The third wave of tobacco products liability cases.

The first two waves of tobacco litigation (1954 to 1973 and 1983 to 1992) broke on the shoals of victim-blaming by jurors and bankrupting strategies by tobacco industry lawyers.(1) Jurors generally showed more anger at plaintiffs who had continued to smoke in the face of health warnings than they did at the product supplier. The industry's successfully "king of the mountain" strategy - to bloody any plaintiffs attorney who dared take it on - was well described in a 1988 internal industry memo:

The aggressive posture we have taken regarding depositions and discovery in general continues to make these cases extremely burdensome and expensive for plaintiff lawyers, particularly sole practitioners. To paraphrase General Patton, the way we won these cases was not by spending all of [RJR]'s money, but by making that other son of a bitch spend all of his.(2)

To understand the newest wave of tobacco products liability litigation, we need to recall the unprecedented pounding of the industry beginning in February 1994. Briefly, on February 25 the Coalition on Smoking OR Health received and made public a letter from U.S. Food and Drug Administration (FDA) Commissioner David Kessler noting that the agency had received "mounting evidence" that the nicotine ingredient in cigarettes is a powerfully addictive agent, and that cigarette vendors control the levels of nicotine to satisfy this addiction." Among the evidence Kessler referred to was a Philip Morris research memo - unearthed by plaintiffs, lawyers and introduced into evidence in Cipollone v. Liggett Group, Inc. - which concluded that a cigarette should be thought of as a dispenser for a dose unit of nicotine."(3)

On February 28 ABC's "Day One" ran a story about how cigarette companies manipulate nicotine levels. Philip Morris responded with a $10 billion defamation suit, denying manipulation but accurately predicting that the story would "spawn additional litigation against plaintiff."(4)

CBS did a "60 Minutes" report alleging that Philip Morris had secretly developed a fire-safe cigarette as early as 1979 but never marketed it. CBS named the research effort "Project Hamlet" ("to burn or not to burn").(5)

ABC's "Day One" ran a second story, this time about the secret list of ingredients in cigarettes. After National Public Radio followed with a story about 13 apparently dangerous ingredients on that list, the cigarette companies tried to get ahead of the public relations curve by releasing the entire list of 599 ingredients.(6) But the bad news for the companies kept coming.

Rep. Henry Waxman (D-Cal.) chaired a series of nationally televised congressional hearings at which Kessler identified industry patents for nicotine manipulation techniques, secret industry nicotine research, and use of genetically engineered enhanced-nicotine tobacco.(7) Former Philip Morris nicotine researchers testified about the suppression of their research results and the midnight closing of their laboratory.

A memorable moment of the hearings came on April 14 when the chief executive officers of the seven major U.S. tobacco manufacturers raised their right hands and swore that they did not believe nicotine was addictive or that cigarettes caused cancer. Few Americans believed them.(8)

One of the most dramatic events last spring was the leaking of incriminating Brown & Williamson Tobacco Co. 1963 documents. A spine-chilling 1963 memo written by B&W's then-general counsel Addison Yeaman noted that "we are, then, in the business of selling nicotine, an addictive drug effective in the release of stress mechanisms."(9)

B&W claimed that these documents were stolen by a paralegal who had been employed by their attorney. The company has not, however, questioned their authenticity.

The contrast between evidence gained from former industry researchers or internal industry documents and the story told by industry spokespersons to Congress and the public provoked eight members of Congress to ask Attorney General Janet Reno to begin a criminal investigation for fraud, antitrust violations, and perjury by the companies.(10)

Third Wave Litigation

The first harbinger of a changed tobacco litigation environment was the Florida District Court of Appeal's unanimous March 15 decision in Broin v. Philip Morris Cos., Inc,. The court reversed the trial court's dismissal of class action allegations by flight attendants who sued tobacco companies for injuries caused by environmental tobacco smoke (ETS). The appellate court considered and rejected defense objections to plaintiffs request for class action certification based on typicality, adequacy of representation, numerosity, and commonality, noting that

if we were to construe the rule to require each person to file a separate lawsuit, the result would be overwhelming and financially prohibitive. Although defendants would not lack the financial resources to defend each separate lawsuit, the vast majority of class members, in less advantageous financial positions, would be deprived of a remedy. We decline to promote such a result.(11)

The new focus on nicotine addiction, combined with the new judicial receptivity to products liability class actions typified by the Florida ETS decision, quickly led to the filing of a potentially formidable class action complaint.

Castano v. American Tobacco Co. seeks medical monitoring costs, damages for emotional distress, and punitive damages for a class of perhaps 50 million currently and formerly addicted cigarette smokers.(12) The case pits 60 plaintiffs' law firms against the usual tobacco industry array. The defendant's motion to dismiss on preemption and statute of limitations grounds has been denied.

Another formidable line of attack was opened on May 23 when Mike Moore, attorney general of Mississippi, filed suit in state chancery court against cigarette manufacturers and affiliated entities. The attorney general seeks recovery for unjust enrichment because Mississippi has spent millions of dollars paying for the medical expenses of indigent citizens who suffer from tobacco-caused diseases and conditions - expenses the cigarette companies, under products liability law, were obligated to pay.(13)

Other states are likely to follow suit. In at least two, Floridal(14) and Massachusetts,(15) legislation has been adopted to facilitate these actions.

With the Centers for Disease Control and Prevention estimating that a minimum of 10.2 percent of all Medicaid expenditures nationwide are due to cigarette use, the industry's liability to Medicaid reimbursement alone could amount to tens of billions of dollars to cover past outlays and over $5 billion per year to meet new expenses.(16) Since the potential recoveries are so large, most attorneys general who have considered these actions have enlisted the help experienced private attorneys whose compensation depends on results.

Attorneys general and private attorneys are also turning to state consume protection laws to seek redress for the "unfair or deceptive" acts practiced by tobacco companies on citizens. On June 30, for example, the California Supreme Court upheld such a claim against a federal preemption attack. This decision permitted a private attorney general, to sue R.J. Reynolds Tobacco Co. for allegedly using the Old Joe Camel character to entice children and adolescents to smoke.(17) The appeals court had stated that the plaintiff

seeks an order enjoining the challenged advertising, imposing a constructive trust on the defendants, "ill-gotten gains," and requiring the defendants to undertake "corrective" advertising and print media campaigns warning consumers of the health hazards of smoking in order to negate the effect of the Old Joe Camel advertisements.(18)

A similar case alleging fraudulent behavior by the entire tobacco industry seeks to have the defendants "provide restitution to the public for all funds unlawfully, unfairly, or fraudulently obtained" and to "disgorge all revenue an profits acquired as a result of defendants unlawful, unfair, and/or fraudulent business practices,"(19)

Most recently, Blue Cross and Blue Shield of Minnesota with Attorney General Hubert Humphrey III filed suit against the cigarette manufacturers. The case involves a private insurer and in state consumer protection and antitrust laws. The companies are charged with conspiring to promote products they knew were harmful while suppressing research that could have led to development of safer products.(20)

No Blameworthy Plaintiff

What these cases have in common, and what distinguishes them from the cases in the previous who waves of tobacco litigation, is the absence of a blameworthy plaintiff. It is extremely difficult to blame nonsmoking flight attendants for having continued to work in smoky airplanes. Also, to the extent that the Castano plaintiffs are really addicted to nicotine, they are not to blame for their continued smoking.

Similarly, states that have provided Medicaid support to needy residents cannot be blamed for the conduct of their beneficiaries. And private attorneys general who are seeking constructive trusts and corrective advertising are trusts plaintiff. It is extremely difficult to blame nonsmoking light attendants for having continued to work in smoky airplanes. Also, to the extent that the Castano plaintiffs are really addicted to nicotine, they are not to blame for their continued smoking.

Similarly, states that have provided Medicaid support to needy residents cannot be blamed or the conduct of their beneficiaries. And private attorneys general who are seeking constructive trusts and corrective advertising are trying to clear up a tragic situation that they had no part in creating. Absent plaintiff fault to distract the fact finder, the role of industry misconduct in each case is easier to discern.

Another difference from the previous two waves of tobacco litigation is the manufacturers' inability to financially crush the attorneys who take them to court. The group pursuing the Castano class action consists of 60 law firms that agreed to contribute $100,000 apiece. The states taking on the industry could fund litigation on any scale, but they probably, will not have to because the private bar is ready to advance the necessary resources to pursue those cases.

As for the small law firm considering whether to take an individual case, the appearance of heavy artillery on the plaintiff's side should make the task of taking on the giant tobacco companies easier. The nondestruct order in Castano, for example, requires the tobacco industry to preserve all possibly relevant documents that were created between January 1, 1946, and March 29, 1994.(21) These records benefit all plaintiffs, cases, as will any admissions or discoveries that emerge in future trials.

New evidence of industry misconduct and new public understanding of nicotine addiction should make lawsuits against the tobacco industry easier for plaintiffs and their attorneys to pursue.(22) For example, on August 2, an FDA advisory panel rejected the industry's repeated claims that its products do not cause addiction. The panel unanimously concluded that "the amount of nicotine delivered by currently marketed cigarettes [is] likely to lead to addiction in the typical smoker."(23)

Repercussions 

The new wave of tobacco litigation spoiled Philip Morris's plans to split its tobacco and nontobacco operations. A company executive said that plaintiffs in current tobacco liability suits would have challenged the split as a "fraudulent conveyance."(24) Observers have also begun to speculate about whether the manufacturers might be planning to file for bankruptcy.(25)

The purpose of the new cases, however, is not to make trouble for manufacturers but to obtain justice for people they have injured. The nicotine class actions and the Medicaid reimbursement cases are likely to produce substantial tobacco industry contributions to the health care system. The consumer protection cases and other cases focusing on the industry's fraudulent behavior may not only cause that behavior to stop but may create a substantial fund for corrective advertising.

Once the industry begins to pay even for part of the damage it has caused to smokers, people who have been exposed to ETS, and taxpayers who have paid for Medicaid benefits to low@income smokers, it will have to raise the prices of its products. This may further discourage tobacco consumption, especially among youngsters. Although the precise shape and role of a future law-abiding tobacco industry is not yet clear, it will surely be much less destructive than the present one.

Antismoking Strategy

Targets Youths

Federal and state governments should take aggressive steps to prevent children from experimenting with cigarettes and becoming lifelong smokers, according to a recent report from the Washington, D.C.-based National Academy of Sciences.

A panel of doctors and other experts appointed by the academy's Institute of Medicine conducted an 18-month study of youth smoking. The committee endorsed federal regulation of tobacco products and urged tighter restrictions on tobacco advertising and promotion and youth access to cigarettes.

More than 1 million youths become regular smokers every year, and 89 percent of adult smokers started before age 18, said Dr. Paul Torrens of the School of Public Health at the University of California at Los Angeles, who chaired the committee. He said most, children who smoke believe wrongly that they will be able to quit within a Few years.

"Children do not appreciate the terrible strength of nicotine as an addictive substance," Torrens said at a September news conference releasing the report to the public. "Children live in a world in which they are invincible."

He said children who become regular smokers take an average of 15 years off their lives and generate about $8.2 billion in health care costs over their lifetimes.

"If we as a nation want to prevent chronic tobacco use, we must deal with the problem when and where it begins: in childhood and adolescence," Torrens said.

The committee called for a "youth-centered tobacco control strategy." Recommendations included -

* Tobacco regulation. Congress should authorize an appropriate federal agency to regulate the packaging and nicotine content of cigarettes. The U.S. Food and Drug Administration is currently considering whether it should take action to regulate cigarettes as a drug.

* Restrictions on advertising. Congress should revise the federal cigarette labeling law to remove the provisions preempting states from restricting cigarette advertising and promotion. The committee said states should be allowed to restrict advertising on billboards, on public transportation, in sports arenas, and in other public locations within their borders. In particular, ad campaigns that have strong youth appeal, such as the Marlboro man and Joe Camel should be banned.

* Higher taxes. The federal excise tax on cigarettes should be increase gradually to $2 per pack. In focus group sessions, teenagers said large price increases would deter them from smoking. "Kids have better ways to spend $5 than on cigarettes," said one participant. Smoking among Canadian teens declined by 52 percent in the 1980s after cigarette taxes rose to almost $3 per pack, the report said. Committee member K. Michael Cummings of the Roswell Park Cancer Institute in Buffalo, New York, said pricing policy may be the most important element of the youth antismoking strategy.

* Curbs on youth access to cigarettes. State laws prohibiting the sale of tobacco products to minors should be more aggressively enforced. The panel suggested that all merchants who sell tobacco products be licensed and subject to civil penalties for selling tobacco to children. "The evidence is very clear that simply educating merchants does not work. It does not reduce sales at all," Cummings said.

The committee also recommended banning tobacco vending machines, self-service displays, and distribution of free tobacco products in public places and through the mail.

The report set the year 2000 as the target date for implementing these measures, although it said some of the legislative goals could be achieved as early as next year.

Copies of the report, "Growing Up Tobacco Free: Preventing Nicotine Addiction in Children add Youths," are available from the National Academy Press, 2102 Constitution Avenue, N.W, Washington, DC 20418; [phone]. Cost is $24.95 plus $4 for shipping.

Notes

(1) See Products Liability Lawsuits Against Cigarette Manufacturers - The First Wave, 1.1 TOBACCO PRODS. LITIG. Rep. 4.1 (1985); Cipollone v. Liggett Group, Inc., 112 S. Ct. 2608 (1992). This emblematic case of the second wave was filed by Rose Cipollone, a dying smoker, in 1983. The subsequent wrongful death action was voluntarily dismissed nine years later by her son, at his attorney's urging, after a four-and-a-half month trial in 1988, a $400,000 verdict, at least a dozen reported decisions (including one by the U.S. Supreme Court), the discovery and revelation of dozens of incriminating tobacco industry documents, and more than $1 million of plaintiff attorneys' time and expenses. (2) Quoted in Haines v. Liggett Group, Inc., 814 F. Supp. 414, 424 (D.N.J. 1993). (3) William L. Dunn, Jr., Motives and Incentives in Cigarette Smoking, 3.4 TOBACCO PRODS. LITIG. REP. 3.362 (1988) Exh. P-5171. (4) Philip Morris Cos., Inc. v. American Broadcasting Cos., Inc., No. LX-8163 (Va., Cir. Ct. for the City of Richmond Mar. 24, 1994); the motion for judgment appears at 9.2 TOBACCO PRODS. LITIG. REP. 3.70, 3.78 (1994). (5) Only one cigarette-caused fire case is currently pending at press time. Kearney v. Philip Morris Cos., Inc., No. 92-11079-REK (D. Mass. Feb. 25, 1992); the opinion denying defendant's motion to dismiss on the pleading appears at 9.1 TOBACCO PRODS. LIT. REP. 2.5 (1994). (6) 9.3 TOBACCO PRODS. LIT. REP. 5.35 (1994). (7) Regulation of Nicotine-containing Tobacco Products under the Federal Food, Drug and Cosmetic Act, 1994: Hearings Before the Subcomm. on Health & the Environment of the House Comm. on Energy & Commerce, 103d Cong., 2d Sess. (1994) (statement of DR. David Kessler, Commissioner, FDA). 9.2 TOBACCO PRODS. LIT. REP. 7.14-7.171; 9.3 TOBACCO PRODS. LIT. REP. 8.108-8.112 (1994). (8) Michael Janofsky, Majority of Americans Say Cigarettes Spur Addiction, N.Y. TIMES, May 1, 1994. (9) Philip Hilts, Tobacco Company Was Silent on Hazards, N.Y. TIMES, May 7, 1994, at Al, All; see also Mark A. Gottlieb, Pandoras Box of Documents Explodes, TOBACCO ON TRIAL, May 30, 1994 (Northeastern U. School of Law). (10) See 9.3 TOBACCO PRODS. LIT. REP. 8.113-8.114 (1994). (11) Broin v. Philip Morris Cos., Inc., No. 92-1405, 1994 WL 81712 (Fla. Dist. Ct. App. Mar. 15, 1994). (12) No. 94-1044 (E.D. La. filed Mar. 29, 1994); the amended complaint appears at 9.2 TOBACCO PRODS. LITIG. REP. 3.49 (1994). (13) Moore v. American Tobacco Co., No. 94-1429 (Miss., Jackson County Chancery Ct. filed May, 23, 1994); the state's complaint appears at 9.2 TOBACCO PRODS. LITIG. REP. 3.35 (1994). (14) FLA. STAT. ch. 409.910, as amended by SB 2110 (Apr. 17, 1994). (15) 1994 Mass. Adv. Legis. Serv. 60, [section] 276 (Law. Co-op.). (16) Centers for Disease Control and Prevention, U.S. Dep't of Health a Human Servs., Medical-Care Expenditures Attributable to Cigarette Smoking - United States, 1993, 43 MORBIDITY AND MORTALITY WKLY. PFP. 469, 471 (1994). In fiscal year 1994, the combined federal and state payments under the Medicaid program are estimated to reach about $146 billion. Center on Addiction & Substance Abuse, Columbia Univ., Cost of Substance Abuse to Americas Health Care System, in REPORT 1. MEDICAID HOSPITAL COSTS (1993). (17) Mangini v. R.J. Reynolds Tobacco Co., 31 Cal. Rptr. d 358 (1994), affirming 21 Cal. Rptr. 2d 232 (Ct.App. 1993). (18) 21 Cal. Rptr. 2d 232, 236. (19) Cordova v. Liggett Group, Inc., No. 651824 (Cal., San Diego Super. Ct. filed May 12, 1992); the complaint appears at 7.2 TOBACCO PRODS. LITIG. REP. 3.55 (1992). (20) State of Minnesota and Blue Cross & Blue Shield of Minnesota v. Philip Morris Cos., Inc., No. C1-94-8565 (Minn., Ramsey County Dist. Ct. filed Aug. 17, 1994). (21) See Castano, No. 94-1044. (22) The Tobacco Products Liability Project will host a conference of concerned attorneys and public health advocates in Boston on Dec. 2-4, 1994, to consider appropriate goals for the new wave of tobacco litigation and how best to work together to achieve them. Registration information is available by writing to Tobacco Products Litigation Reporter, Northeastern University School of Law, 400 Huntington Avenue, Boston, MA 02115; or fax to [phone]. (23) John Schwartz, FDA Panel Says Nicotine Is Addictive, WASH. POST, Aug. 3, 1994, at Al. (24) Roy Asfar, Philip Morris to Meet Shareholders Calling for Split, REUTERS,June 21, 1994, on NEXIS. (25) Gail Appleson, Lawyers Forsee Bancruptcy Route for Tobacco Firms, REUTERS, May 31, 1994, on NEXIS.