Tobacco class action goes up in smoke; individual and government cases proceed.

A Florida class action against tobacco manufacturers took a blow in May, but an individual suit in Arkansas was rewarded at trial, and the federal government had a big win, too.

Despite the setback in Florida, where a federal appeals court questioned the viability of class actions against the industry, the success of other tobacco litigation shows that plaintiffs still have options. The U.S. District Court for the District of Columbia upheld the federal government's use of racketeering laws against tobacco manufacturers, and individual suits are still succeeding.

Florida class rejected

There's trouble for tobacco litigation in the Sunshine State. Florida's Third District Court of Appeals overturned a $145 billion punitive damages award in the class action, which seeks to hold cigarette manufacturers accountable for nicotine addiction and smoking-related health problems of all Florida smokers. (Engle v. Liggett Group Inc., No. 3DOO-3400, 2003 WL 21180319 (Fla. Dist. Ct. App. May 21, 2003).) The court ordered the suit decertified, essentially forcing each of the estimated 700,000 plaintiffs to sue the tobacco industry individually if they wish to pursue their claims. The plaintiffs filed an appeal in July.

Engle resonates nationally. Richard Daynard, a law professor at Northeastern University in Boston and president of the pro-plaintiff Tobacco Products Liability Project (TPLP), said the decision makes it harder to bring similar suits elsewhere, "because one of the relatively few courts that were willing to consider letting them go forward [is] pulling back."

The court raised several issues related to the size of the class, suggesting that class actions are an unworkable solution for individuals harmed by tobacco products. But plaintiff lawyers note that the same court approved the suit's certification in 1996 after reducing it from a nationwide class action to one involving only Florida smokers. And in an earlier decision, the court had discussed and dismissed the concerns it raised in Engle about how to address the individual issues of each smoker in tobacco class actions.

Judge David Gersten, writing for the unanimous court in Engle, cited several factors that led to the suit's decertification. First among them was Florida's rules of civil procedure, which require that common issues of law outweigh the plaintiffs' individual issues in a class action. The court held that the smokers' class did not meet this standard.

Citing "unique and different experiences" for each smoker, Gersten wrote that "class representation is not 'superior' to individual suits."

But in Broin v. Philip Morris Co., Inc., in which the plaintiffs claimed injury from exposure to secondhand smoke, the same court rejected the argument that plaintiffs' different circumstances posed an impediment to class action litigation. "Claims that arise from different factual contests may be pled as a class action if they present a question of common interest," wrote the court --which included Gersten and Judge Mario Goderich, who also sat on the Engle panel--since "it is virtually impossible to design a class whose members have identical claims." (641 So. 2d 888, 890 (Fla. Dist. Ct. App. 1994).)

Daynard took issue with the Engle decision for that reason. "Everything is different, everybody is different, every situation is different," he said. "You can take that position, but then you get rid of class actions and you get rid of the realistic possibility of actually providing justice in mass tort situations."

The court also said the size of the class would make it too difficult to determine which states' laws should apply to the plaintiffs' claims. Citing evidence presented in pretrial proceedings, Gersten noted that more than 65 percent of current and former smokers in Florida became residents after they had become regular smokers. Because Florida courts must defer to the law of the state that "has the most significant relationship to the occurrence and the parties," the presiding judge would be required to analyze the law in each state where claimants contracted ailments. This requirement, Gersten wrote, "present[s] an insuperable roadblock to smokers' class actions."

But in Broin, the court wrote that choice-of-law issues "do not require dismissal of a class action" and that "class treatment will aid judicial efficiency" when cases involve large numbers of claimants, even if they're from different states.

The Engle court also cited individual differences among plaintiffs in overturning the jury's punitive damages award. Under Florida law, punitive damages are determined in relation to compensatory damages. Because the defendants' liability to each member of the class had yet to be determined in the next phase of trial and compensatory damages for each plaintiff would be based on that liability, the court deemed the punitive award premature.

The court rejected the plaintiffs' argument that punitive damages were warranted because the jury had round that the tobacco companies had breached a duty to Florida smokers by producing dangerous products and promoting them dishonestly. Gersten wrote that the finding of a breach of duty alone does not prove liability, holding that elements of liability "must be established on an individualized basis.... [O]ne class member's circumstances cannot serve as a proxy for another's."

But, said the court, even if a breach of duty were enough to prove liability, punitive damages in Engle were superseded by a 1997 settlement between the state of Florida and the tobacco industry, which the court claimed satisfied all punitive damages for plaintiffs in the state, including those claimed in smokers' class actions.

That statement surprised lawyers for tobacco plaintiffs, because the court had approved the suit's trial plan--which included a punitive damages phase--in 1999. Attorneys familiar with the settlement say it has a clause specifically stating that it does not preclude punitive damages.

"This conclusion is sharply at odds with the language of the settlement agreements," said TPLP staff attorney Mark Gottlieb in a written statement.

The court suggested that class members be allowed to proceed individually. But plaintiff lawyers noted that the Broin court round the idea of adjudicating 60,000 individual suits "impractical." The Engle class includes more than 10 times as many plaintiffs.

"There isn't time in the world," to litigate all those cases, said Norwood Wilner, a Jacksonville attorney with substantial experience representing both individual and class plaintiffs in tobacco suits. "It's certainly a failure of the system to not be able to get some help for those people."

Wilner can't help thousands of clients file individual claims, and most attorneys don't want to take on wealthy manufacturers on behalf of individual plaintiffs, leaving tobaccco plaintiffs in a bind.

"They have a right to try their cases separately," said Daynard. "They're just not going to be able find a lawyer to do it."

One plaintiff at a time

Other attorneys share Daynard's concern. But Wilner's win in Boerner v. Brown & Williamson Tobacco Co. shows that individuals can still win suits against the tobacco industry. (No. LR-C_98-427 (E.D. Ark. May 23, 2003).)

The facts of Mary Jane Boerner's case echo those of many previous suits brought by smokers. Boerner was 15 when she began smoking in 1945, and she was addicted within three years. She finally quit in 1981 but was diagnosed with lung cancer in 1996.

Two years later, Boerner sued Brown & Williamson for personal injuries and loss of consortium under the theories of fraud and deceit, negligence, and strict liability. She claimed that the company had defectively designed its product and failed to adequately warn her of its dangers. After her death in 1999, her husband refiled and amended the claim to include wrongful death.

Although Henry Boerner's claims of breach of duty and inadequate warning between 1969 and 1981 were dismissed, the Eighth Circuit Court of Appeals permitted his claims of defective design and inadequate warning before 1969--when cigarette packages began carrying amended health advisories--to proceed to trial. After a one-month trial and three days of deliberation, the jury found for Boerner.

Individual tobacco suits "are manageable," said Wilner. "They're not easy, but they're not impossible."

"The cases can be won," said Daynard. Plaintiffs "just need people who [won't be] scared off by the tobacco industry."

On the same day as the Boerner verdict, the federal government won an important victory against Big Tobacco when the U.S. District Court for the District of Columbia allowed U.S. v. Philip Morris, Inc.--a RICO suit seeking injunctive relief and damages from tobacco manufacturers for "an unlawful conspiracy to deceive the American public"--to proceed. (No. CIV.A.99-2496 GK, 2003 WL 21220695 (D.D.C. May 23, 2003).)

The government claims that cigarette warning labels and the industry's marketing tactics have misled smokers, and that tobacco advertising has targeted children. The defendants argued that the RICO claims should be dismissed because tobacco warnings, advertising, and promotion are exclusively regulated by the Federal Trade Commission (FTC).

They claimed that the Federal Trade Commission Act (FTCA) and the Federal Cigarette Labeling and Advertising Act preempt RICO. Filing claims under RICO, over which the FTC has no authority, would inhibit the commission's ability to enforce the statutes, the defense said.

Judge Gladys Kessler rejected that argument, saying that the appropriateness of the RICO claims was determined by whether it conflicted, not merely over lapped, with another statute. Citing extensive case law, she found no conflict between the FTCA and RICO. "When two federal statutes overlap, courts must give effect to both, if at all possible," Kessler wrote.

Citing the U.S. Supreme Court decision in Cipollone v. Liggett Group (505 U.S. 504 (1992)), Kessler noted that the Court found that "failure-to-warn claims that were unrelated to advertising or promotion, such as claims relying on testing or research practices, were not preempted" by the labeling act, which required that warnings appear on every package of cigarettes. Since the government's RICO suit includes claims that the industry distorted or buried testing and research results, the suit can proceed, she held.

The trial is set to begin next month.