Tobacco companies looking to filter deadly image as jury debates punitive damages
Wresting sympathy from the jury in a Miami-Dade Circuit courtroom is a given for lawyer Stanley Rosenblatt, since he is representing about a half-million people ravaged by smoking-related illness, or the survivors of those who have already died of such di
With hundreds of billions of dollars at stake, the country's top five tobacco companies also are trying to elicit a sympathy for their billion-dollar corporations.
They are attempting to humanize the corporations with the faces of the factory workers who make the cigarettes and the image of teachers and other dedicated professionals whose retirement funds are tied up in the industry's stock. They also are depicting an industry that has changed and now is actively working to prevent teenagers from picking up the cigarette habit.
In their opening statements last week in the punitive phase of this statewide class action, industry lawyers painted pictures of gloom for all of those people and their money. And they talked about the $254 billion shadow cast on the industry by legal settlements it has reached with the attorneys general of all 50 states.
For the first time it appears a group of plaintiffs has found a chink in the armor that has allowed the industry to go unscathed. And industry lawyers know they are facing a tough audience.
The jury decided last year that cigarettes cause lung cancer, emphysema and more than 20 other diseases.
In April, the tobacco companies lost their arguments that smoking is a personal choice and there are other risk factors that contribute to lung cancer and those other diseases when the jury awarded $12.7 million to three people who represent the entire class of smokers suing the industry.
Now the jury is being asked to decide how much the companies should pay as punishment for their actions and to deter them from continuing business as usual.
The key issue of this phase of the trial was summed up early last week by Dan Webb, the lead attorney for tobacco giant Philip Morris: "The bottom line of this case, Mr. Rosenblatt and I agree, is whether these tobacco companies have changed. Have they 'gotten the message.'"
There's been a change in corporate culture, Webb said, presenting charts showing the company's core values that are supposed to include openness, cooperation and efforts to prevent teen smoking.
That commitment toward protecting teens includes a new division within the corporate structure, funded with $100 million and a company vice president at the helm, he said.
"It's not some guy down in the basement and (the CEO) said to him go out and deal with this," Webb said.
Tobacco company Lorillard spent $12 million to develop its youth anti-smoking plan, and in 1999 spent $8.4 million on it, which is $700,000 more than the company spent in the same year on advertising, said Ken Riley, a company attorney.
But anti-smoking activists called these measures "cosmetic."
"Usually $100 million is a large figure. But in context in the tobacco industry, and what is at stake for them, many billions of dollars, it's a wise investment if it is successful in convincing the public, particularly the policy makers, that they have fundamentally changed the way they do business," said Ed Sweda, the top lawyer for the Tobacco Control Resource Center, based at Northeastern University in Boston.
"It's principally a cosmetic program because there are some fundamental things they can do that cost a lot less than a $100 million and they can do it overnight if they really want to reduce the incidence of youth smoking," Sweda said.
For instance, Philip Morris could retire the Marlboro Man, the cowboy image that has become synonymous with the cigarette advertisements, he said.
Start with Marlboro
More than 60 percent of the children who smoke, chose to start by smoking Marlboro cigarettes over hundreds of other brands, he said.
"That's no coincidence, " Sweda said. "And (the tobacco companies) have not shown any measurable proof their anti-smoking programs have had an effect."
Tobacco lawyers extolled the industry efforts to cut back on advertising, especially the promotional material thought to entice young smokers.
Under a $426 billion settlement with 46 states, and $13 billion-plus settlement reached with Florida's attorney general in 1998, the industry agreed to give up advertising on billboards, at sporting events and on mass transit because these venues reach large numbers of young people.
Much of the billboard space had been paid for in advance, according to the tobacco lawyers. And now that paid space is being used for anti-smoking campaigns, they said.
But Sweda pointed out there have been a number of studies showing that cigarette advertisements in magazines increased in the first three quarters of 1999, immediately after the tobacco companies signed these agreements.
"So the direct message from the studies is that the tobacco companiesshifted their advertising dollars into other means," he said.
The tobacco lawyers pointed out in court that under the settlement agreements the attorneys general were given the power to monitor cigarette advertising and other industry activities. If they see something they don't like, they have the power to challenge it.
"The attorneys general have the power of investigation and can ensure the conduct of the past does not occur or continue into the future," said Webb, the Philip Morris attorney.
The problem, however, is that the agreements are made with individual attorneys general. Any problem with the cigarette makers must be fought by an individual attorney general in an individual state.
A few weeks ago, California's attorney general finally used that power and charged RJ Reynolds with violating the settlement agreement by mailing free cigarette samples to people, including those who did not seek them.
Magazine ad pulled
RJ Reynolds stopped it.
And more recently, Brown and Williamson pulled a magazine advertising campaign for one of its cigarettes because the promotions showed the cigarettes in human-like poses and situations, which one attorney general found inappropriate under the agreement.
But how much are the individual attorneys general, and the state governments they work for, willing to challenge an industry now infusing state coffers with billions and billions of dollars?
All this money coming into the states gives the tobacco companies a tremendous edge with legislators looking to balance their budgets, Sweda said.
Florida is no exception.
Months ago the tobacco lawyers said in court and in trial documents that they feared a huge punitive award in this class action could potentially bankrupt the industry.
Florida law does not allow awards in a lawsuit to bankrupt a company. But that apparently was not enough to quell the fears of Florida legislators.
Last month, state Attorney General Bob Butterworth sent a legal opinion to the legislators that contradicted the plan that has been laid out for this class-action trial and was contrary to appeals court rulings that have already been issued.
A few weeks later, the state legislature passed a law that would protect the tobacco companies by placing a $100 million cap on the amount the industry would have to post as a bond in order to appeal any damages awarded to the smokers.
Under the previous law, tobacco would have had to post about 120 percent of the award to the smokers in bond. And that could have been billions, which would have had a great impact on the way the companies do business.
"It doesn't bode well for vigorous enforcement of other things under the (settlement agreements) if they are focusing simply on the dollars coming in but not the other major purposes of the agreement," Sweda said.
"At this point the Rosenblatts are the only ones left to carry that torch alone," he said.