the basis of that 

evidence, defendant had urged, many putative class members got exactly what defendant represented—lower tar and 

nicotine. The trial court specifically noted that plaintiffs 

had not presented evidence of their own to refute defendant’s evidence on that point. On the record before it, the 

trial court found that the amount of tar and nicotine that 

Marlboro Lights delivered varied significantly based on 

smoker behavior. The trial court therefore concluded that, 

to establish an ascertainable loss from having purchased 
Cite as 358 Or 88 (2015) 101

Marlboro Lights, “each plaintiff and each member of the 

proposed class must prove that the Marlboro Lights he or 

she purchased did not deliver lowered tar and nicotine to the 

person who smoked them.”

The trial court likewise concluded that individual

inquiries would predominate in litigating whether any ascertainable loss was “as a result of” defendant’s alleged misrepresentation. The trial court reasoned that, in this case, 

to establish that plaintiffs had suffered an ascertainable 

economic loss that was caused by (i.e., “as a result of”) 

defendant’s unlawful practice, plaintiffs had to show that 

the class members purchased Marlboro Lights in reliance 

on the perceived health benefits of a lowered tar and nicotine cigarette. Said another way, plaintiffs had to show that 

defendant’s marketing of Marlboro Lights as “lowered tar 

and nicotine” cigarettes was a substantial factor in each 

class member’s purchase decision. In the trial court’s view, 

defendants had produced extensive evidence that many 

individuals bought Marlboro Lights for reasons other than 

their perceived health benefits. Plaintiffs, in response, had 

not demonstrated to the trial court that they could prove, 

through evidence common to the class, that the alleged representation that Marlboro Lights were inherently lower in 

tar and nicotine was a substantial or motivating factor in 

every class member’s purchase decision. Consequently, the 

trial court concluded, plaintiffs had not demonstrated that 

causation/reliance could be litigated without the need for 

individualized inquiries into the class members’ individual 

reasons for their purchase.

The trial court further concluded that there were 

other “indisputably substantial issues unique to each class 

member”; the court pointed particularly to the individual 

inquiries required of the class members to litigate defendant’s statute of limitations defense. The trial court considered those other “unique to each class member” issues in its 

decision, but did not independently rest its ruling on them. 

Rather, the trial court specifically stated that its class certification decision was principally driven by its conclusion 

that the individual inquiries required to litigate the issues of 

ascertainable loss and causation/reliance “overwhelmingly”

predominated over common issues. The trial court further 
102 Pearson v. Philip Morris, Inc.

stated that its conclusions on those two elements of plaintiffs’ claim (causation/reliance and ascertainable loss) were 

“separate and independent grounds for finding that individual questions predominate.” As the trial court explained: “I 

would reach the conclusion that individual questions predominate over common questions (to a degree that requires 

denial of class certification) even if my finding on one of 

those issues were found on appeal to be wrong.”

The trial court concluded its written opinion and 

order by denying plaintiffs’ request to certify an issue class. 

The trial court emphasized in that regard that plaintiffs 

had not specified what the “issue classes” might be, but 

instead merely had asserted that “[a]ll common issues identified by plaintiffs in this motion are appropriate for class 

certification.” The trial court noted that plaintiffs had listed 

17 issues of fact arising out of their own factual statement 

and 39 issues of law arising out of defendant’s affirmative 

defenses, all of which plaintiffs had asserted were issues 

“common” to the class. The trial court declined to certify 

one or more “issue classes,” concluding that plaintiffs’ nonspecific proposal had not demonstrated how issue certification would “eliminate the main obstacle” to resolution of the 

class claim, which was the “overwhelming predominance of 

individual issues.”

2. Court of Appeals’ Decision

Plaintiffs appealed to the Court of Appeals, challenging the trial court’s order denying their motion for 

class certification and issue class certification. For purposes 

of a UTPA claim, the majority held, a plaintiff suffers an 

ascertainable loss if he or she purchases a product that was 

represented to have a “feature of value” that it in fact does 

not have, which in turn renders the product less valuable. 

Pearson, 257 Or App at 136. The loss is, in that instance, 

“the value of that feature.” Id. at 137. The fact that Marlboro 

Lights and regulars were always priced the same did not 

defeat plaintiffs’ claim of ascertainable loss, according to the 

majority, because that was the wrong comparison. Id. at 138-

39. The correct comparison was the value of the represented 

product versus the value of the received product. Id. at 139. 

The majority acknowledged that plaintiffs had produced 
Cite as 358 Or 88 (2015) 103

no evidence of the value of an “inherently” light cigarette 

(i.e., one that delivered lower tar and nicotine than a regular cigarette, no matter how it was smoked). Id. at 138. The 

majority concluded, however, that “a jury could infer” that 

an inherently light cigarette would be more valuable than a 

“potentially light cigarette” (i.e., one that could deliver lower 

tar and nicotine than a regular cigarette if smoked in the 

same way as a regular). Id. The majority therefore determined that, contrary to the trial court’s ruling, ascertainable loss could be “litigated on a class-wide” basis, which 

weighed in favor of class certification. Id. at 139.

The Court of Appeals majority then turned to 

whether individual inquiries would be required to establish that the class members’ ascertainable losses were “as a 

result of” the alleged unlawful representation. The majority 

agreed with the trial court that, to prove causation given 

the nature of their UTPA class claim, plaintiffs had to prove 

that the class members relied on defendant’s lowered tar 

and nicotine representation in purchasing Marlboro Lights. 

Id. at 143-46. Where the Court of Appeals majority parted 

company with the trial court was on whether plaintiffs had 

established that they could prove reliance through evidence 

common to the class as a whole. The majority reasoned that 

an inference of classwide reliance could be drawn from the 

uniform nature of defendant’s representations, defendant’s 

design and marketing of Marlboro Lights, and the fact that, 

in the studies and surveys that defendant had submitted, 

“many” persons who smoked light cigarettes believed that 

they were safer than regular cigarettes. That evidence “convince[d]” the majority that defendant’s representations were 

a substantial factor “in the vast majority” of the putative 

class members’ purchase decisions, and that plaintiffs therefore could prove reliance on the basis of evidence common to 

the class. Id. at 160.

Finally, although the Court of Appeals majority 

acknowledged that other issues—and, in particular, the 

affirmative statute of limitations defense—will require 

individual inquiries of class members, it concluded that 

those issues would arise “only after a jury has determined 

the central question of defendant’s liability to the class.” Id.

at 167.
104 Pearson v. Philip Morris, Inc.

On balance, then, the Court of Appeals determined 

that common issues predominated. Id. at 166. Recognizing 

that whether a class action is a superior means for trial of 

the class claims is a decision ultimately committed to the 

trial court’s sound discretion, the court remanded the case 

to the trial court to reevaluate the superiority question in 

light of the majority’s decision on the predominance of common issues. Id. at 168-69. The majority directed the trial 

court on remand to also “revisit” its denial of issue class certification, given that the trial court’s predominance conclusion had been central to how it had exercised its discretion 

in that regard. Id. at 171-72.

Judge Duncan wrote a separate opinion concurring

in part and dissenting in part, in which three other judges 

joined. Judge Duncan agreed with several aspects of the 

majority’s decision, including that ascertainable loss could 

be litigated through evidence common to the class and that 

causation in this context required proof of reliance. Id. at 

173 (Duncan, J., concurring in part; dissenting in part). 

She disagreed, however, that reliance could be litigated on 

a classwide basis. Significantly, her reasoning differed from 

that of the trial court.

In particular, in Judge Duncan’s view, defendant’s 

representation that Marlboro Lights were “lowered tar and 

nicotine” was open to multiple interpretations on the purchasers’ part. Id. at 175. Judge Duncan observed that some 

purchasers may have understood from the “lowered tar and 

nicotine” representation that the cigarettes were “inherently” light—that is, “that either the contents or the design 

of the cigarettes made it impossible” to deliver the same 

amount of tar and nicotine as regular cigarettes. Id. On the 

other hand, she reasoned, other purchasers may have understood the representation to mean only that Marlboro Lights 

would deliver less tar and nicotine if smoked in the same 

way as regulars. Id. Because defendant’s representation was 

open to multiple interpretations, Judge Duncan believed 

that there were likely variations in whether defendant’s representations played a substantial role in the class members’ 

decisions to purchase Marlboro Lights. Id. She also observed 

that the class members’ individual understandings were 
Cite as 358 Or 88 (2015) 105

likely to vary given the 30-year class period involved, 

during which the lay press publicized information that the 

amount of tar and nicotine that light cigarettes delivered 

depended on how they were smoked. Id. at 176. Given those 

likely variations in purchasers’ understanding, Judge 

Duncan disagreed with the majority that plaintiffs could 

prove that the class members, through common evidence, 

could establish that they made their purchases based on 

the same understanding of and uniform reliance on the 

alleged misrepresentation; rather, that issue, in Judge 

Duncan’s assessment, would have to be litigated “based on 

evidence specific to each class member.” Id. at 177. Judge 

Duncan, and the three other members of the court who 

joined her, therefore concluded that the trial court correctly denied class certification. Id. at 177-78.11

II. DISCUSSION

On review to this court, the parties renew many, 

if not most, of the arguments that they presented to the 

trial court and to the Court of Appeals. The overarching 

issue that we must resolve is whether, on the record before 

us, plaintiffs failed to demonstrate that issues common to 

their class UTPA claim predominate over individual issues. 

Resolution of that issue requires us to consider several subsidiary questions, some of which turn on the standards for 

class certification and others of which turn on the substantive law that governs plaintiffs’ UTPA claim. We begin our 

analysis by examining the standards that govern class certification in Oregon, as well as the respective roles of the 

trial court in making and an appellate court in reviewing 

the class certification determination. We then turn to plaintiffs’ UTPA class claim to resolve what issues would be pivotal in litigation of that claim and whether plaintiffs have 

demonstrated that, given those issues, their UTPA claim 

could be litigated on the basis of evidence common to the 

class.

11 Because the trial court, in denying issue class certification, had appeared 

to rely at least in part on its conclusion that ascertainable loss could not be tried 

on the basis of common evidence, the four members of the court who separately 

concurred and dissented agreed that the case should be remanded to the trial 

court to reevaluate that aspect of its decision. Id. at 178-79.
106 Pearson v. Philip Morris, Inc.

A. Class Certification Generally

The standards that govern class certification are 

set out in ORCP 32. Under that rule, a class certification 

determination divides into two basic inquiries. First, the 

trial court must determine if the action meets five prerequisites: The class must be so numerous that simple joinder 

is impracticable (“numerosity”); there must be questions of 

law or fact common to the class (“commonality”); the named 

representatives’ claims must be typical of those of the class 

(“typicality”); the named representatives must be individuals who will adequately protect the interests of the class 

(“adequacy”); and prelitigation notice requirements must 

have been complied with (“notice”). ORCP 32 A (1)-(5). If 

any one of the five requirements is not satisfied, the case 

cannot go forward as a class action. ORCP 32 B.

If, however, all five requirements are met, the second basic inquiry comes into play: whether “a class action is 

superior to other available methods for the fair and efficient 

adjudication of the controversy.” ORCP 32 B. Again, the 

plaintiff must prevail on the superiority question before the 

action may be maintained as a class action. Id. The rule identifies eight factors “pertinent” to assessing superiority. The 

third factor is one that frequently drives class certification 

decisions, and did in this case: “[t]he extent to which questions of law or fact common to the members of the class predominate over any questions affecting only individual members.” ORCP 32 (B)(3).12 Neither the “predominance” factor 

nor any of the other seven, however, is controlling. Rather, 

the trial court has considerable discretion in weighing all of 

the factors that apply in a given case and determining if a 

class action will be a superior means of litigating the class 

12 Other factors include whether a separate action on the class members’ 

claims will risk inconsistent adjudications or impair the ability of class members 

to protect their interests; whether individual members of the class have an interest in individually controlling the action on their claim; whether a class action 

will be unmanageable; and whether the class members’ claims are too small to 

justify the expense of litigating them on an individual basis. ORCP 32 (B)(1), (4), 

(7), (8). The trial court in this case found that some of the factors listed in the 

rule weighed in favor of class certification, especially the generally low value of 

the individual members’ claims and the high expense of litigation. But in the trial 

court’s judgment, the factors favoring class certification were vastly outweighed 

by the predominance factor, which favored denying certification.
Cite as 358 Or 88 (2015) 107

claims.13 See generally Newman v. Tualatin Development Co. 

Inc., 287 Or 47, 51, 597 P2d 800 (1979) (trial court’s determination that action may proceed as a class action “is largely 

a decision of judicial administration ** * [and, i]n making 

such decisions the trial court is customarily granted wide 

latitude”).

Establishing that the standards for class certification are satisfied under both ORCP 32 A and 32 B is not a 

mere exercise in pleading. Rather, a plaintiff seeking class 

certification has the affirmative burden to demonstrate that 

the requirements of ORCP 32 are satisfied. Bernard v. First 

Nat’l Bank, 275 Or 145, 153, 550 P2d 1203 (1976).14 Thus, 

before a trial court may certify a class under ORCP 32, it 

must make an affirmative determination that the rule’s 

requirements for certification are satisfied. Although a class 

certification decision is not a trial of the merits, Newman, 

13 Oregon’s original class action statute was modeled after Rule 23 of the 

Federal Rules of Civil Procedure, although some of its provisions differed. See 

generally Bernard v. First Nat’l Bank, 275 Or 145, 150-51, 550 P2d 1203 (1976) 

(describing history of Oregon class action statute). Under the original class 

action statute, which was later codified as ORCP 32 (1991), the predominance 

requirement was one of the threshold prerequisites for class certification; if it 

was not satisfied, the class action could not be maintained. Id. at 149-50 (quoting statute); see also ORCP 32 B (1991) (same provision as original statute). In 

1992, the Council on Court Procedures substantially modified the rule. See generally Council on Court Procedures, Staff Comment, 1992, reprinted in Lisa A. 

Kloppenberg, Oregon Rules of Civil Procedure 1994 Handbook 88 (1993) (comment 

on 1992 amendments). The Council made predominance a factor in the superiority decision, rather than one that, as before, had precluded certification. Id. 

The Council specifically endorsed commentary accompanying proposed changes 

to the federal rule (which were not adopted), which emphasized that the predominance question remained “unquestionably important,” but should be weighed 

with other factors in the superiority assessment. Report and Recommendation of 

the Special Committee on Class Action Improvements, 110 FRD 195, 204 (1986). 

Thus, the Council in 1992 did not change the standard by which predominance is 

tested, but did turn it into a factor for the trial court’s discretionary assessment 

of superiority, rather than a prerequisite for class certification.

14 Although ORCP 32 does not expressly place the burden on the plaintiff, 

it does so implicitly. See ORCP 32 B (prerequisites for class certification must 

be “satisfied” and trial court must “find” that a class action is superior to other 

adjudication methods before action may be maintained as class action); ORCP 

32 C(1) (trial court must decide class certification by order in which trial court 

“shall find the facts specially and state separately its conclusions thereon”). The 

same is true of the federal class action rule. Wal-Mart Stores, Inc. v. Dukes, 564 

US ___, 131 S Ct 2541, 2551, 180 L Ed 2d 374 (2011) (party seeking to maintain 

a class action likewise “must affirmatively demonstrate his compliance” with the 

requirements of Rule 23).
108 Pearson v. Philip Morris, Inc.

287 Or at 51, the issues that must be resolved for the class 

certification determination frequently overlap with the merits of a plaintiffs’ class claim, Coopers & Lybrand v. Livesay,

437 US 463, 469, 98 S Ct 2454, 57 L Ed 2d 351 (1978) (“the 

class determination generally involves considerations that 

are enmeshed in the factual and legal issues comprising the 

plaintiff’s cause of action”).

As federal courts have observed of the parallel 

requirements of the federal class action rule, the essential 

objective of the class determination is to “formulate some 

prediction as to how specific issues will play out” at trial. 

Waste Mgmt. Holdings, Inc. v. Mowbray, 208 F3d 288, 298 

(1st Cir 2000). To that end, a trial court must “probe behind 

the pleadings” to the extent necessary to resolve the class 

claims. General Telephone Co. v. Falcon, 457 US 147, 160, 

102 S Ct 2364, 72 L Ed 2d 740 (1982). If a class certification decision could come out different ways, depending on 

how factual disputes are resolved, the answer is not—as it 

would be for summary judgment—that the class should be 

certified and the dispute be resolved at trial. Instead, the 

trial court must resolve the dispute for the limited purpose 

of the class certification decision. See generally Richard A. 

Nagareda, Class Certification in the Age of Aggregate Proof, 

84 NYU L Rev 97, 100, 114 (2009) (trial court must resolve 

factual disputes, even if they go to merits of dispute, with 

no issue preclusive effect, if disputes bear on whether class 

certification standards are satisfied). Likewise, if the parties have competing views of the law that governs the class 

claim, a court must “stand ready to say what the law is” 

to the extent that class determination will come out differently depending on which view is correct. Id. at 164 (internal 

quotation marks omitted); see also Tardiff v. Knox County, 

365 F3d 1, 4-5 (1st Cir 2004) (court must test disputed legal 

premises of claim at class certification stage if class action 

would be proper on one premise but not another).

For the superiority determination under ORCP 32 B,

in particular, the factors to be weighed by the court are 

legal in nature; however, their application can require, and 

even pivot on, the resolution of disputed facts. For example, in Bernard, this court described one of those factors—

predominance, i.e., whether common legal or factual questions
Cite as 358 Or 88 (2015) 109

predominate over individual ones—as ultimately a legal 

conclusion. 275 Or at 153. The court explained, however, 

that arriving at that conclusion may require factfinding by 

the trial court. By way of illustration, Bernard noted that if 

statistical evidence were put before a trial court bearing on 

the knowledge or state of mind of class members in entering 

a particular transaction, the conclusion to be drawn from 

that evidence would be factual in nature, and thus for the 

trial court to determine. Id. at 153-54. By analogizing the 

applicable scope of review to the one announced in Ball v. 

Gladden, 250 Or 485, 487-88, 443 P2d 621 (1968), Bernard

conveyed that an appellate court must defer to the trial 

court’s resolution of any disputed facts, reviewing the record 

only to determine if no evidence supports the trial court’s 

express and implicit factual findings. The appellate court 

then determines if, on the basis of that resolution of any 

disputed factual issues, the trial court’s ultimate predominance determination was legally correct. Id. at 154. That is 

the task that this case presents for us.

B. The Predominance Standard

Against that general backdrop, we turn more specifically to the predominance factor set out in ORCP 32 B(3).

For purposes of our review, plaintiffs in this case have met 

the five threshold prerequisites of ORCP 32 A (numerosity;

commonality; typicality; adequacy; and notice). The trial 

court determined that those prerequisites were satisfied, and 

defendant does not challenge that determination. Because

the trial court’s superiority assessment was driven by its 

predominance conclusion, 358 Or at 106, the question at 

this juncture is only whether, based on this record, plaintiffs 

established that common issues predominate over individual ones, contrary to the trial court’s conclusion. We therefore examine the predominance criterion in greater depth.

Although plaintiffs have established, as the “commonality” prerequisite of ORCP 32 A requires, that their 

claim entails issues of fact or law common to the class, satisfying that requirement is not the same as satisfying the 

predominance factor for purposes of assessing superiority. 

As federal courts have recognized of the parallel federal 

rule, “the predominance criterion is far more demanding’’ 
110 Pearson v. Philip Morris, Inc.

than the commonality requirement. Amchem Prods., Inc. v. 

Windsor, 521 US 591, 623-24, 117 S Ct 2231, 138 L Ed 2d 

689 (1997); see also Benedict v. Altria Group, Inc., 241 FRD 

668, 672 (D Kan 2007) (commonality requirement is generally subsumed within and superseded by the “far more 

demanding” predominance requirement for class certification). Commonality asks only if there are questions of law or 

fact common to the class. ORCP 32 A(2). It does not test how 

central the common questions are to the resolution of the 

action. Nor does it take into account the nature of the proof 

required to litigate those common issues.

The predominance inquiry, on the other hand, asks 

exactly those things—how central are the common questions, and will common proof resolve them? To test whether 

common issues of fact or law predominate over individual 

ones, the trial court must assess whether it is “likely” that 

the final determination of the action will require separate 

adjudications to resolve factual or legal questions regarding 

the individual class members and, if so, how many individual adjudications would be required. See Bernard, 275 Or 

at 157-62 (stating standard in the context of the issue of 

individual class member knowledge); accord Newman, 287 

Or at 53-54 (relying on standard from Bernard). The predominance criterion requires the trial court to predict how 

the issues will play out at trial by considering whether the 

adjudication can be resolved with evidence common to the 

class (i.e., proof for one class member will be the same for 

all), or whether it will entail separate inquiries for the individual class members. As one foremost authority on class 

actions has observed of the predominance inquiry:

“What matters to class certification * ** is not the raising 

of common ‘questions’—even in droves—but, rather, the 

capacity of a class-wide proceeding to generate common

answers apt to drive the resolution of the litigation. Dissimilarities within the proposed class are what have the potential to impede the generation of common answers.”

Nagareda, 84 NYU L Rev at 132.

In effect, predominance asks: What do the individual class members have in common, what don’t they 

have in common, and how much will those similarities and 
Cite as 358 Or 88 (2015) 111

dissimilarities matter in litigating the case? In practical 

terms, the inquiry is designed to determine if proof as to one 

class member will be proof as to all, or whether dissimilarities among the class members will require individualized 

inquiries. How the predominance inquiry is answered, then, 

is a key factor in the trial court’s discretionary assessment 

of whether a class action will be a fair and efficient means 

of litigating the case, and thus superior over other available 

means to resolve the controversy. See ORCP 32 B (certification requires court to find that class action is superior 

method for fair and efficient adjudication of controversy).

Our cases illustrate that understanding of and 

approach to the predominance inquiry. The lead case is 

Bernard, which involved a putative class action brought 

against a bank for damages based on the bank’s method of 

computing interest on loans. The plaintiffs’ breach of contract and assumpsit claims alleged that the bank failed 

to disclose to class members its method of computing loan 

interest, and the class members did not otherwise know 

of that computation method. Given that legal and factual 

context, the predominance inquiry depended on whether it 

was “‘likely’ that final determination of the action [would] 

require separate adjudications concerning the knowledge of 

‘numerous’ plaintiffs’” as to how the bank computed interest 

on the loans. Bernard, 275 Or at 149. The written contract 

for the loans had stated that interest would be calculated 

at a rate-of-percent “per annum,” without explaining which 

of three different common methods of calculating annual 

interest the bank would use. Id. at 147-48. The plaintiffs’ 

theory was that, because the bank had failed to disclose its 

method of calculation, it could be inferred that borrowers—

uniformly, throughout the class—did not know what that 

method was. See id. at 162 (describing plaintiffs’ evidence 

and theory).

This court in Bernard concluded, however, that the 

inference that the plaintiffs relied on was insufficient to 

show that their knowledge (or lack thereof) could be resolved 

on the basis of evidence common to the class. The court reasoned that resolving what the class members knew required, 

in part, determining “the meaning attached by the parties 

to the words ‘per annum,’” which in turn was a “matter of 
112 Pearson v. Philip Morris, Inc.

interpretation” by individual borrowers. Id. at 154-55. The 

court pointed to the general difficulty of establishing individual class members’ “state of mind” on a classwide basis. 

Id. at 156. Ultimately, the court declined to certify the class, 

concluding from the record that it appeared “probable that 

many claimants’ knowledge will legitimately be in issue and 

that separate adjudications of the claims of numerous members of the class will be required to dispose of the question 

of defendants’ liability.” Id. at 162.

Since Bernard, our cases have approached the predominance inquiry in that same way—viz., by asking what 

legal and factual issues must be resolved, and what the 

plaintiff and the defendant are entitled to prove and contest, 

to fairly and fully litigate the issues. The outcomes of the 

cases have depended on the particular claims involved and 

the record made on the class certification motion.

In Newman, for example, the question was whether 

the individual class members in purchasing townhomes had 

relied on a representation in a warranty brochure that the 

pipes were copper. The plaintiffs produced no direct evidence on the point, but instead relied on an inference that 

most or all class members had relied on the representation, 

which was one among many construction features described 

in the brochure. Analogizing to Bernard, the court determined that the inference on which the plaintiffs relied was 

too weak to establish that “every member of the class read, 

was aware of, and relied upon each of the representations in 

the brochure.” Newman, 287 Or at 54.

In contrast, in Derenco v. Benj. Franklin Fed. Sav. 

and Loan, 281 Or 533, 577 P2d 477 (1978), the record established that individual variations among the class members were unlikely. Derenco was similar to Bernard in that 

it involved how a bank invested certain funds that it held 

for borrowers; a significant issue for resolution was, again, 

whether borrowers knew of the bank’s practice. The class 

certification decision came out differently than in Bernard, 

however, because of Derenco’s different factual record. In 

Derenco, the class consisted of persons unfamiliar with 

banking practices who had not been informed, either by the 

terms of their contract or otherwise, how the bank invested 
Cite as 358 Or 88 (2015) 113

the funds, and the banking industry had no uniform practice in that regard. Id. at 556-57. The court contrasted that 

record in Derenco with the record in Bernard and concluded, 

opposite of the conclusion in Bernard, that it was unlikely 

that any significant number of class members knew of the 

bank’s investment practice or, for that matter, that it even 

occurred to them to consider whether and how the bank 

invested the funds. Id. at 572.15

Finally, Hurt v. Midrex Division, 276 Or 925, 556 

P2d 1337 (1976), like Derenco, resulted in class certification based on the predominance of common issues. There, 

a putative class of employees of an iron ore reducer brought 

an action for monetary damages, alleging that the defendant’s ore reduction plant emitted paint particulates that 

damaged the employees’ cars parked outside the plant. By 

way of defense, the defendant alleged that the employees 

were aware of the damage being done to their cars but had 

parked there anyway, and therefore had assumed the risk 

of where they chose to park or, alternatively, had contributed to and aggravated their own damages. Hurt, 276 Or at 

927-28. The defendant urged that the class members’ awareness of the paint particulates would require individualized 

inquiries, but the court disagreed on the particular record 

before it. It was “implausible,” the court concluded, that the 

employees who parked on the defendant’s premises “would 

not have been equally aware of the problem at the time or 

shortly after” they first parked there. Id. at 928. In fact, 

the record showed that the problem of the paint damage to 

employee cars had been “of sufficient notoriety to be the subject of negotiation between the employees’ union and [the] 

defendants.” Id. The court viewed the potential for individual variances in the class members’ subjective awareness to 

15 In Derenco, the court more or less blatantly engaged in de novo review 

of the factual record, without saying so and without acknowledging the standard of review announced in Bernard. See Derenco, 281 Or at 572 (“We conclude 

from the evidence in this case ***” and “It is our conclusion that the proof here 

indicates * **[.]”). One explanation may be that Derenco involved an action for 

an accounting, which at common law was an equitable proceeding. See Carey v. 

Hays, 243 Or 73, 77, 409 P2d 899 (1966) (action for accounting at common law 

equitable in nature); see former ORS 19.125(3) (1975) (equity cases subject to 

de novo review on appeal). In all events, Derenco did not purport to change the 

standard of review announced in Bernard, and we would not adhere to it now if it 

had.
114 Pearson v. Philip Morris, Inc.

be “theoretical” only. Id. at 929. A defendant could not, the 

court declared, defeat the predominance of common issues 

by “dreaming up a theoretical defense requiring individual 

inquiries for which there is little basis in fact.” Id. (quoting 

Bernard, 275 Or at 158).

Collectively, our cases demonstrate that whether 

common issues predominate in a particular case for purposes of class certification depends on a pragmatic assessment of how a case, if fairly and fully tried, is likely to be 

litigated. The point of asking whether common issues predominate is to predict the degree to which litigation of the 

controversy will require delving into individualized proof or, 

conversely, the degree to which the issues lend themselves 

to resolution through common proof—that is, proof for one 

individual class member will be proof for all. The inquiry 

looks not only to how a plaintiff can prove its prima facie

case; it considers, as well, the nature of the plaintiff’s claim 

more generally, the defenses to the claim, the legal and factual issues framed by the parties’ positions, and the record 

made on the disputed issues of fact. See Bernard, 275 Or at 

159 (class action procedures not designed to deprive defendants of valuable procedural and substantive rights by preventing them from asserting what appear to be bona fide 

defenses; predominance inquiry requires consideration of 

likelihood that individual inquiries are necessary to permit defendant to litigate legitimate issues in defense). If 

the record suggests legitimate and legally material factual 

differences among the class members that a defendant is 

entitled to expose through individualized inquiries—what 

Professor Nagareda terms “fatal dissimilarities” among the 

class16—the predominance inquiry must take those individualized inquiries into account.

16 See, e.g., Nagareda, 84 NYU L Rev at 107, 131 (using term). Professor 

Nagareda also describes what he terms “fatal similarities”—characteristics common to the class that may defeat their substantive claims. See, e.g., id. (using 

term). Fatal similarities may defeat the class claim at the summary judgment 

stage or at some other procedural juncture, but they do not defeat class certification. Id. at 107. Hurt, 276 Or at 928-29, provides an example of a potentially fatal 

similarity—the common knowledge of all employees that, by parking in their 

employer’s parking lot, they would incur damage to their cars. That similarity 

aided the plaintiffs in achieving class certification; on the merits, however, that 

similarity stood to significantly advance the defense claims that the employees 

had assumed the risk of parking there and had contributed to their own damages.
Cite as 358 Or 88 (2015) 115

C. The UTPA and Plaintiffs’ Specific Class Claim

With that discussion of the class certification standards in place as a foundation, we turn to an analysis of 

plaintiffs’ UTPA class claim. We first consider the nature of 

UTPA claims more generally. We then examine the specific 

claim that plaintiffs seek to pursue on behalf of the putative class. As we will discuss, with respect to the specific 

claim that plaintiffs seek to pursue, the parties’ positions 

frame both legal and factual disputes that bear directly on 

the class certification question of whether common issues 

predominate over individual issues. We work through those 

disputes, consistently with our role in resolving legal issues 

and the trial court’s role in resolving factual issues. We then 

resolve the ultimate issue before us—whether, given what 

plaintiffs must prove to establish their UTPA claim, plaintiffs carried their burden to show that, on issues apt to drive 

the resolution of the litigation, evidence common to the class 

will generate common answers for the individual members; 

or in contrast, whether a full and fair resolution of the controversy has a substantial—and not just theoretical—likelihood of requiring individual inquiries.

1. UTPA Claims Generally

Oregon’s UTPA, like those of many other jurisdictions, was enacted as a comprehensive statute for the protection of consumers from unlawful trade practices. See State 

ex rel Redden v. Discount Fabrics, 289 Or 375, 382, 615 P2d 

1034 (1980) (discussing UTPA generally). The trade practices declared unlawful under the UTPA are extensive, too 

much so for description. See generally ORS 646.607 (setting 

forth unlawful trade practices involving unconscionable tactics and failure to deliver as promised or failure to refund for 

undelivered goods and services); ORS 646.608 (enumerating 

approximately 76 additional unlawful trade practices). But 

as relevant here, under ORS 646.608(1)(e), a person engages 

in an unlawful trade practice if, in the course of that person’s 

business, vocation, or occupation, the person “[r]epresents 

that goods *** have sponsorship, approval, characteristics, 

ingredients, uses, benefits, quantities or qualities that [they] 

do not have.” For purposes of the UTPA, a “representation” 

includes “any assertion by words or conduct” and also “a failure to disclose a fact.” ORS 646.608(2).
116 Pearson v. Philip Morris, Inc.

The UTPA has both public and private enforcement provisions. ORS 646.632 (authorizing officials to bring 

action in name of state); ORS 646.638 (authorizing action 

by private person). A public official bringing an enforcement 

action may seek, among other possible relief, injunctions, 

imposition of statutory penalties, and loss of licenses and 

franchises. See Weigel v. Ron Tonkin Chevrolet Co., 298 Or 

127, 134, 690 P2d 488 (1984) (citing provisions). A public 

action does not require proof that any consumer has suffered economic loss or other injury as a result of the unlawful practice. Discount Fabrics, 289 Or at 384.17 Nor does a 

statute of limitations apply to a public action.

A private action, in contrast, must be brought 

within one year after discovery of the unlawful conduct. 

ORS 646.638(6). And, unlike in an action a UTPA claim 

pursued by a public official, a plaintiff in a private action 

must prove injury in the form of an “ascertainable loss of 

money or property.” ORS 646.638(1). By way of relief, the 

injured consumer can recover actual damages or a statutorily set minimum damage amount of $200, “whichever 

is greater.” ORS 646.638(1). And although a private action 

may be brought as a class action, at the time of this action, 

class members were limited to actual damages; they could 

not recover the statutory minimum of $200 each. See ORCP 

17 That is not to imply that the public official cannot seek to make whole 

any consumers who may have been injured economically by a practice. Under 

ORS 646.636, a court’s remedial powers in a public enforcement action include 

“restor[ing] to any person in interest any moneys or property, real or personal, 

of which the person was deprived by means of any” unlawful trade practice. But 

a private loss of money or property is not an element of the public action. That 

makes sense because many of the trade practices made unlawful by the statute, 

although contrary to public policy because of their potential for economic injury, 

deception, and frustration of consumer expectations, would not necessarily or 

even likely result in actual or measurable loss of money or property. Examples 

include vague or false representations about where a product was made, ORS 

646.608(1)(b); disparaging comments about a competitor’s product that are false 

or misleading, ORS 646.608(1)(h); selling goods door to door without making certain required disclosures, ORS 646.608(1)(n); making a false or misleading statement about a prize or contest, ORS 646.608(1)(p); or attempting to induce membership in a pyramid club, ORS 646.608(1)(r). For those and many other unlawful 

practices listed in the statute, enforcement through a public action, which within 

10 days of filing can result in cessation of the unlawful practice through a defendant’s voluntary compliance agreement (ORS 646.632(2)), is often the most effective means of protecting consumers from the practices that the statute makes 

unlawful.
Cite as 358 Or 88 (2015) 117

32 K (2007) (class action cannot be maintained for minimum damages under ORS 646.638).

The nature of the “ascertainable loss” that the 

private plaintiff must prove distinguishes a UTPA claim 

from any other claims or remedies that a plaintiff might 

pursue through other actions. The requirement that the 

loss be “ascertainable” connotes generally that it is one 

“capable of being discovered, observed, or established.” 

Scott v. Western Int. Sales, Inc., 267 Or 512, 515, 517 P2d 

661 (1973). Thus, the loss must be objectively verifiable, 

much as economic damages in civil actions must be. See 

ORS 31.710(2)(a) defining “economic damages” as “objectively verifiable monetary losses”). But unlike general economic damages in a civil action, the loss required for a 

UTPA claim must be specifically of “money or property, 

real or personal.” ORS 646.638(1). An ascertainable loss 

of some other kind—such as loss of physical ability due 

to a personal injury—is not cognizable in a UTPA claim. 

Likewise, noneconomic losses cognizable in a civil action—

such as physical pain, emotional distress, or humiliation 

(ORS 31.710(2)(b))—will not satisfy a private UTPA plaintiff’s burden. Finally, the ascertainable loss must be “a 

result of” the unlawful trade practice. That is, the unlawful trade practice must have caused the ascertainable loss 

that the plaintiff suffered.

2. Plaintiff’s Specific Class Claim

As earlier described, plaintiffs brought two UTPA 

claims, both of which alleged that defendant represented 

Marlboro Lights as having characteristics that they do not 

have, in violation of ORS 646.608(1)(e). The two claims differed, however, in the nature of the characteristic involved. 

The first claim asserted that Marlboro Lights promised lower tar and nicotine amounts and failed to deliver 

those lower amounts. The second claim was premised on 

a different promised characteristic: that defendant represented Marlboro Lights to be “inherently” lower in tar and

nicotine—that is, lower no matter how they were smoked—

when in fact the amount of tar and nicotine varied based 

on smoker behavior. As to the class, plaintiffs pursued 

only their second claim—the claim based on “inherent” 

lightness.
118 Pearson v. Philip Morris, Inc.

In pleading that claim, plaintiffs asserted that 

defendant made the misrepresentation both affirmatively 

and by omission:

“Defendant both affirmatively misrepresented that its 

‘light’ cigarettes would inherently deliver low tar and nicotine and failed to disclose that, in order to receive lower tar 

and nicotine, the smoker would have to smoke the ‘light’ 

cigarettes in a particular way.”

As required for their private UTPA action, plaintiffs also 

asserted that they and the class members suffered ascertainable losses “as a direct result” of defendant’s misrepresentation “because they paid for cigarettes they believed 

were inherently lower in tar and nicotine than defendants’ 

regular cigarettes but received cigarettes that would deliver 

lowered tar and nicotine only if smoked in particular ways.” 

By way of relief, plaintiffs asked for “[e]conomic damages for 

purchase price refund or diminished value, in an amount to 

be proved at trial.”

In the trial court and in the Court of Appeals, as 

we earlier described, the dispute between the parties on the 

predominance factor centered on the elements of “ascertainable loss” and “causation” of that loss. The Court of Appeals 

(both the majority and the dissent) concluded that ascertainable loss could be resolved based on evidence common 

to the class, contrary to the trial court’s conclusion. Both 

the Court of Appeals majority and the dissent also agreed 

with the trial court that proof of causation would require 

proof of “reliance.” But the majority concluded, contrary to 

the trial court, that causation/reliance could be proved by 

proof common to the class, while the dissent agreed with 

the trial court (albeit for different reasons) that litigation of 

that issue would require numerous individualized inquiries 

of the class members.

To address those issues, it is helpful to distinguish 

expressly between two different and analytically distinct 

theories of ascertainable loss on which plaintiffs predicated 

their class claim. One theory was a loss based on “diminished value.” Specifically, plaintiffs’ claim was that they and 

the class members bought a product that was worth less 

than they paid for it, and their damages were the difference 
Cite as 358 Or 88 (2015) 119

in the value of the product as represented versus the value of 

the product they actually received. Plaintiffs’ other theory of 

loss was that they and the class members bought Marlboro 

Lights believing defendant’s representation of inherent 

lightness, they did not get what they believed they were getting, and they therefore were entitled to a refund of their 

purchase price. Those distinctive theories present different 

concerns in terms of their legal viability and the nature of 

the proof required to adjudicate them. We therefore analyze them separately, beginning with plaintiffs’ diminished 

value theory of ascertainable loss.

a. Diminished Value

The premise of plaintiffs’ diminished value theory 

was that the characteristic of “inherent lightness” has economic value, so that plaintiffs and the class members suffered an economic loss at the moment of purchase because 

they bought a product that lacked that characteristic. In 

effect, they bought a product that was the equivalent of 

Marlboro regulars, rather than the Marlboro Lights that the 

product purported to be. At the hearing on their motion to 

certify the class, plaintiffs explained to the trial court that 

they were prepared to produce expert testimony at trial that 

an inherently lighter cigarette (i.e., one that delivered less 

tar and nicotine than a regular cigarette, no matter how it 

was smoked) had greater economic value than a regular one. 

As a result, their theory went, by purchasing cigarettes that 

were not inherently light, plaintiffs and the class members 

did not get full value for their purchase. In colloquy at the 

hearing on the motion for class certification, the trial court 

clarified the gravamen of plaintiffs’ diminished value theory 

by stating that “the heart” of that theory was that the class 

members suffered an economic loss without having “to ever 

open the pack” because the product they bought was not 

what it was labeled to be. Plaintiffs’ counsel replied, “That’s 

correct.” The trial court further clarified that the loss was 

not because, “when smoked, [Marlboro Lights] deliver less 

tar and nicotine” than regulars, to which plaintiffs’ counsel 

replied, “You are there.”

Defendant responded to that theory by producing 

evidence that Marlboro Lights had always been priced the 
120 Pearson v. Philip Morris, Inc.

same as its regular cigarettes. Defendant emphasized that 

the essence of plaintiffs’ class claim was that the Marlboro 

Lights were not substantially different from Marlboro regulars. Plaintiffs’ diminished value theory hinged on the idea 

that they and the class members therefore suffered out of 

pocket losses as measured by the difference in value between 

the product they were supposed to have gotten—Marlboro 

Lights—and the product they in fact got—the equivalent of 

Marlboro regulars. Defendant maintained that plaintiffs’ 

diminished value theory of loss was not viable given the evidence that the two products—Marlboro Lights and Marlboro 

regulars—had always been priced the same.

Plaintiffs’ position, however, was that such proof 

was beside the point. Plaintiffs, continuing to point to the 

expert evidence that they said they would produce at trial, 

maintained that the characteristic of “inherent” lightness 

had economic value in the market. In their view, regardless 

of what purchasers paid for Marlboro Lights, the product 

was worth less than it would have been if Marlboro Lights 

had been inherently light, as allegedly represented. Thus, 

under plaintiffs’ theory, they and the class members suffered an economic loss in the form of the diminished value of 

the product they bought as compared to the value the product would have had if it were as represented.

Plaintiffs did not, however, produce that expert testimony for the trial court. To the extent plaintiffs’ position 

was that, any time a product is not as represented, there 

is automatically an “ascertainable loss,” the trial court 

rejected its logical viability. “A simple example,” the trial 

court explained, “shows the fallacy of that proposition as a 

blanket assertion. If a consumer buys a stone advertised as 

a cubic zirconi[a], he or she has suffered no ascertainable 

loss if the stone turns out to be a diamond.” On the record 

before it—where there was no difference in price between 

the Marlboro Lights and regular Marlboro cigarettes—the 

trial court found the inference of diminished value that 

plaintiffs said could be drawn for the class as a whole to be 

untenable. Given plaintiffs’ failure to come forward with 

the expert evidence they said they could produce at trial, 

the trial court had no other evidence of plaintiffs’ theory of 
Cite as 358 Or 88 (2015) 121

diminished value—other than plaintiffs’ flawed logic—to 

establish the legal viability of that claim.

The Court of Appeals disagreed, not on the basis 

that plaintiffs had promised to produce an expert at trial 

who would support their theory, but instead because it concluded that plaintiffs’ theory rationally supported their claim 

of diminished value. No expert testimony was required, in 

the Court of Appeals’ view. Rather, “a jury could infer that 

an inherently light cigarette would be more valuable than 

a potentially light cigarette.” Pearson, 257 Or App at 138 

(emphasis added). Plaintiffs’ claim, the Court of Appeals 

explained, was that they had purchased a product that was 

represented to have a feature “of value” that it did not have. 

Id. at 137-38. The court thus distinguished the trial court’s 

cubic zirconia example, saying simply that it was “inapt,” 

because here “plaintiffs’ theory is that they received a product that was less valuable than it was represented to be.” Id. 

137 (emphasis in original).

In reasoning that an inference of diminished value 

was permissible on this record, the Court of Appeals relied 

on our decision in Scott v. Western International Surplus 

Sales, Inc., 267 Or 512, 517 P2d 661 (1973). There, the 

plaintiff had purchased a backpacking tent that came in 

packaging that pictured a tent with eaves and a window, 

and that expressly stated “Nylon Net Rear Window with 

ZIPPERED flap.” Id. at 514. The tent inside, however, did 

not have those features. Id. The evidence established only 

that the plaintiff had paid $38.86 for the tent; no evidence 

established the price of the same tent without eaves and a 

window. Id. at 516. On that state of the record, this court 

concluded that a jury could permissibly infer, first, that a 

tent with the features pictured on the packaging (eaves and 

a window) was worth $38.86 and, second, that a tent without 

those features was worth less than $38.86. 267 Or at 515-

16.18 Analogizing to Scott, the Court of Appeals held that a 

18 The plaintiff might have had a problem in Scott had the plaintiff sought 

damages in the amount of the actual diminished value of the tent that he received, 

given that state of the record. But this court pointed out in Scott that the plaintiff 

sought to recover the minimum statutory damages of $200. Id. at 515. Thus, the 

plaintiff could prevail on the basis of a showing of “some loss,” without showing 

the amount of the tent’s actual diminished value. Id. at 516.
122 Pearson v. Philip Morris, Inc.

reasonable inference could likewise be drawn in this case 

that the value of being “inherently light” made Marlboro 

Lights worth more than regular cigarettes. Pearson, 257 Or 

App at 135-37.

Although such an inference may be logically permissible based on common consumer experience or normal market assumptions for many goods and products, it 

does not hold up in this context. Here, unlike in Scott, the 

undisputed evidence affirmatively establishes that there 

is not—and never has been—a price difference between 

Marlboro Lights and regulars. When the price of goods 

is not different based on some represented quality (say, 

for example, color or flavor), it simply does not logically 

follow that the quality has greater economic worth.19 In 

terms of economic loss—which is the kind of loss required 

here—when there is no price difference for a good with a 

particular feature and the same good without it, a plaintiff 

has not paid any extra for the represented quality that the 

plaintiff did not receive. In other words, the plaintiff is not 

out of pocket any additional money based on the purchase; 

the plaintiff got the represented feature for no charge. To 

be sure, the purchaser may be disappointed in the product because it is not what the purchaser believed he or 

she was buying, and the purchaser may have suffered a 

loss in the form of buying something he or she would not 

have otherwise bought. But a loss in the form of the purchase price is a different theory, one we discuss separately. 

For a diminished value theory, the fact that the product 

costs the same with or without a represented characteristic defeats a logical inference that the product without the 

feature is worth less.

Two other factual aspects of this case compound the 

difficulty of the inference that the Court of Appeals said was 

permissible. First, even if we could accept plaintiffs’ unsupported premise—that light cigarettes are economically worth

more than regulars—the fact that Marlboro Lights and 

19 For example, if cherry cola and regular cola have always cost the same, 

and through a bottling error, thousands of bottles labeled cherry cola are filled 

with regular cola and vice versa, it is difficult to see how the purchasers suffered 

a diminished value loss, although, to be sure, for purchasers who bought the cola 

based on flavor, they did not receive what they believed they were buying.
Cite as 358 Or 88 (2015) 123

regulars cost the same still defeats a reasonable inference 

that plaintiffs and the class members paid too much (which 

a diminished value theory requires). It is just as likely that 

purchasers of Marlboro regulars, whose product should have 

been worth less under plaintiffs’ theory, overpaid. Given the 

price parity between the two products, it is impossible to 

know which product (if either) is overpriced relative to the 

other.

The other factor complicating the inference that the 

Court of Appeals said could be drawn is that this product 

is one that is consumed, rather than sold on a secondary 

market. For promotional or other reasons, some goods with 

a represented quality or characteristic of value may initially 

be sold at a price that is the same as the good without that 

quality (such as a car represented to be a new model year, 

where the price set is the same as for the current model 

year). For purposes of resale, however, the good may be 

worth more if it has that quality, even though the purchase 

price was the same. If, then, the good was misrepresented 

and does not have that characteristic (for example, the car 

turns out to be the current year’s model, contrary to the representation), the purchaser suffers an economic loss, if not at 

the moment of purchase, at least when the purchaser later 

resells the good.20 But a good that is consumed or otherwise 

extinguished or depleted in its use is not subject to the same 

analysis. For goods of those kinds, under a diminished value 

theory, a purchaser can suffer an economic loss only in the 

form of having paid too much at the time of purchase. And 

20 The car example is similar to the facts in Weigel, where the plaintiff purchased what was represented to be a new car that was in fact used. The plaintiff 

pursued a UTPA claim on the theory that he suffered an ascertainable loss in 

the form of the difference between the price paid and the actual market value 

of the car, which this court held a jury could infer was less than the price paid. 

Weigel, 298 Or at 134-37. In other words, as in Scott, the plaintiff suffered an outof-pocket loss at the moment of purchase based on the price paid and the actual 

value of the item. Our example poses a harder problem, because the purchase 

price of the new model year car was unchanged from last year’s model. Again, the 

UTPA requires ascertainable loss in the form of money or property. It does not, at 

least textually, include a loss of “property value.” Whether, to prove an ascertainable loss for purposes of the UTPA, a purchaser can rely on diminished property 

value alone, without some out-of-pocket loss incurred through resale, is nothing 

we decide in this case. We offer the example to demonstrate the significant difference, however, between goods that are consumed and those that are possessory 

property with ongoing resale value.
124 Pearson v. Philip Morris, Inc.

when, as here, the good is the same price with or without 

a represented feature, no logical inference of economic loss 

arises.

It may be, as plaintiffs represented to the trial court, 

that through expert testimony, they had some specialized 

economic theory to present to establish on a classwide basis 

that each of the class members suffered a diminished value 

loss. In other cases involving light cigarettes and similar 

allegations of loss, the plaintiffs have attempted to rely on 

expert testimony to establish that the tobacco industry marketing drove up demand, thus inflating the purchase price 

of light cigarettes, so that the plaintiffs paid more than they 

otherwise would have if the truth about light cigarettes 

had been known. See, e.g., McLaughlin v. Am. Tobacco Co., 

522 F3d 215, 226-27 (2d Cir 2008) (rejecting theory of economic loss akin to “fraud on the market theory”). So far, 

no court presented with a specialized economic theory of 

loss has found the theory viable. But in all events, plaintiffs 

in this case did not come forward with the evidence that 

they said they would produce at trial. We are therefore left 

with whatever logical inferences, based on ordinary market 

assumptions, that a jury could draw. Contrary to the Court 

of Appeals’ reasoning, where, as here, there is no difference 

in the price between a product with the represented feature 

and one without, plaintiffs’ theory of diminished value provides no logically viable theory on which classwide economic 

losses can be established.

b. Refund of Purchase Price

Plaintiffs’ alternative theory of economic loss was, 

as we have described, based on their and the class members’ alleged failure to receive what defendant’s representation led them to believe they were buying. Specifically, 

plaintiffs alleged that they suffered ascertainable loss “as a 

direct result” of defendant’s misrepresentation because they 

paid for cigarettes that “they believed were inherently lower 

in tar and nicotine than defendant’s regular cigarettes but 

received cigarettes that would deliver lowered tar and nicotine only if smoked in particular ways.” They sought a 

refund of their purchase price as a remedy.
Cite as 358 Or 88 (2015) 125

After plaintiffs moved for certification of the class, 

and once the parties squared off in their written memoranda and evidentiary submissions, both legal and factual 

issues pertinent to the certification decision emerged. One 

of their key legal disagreements was whether plaintiffs, 

to prevail on their class claim, would have to prove “reliance.” Specifically, the dispute was whether plaintiffs’ claim 

required proof that a substantial factor in each class member’s decision to purchase Marlboro Lights was the “lowered tar and nicotine” representation on their packaging. 

Resolution of that legal question was important to the class 

certification decision, because it would affect the likelihood 

that individual inquiries of the class members would be 

required to determine whether they had, in fact, relied on 

defendant’s representations. See, e.g., Newman, 287 Or at 

54 (reliance of class members on information in sales brochure called for individual inquiries); Bernard, 275 Or at 

154, 162 (individual issues predominated where class claim 

depended on determining individual meaning that class 

members attached to bank’s representation, as well as what 

class members knew about bank’s practices). As we earlier 

recounted, the trial court and Court of Appeals agreed 

that reliance on defendant’s alleged misrepresentation was 

required. The parties, before this court, again wage that 

battle. Although neither the parties nor the trial court or 

Court of Appeals explicitly analyzed reliance as an aspect 

of plaintiffs’ purchase price theory of loss, that theory is the 

appropriate context for the issue. We therefore discuss it at 

this juncture.21

The starting point is the statute. ORS 646.638(1) 

does not—at least by its terms—require reliance. It does, 

however, provide that a person pursuing a private action 

under the UTPA must suffer “an ascertainable loss of money 

or property, real or personal, as a result of” an unlawful 

trade practice. Id. The key phrase is “as a result of.” That 

21 The nature of the causal link required for plaintiffs’ diminished value theory of loss—that is, what would be required to show that the loss was “as a result” 

of the alleged misrepresentation—would likewise bear on whether common or 

individual issues predominate for purposes of that theory. But because plaintiffs’ 

diminished value theory is not viable on the record before us, we do not decide 

whether that alternative theory of loss would or would not require reliance to 

establish the requisite causal connection for plaintiffs’ UTPA claim.
126 Pearson v. Philip Morris, Inc.

phrase effectively requires that the unlawful trade practice cause the ascertainable loss on which a UTPA plaintiff relies. In several previous cases, we have examined 

whether the causation element of the statute equates with a 

requirement that a plaintiff prove reliance. Our answer has 

been: “It depends.” Whether reliance is required to establish 

causation turns on the nature of the unlawful trade practice 

and the ascertainable loss alleged. Discount Fabrics, 289 

Or at 384; Sanders v. Francis, 277 Or 593, 598-99, 561 P2d 

1003 (1977).

Although reliance is not, in and of itself, an element of a UTPA claim, it is a natural theory to establish the 

causation of the loss (i.e., the “injury” in a UTPA claim) for 

a purchaser seeking a refund based on having purchased a 

product believing it had a represented characteristic that 

it did not have. Causation is logically established if a purchaser shows that, without the misrepresentation, the purchaser would not have bought the product and thus should 

be entitled to a refund. But if the purchaser did not care 

whether the product had a character or quality as represented (or was not aware of the representation) and bought 

it for other reasons, then the purchaser’s expectations have 

not been frustrated. In that circumstance, the misrepresentation cannot be said to have “caused” the purchaser to 

suffer a loss in the form of the purchase price. As a function of logic, not statutory text, when the claimed loss is the 

purchase price, and when that loss must be “as a result” of 

a misrepresentation, reliance is what “connects the dots” 

to provide the key causal link between the misrepresentation and the loss. See Poulos v. Caesars World, Inc., 379 

F3d 654, 664-65 (2004) (so observing in civil RICO context, 

where action requires proof of injury as result of unlawful 

conduct).

Plaintiffs nevertheless argue that the class does 

not have to establish reliance because theirs was a “failure to disclose” theory, rather than one predicated only on 

an affirmative misrepresentation. They expressly pleaded, 

they point out, that defendant “both affirmatively misrepresented that its ‘light’ cigarettes would inherently deliver 

low tar and nicotine and failed to disclose that, in order to 

receive lower tar and nicotine, the smoker would have to 
Cite as 358 Or 88 (2015) 127

smoke the ‘light’ cigarettes in a particular way.” Relying on 

Sanders, they urge that a UTPA action based on failure to 

disclose does not require reliance because it would be “artificial” to require a plaintiff to prove that it relied on undisclosed information. 277 Or at 598-99. In response, defendant 

characterizes this as a “half-truth” case, one that involves 

an alleged affirmative misrepresentation coupled with the 

alleged failure to disclose, and therefore one that requires 

proof of reliance.

Those arguments miss the mark. It is not the 

nature of the misrepresentation in this case that requires 

proof of reliance. It is the misrepresentation coupled with 

plaintiffs’ theory for having suffered a loss in the form 

of the purchase price because they did not get what they 

believed they were buying. In this case, reliance inheres 

in the combination. We decline the parties’ mutual invitations to reduce the analysis to an exercise in attaching 

labels. What a plaintiff must prove is that (1) the defendant committed an unlawful trade practice; (2) plaintiff 

suffered an ascertainable loss of money or property; and 

(3) plaintiff’s injury (ascertainable loss) was the result of 

the unlawful trade practice. In other words, plaintiff must 

suffer a loss of money or property that was caused by the 

unlawful trade practice. Whether, to prove the requisite 

causation, a plaintiff must show reliance on the alleged 

unlawful trade practice depends on the conduct involved 

and the loss allegedly caused by it. Sanders, 277 Or at 

598-99; see also Discount Fabrics, 289 Or at 384 (so characterizing the holding in Sanders). The answer requires 

reasoned analysis of the claim, not labeling. Here, in their 

complaint, although plaintiffs described defendant’s representation in hybrid terms—that is, part affirmative misrepresentation and part failure-to-disclose—that description did not change the causative link that their refund 

theory depended on. Under that theory, proof of reliance 

on the alleged misrepresentation was integral to plaintiffs’ 

class claim. See Benedict, 241 FRD at 679 (for light cigarette purchasers seeking to recover money on claim that 

they did not get what they thought they were paying for, 

reliance is required to show loss was caused by alleged 

misrepresentation).
128 Pearson v. Philip Morris, Inc.

D. Whether Common Issues Predominate

With our conclusion as to what plaintiffs were 

required to prove to establish their class claim, we turn to 

whether they carried their burden to show that the claim 

could be litigated through common proof and would not, 

instead, require a significant number of individual inquiries. As both the trial court and Court of Appeals concluded, 

the pivotal issue was whether plaintiffs could prove reliance 

through common evidence.

Plaintiffs argued to the trial court—and continue 

to argue on review—that they can prove classwide reliance 

circumstantially, by inference. Specifically, they urged that 

a factfinder could find that the representation made through 

the labeling of Marlboro Lights to all purchasers (i.e., “lowered tar and nicotine”) was made uniformly to all purchasers; that all purchasers would have had a common understanding of the representation (i.e., that the cigarettes were 

“inherently” lighter no matter how they were smoked); and 

that the representation went to the product’s “defining feature,” so that all purchasers would have naturally relied on 

it. From those circumstantial facts, plaintiffs argued, a factfinder reasonably could infer that the class as a whole relied 

on defendant’s alleged misrepresentation.

Defendant responded to plaintiffs’ circumstantial 

basis for establishing classwide reliance by presenting 

opinion surveys, statistical data, expert opinion, and market analyses. Much of defendant’s evidence was based on 

actual smoker responses; all was offered to show that smokers have varying beliefs about whether lowered tar and nicotine cigarettes are healthier than regular cigarettes and 

often choose light cigarettes over regulars for reasons other 

than perceived health benefits, such as taste. Defendant 

also produced articles published by the lay press describing 

how smoker behavior can and often does defeat the lower 

yields of tar and nicotine that light cigarettes might otherwise deliver. Although plaintiffs took issue with what conclusions should be drawn from defendant’s evidence and 

what weight the trial court should give it, plaintiffs came 

forward with no similar direct evidence of their own of why 

people purchase or smoke light cigarettes; instead, they 
Cite as 358 Or 88 (2015) 129

rested on the inference of reliance that they asserted could 

be drawn.

So framed by the parties’ respective positions, the 

disputed and central factual question was: Why do people 

buy light cigarettes? More fundamentally for purposes of the 

predominance inquiry, the disputed factual issue was: Do all 

(or nearly all) people buy them for the same reason and can 

that factual question be determined based on common evidence, or does deciding it require individual inquiries? The 

trial court expressly found that “it is not as self-evident as 

plaintiffs contend that every purchaser of Marlboro Lights 

was motivated substantially by health concerns and acted 

because he or she was misle[d] by [the] name Marlboro 

‘Lights’ or the statement ‘lowered tar and nicotine.’”22 The 

trial court bolstered that finding by observing that evidence 

in the record showed “the irrationality of smoking and cigarette purchasing.” In the trial court’s view, plaintiffs had 

urged that reliance was “susceptible” to proof on a classwide 

basis, but had failed to present adequate common proof to 

establish that the 100,000 individuals who had purchased 

one or more packs of Marlboro Lights over a 30-year period 

had all done so for the same reason—i.e., because they 

read, understood, and believed that “lowered tar and nicotine” meant the cigarettes were “inherently” lighter and 

would deliver less tar and nicotine no matter how they were 

smoked.

In reaching the opposite conclusion, the Court of 

Appeals majority went through the record at some length—

a record that consists principally of defendant’s evidence, 

given that plaintiffs effectively presented no evidence of 

their own beyond the circumstantial evidence of the representation made. See Pearson, 257 Or 161-65. The majority identified problems in defendant’s surveys, such as the 

fact that some did not “necessarily” capture information 

relevant to reliance, at least to the majority’s satisfaction. 

Id. at 163. With others, the majority declined to give them 

the “weight” that defendant urged they could bear. See, e.g., 

22 Plaintiffs resist any characterization of that statement by the trial court 

as a “factual finding,” insisting instead it is at most an observation about the 

force of plaintiffs’ contention. Suffice it to say, we disagree.
130 Pearson v. Philip Morris, Inc.

id. (citing example). For survey evidence where consumers 

answered that they selected light cigarettes for their taste, 

the majority found that the consumers’ own explanations 

for purchasing light cigarettes were impeached by tobacco 

industry research concluding that smokers are “remarkably 

insensitive to taste nuances in cigarettes.” Id. at 164-65. 

The majority, after considering the circumstantial inference 

that plaintiffs relied on, as against the surveys, data, and 

expert opinions produced by defendant, concluded:

“The uniform nature of defendant’s representations, defendant’s design and extensive marketing of the cigarettes, 

and studies and surveys that indicate that many[23] persons 

who smoked light cigarettes believed that they were safer 

than regular cigarettes convince us that defendant’s representations were a substantial factor in the vast majority of 

the putative class members’ purchases of at least one pack 

of Marlboro Lights.”

Id. at 160 (emphasis added).

In approaching the predominance inquiry as it did, 

the majority stepped out of its institutional role by substituting its judgment for that of the trial court in terms of 

the weight to be given to the competing evidence that the 

parties presented. In effect, the Court of Appeals majority 

took over for, and displaced, the trial court as factfinder. The 

majority did not conclude that, as a matter of law, the trial 

court could not find on this record, as the trial court did, 

that people have varying and often irrational reasons for 

purchasing the brand and type of cigarettes they do. Had 

the majority so reasoned, however correctly or incorrectly, 

that reasoning would at least have been consistent with its 

role as a reviewing court. Instead, the majority simply disagreed with the trial court on what factual conclusion to 

draw from the record.

The majority, having overstepped its role in reviewing the facts, then asked the wrong legal question. Looking 

to Strawn v. Farmers Ins. Co., 350 Or 336, 258 P3d 1199 

23 Note that the court said “many,” without attempting to quantify, and left 

undiscussed how many others held a contrary belief. Nor did the court purport 

to conclude that the number was sufficiently large as to render the number of 

consumers with a different belief de minimis.
Cite as 358 Or 88 (2015) 131

(2011), the majority asked, as we had in Strawn, whether 

plaintiffs had produced evidence that, even though circumstantial, would permit an inference of classwide reliance. 

Pearson, 257 Or App at 158-60. The majority pointed out—

correctly—that this court in Strawn declined to hold that, in 

a class action, reliance always must be established by separate evidence specific to each class member. The majority 

also noted—again correctly—that we concluded in Strawn

that the evidence that the plaintiffs had produced in that 

case permitted a factual inference of classwide reliance. Id. 

at 159-60. The majority then compared the plaintiffs’ circumstantial evidence of reliance in Strawn to plaintiffs’ circumstantial evidence of reliance in this case, and concluded 

that an inference of reliance was as permissible in this case 

as it was in Strawn. Id. at 160.

Strawn, however, arose in a significantly different 

procedural posture; because of that different posture, it 

provides no particular guidance for this dispute. The issue 

in Strawn was whether the defendants were entitled to a 

directed verdict on the theory that plaintiffs, for their evidence to be legally sufficient, had to produce direct, rather 

than circumstantial, evidence of reliance. The issue was, in 

other words, whether the plaintiffs’ proof at trial was legally 

sufficient to create a jury question on whether the class 

as a whole had relied; we held that it was. 350 Or at 362. 

This court was not asked to review—and did not review—

whether the class in Strawn had been properly certified; the 

trial court’s pretrial certification decision was not challenged 

before this court. 350 Or at 356 n 13 (on review, defendant’s 

challenges to class certification had dropped from the case). 

Thus, as the case came to this court, Strawn did not involve 

the predominance inquiry that this case involves—a pretrial prediction of whether, given the plaintiffs’ claims, the 

defendant’s defenses, and the record, it was likely that individual issues would predominate over common ones in the 

adjudication of the reliance element of the plaintiffs’ claim.24

24 Significantly, defendant asserted in Strawn that the trial court precluded 

it from presenting individualized evidence to refute the inference of classwide 

reliance on which the plaintiffs relied. In rejecting that argument, we specifically noted that the defendant was entitled to contest the plaintiffs’ proof of 

reliance, and had the opportunity to offer individualized evidence to that end; 
132 Pearson v. Philip Morris, Inc.

The guidance it gave for assessing whether a class plaintiff’s 

circumstantial evidence created a jury question on the issue 

of classwide reliance is inapposite to the class certification 

issue that this case presents.

The controlling question for the majority in this 

case, then, should not have been whether reliance was “susceptible” to classwide proof on the basis of the inference 

that plaintiffs relied on. See Pearson, 257 Or App at 158 (so 

framing the question). That framing of the question asks, 

at most, whether plaintiffs potentially could prove a prima 

facie case. As we have already discussed, the nature of the 

evidence required to prove a plaintiff’s case is a consideration in the predominance inquiry, but it is only part of the 

equation. The trial court must consider what it will take to 

fully and fairly adjudicate the factual disputes between the 

parties, which requires the court also to consider the nature 

of the proof that the defendant is entitled to present to raise 

legitimate defenses and to otherwise challenge the factual 

premises of the plaintiffs’ theory.

In this case, we decline, for purposes of our analysis, to describe the extensive record in detail, as the Court 

of Appeals majority did. It was the trial court’s function to 

the defendant, however, had failed to take advantage of that opportunity. Id. at 

349-50, 356 n 13. Because the defendant in Strawn ultimately did not make individualized inquiries of the class members, we do not know what evidence the 

defendant would have offered or the extent to which individualized issues would 

have revealed fatal dissimilarities in the class or undermined the efficiency of the 

class action that the court had certified.

Nor do we know whether the defendant in Strawn at the class certification 

stage, in the face of the inference of classwide reliance on which the plaintiffs 

relied, created legitimate doubt as to whether the class members had uniformly 

understood and relied on the representation at issue. In the face of such evidence, the fact that the plaintiffs’ evidence could support a rational inference of 

classwide reliance would not have been enough to carry the plaintiffs’ burden on 

the predominance inquiry. See Bernard, 275 Or at 159-60 (class certification not 

appropriate where a legitimate defense will require individual inquiries; class 

action is procedural device and does not erode the substantive rights of parties or 

deprive defendant of presenting factual and legal defenses). Rather, if the defendant in Strawn at the class certification stage legitimately drew the uniformity 

of the class members’ states of mind into doubt, the trial court should have considered that fact in assessing whether individual inquiries predominated over 

common ones. The important point is not what the answer should have been in 

Strawn if the defendant had challenged class certification pretrial on that basis; 

the important point is that the answer would not have been based on the sufficiency of the evidence analysis that our decision in Strawn procedurally involved.
Cite as 358 Or 88 (2015) 133

determine from that record whether, factually, the class 

members could have had different subjective reasons for their 

purchase decisions, some of which had nothing to do with 

whether they did or did not believe that Marlboro Lights were 

“inherently” lighter. It was likewise the trial court’s function 

to determine from the record whether, factually, the individual class members were likely to all have had the same or 

differing beliefs as to whether a cigarette represented to be 

lower in tar and nicotine was inherently healthier, no matter 

how it was smoked, than a regular cigarette.

As we have previously observed, sustaining a class 

action where the claim requires a large number of individual 

members to have the same subjective states of mind is difficult. Bernard, 275 Or at 156-57. For at least some commodities, the only logical explanation for a consumer’s purchase 

may be that the product has—or is represented to have—an 

essential quality, without which it would be worthless. See, 

e.g., Garner v. Healy, 184 FRD 598 (ND Ill 1999) (consumers 

purchased “car wax” and allegedly received worthless “nonwax” product). For products that are worthless without a 

particular represented characteristic or quality, a defendant 

who asserts that individual inquiries are needed to establish that the product was purchased for other reasons may 

be “dreaming up a theoretical defense requiring individual 

inquiries for which there is little basis in fact.” Bernard, 275 

Or at 158. This is not that kind of case. Rather, this is a more 

typical consumer transaction, one that involves consumer 

choices that implicate states of mind, perceptions, beliefs, 

and conscious and subconscious motivations.25 Indeed, as 

25 The trial court was not alone in its conclusion that individuals who purchase and smoke Marlboro Lights do so for various reasons, and with a range of 

beliefs about whether lower tar and nicotine cigarettes are in fact healthier than 

regular cigarettes. Related putative class litigation has been brought in courts 

throughout the country over the past decade or so. The overwhelming majority of courts have similarly declined class certification. As did the trial court in 

this case, those courts have concluded that, to resolve why individuals purchase 

light cigarettes and what they know and believe about whether and under what 

circumstances those cigarettes will deliver less tar and nicotine, would require 

numerous individual inquiries of the putative class members. See Phillips, 298 

FRD at 365-66 (so holding; citing representative cases); Lawrence v. Philip Morris 

USA, Inc., 164 NH 93, 99-101, 53 A3d 525 (2012) (reversing trial court certification of class; extensively discussing factual showing by defendant; concluding 

as a matter of law that knowledge and mental state of class members required 

individualized inquiries that predominate over common ones).
134 Pearson v. Philip Morris, Inc.

the trial court expressly found, smoking is in many ways 

an irrational choice. When a consumer’s choice to engage in 

activity or buy a product involves irrational motivations, it 

is all but patent that individual inquiries will be required 

to determine why the individual members of a large class 

make the choices they make. See, e.g., Poulos, 379 F3d at 668 

(no single, logical explanation for gambling exists; for different gamblers, activity may be an addiction, a form of escape, 

a casual endeavor, a hobby, a risk-taking money venture, or 

scores of other things).

Judge Duncan, writing for four members of the 

Court of Appeals, identified a further reason why the issue 

of reliance would entail individualized inquiries of the 

class members. As she explained, the very representation 

that plaintiffs relied on injected individualized issues as to 

whether the 100,000 estimated class members likely had a 

common understanding of the alleged misrepresentation on 

which plaintiffs relied:

“The representations at issue were that Marlboro Lights 

were ‘Lights’ and had ‘Lowered Tar and Nicotine.’ In my 

view, reliance on the part of all putative class members 

cannot be inferred from circumstantial evidence in this 

case because of the likely variations in both how putative 

class members understood defendant’s representations and, 

relatedly, whether the representations played a substantial 

role in their decisions to purchase Marlboro Lights.”

257 Or App at 175 (Duncan, J. concurring in part, dissenting in part).

As Judge Duncan intimated, the words “inherently 

light” do not appear in the representation that defendant 

made. Likewise, nothing in defendant’s representation said 

anything to the effect of “lower in tar and nicotine no matter how you smoke them.” Some purchasers, Judge Duncan 

explained, might infer that Marlboro Lights would deliver 

less tar and nicotine no matter how they were smoked. 

Id. Others might infer that, all other things being equal, 

Marlboro Lights would deliver less tar and nicotine than regular cigarettes only if smoked in the same way as regulars. 

Id. Compounding the problem, Judge Duncan observed, was 

that “the class period is long. It runs from 1971 to 2001. In 
Cite as 358 Or 88 (2015) 135

that 30-year period, information about dilution filters and 

the phenomena of titration and compensation was increasingly available.” Id. at 176. The fact that plaintiffs’ claim 

of reliance depended on a purchaser’s subjective interpretation of the representation, coupled with the long class 

period over which information that Marlboro Lights were 

not inherently light was increasingly available to the public, 

led Judge Duncan to conclude that there was a “legitimate 

question” whether a considerable number of the class members knew, or were on notice, that Marlboro Lights were not 

inherently light and did not rely on that representation. Id. 

at 177. Judge Duncan’s conclusion that individual issues 

would predominate over common ones in litigating the reliance element of plaintiffs’ claim, although different from the 

trial court’s reasoning, is correct as well.26

Thus, we agree with both the trial court and Judge 

Duncan that plaintiffs failed to show that the reliance 

required to prove their refund theory of economic loss could 

be litigated through common evidence, rather than requiring individual inquiries of the class members. As the trial 

court found, and as the record supports, there was ample 

evidence that, among the putative class of 100,000 who purchased Marlboro Lights in Oregon over a 30-year period, 

the purchasers had varying beliefs as to whether lowered 

tar and nicotine cigarettes were “healthier” to smoke. The 

record also contains ample evidence that the putative class 

26 Worth emphasizing is that the problem that Judge Duncan identified is one 

of common reliance and causation among the class members, not whether there 

was a misrepresentation common to the class. Defendant does not argue—and 

the trial court did not conclude—that individual differences were likely to plague 

the question of whether defendant’s lower tar and nicotine labeling was a misrepresentation. Presumably, whether that was a misrepresentation is determined 

based on an objective standard of what a reasonable consumer would understand 

the representation to be; no party argues otherwise in this case, and that is not 

an issue. As an objective inquiry, it would be common to the class. Reliance, however, is necessarily subjective—it turns on what individual purchasers in fact 

believed and whether their beliefs motivated their purchases of Marlboro Lights. 

The fact that the misrepresentation on which plaintiffs rely was not express, but 

depended on inference and subjective interpretation, has bearing on the reliance 

issue, but not on whether defendant made a misrepresentation. Although defendant does not concede that it misrepresented its product, it does not dispute on 

review that whether it in fact there was a misrepresentation as alleged is an issue 

that can be and likely would be resolved for or against defendant based on proof 

common to the class.
136 Pearson v. Philip Morris, Inc.

members were motivated to buy Marlboro Lights for a variety 

of reasons, some irrational, and others unrelated to whether 

Lights were “inherently” lower in tar and nicotine than regular cigarettes. And, as Judge Duncan reasoned, the representation of “inherent” lightness on which plaintiffs rely 

depends significantly on interpretation and what purchasers understood the “lowered tar and nicotine” label to imply, 

which added to the potential for the class members to have 

varying motivations for buying Marlboro Lights. For those 

reasons, the potential for fatal dissimilarities (to borrow 

again from Professor Nagareda) in terms of the class members’ reliance on the alleged misrepresentation was great.

As we have emphasized, a trial court’s role in deciding whether to certify a class is to make a preliminary forecast of how the adjudication of the issues at trial likely will 

play out. Unlike in Strawn, where the issue was the sufficiency of the plaintiffs’ evidence to survive a motion for 

directed verdict, the trial court does not decide class certification by assessing only whether an inference of classwide 

reliance permissibly can be drawn from evidence common to 

the class. The class certification decision also must account 

for how the defendant legitimately may seek to dispute the 

plaintiff’s evidence. Here, the trial court found that, factually, there were likely to be material differences among the 

individual class members as to whether they subjectively 

believed that Marlboro Lights were inherently lower in tar 

and nicotine and purchased them in reliance on defendant’s 

lower tar and nicotine representation. On the basis of that 

showing by defendant, the trial court correctly determined 

that plaintiffs did not carry their burden to show that, on 

the element of reliance, common issues prevailed over individual ones. See Bernard, 275 Or at 162 (predominance 

standard not satisfied where record establishes that state 

of mind of individual class members will legitimately be in 

issue and will require separate adjudications of claims of 

numerous members of class).

E. Statute of Limitations

On review, defendant renews its argument that, 

in addition to the individual inquiries required to resolve 
Cite as 358 Or 88 (2015) 137

the issues of ascertainable loss and causation of that loss 

(reliance), the litigation of defendant’s statute of limitations 

defense likewise would require highly individualized inquiries and could not be resolved on the basis of common proof. 

The trial court did not suggest that it would have denied class 

certification on that basis alone. It did, however, agree with 

defendant and considered the need for individual inquiries 

to resolve defendant’s statute of limitations defense a factor 

in its conclusion that individual issues predominated, which 

in turn weighed in the trial court’s discretionary assessment 

that a class action was not a superior means for litigating 

the claim in this case. The Court of Appeals, on the other 

hand, although it agreed that resolving defendant’s statute 

of limitations defense would require individual inquiries, 

concluded that it should not be a factor in assessing predominance. Pearson, 257 Or App 166-67. We therefore discuss, briefly, why the trial court was correct and the Court 

of Appeals was not.

As we have already described, under ORS 646.638(6),

a private UTPA action must be brought within one year from 

the discovery of the unlawful trade practice on which it is 

based. Because the limitation period is tied to the plaintiff’s 

“discovery” of the unlawful conduct, it runs in this case from 

when the plaintiffs and the members of the plaintiff class 

either actually knew or should have known that the representation that Marlboro Lights were lower in tar and nicotine was not true. See generally FDIC v. Smith, 328 Or 420, 

428, 980 P2d 141 (1999) (“In general terms, a cause of action 

does not accrue under the discovery rule until the claim has 

been discovered or, in the exercise of reasonable care, should 

have been discovered.”); see also Sazenz v. Pittenger, 78 Or 

App 207, 211-12, 715 P2d 1126 (1986) (UTPA statute of limitations begins running when plaintiff knows or should have 

known of the allegedly unlawful conduct).

In class actions, the extent to which a statute of 

limitations defense is likely to entail highly individualized inquiries of class members depends on the nature of 

the claim and the specific facts involved. Here, no one disputes that individualized inquiries would be required to 

determine whether and when individual class members 
138 Pearson v. Philip Morris, Inc.

were aware, through publicized reports or otherwise, that 

Marlboro Lights either were not lighter at all or were lighter 

only if smoked in a particular way. Defendant asserts that 

individual inquiries of class members would be required to 

determine whether and when they became aware that the 

alleged representation was false; plaintiffs, the trial court, 

and the Court of Appeals agree. In effect, there is consensus that, given the estimated 100,000 members in the putative class, coupled with the significant 30-year time period 

involved and the publicized information during that period 

that “light” cigarettes were not necessarily healthier, the 

claims of many of the putative class members might be time 

barred.27

The Court of Appeals recognized that the statute of 

limitations issue would require individualized inquiries and 

proof; in its view, however, that fact did not affect the predominance inquiry, because those individualized questions 

would arise “only after a jury has determined the central 

question of defendant’s liability to the class.” Pearson, 257 Or 

App at 166-67. The Court of Appeals considered the statute 

of limitations defense as analogous to resolving damages, 

which it described as a part of a claim distinct from liability, 

27 Although she did so to make a different point, Judge Duncan canvassed 

briefly the information made public about the fact that the amount of tar and 

nicotine delivered by light cigarettes to smokers depended on how the cigarette 

was smoked. Pearson, 257 Or App at 176 (Duncan, J., concurring in part; dissenting in part) (discussing that evidence to demonstrate degree to which individual 

class members may not have understood lowered tar and nicotine representation 

to mean that Marlboro Lights were inherently light, no matter how they were 

smoked). Judge Duncan pointed out that information was publicized as early as 

1976, five years after the beginning of the 30-year class period, and continued 

with other reports and articles throughout the class period. Id. Relying on much 

of the same evidence that defendant put into the record in this case, courts in 

similar cases in other jurisdictions have likewise concluded that the amount of 

publicity that occurred between the 1970s and 2001 (when defendant removed 

the lower tar and nicotine label from Marlboro Lights) made it highly likely that 

individual purchasers would vary significantly in their awareness of that publicity. See, e.g., Lawrence, 164 NH at 100-01 (describing publicity, including 1982 

American Cancer Society and 1993 National Cancer Institute publications distributed nationally, the latter of which specifically advised smokers, when smoking light cigarettes, to not “smoke more cigarettes, inhale them more often or 

more deeply, or place your fingertips over the holes on the filters”); In re Light 

Cigarettes, 271 FRD at 412, 421(noting public information disseminated through 

class period; concluding that statute of limitations defense would require individualized inquiries of putative class members because, as “a matter of law,” number 

of potential class members aware of publicity was not de mimimis).
Cite as 358 Or 88 (2015) 139

and something to be resolved through individualized inquiries after a determination of liability to the class as a whole. 

Id. at 167 (so concluding; citing federal cases).

The Court of Appeals’ reasoning was flawed, however, and the court too quickly dismissed the problem. If the 

statute of limitations has run on individual class members’ 

claims, those claims are barred. Defendant is not liable on 

them. A statute of limitations defense is approached like other 

issues that go to the merits on liability. If the facts are undisputed, the defense can appropriately be resolved on summary 

judgment. See, e.g., Greene v. Legacy Emanuel Hospital, 335 

Or 115, 129, 60 P3d 535 (2002) (no genuine issue of material 

fact existed as to when plaintiff discovered harm; summary 

judgment on statute of limitations correctly granted). But if 

disputed facts must be resolved to determine if a claim is time 

barred, those facts must be resolved by the finder of fact at 

trial. See, e.g., Keller v. Armstrong World Industries, Inc., 342 

Or 23, 33, 147 P3d 1154 (2006) (genuine issue of material fact 

as to when plaintiff was aware that asbestos might be cause of 

pulmonary problems precluded summary judgment on statute 

of limitations ground).

For purposes of a class certification decision, when 

a statute of limitations defense is not just a theoretical or 

frivolous issue, but instead has a legitimate basis given the 

nature of the claim and the facts, a trial court should consider it along with other central issues in the case in the 

predominance inquiry. In this case, given the large putative 

class of an estimated 100,000 members, the lengthy 30-year 

time period for plaintiffs’ UTPA claim, and the significant 

opportunities throughout that time period for class members to have read or otherwise become aware of publicized 

information that light cigarettes were potentially no lower 

in tar and nicotine than regular cigarettes, the individualized inquiries required by defendant’s statute of limitations 

defense were properly considered in the trial court’s predominance determination.28

28 The Court of Appeals had another layer to its reasoning, one that compounded the problem of the need for individual inquiries on the statute of limitations defense. On the issue of classwide reliance, the court concluded that, 

as long as class members relied “initially” on the alleged misrepresentation in 
140 Pearson v. Philip Morris, Inc.

F. Issue Class Certification

The only remaining issue is plaintiffs’ argument that 

the trial court erred in denying their alternative request for 

certification of an issue class under ORCP 32 G. In denying 

plaintiffs’ request for issue certification, the trial court reasoned that the most fundamental issues in the case—that is, 

the issues most apt to drive the resolution of the class claim 

at trial—were likely to require individualized inquiries of 

the class members, so that individual issues still would predominate for any potential issue class. Because the Court of 

Appeals disagreed with the trial court’s central determination that individual issues predominate over common ones, 

it reversed the trial court’s denial of issue class certification,

and instructed the trial court to reconsider issue class certification based on what the Court of Appeals deemed to be 

the correct predominance determination (assuming that 

the trial court did not certify the class on reconsideration). 

Pearson, 257 Or at 171-72.

purchasing Marlboro Lights, it would not matter if they later became aware 

(through the publicity or otherwise) that Marlboro Lights delivered lower tar and 

nicotine only if smoked in the same way as a regular cigarette. That information, 

the court reasoned, would mean only that class members could not recover for 

later purchases. Pearson, 257 Or App at 160. The court thus appears to have 

concluded that an inference of classwide reliance was possible at least for the 

class members’ initial purchases of Marlboro Lights. As we have explained, the 

permissible nature of that or any other inference of classwide reliance is not the 

correct test for class certification; the test requires consideration as well of what 

defendant would be entitled to show to defeat that inference.

Equally important, though, the more narrow inference on which the Court 

of Appeals relied would inject further individual inquiries into the case. The 

class members were defined as individuals who had purchased Marlboro Lights 

in Oregon during a 30-year period. They did not have to have been Oregon residents at any point during those 30 years or throughout the time they purchased 

Marlboro Lights. Some members of the putative class may have lived for many 

years in other states and later moved to Oregon. Others may have traveled or 

visited Oregon frequently, without ever having lived here. Defendant would be 

entitled to determine whether nonresident class members made their initial “reliance” purchases in Oregon or elsewhere. Conversely, even lifelong Oregon residents may have made their initial purchases while out of state (attending school 

or stationed elsewhere with the military, as only two examples). Narrowing the 

inference, as the Court of Appeals did, thus invited an additional round of individual inquiries as to where the class members made their initial purchases. And 

it also placed added importance on when those initial “reliance” purchases were 

made, because the farther back in the 30-year class period each class member 

began purchasing Marlboro Lights, the more likely that their initial “reliance” 

purchases would be barred by the one-year statute of limitations.
Cite as 358 Or 88 (2015) 141

We already have concluded that the trial court’s 

predominance determination was correct. That effectively 

moots the Court of Appeals’ dispositional rationale for 

reversing the trial court on the issue class certification 

issue. The question before us is whether the trial court erred 

in denying the motion for issue certification.

Plaintiffs’ approach to issue certification was of little 

aid to the trial court, and is of little aid to us. Plaintiffs did 

not—and still do not—identify any particular issue or group 

of issues as the objects of their motion. Instead, at trial and 

on review, they asserted summarily that “all common issues 

identified by plaintiff in this motion are appropriate for class 

certification.” The motion listed 17 “common issues of fact” 

and 39 “common questions of law,” many of which appear 

to be duplicative or, at least, overlapping. Plaintiffs do not 

attempt to demonstrate how those issues are adequate for 

certification under the applicable rule. And they have not 

explained how those more specific issues would avoid many 

of the individualized issues that we have identified. At the 

least, the need for individualized inquiries to resolve defendant’s statute of limitations defense would appear as likely 

to arise for the issue classes as for the class as a whole.

ORCP 32 G commits issue class certification, in significant part, to the discretion of the trial court. The particular claim or issue to be certified for class treatment must 

satisfy all prerequisites for class certification under ORCP 

32 (A)(1) except numerosity—i.e., commonality, typicality, 

adequacy, and notice. Beyond that, the rule merely provides 

that, when “appropriate” under the general standards for 

class certification, the trial court “may” order a class action 

with respect to a particular claim or issue. See 358 Or at 

97 n 9. In this case, given the broad discretion that the rule 

confers on the trial court and given the limitations of plaintiffs’ argument in favor of issue class certification, we conclude that the trial court did not abuse its discretion, and 

therefore did not err, in denying plaintiffs’ motion for issue 

certification.

The decision of the Court of Appeals on class certification and issue class certification is reversed. The 

trial court order denying class certification and issue class 
142 Pearson v. Philip Morris, Inc.

certification is affirmed. The case is remanded for further 

proceedings on the named plaintiffs’ individual claims.

WALTERS, J., concurring.

I concur in the majority opinion and write only to 

call attention to the important difference between two types 

of ascertainable losses that a plaintiff may seek to recover 

in a claim under the Unlawful Trade Practices Act—diminished value and a refund of the purchase price.1

 I agree 

with the majority that, in this case, we need not determine 

whether subjective reliance is an element of a plaintiff’s 

claim for diminished value and, if so, how that element may 

be proved. However, that issue may arise in the future, and 

a correct understanding of the law is important to those 

whose business or trade practices are subject to the UTPA, 

as well as to those who purchase real estate, goods, or services that are subject to the act.

As the majority explains, Oregon’s UTPA was enacted

as a comprehensive statute to protect consumers from unlawful trade practices. 358 Or at 115. The act has both public 

and private enforcement mechanisms and “is designed to 

encourage private enforcement of the prescribed standards 

of trade and commerce in aid of the act’s public policies as 

much as to provide relief to the injured party.” Weigel v. Ron 

Tonkin Chevrolet Co., 298 Or 127, 134, 690 P2d 488 (1984). 

As a result, a party’s losses “should be viewed broadly,” id. 

at 136, and private claims under the act are not limited to 

those where a plaintiff shows “an economic loss in the sense 

of a difference between the price paid and some objective 

measure of market value,” id. at 133. The act also permits a 

claim when a plaintiff can establish a loss based on the fact 

he or she expended funds “for goods that are not as desired 

by the customer and represented by the seller irrespective of 

their market value to others.” Id. at 134.

A plaintiff who cannot show “an economic loss in 

the sense of a difference between the price paid and some 

objective measure of market value,” id. at 133, but who can 

show that he or she would not have purchased a product but 

for the seller’s misrepresentations about that product, may 

1 I do not intend to imply that other theories of loss may not be actionable.
Cite as 358 Or 88 (2015) 143

seek return of the money paid for the product irrespective 

of its market value, 358 Or at 126. Thus, to use an example that the majority uses, a plaintiff who buys a product 

represented to be cherry cola because the plaintiff wants to 

experience the cherry taste, may, if the product is, instead, 

regular cola, seek a return of the money paid, even if the 

cost of cherry and regular cola is the same.

That does not mean, however, that a plaintiff who 

can show a difference between the price paid for a misrepresented product and the market value of that product must, 

like a plaintiff seeking a refund of the purchase price, also 

show that he or she made a subjective choice to purchase 

the product because of the misrepresented characteristic. In 

a diminished value claim, the plaintiff’s ascertainable loss 

is not the full amount of the purchase price; rather, it is the 

difference between the purchase price and the market value 

of the item purchased. 358 Or at 118-19.

To illustrate the difference, consider the following 

example. Assume that a seller advertises a tent as having 

a dozen features, one of which is that the tent is waterproof and another of which is that the tent weighs less than 

three pounds. Assume that the plaintiff purchases the tent 

for $100 and that the subjective reason that she does so is 

that it is represented to be waterproof. The plaintiff plans 

to go camping that weekend, and rain is forecast. Although 

the plaintiff reads the description of the tent, including the 

description of the tent as weighing less than three pounds, 

weight is not the feature that motivates the plaintiff. She 

plans to go car camping, not to carry the tent on her back. 

Assume that, after making her purchase and completing 

her trip, the plaintiff decides to sell the tent and learns that 

it weighs six pounds, not the represented three. In addition, 

the plaintiff learns that, all other features being equal, tents 

that weigh more than three pounds have a market value of 

no more than $80.

In that example, the seller engaged in an unlawful 

trade practice by representing that the tent had a characteristic that it did not have. ORS 646.608(1)(e). Also in that 

example, the plaintiff suffered an “ascertainable loss” as a 

“result of” the seller’s unlawful trade practice, as required 
144 Pearson v. Philip Morris, Inc.

by ORS 646.638(1), because the plaintiff paid the market 

value of the tent as represented, but the tent was not as 

represented. The plaintiff’s economic loss was the difference 

between the purchase price of the tent as represented ($100) 

and the objective market value of the tent that the plaintiff 

received ($80)—a difference of $20. Because the tent was 

not as represented, the plaintiff suffered economic loss when 

she paid more for the tent than it was objectively worth.

That conclusion is correct even though the plaintiff’s 

subjective reason for purchasing the tent was that it was 

waterproof. The UTPA does not require that a consumer’s

purchase be the “result of” an unlawful trade practice; it 

requires that a consumer’s ascertainable loss be the “result 

of” an unlawful trade practice. ORS 646.638(1). When a 

plaintiff can establish that she purchased an item and that, 

as a result of a misrepresentation of the item’s characteristics, the purchase price of that item was greater than its 

objective market value, the necessary connection between 

the unlawful trade practice and the ascertainable loss 

exists.2

 However, when a plaintiff cannot prove diminished 

market value and relies, instead, on a contention that she 

would not have purchased the item without a represented 

characteristic of particular benefit to her, the plaintiff must 

prove the subjective reason for her purchase. 358 Or at 126.

That understanding of the UTPA comports with 

its purpose. People buy products after weighing numerous 

characteristics, benefits, and qualities. They may make 

their final decisions based on more than one of a product’s 

features, or they may not be able to articulate why, in the 

end, they laid their money down. But when people make 

purchases, they nevertheless expect to receive products that 

have all of the represented features, not only those features 

that were subjectively determinative in the purchasing decision. When a plaintiff establishes that he or she purchased 

a product that was not as represented and that he or she 

suffered diminished value as a result, the purchaser demonstrates ascertainable loss sufficient to permit a claim under 

the UTPA.

2 As the majority recognizes, there are instances in which diminished value 

may be inferred. See 358 Or at 121-22 (discussing Scott v. Western Int. Sales, Inc., 

267 Or 512, 517 P2d 661 (1973) as permitting such an inference).