Suit of Smokers Exposed to Asbestos Says Tobacco Groups Hid Cancer Data
Opening arguments are to begin Monday in the latest flash point in the tobacco wars, a lawsuit brought on behalf of smokers with lung disease who were exposed to asbestos, the lethal industrial fiber.
The case is the first in a backlog of tobacco suits before U.S. District Judge Jack B. Weinstein in Brooklyn, N.Y., a plaintiff-friendly judge who has long been receptive to mass liability suits, including claims brought against the asbestos industry in the early 1980s by hundreds of thousands of industrial workers with lung disease.
The plaintiff in this case is a trust fund created in 1988 to pay those claims after the nation's largest maker of asbestos products, Johns-Manville Corp., of Denver, filed for financial reorganization in the face of mounting litigation. Swamped by claims, the trust has been able to pay 10 cents on the dollar to claimants, and it contends that the tobacco industry should be at least partially liable for the cost. The trust is seeking $4.6 billion in damages from the nation's five largest tobacco companies.
Alleged Conspiracy to Conceal
According to the suit, the tobacco industry conspired to conceal the higher risk of cancer for asbestos workers who smoked while encouraging them to light up. It has long been well documented, though not widely known, that those exposed to asbestos who also smoke face as much as 50 times the risk of lung cancer as those who don't. The trust is alleging fraud against asbestos workers under the Federal Racketeer Influenced and Corrupt Organizations Act, as well as fraud against the trust itself under New York state law. The trust contends that it overpaid claims for injuries that were at least exacerbated if not caused by the deadly synergy of asbestos and cigarette smoke.
The companies deny the allegations, and Wall Street tobacco analysts dismiss the case as a stretch. A dozen similar suits are pending before Judge Weinstein filed by insurers, union health-benefit funds and other third parties seeking reimbursement of smokers' medical expenses. Seven federal courts of appeals, including the one that oversees Judge Weinstein's Eastern District of New York, have rejected such suits, concluding that third parties are too legally remote, or removed, from injuries caused by alleged tobacco-industry misconduct to recover damages directly themselves.
"I have as close to absolute confidence as I can that if the industry were to lose this case they would win on appeal," says tobacco analyst David Adelman, at Morgan Stanley Dean Witter in New York.
Judge Weinstein sidestepped the remoteness issue in an order last May allowing the case to forward by focusing on the industry's allegedly "fraudulent scheme of misinformation directed at asbestos workers." As evidence, the judge cited a 1978 memo by a lawyer for American Tobacco Co., now owned by Brown & Williamson Tobacco Corp., acknowledging "enormously inflated" lung-cancer risks for asbestos workers who smoke compared with nonsmoking asbestos workers.
"It is difficult to doubt that the joint effect of smoking and asbestos on lung cancer is synergistic," the tobacco industry's now defunct research arm, the Council for Tobacco Research, concluded in a 1980 memo also cited by the judge. "The tobacco industry should consider whether it might take further steps to ensure that the lethal smoking/asbestos combination is avoided."
Instead, tobacco companies publicly denied a smoking and asbestos cancer link, according to the suit and even helped labor unions sue Johns-Manville to lift a workplace smoking ban in the 1970s.
The tobacco industry denies that it withheld information from the public or misled asbestos workers. An outside lawyer for the industry helped the union challenge the smoking ban at Johns-Mansville asbestos plants, focusing on the union's concern that it could lead to discriminatory hiring practices against smokers, not health issues, says lead defense lawyer David Bernick, who represents Brown & Williamson, a unit of British American Tobacco PLC.
Mr. Bernick contends the trust's case is money grab by the claimants trust based on a legal strategy the trust itself rejected years ago. The idea was revived in 1997 only because tobacco companies were negotiating a $368 billion national legislative settlement of all major tobacco litigation based on past wrongful conduct, says Mr. Bernick. The proposed settlement ultimately collapsed in Congress, but not before the trust sued to lay claim to a portion of the expected proceeds. "There's no other way to look at it," says Mr. Bernick.
Moreover, he contends, the trust had previously decided against suing tobacco companies to steer clear of costly litigation that could deplete funds available for claimants. Instead, he says, it instructed its outside lawyers to factor in the effect of smoking on injured asbestos workers by paying them discounted settlements. That by itself, Mr. Bernick contends, argues against tobacco companies having to pay damages to the trust now.
Much of the trial will focus on expert testimony for the trust by MIT economics professor Jeffrey E. Harris on computer-model extrapolations from surveys he took of sample asbestos claimants. Mr. Harris compared 4,169 claimants who smoked with 2,907 who didn't because they were aware of the enhanced health risk. According to Mr. Harris's expert report, the "quit rates" of asbestos workers who smoked would have been 2.4 times greater had tobacco companies not misinformed them.
Brown & Williamson's lawyer Mr. Bernick dismisses the analysis as grounded on flimsy and speculative assumptions, including no evidence cited by Harris that tobacco companies misled smokers about asbestos. "There is no record that we said anything in the public domain that had the effect of distorting anything," says Mr. Bernick.
Other tobacco company defendants are Philip Morris Cos.; R.J. Reynolds Holdings Inc., an independently held former unit of RJR Nabisco Holdings Corp.; Lorillard Inc., a unit of Loews Corp.; and Liggett Group., a unit of Vector Group Ltd.
The trial is expected to last 10 weeks.