Tobacco Litigation Update (as of October 2001)
Prepared for the Robert Wood Johnson Foundation's SAPRP Conference November 2001
1. Individual smoker suits
News since October 2000
On March 8, 2001, Brown & Williamson paid nearly $1.1 million to an injured Florida smoker, Grady Carter, plus attorneyâ€™s fees to his lawyer Norwood â€œWoodyâ€ Wilner. Carter went to trial in 1996, and the jury awarded Carter $750,000 for compensatory damages (punitive damages were not sought). After more than four years of appeals, the added interest increased Carterâ€™s payment to almost $1.1 million. A Florida appeals court had reversed the verdict in 1998, citing the expiration of the statute of limitations and other errors by the trial court in admitting evidence. Later, the Florida Supreme Court reversed the appeals court and reinstated the jury verdict.
o During the week of August 24, 2001, Philip Morris appealed the 1999 verdict in Henley v. Philip Morris, which awarded the plaintiff $1.5 million in compensatory and $50 million in punitive damages (the trial judge later cut the punitive damages to $25 million). The primary argument on appeal is that the 1998 repeal of Californiaâ€™s codification of Section 402A, comment i of the Restatement (Second) of Torts should NOT be applied retroactively. The issue before the court is whether someone injured by smoking but diagnosed prior to the repeal of the state statute has a legitimate cause of action in California.
o In Boeken, a Los Angeles, California jury on June 6, 2001 awarded a plaintiff smoker with lung cancer $5.5 million in compensatory damages and $3 billion in punitive damages against Philip Morris. On August 9, the trial judge reduced the punitive damage verdict to $100 million and rejected the defense argument that the repeal of the state statute (noted above) was not retroactive, citing legislative history and intent in reaching this conclusion. The defendants are sure to appeal this case.
o In Whiteley, the plaintiff was awarded $20 million in 2000. This case is being appealed.
o Naegele v. RJR involves a smoker diagnosed with cancer prior to the repeal of the state statute. The trial court dismissed the case based on its ruling that the repeal was not retroactive. This case is expected to be argued before the California Supreme Court during the 2001-02 term.
o Myers v. Philip Morris involves a smoker diagnosed after the repeal of the statute but whose illness began to accrue before the repeal. The 9th Circuit has asked the California Supreme Court to review this case, which has been joined with Naegele.
- On October 12, 2000, a jury found in favor of the plaintiff in Jones in Tampa FL, a lung cancer wrongful death case. The jury awarded $200K in compensatory damages and no punitive damages.
- After four days of deliberation, a New Jersey jury found defendant tobacco companies not liable for the lung cancer and death of Constance Mehlman (who had stopped smoking 30 years before her death) in Mehlman v. Philip Morris, et al. on May 16, 2001. Claims in the plaintiff's complaint included: 1) Products liability (design defect); 2) fraud/constructive fraud; 3) breach of implied warranty; 4) consumer protection; 5) negligence; and 6) conspiracy.
- On January 16, 2001, a NY jury brought in a defense verdict in the Apostolou case (a decision that the plaintiffâ€™s lawyers said they would appeal). This defense verdict seemed to be based on â€œassumption of riskâ€ and the jury had earlier agreed that smoking caused the victimâ€™s lung cancer.
News from 1999 and 2000
- In Branch-Williams, an Oregon jury in 1999 awarded plaintiff $71.5 million in punitive damages, reduced to $32.5 million by the trial judge. This case is being appealed. This case, plus Henly and Whiteley noted above, were the three big dollar plaintiff victories before 2001 in individual smoker cases.
- In June, 2000 a Brooklyn NY jury in the Anderson case rejected the claim that 30 years of smoking was a substantial cause of plaintiffâ€™s lung cancer.
- In July, 2000 a Mississippi jury in the Nunnally case rejected claims that RJ Reynolds should be held liable for the fatal lung cancer of three pack-a-day smoker.
- In 1999 a Louisiana the jury found for American Tobacco in the Gilboy case, as it was apparently not convinced that the plaintiffâ€™s cancer was caused by smoking.
- In 1999, a Missouri jury in the Steele case found for Brown and Williamson in a wrongful death-lung cancer case.
- In 1999, a Tennessee jury found for the tobacco industry in the Karney case, by finding no liability in Phase One of a consolidated case.
2. Second-hand smoker suits
- Flight Attendant: On April 5, 2001, a Miami jury held in Fontana that cigarette makers are not liable for the potentially fatal lung disease of a flight attendant exposed to tobacco smoke pollution on the job. A possible explanation is that plaintiffâ€™s current treating physician was not called to testify â€“ the only member of her medical team who did testify was her radiologist. Over 3,000 similar cases involving flight attendants are pending and stem from a 1997 class action settlement of the first phase of the Broin trial.
- In Broin, the tobacco industry agreed to pay $300 million in lieu of punitive damages for societal studies relating to tobacco-related illness, and $49 million to plaintiffs attorneys. Class members received no payments but were entitled to go forward with their compensatory damage claims and the burden of proof was switched from the smoker to the industry in claims involving lung cancer, chronic bronchitis, emphysema, chronic obstructive pulmonary disease or chronic sinusitis.
3. Third-party suits
- Empire Blue Cross and Blue Shield v. Philip Morris, Inc., et al.: On June 4, 2001, a Brooklyn jury found the defendant tobacco companies liable for unfair and deceptive business practices and ordered defendants to pay Empire Blue Cross and Blue Shield of New York $17.8 million, marking the first case in which a third party has successfully sought compensation from the tobacco industry. (Punitive damages were not sought.) The Brooklyn jury also awarded $11.8 million to Empire under an alternate claim that lets the insurer â€œstand in the shoes of its members,â€ and Empire would receive the larger of the two awards if both survive on appeal. The jury in turn rejected the RICO claims. Prior to proceeding to trial, defendants had sought a writ of mandamus from the Second Circuit to force Brooklyn District Court Judge Weinstein to apply the remoteness rule that has previously barred Third-Party suits. The Circuit Court denied the writ. Defendant tobacco companies might not appeal the verdict, given the fact that the damages awarded were modest compared to the $3 billion sought by plaintiff insurers.
- On May 22, 2001, the DC Circuit affirmed in SEIU Health & Welfare Fund v. Philip Morris Inc. the dismissal of suits filed by labor union health funds. The Circuit Court found the lawsuits to be â€œtoo remote, contingent derivative, and indirect to surviveâ€ because suits were based on costs incurred by members who smoke. 8 of 12 circuits have ruled against suits by labor unions and others attempting to recoup funds spent on health care for individuals with tobacco-related illnesses.
- In a somewhat similar case brought by the Manville asbestos trust against the tobacco industry seeking $160 M reimbursement for health care costs of asbestos workers was declared a mistrial on January 25, 2001 after the jury deadlocked (reportedly 10-2 in favor of the tobacco companies).
4. Class action suits
- In the Engle class action case in Florida, in July 2000 a jury awarded around $150 billion in punitive damages and substantial compensatory awards for a few individual claimants. The awards were upheld by the trial judge in 2000, and efforts by the defendants to move the case to federal court seem to have failed as of November 2000. That case is on appeal and there have been no major new developments in 2001.
- Scott v. American Tobacco, Louisianaâ€™s post-Castano class action case, is moving forward after a state appeals court affirmed the trial courtâ€™s certification a class suing the tobacco companies for medical monitoring costs on November 4, 1998.
- A state judge has declared a mistrial in a West Virginia class action trial seeking medical monitoring for smokers. The trial plan prohibited any reference to the issue of addiction and an inadvertent reference resulted in the mistrial. The judge now questions his decision to banish the addiction issue from the trial. A new trial apparently began in September 2001.
5. U.S. government suit
- US v. Philip Morris, Inc., et al.: on September 28, 2000, US District Judge Gladys Kessler dismissed the governmentâ€™s claims under the Medical Care Recovery Act and the Medicare Secondary Payer provisions, but allowed the government to proceed in the case under RICO, which might permit the government to recover from tobacco companies â€œill-gotten gainsâ€ or profits since 1954, with interest. Trial for the RICO claims was set for July 15, 2003. In 2000, the Clinton administration earmarked $23 million for the lawsuit in various departments. The Bush administrationâ€™s budget did not provide specifically for the tobacco suit. In June, 2001 the Bush administration announced that it will seek a settlement with the tobacco companies. As of October, the tobacco companies seem reluctant to settle and the government appears to be going ahead to prepare for trial.
6. Foreign governments filing suit in U.S. courts
- EC v. RJR Nabisco et. al: on November 3, 2000, the European Commission filed a massive smuggling complaint against the tobacco industry in United States District Court for the Eastern District of New York, alleging RICO violations. On July 17, 2001, District Court Judge Nicholas Garaufis dismissed the lawsuit, ruling the Commission suffered no direct injuries since the actual losses were suffered by the individual EU nations. On August 6, 2001, The European Commission filed a new complaint in federal court in Brooklyn, New York on behalf of the EU and ten EU nations: Italy, Germany, France, Spain, Portugal, Greece, Belgium, the Netherlands, Finland, and Luxembourg.
- On May 22, 2001, the DC Circuit affirmed in SEIU Health & Welfare Fund v. Philip Morris Inc. the dismissal of suits filed by the governments of Guatemala, Nicaragua and the Ukraine. The Circuit Court found the foreign governmentsâ€™ lawsuits to be â€œtoo remote, contingent derivative, and indirect to surviveâ€ because the governments based their suits on the health costs incurred by citizens who smoke. The same ruling also dismissed suits brought by labor union health funds for the same reasons.
- On April 17, 2001, Ecuador's government dropped its lawsuit against U.S. tobacco companies for economic losses caused by lung cancer and other tobacco-related illnesses, after the Miami judge overseeing the case stated that he would dismiss the case if the plaintiffs did not voluntarily withdraw the complaint.
- On January 1, 2001, the government of Peru began recruiting legal advisors to assist in its intended suit against U.S. tobacco companies for the cost of treating tobacco-related illnesses.
- On June 30, 2000, U.S. District Court Judge Thomas McAvoy threw out Canada's suit against the R.J. Reynolds Companies and the Canadian Tobacco Manufacturers Council. The Canadian government alleged that the defendants had aided and abetted the smuggling of tobacco products into Canada, thereby evading taxes and duties, and aimed to claim as much as $3 billion under the treble damages provision of RICO. Judge McAvoy dismissed the suit on the grounds that Canada's effort to collect evaded taxes and duties was prohibited by the 18th Century common law "revenue rule" that bars U.S. courts from interpreting or enforcing the tax laws of foreign countries. On May 30, 2001, the Canadian government filed an appeal, arguing that the revenue rule does not apply because the evaded taxes are simply part of the damages Canada suffered as part of the defendants' use of the U.S. mails and wires to further a smuggling scheme.
7. Legal actions in other countries
The following list provides a sampling of litigation and is not meant to be comprehensive.
- Australia: In March 1999, Slater and Gordon solicitors brought class action proceedings on behalf of several plaintiffs against British American Tobacco Australia, Ltd.. The Australian Federal Court held that the proceedings should not continue as a class action but gave leave for plaintiffs to proceed individually. On December 15, 2000, the tobacco company announced that it had won the individual court actions in the Federal Court against plaintiffs claiming injury as a result of smoking.
- Australia: In May 2001, The Australian Supreme Court jury found in favor of a plaintiff who contracted throat cancer because of years of second-hand smoke during her employment as a barmaid, and ordered the club to pay her more than $450,000 in damages, marking the first time in the world damages was awarded for cancer caused by environmental tobacco smoke.
- Canada (British Columbia): On January 24, 2001, the province of British Columbia filed suit in the British Columbia Supreme Court against tobacco companies, including British American Tobacco's Canadian affiliate, seeking damages for the cost of treating smoke-related diseases, estimated at approximately C$500 million ($334 million) a year. The tobacco industry responded by challenging the constitutionality of the legislation on which the case is based. BC's complaint was nearly identical to a lawsuit the province filed against the industry last year. The earlier suit was rejected by a judge on constitutional grounds due to the way defendants were classified.
- Canada (Ontario): In March 2001, Ontario Justice Janet Wilson has allowed McIntyre, a widow whose husband who died of lung cancer in 1999, to hire a lawyer on a contingency fee (typically illegal in the province). McIntyre is planning to sue Imperial Tobacco for $11 million on a wrongful action for the death of her husband.
- Canada (Newfoundland): the Newfoundland government passed the Tobacco Health Case Costs Recovery Act on May 24, 2001, which permits the government to sue tobacco companies for the cost of treating smoking-related illnesses. Newfoundland health officials estimate that smoking-related illnesses cost the province $360 million a year.
- China: In May 2001, the Lianoning High People's Court ordered Kunming Cigarette Company of southwest China's Yunnan Province to pay 800,000 yuan ($96,400) to a famed Chinese Olympic gold-medalist Wang for misusing her picture in an ad without her permission. Wang's suit was initially rejected by a lower court based on lack of evidence, which lead to the reversal in the high court.
- China: On June 28, 2001, a Beijing-based court turned down a 17-year old boy's suit against the State Tobacco Monopoly Administration (STMA) and 24 tobacco producers for violating his consumer right to be informed what he was consuming. The court dismissed the case for lack of evidence, but one judge stated that the plaintiff may bring the case against the defendants on another ground.
- Columbia: In November, 2000, the government of Columbia filed suit against Philip Morris, Inc. for 44.6 billion pesos ($21 million) for allegedly not declaring the value of cigarettes it brought into Columbia.
- Ireland: In May 2001, Solicitor Peter McDonnell urged the government to drop the 3-year statute of limitation of cases taken by smokers against tobacco companies, so as to avoid barring victims who were unaware of the cancer risks. McDonnell is preparing more than 200 cases against six tobacco companies (and hopes to be in the High Court sometime in 2002),
- Japan: In 1998 a suit filed by seven plaintiffs suffering from lung or throat cancer or pulmonary emphysema at the Tokyo District Court against Japan Tobacco Inc, and the government (for approving the sales). Plaintiffs are demanding 10 million yen each in damages, detailed health warnings on packages, and a ban on tobacco advertising and cigarette machines. The trial has stalled over the issue of whether smoking is hazardous and two of the plaintiffs have since died of tobacco-related diseases.
- Norway: a long-time smoker with lung cancer has sued the Norwegian tobacco industry. The lawsuit was set to begin on October 2, 2000 at the court of Orkdal, and is the first of its kind in Norway.
- Russia: In late December, 2000, State Duma Deputy Alexei Mitrofanov and others filed a lawsuit in a Moscow court, alleging Philip Morris and British American Tobacco violated Russia's consumer protection laws, and asking the court to order the two companies to recall their products and pay up to 500 million rubles ($17.8 million) in "moral damages." Both companies stated in January 2001 that they were surprised by the suit and only learned about them from local media reports. Mitrofanov stated that he also intends to file suits against the companies addressing the difference in quality between imported and domestically produced cigarettes of the same brand, and the failure to print expiration dates on packages.
- Saudi Arabia: In November 2000, a Saudi hospital stated its intention to sue international tobacco firms and their local agents for at least 10 billion riyals ($2.6 billion) to compensate for the cost of treating lung disease. The hospital is government-run and does not charge patients for treatment and services.
- South Africa: In July, 2001, South African Judge-President W. Steenkamp of the Northern Cape High Court issued a court order prohibiting smoking near a one-year-old child. The order prohibited the boy's parents, family and friends from smoking in a room or car where the child is present, and is the first of its kind in the world.
- Spain: In January, 2001, associations representing 4,300 cancer patients began filing separate suits in 14 Spanish cities against tobacco companies, including Spanish affiliates of R.J. Reynolds and Philip Morris, seeking 4 billion pesetas ($22.9 million) in damages. The Spanish plaintiffs are smokers who had their voice boxes removed because of throat cancer, and seek to use the compensation to fund rehabilitation centers where cancer victims whose larynxes were removed can receive psychological counseling and learn to speak again.
- Uganda: On May 31, 2001, the Environmental Action Network Ltd. Of Uganda filed an action in the High Court of Uganda, seeking declaration that smoking in public constituted an infringement of the rights of non-smokers to life and to a clean and healthy environment and constitutes criminal conduct. The suit names the Attorney General and the National Environment Management Authority (NEMA) as respondents. British American Tobacco, as well as a smoker represented by BAT's legal counsel, unsuccessfully sought to join in the same suit in July by Principal Judge Herbert Ntabgoba, who in August dismissed with costs all four objections raised by the Attorney General and NEMA to steer the suit for hearing on the merits.
- Uganda: On November 24, 2000, High Court Judge Justice Katutsi dismissed a class action against BAT for failure to meet class action requirements. On the same day, Katutsi also rejected BAT time-bar challenges to an individual health-related suit and permitted the plaintiff to move forward on the merits.
- See also EU case under "Tobacco industry as plaintiffs"
8. Tobacco industry as plaintiffs
- Lorillard Tobacco Co., et al. v. Reilly, Attorney General of Massachusetts, et al.: the US Supreme Court ruled on June 28, 2001 that regulations restricting tobacco advertising within 1000 feet of school and playgrounds were preempted by federal law and violated the tobacco industry's right to free speech. The Court ruled 5-4 that the Federal Cigarette Labeling and Advertising Act preempts state regulations such as those adopted in Massachusetts. It also ruled 6-3 that such restrictions violate the tobacco companies' First Amendment right to free speech. (Background at http://www.tobacco.neu.edu/PR/Backgrounders/Lorillard_v_Reilly_scotus.htm)
- On June 8, 2001, U.S. District Court Judge Loretta A. Preska threw out a New York state statute that banned mail-order, Internet and telephone tobacco sales, ruling that the law interfered with interstate commerce and was unconstitutional. The suit was brought by Brown & Williamson Tobacco Corp., which had plans for a multi-million dollar catalog campaign to market its cigarette brands, in October 2000.
- On October 5, 2000, the European Court of Justice overturned legislation adopted by the European Union in July 1998 which would have gradually phased out almost all tobacco advertising and sponsorship by 2006. The Court annulled the legislation on grounds that "EU lawmakers had no competence for introducing it on the basis of internal market legislation." The suit was brought by the German government and various tobacco companies. Apparently the EU is in the process of reintroducing similar legislation under its authority to regulate trade among EU members.