What's Tobacco's Future in the Bush Era?
While the rest of the world was focused on election lawsuits in Florida, tobacco industry lawyers were following not only that litigation but also other suits in Florida courts that could cause them serious harm.
Lawyers on both sides of the tobacco wars have long assumed that, if elected, George W. Bush would put an end to the Clinton administration's multi-front assault on Big Tobacco, including a pending racketeering lawsuit, so industry lawyers had a huge stake in the election outcome.
Indeed, President Bush's ascendency may signal the end of a period in which lawsuits can threaten to put tobacco companies out of business. But for now, two historic lawsuits are proceeding against the industry in Florida, long one of the most important battlegrounds of the tobacco war. Industry lawyers must also deal with other key litigation elsewhere. This includes recent mistrials in major cases in West Virginia and Brooklyn, N.Y., and a defense verdict in a second Brooklyn case.
The Justice Department suit, though, is still the big one. Bush, an advocate of tort reform, criticized that suit during the presidential campaign. In nominating former Missouri Sen. John Ashcroft, R-Mo., as attorney general and Wisconsin Governor Tommy Thompson to head the Department of Health and Human Services, Bush also chose two politicians who have been sympathetic to Big Tobacco in the past. Ashcroft, who stands to inherit the multibillion-dollar lawsuit against the industry, is particularly pivotal.
The DOJ case involves civil racketeering claims by the federal government, which alleges that it was wrongly forced to pay medical expenses for sick smokers. U.S. v. Philip Morris Inc., No. 99-2496 (D.D.C.). (Washington, D.C., U.S. District Judge Gladys Kessler dismissed the government's claims under the Medical Care Recovery Act and Medicare Secondary Payer provisions.)
As on many issues, Ashcroft has tried, in testimony before the Senate Judiciary Committee, to round off some of his sharper ideological edges, including his tobacco views. The Justice Department suit came up only once, in a question from Sen. Edward M. Kennedy, D-Mass.
"Can you give us any assurance about that case?" asked Kennedy. "Do you intend at this time to withdraw it? Do you intend to carry it forward?"
After assuring Sen. Kennedy that he is "no friend of the tobacco industry," Ashcroft said, "I have no predisposition to dismiss that suit. I would evaluate that suit, conferring with members of the Department of Justice."
But tobacco control advocates do not consider Ashcroft a comrade-in-arms. In 1998, Ashcroft was the only senator on the Commerce Committee to vote against the McCain tobacco bill, which eventually failed in the Senate.
"It would be a big-government travesty at its biggest," Ashcroft said at a press conference, "to use the tragedy of tobacco as a smoke screen to cover the expansion of the nanny state."
Many foes of Big Tobacco are left debating whether the Bush administration will pull the plug on the federal lawsuit or just choke off the money needed to pursue it.
The effort is budgeted at $23 million for the current fiscal year, says a spokeswoman for the department. It is scheduled for trial in 2003.
John F. Banzhaf III, a professor at George Washington University Law School in Washington, D.C., envisions a third, more subtle threat. The government may simply settle the case on terms favorable to the industry, declare a false victory and walk away, he says. A deal might even include presidential backing for legislation giving the industry the legal immunity it tried desperately to win in a failed global settlement with state attorneys general and private lawyers in 1997.
It is also considered very unlikely that Congress, under a Bush administration, will give the FDA broad authority to regulate tobacco as a drug. Under Clinton, the agency claimed that authority and fought for it unsuccessfully in the U.S. Supreme Court, in cooperation with the Justice Department.
Wall Street seems to agree that Bush will go easier on Big Tobacco. Industry stocks, whose value had been depressed for years because of the uncertainty of the litigation picture, are up sharply since the election.
In contrast, the day before the election, Miami Circuit Court Judge Robert P. Kaye ruled on post-trial motions, upholding an unprecedented $145 billion punitive damages verdict against the tobacco industry in a state-wide smokers' class action. Engle v. R. J. Reynolds Tobacco Co., No. 94-08273 (Fla. Cir. Ct., Dade Co.).
The rulings clear the way for the defendants to appeal the procedurally intricate case, which was filed in 1994 by the Miami husband-and-wife lawyer team of Stanley and Susan Rosenblatt.
Although many state and federal courts have thrown out similar class actions, on the ground that individual claims differ too much to be tried together, anti-tobacco lawyers are hopeful that Florida's supreme court will eventually uphold the verdict.
Also in November, the Florida Supreme Court reinstated a $750,000 verdict won by Grady Carter in a case against Brown & Williamson Tobacco Corp. Carter's lawyer, Norwood S. "Woody" Wilner of Spohrer, Wilner, Maxwell & Matthews in Jacksonville, Fla., has tried several individual cases.
Still, although there are now hundreds of similar suits pending against the industry across the country, and despite high-profile settlements with state governments, the industry has never paid a dollar to a former smoker on a tobacco product liability claim.
There have been a handful of individual verdicts against the industry in recent years, but none has yet emerged from appeals.
Grady Carter's case is closest. This month, the Florida Supreme Court declined to reconsider its decision reinstating his verdict, which sets up a possible final appeal to the U.S. Supreme Court. Company lawyers say that they plan to file a petition for high court review.
Still, juries continue to hold smokers responsible for their smoke-related illnesses in some cases.
On Jan. 16, the tobacco industry won a verdict in a Brooklyn case brought by the family of a woman who died of lung cancer. Although a six-woman jury found that cigarettes were the cause of Bonnie Apostolou's death, they also decided that she had assumed the risk of smoking. Apostolou v. American Tobacco Co. (N.Y. Sup. Ct., Kings Co.).
Plaintiffs' lawyers in the current wave of tobacco litigation have tried to avoid the problems of litigating individual suits by aggregating thousands, even millions, of smokers into class actions.
But besides the Engle case in Florida and a case pending in Louisiana, almost every class action to compensate smokers for death and disease has been dismissed on the ground that the claims are too different to be tried together.
Lawyers have also sued on behalf of entities that were required to pay the health care costs of sick smokers. But courts have often found the harm too remote from the cause.
To date, lawsuits by American Indian tribes, foreign governments and labor union health plans have yet to succeed.
Plaintiffs' lawyers have been most successful when they have able to couple the prestige and enforcement power of government to their cases, a strategy that has since been applied to litigation against lead paint and gun makers.
Most threatening to the tobacco industry were lawsuits brought on behalf of state governments across the country, which it settled for a total of $246 billion.
Some remaining threats to the industry are pending before federal District Judge Jack B. Weinstein in Brooklyn, N.Y. Weinstein has set an aggressive trial schedule for cases brought by Blue Cross and Blue Shield health plans, union health care plans and former manufacturers of asbestos.
Although similar cases have been dismissed across the country, Weinstein has pushed them to trial, one after another, in an attempt -- so far unsuccessful -- to press for a broad settlement of industry liability.
In the first case, brought on behalf of a trust set up to compensate injured asbestos workers, Weinstein was forced to declare a mistrial on Jan. 25, when deadlocked jurors reported threats of violence in the jury room. Falise v. American Tobacco Co., No. 99-7392 (E.D.N.Y.).
That followed on the heels of another important mistrial in West Virginia. In that case a state judge declared a mistrial on Jan. 22, in a class action seeking the cost of medical monitoring for smokers. In re Tobacco Litigation (Medical Monitoring Cases), No. 00-6000 (W. Va. Cir. Ct., Ohio Co.).