FOR IMMEDIATE RELEASE 

July 6, 2006  
Tobacco Products Liability Project (TPLP)
Contact:  Richard A. Daynard
Edward L. Sweda, Jr. or
Mark Gottlieb
617-373-2026
media@tplp.org

DESPITE HEADLINES, FL SUPREME COURT'S DECISION IN ENGLE CASE WILL PROVE TO BE AN ENORMOUS BLOW TO CIGARETTE COMPANIES

Few expected the $145 billion punitive damages award to survive appeal.  Yet the real key to understanding the decision lies in the Court's use of the latin phrase "res judicata, meaning that the issue has been judged.  The Court's findings that cigarette manufacturers are negligent and that their products are defective, unreasonably dangerous, addictive, and the cause of 16 major diseases will carry over to individual claims for compensatory and punitive damages by upwards of 100,000 class members.  At trial, these class members will need only prove individual medical causation and reliance on any acts of fraud that may be alleged. The Tobacco Products Liability Project expects tens of thousands of streamlined cases top be filed in Florida by this time next year.  

 Almost 6 years after the Miami jury sitting for  the longest civil trial in U.S. history issued its devastating verdict against the tobacco industry, its ultimate meaning has been determined by Florida's highest court.  Today, headlines are screaming about a big victory for Big Tobacco, but while the upholding of the reversal of  a $145 billion punitive damages award was certainly good for the tobacco industry, the larger context of this decision leaves the viability of the major U.S. tobacco companies very much in doubt.

Here is what the Court gave to the cigarette companies in today's decision:

1) elimination of $145 billion punitive damages award (which 95% of people paying attention to this case expected);
 

2) decertification of the class in one year; and
 

3) reversal of one of the three individual representative class member's compensatory damages award because the claim was barred by the statue of limitations (saving the defendants all of around $7 million).

Here is what the Court handed the defendants in terms of a defeat today:

1) reversal of  appeals court decision and restoring punitive damages as an option in cigarette cases in Florida, including those of potentially hundreds of thousands of class members;
 

2)  reversal of appeals court and allowing to stand all of the findings of general liability against the defendants including liability for:

a) negligence; b) defective and unreasonably dangerous products; c) addictive products; d) strict liability; e) fraud by concealment; f) civil conspiracy-misrepresentation; g) conspiracy-concealment; ; h) breach of implied warranty; i) general causation.

In addition, the Court ruled that cigarettes smoking causes the following diseases:

aortic aneurysm, bladder cancer, cerebrovascular disease, cervical cancer, chronic obstructive pulmonary disease, coronary heart disease, esophageal cancer, kidney cancer, laryngeal cancer, lung cancer (specifically, adenocarinoma, large cell carcinoma, small cell carcinoma, and squamous cell carcinoma), complications of pregnancy, oral cavity/tongue cancer, pancreatic cancer, peripheral vascular disease, pharyngeal cancer, and stomach cancer.

3) each of these findings on liability need not be proven at trial by class members who file individual claims in Florida within the year (res judicata).  At trial, individual members of the class will need to prove that they smoked a defendant's product, that the smoking caused their specific case of whichever disease is at issue, and that they relied on a defendant's fraudulent claims (but only if fraud is alleged in the complaint and it need not be). While the companies can defend these cases, they cannot claim that they were not negligent, that their products are not defective or unreasonably dangerous and addictive, that smoking does not cause the 16 aforementioned diseases, or otherwise deny any of the other findings that the Court determined were binding on these subsequent cases.

How much money might Big Tobacco still be on the hook for? 

This is very hard to determine at this time.  It depends on the actual class size, the percentage of the actual class members that want to file individual cases, and the ability of Florida attorneys to meet the demand for case filings.  To be relatively conservative, assume that the class size if 200,000 and one third of these individuals actually file complaints within the year.  That means we would see about 67,000 new cases.  If the plaintiffs win only half of these (bearing in mind that most of the difficult issues have already been decided), this could mean 38,500 verdicts.  Looking at the very low end of compensatory damages for one of the smoking-caused diseases, assume that these verdicts average $500,000.  Assume that only half of these verdicts will trigger punitive damages and that punitive damages average nine times the compensatory damages.  That would mean $19.2 billion in compensatory damages and an additional $86.6 billion in punitive damages for a total of around $106 billion. 

But moreover, it will be a monumental challenge for the defendants to simultaneously defend so many cases.  While clearly tens of thousands of trials will take years to play out, it could very well require the cigarette companies to defend many hundreds of trials per year in Florida alone. 

One effect of this new flow of cases is that dozens of plaintiffs' law firms will become involved in tobacco litigation and their involvement is likely to spread well beyond the borders of the Sunshine State.  A recent ruling by the Massachusetts Supreme Judicial Court has eliminated a key tobacco defense in that state and as more attorneys become well-versed with the technical details of conducting a tobacco trial, we are sure to see attempts at replicating the class action approach to general liability in other states, even though recent changes in the law move most class actions to federal courts.

Richard A. Daynard, Professor of Law at Northeastern University in Boston and Chair of the Tobacco Products Liability Project, notes: "In 1984 when TPLP was started, the idea was that if every plaintiff had their day in court and were allowed to be heard, the Industry wouldn't be able to pay all the damages and would have to change their ways. If you take the amount paid to the 2 individual cases in Engle and multiply that amount by the tens of thousands of individual cases that could now be brought in FL (plus cases in other states), it proves that theory correct. In one famous RJ Reynolds internal document, a cigarette industry lawyer paraphrased General Patton by saying that 'the way we won these cases was not by spending all of Reynolds's money, but by making that other son of a bitch spend all of his."  That approach collapsed with today's historic ruling."

Edward L. Sweda, Jr., Senior Attorney for TPLP observed: "Today’s ruling is a major victory for injured Florida smokers since there now exists a viable and streamlined approach to litigation against the tobacco companies – with the prospect of both compensatory and punitive damages.  Much of what would need to be proved to establish punitive damages, i.e., reprehensible industry misconduct, is now established as part of the Phase I Findings.  Keeping in mind that the May 2003 ruling by the Third District Court of Appeal had completely wiped out the entire Engle case and eliminated all remedies for injured Florida smokers, we are delighted that the Florida Supreme Court ruled that, after approving the reversal of the $145 punitive damages award, “we quash the remainder of the Third District’s decision.”

Mark Gottlieb, Director of TPLP predicts that, "Despite the many headlines trumpeting this decision as a victory for Big Tobacco and the end of the largest legal threat facing the industry, I think this decision is likely to be remembered as a turning point in the battle to hold these cigarette companies legally and financially responsible for the unfathomable harm that their products have and continue to cause as a result of their disgusting and dishonest conduct.  TPLP will work to help bring as many attorneys into the fold and up to speed as possible in order to provide the class members with their long overdue day in court."

The Decision is available at http://www.floridasupremecourt.org/decisions/2006/sc03-1856.pdf