Florida Appeals Court Reverses Engle Verdicts; Unanimous Panel Orders Class Decertified; Decision Sets Aside $145 Billion Punitive Award.

Business Editors/Legal Writers

MIAMI--(BUSINESS WIRE)--May 21, 2003

A Florida appeals court today decertified the Engle class and set aside a Dade County Circuit Court jury's decision in the case against Philip Morris USA and other cigarette makers, including the nearly $145 billion punitive damages award.

"Today's decision reversing the Engle judgment is in line with the country's legal mainstream, which does not allow class actions in smoking and health cases but preserves the rights of individual smokers in the state to pursue their claims in court," said William S. Ohlemeyer, Philip Morris USA vice president and associate general counsel.

"This was an eight-year experiment with a tobacco class-action lawsuit. In the end, the appellate court agreed with nearly 40 state and federal courts across the country that have concluded the law doesn't allow claims of smokers to be tried as class actions because each claim must consider the circumstances unique to each individual."

In its 68-page opinion, the court set forth in considerable detail why the Engle case failed to meet virtually every legal requirement for class certification. In addition, the court said that the three individual plaintiffs, whose claims were tried in the second phase of the trial, were not entitled to damages. In fact, the court said the trial judge should have entered judgments in favor of the companies at the end of the trial's second phase.

The three-judge panel said, "Although the emotional appeal of the class representatives' claims is compelling, our job as appellate judges is not to be swayed by emotion where to do so results in violating established legal principles."

In addition, the court criticized the plaintiffs' lawyer for his conduct throughout the trial. Said the court: "It is obvious that the 'runaway' jury award was largely the result of numerous improper comments by plaintiffs' counsel directing the jury to disregard limitations on punitive damages. The trial was book-ended with prejudicial misconduct which incited the jury to disregard the law because the defendants are tobacco companies."

In summary, the court said, "The fate of an entire industry and of close to a million Florida residents cannot rest upon such a fundamentally unfair proceeding."

The Engle case was filed in 1994 as a nationwide class action consisting of smokers who had contracted diseases associated with smoking. In 1996, Florida's 3rd District Court of Appeal allowed the case to proceed as a statewide class action.

Today that same court reversed the verdicts that resulted from a multi-phased trial spanning nearly two years in Dade County Circuit Court.

"Even in cases involving controversial companies and products, the rules must be applied fairly. This court concluded that the way the Engle case was tried prevented Philip Morris USA and other cigarette makers from getting a fair trial," Ohlemeyer said.

The Engle case was conducted in two phases, with a third phase envisioned by Miami Circuit Court Judge Robert P. Kaye if there were plaintiffs' verdicts in the earlier phases.

Phase One began on Oct. 19, 1998, and ended on July 7, 1999, when a six-person jury found that smoking could cause more than 20 diseases or medical conditions; that cigarettes are addictive or dependence producing; and that tobacco companies could be assessed punitive damages.

Phase Two began on Nov. 1, 1999, and focused on whether the tobacco companies were liable to three individual smokers who had cancer.

On April 7, 2000, the six-person jury found in favor of plaintiffs Mary Farnan, Frank Amodeo and the estate of Angie Della Vecchia and awarded a total of $12.7 million in compensatory damages, setting the stage for the punitive damages phase. Plaintiff Frank Amodeo was also found by the jury to have sued too late.

The same six-person jury on July 14, 2000, returned a plaintiffs' verdict assessing punitive damages of nearly $145 billion against the cigarette makers.

Judge Kaye subsequently entered an order of final judgment against the companies despite his own ruling that each of the estimated 700,000 class members would require individual trials, setting the stage for the appeal to Florida's 3rd District Court of Appeal.