In a Los Angeles courtroom last month, tobacco giant Philip Morris relied on the same argument that has protected it for decades. Betty Bullock, a 64-year-old grandmother dying of lung cancer, was well aware of the health risks of smoking as she puffed on
Is it payback time for individual smokers? Until recently, the biggest litigation threat to the tobacco industry came from aggregated cases such as those brought by the state attorneys general in the mid-1990s. Suing a tobacco company for one smoker's illness was a futile and expensive gesture. Few plaintiffs' lawyersâ€“who get paid only if their client winsâ€“would even consider such a case. But the odds have changed dramatically. Numbers tell the story: From 1954 to 1998, only 3 of the more than 800 individual smokers who sued cigarette makers won their cases, and two of those were reversed on appeal. But since 1999, smokers have won 10 of the 30 cases brought against tobacco firms in several states. In fact, the Bullock case was the fourth California victory in a row against Philip Morris in the past three years. "The industry's aura of invincibility has been shredded," says Peter Jacobson, a professor of public health at the University of Michigan.
Winning a jury vote is far from a guarantee of receiving a hefty award, of course. With the industry appealing all the recent verdicts, only one smoker has ever received cash: Grady Carter, a retired air traffic controller from Florida who fought a six-year legal battle to collect $1.1 million last year from Brown & Williamson, maker of Kools and Lucky Strikes. And as judges are prone to reduce astronomical punitive damages, it's highly unlikely Bullock will receive anything near $28 billion.
All the same, plaintiffs' attorneys around the country smell blood. There are now 55 law firms in 26 states that belong to the new Tobacco Trial Lawyers' Association, up from perhaps a dozen willing to represent a smoker five years ago. With lawyers sharing information and strategy, the cost of bringing cases against tobacco firms is coming down. New cases are cropping up in fresh venues. In Pennsylvania, for example, Greitzer & Locks, well versed in suing for damages from asbestos and pharmaceutical firms, has its first tobacco trial scheduled to start this month.
Why the deterioration in Big Tobacco's courtroom track record? "It's the documents, stupid," quips Chuck Tauman, the Oregon plaintiffs' attorney who has scored two recent multimillion-dollar verdicts against Philip Morris. When the five major tobacco companies settled with 46 states in 1998, they not only had to pay the states $246 billion over 25 years but, in the interest of public disclosure, they also had to post millions of pages of previously secret internal documents on the Internet. "Before, plaintiffs were going to trial without any incriminating evidence," says Kenneth McClain, a Missouri lawyer who got a verdict against R. J. Reynolds last summer. Now plaintiffs can marshal documents showing that tobacco companies knew for decades that cigarettes cause cancer and that nicotine is addictiveâ€“even as they publicly denied the links. The outright lies make jurors mad. "It changes the whole dynamic in the courtroom," says McClain.
A fervent antitobacco subculture has sprung up to mine the new cache of depositions, trial testimony, and other documents, benefiting not only plaintiffs' lawyers but the public-health community. The Web's largest tobacco database, Tobacco Documents Online (www.tobaccodocuments.org), is funded by institutions that get money from the National Cancer Institute, such as the Mayo Clinic. "It's heaven," says Ray Goldstein, a San Francisco paralegal who has set up his own business specializing in smokers' suits. (His slogan: "Bad News for Big Tobacco.") The American Lung Association of Colorado regularly alerts more than 1,300 people and institutions, including plaintiffs' lawyers, via E-mail to the content of the ongoing uploads the tobacco firms are required to make until June 30, 2010.
Inside scoop. But documents alone don't necessarily win over juries. Plaintiffs' attorneys over the past several years have been ferreting out more tobacco insiders willing to testify. "It really helps a lot to have someone take the stand with firsthand knowledge," says Cliff Douglas, a Michigan plaintiffs' lawyer. For instance, William Farone, who was a top tobacco scientist at Philip Morris from 1976 to 1984, testified on behalf of Bullock.
Antitobacco advertising by public-health organizations also molds the views of today's jurors. In California, the state health department has been running ads that not only encourage smoking cessation but also attack tobacco firms. One TV ad, for example, portrays tobacco executives as liars and plays on the cautionary alert displayed on the side of cigarette packages: "WARNING: Some people will say anything to sell cigarettes." With another trial beginning this month in Sacramento, R. J. Reynolds is asking a state judge to dismiss the case or move it because of the ads. "The state's self-proclaimed 'propaganda' campaign has had devastating effects on the cigarette companies' right to a fair trial within California," the firm wrote in a recent court memorandum. Tobacco companies say the state targets its ad spending in cities where juries are sitting, a charge that state health authorities deny.
Interestingly, despite the string of plaintiffs' victories with giant awards, the number of cases actually filed in California hasn't risen in two years. "Lawyers there are reluctant to invest further until the litigation is upheld on appeal," notes Merrill Lynch analyst Martin Feldman. "The lawyers' ultimate goal is to get tobacco companies to settle," says Prudential Securities analyst Robert Campagnino. "They'd love to say to a tobacco company, 'I have 20 victims just like the one that just won $100 million, so let's talk.' "
That's wishful thinking, of course, because settling individual cases certainly isn't in Big Tobacco's game plan. But Philip Morris, at least, admits the recent smoker victories are changing its thinking. "The clear message for us in the verdicts is that jurors want significant change in how the industry operates going forward," says Michael Pfeil, a vice president at Philip Morris U.S.A. The company, which also wants a clear legal path before it starts marketing new "reduced risk" cigarettes, recently revved up a lobbying campaign to press the Food and Drug Administration to regulate tobacco. Philip Morris isn't pushing Congress for immunity from lawsuits, however. Attempts to put a cap on punitive damages doomed a congressional attempt to pass tobacco control legislation in 1998.
The heat is on. The private lawsuits certainly have a downside from a public-policy perspective. Any monies the current crop of plaintiffs collects from tobacco firms won't help those individuals suffering from tobacco-related illnesses who haven't sued. Lawyers for the winners will earn multimillion-dollar contingency fees. But longtime foes of tobacco don't mind. "This isn't about whether lawyers are altruistic or well-meaning," says Matthew Myers, president of Campaign for Tobacco-Free Kids. "These suits by themselves won't bring fundamental change, but they are one more pressure point on tobacco companies."
Tobacco stocks are certainly feeling the pressure. Philip Morris shares are down 25 percent since June, while R. J. Reynolds is down about 40 percent. With the industry's high profits, Wall Street isn't worried about the firms' actual ability to pay damages if they ultimately mustâ€“"it's a cost of doing business," says Salomon Smith Barney analyst Bonnie Herzog. But the prospect of a steady drumbeat of bad litigation news is daunting. At least 25 smokers' trials are scheduled to start between now and mid-2003, and the industry also faces numerous class actions and a 1999 lawsuit filed by the Department of Justice aimed at recovering the government's costs of treating tobacco-related illnesses.
For its part, R. J. Reynolds remains defiant. "We have never paid any smoker a penny," says the company's executive vice president and general counsel, Charles Blixt. It may take five years for an individual plaintiff to weather the appeals process, but odds are good that one day that statement will no longer be true.