Award for Smoker Is Overturned

A state appeals court threw out a $21.7-million award against two tobacco giants Wednesday, ruling that a jury shouldn’t have considered evidence of industry misconduct in a 10-year period during which cigarette makers were protected from litigation.

The decision marked the first time a jury award had been overturned as a result of a California Supreme Court ruling in 2002 that determined the effect of previous legislative protections for the industry. That ruling said that because the state had shielded the tobacco industry from lawsuits from 1988 to 1998, diseased smokers who sue may not present evidence of misconduct during those years.

Leslie Whiteley, the cancer-stricken smoker who won the $21.7-million verdict against Philip Morris USA (now known as Altria Group Inc.) and R.J. Reynolds Tobacco Holdings Inc., died shortly after it was awarded in 2000. Her case was on appeal when the California high court decided how lower courts should deal with the 10-year immunity period for the industry.

Two other major jury awards against cigarette makers decided before the ruling remain on appeal.

In its unanimous ruling Wednesday, the three-member panel of the 1st District Court of Appeal said the trial judge in the Whiteley case should have instructed the jury not to consider any evidence of industry misconduct from the years when cigarette makers were protected in California.

The appeals court also said there was insufficient evidence for a jury finding that the negligent design of cigarettes caused Whiteley’s lung cancer.

H. Joseph Escher III, one of the lawyers for the tobacco companies, called the ruling a “huge blow” for litigants bringing lawsuits against cigarette makers. “The only claim they can win on is fraud,” Escher said. Now Whiteley’s family “is going to have to start all over again.”

Madelyn J. Chaber, who represented Whiteley, said she was disappointed but pleased the court found that smoking victims may still wage legal battles based on allegations that the industry made fraudulent claims about the safety of smoking and enticed young people to become addicted.

In upholding that right, the appeals court rejected industry claims that warnings put on cigarette packages in 1972 precluded people who later started smoking from suing.

The court said Whiteley’s claims weren’t based on the argument that the warnings were inadequate or that the industry’s promotions and advertisements downplayed the hazards of smoking.

“Rather,” said Justice J. Anthony Kline, who wrote the decision, “defendants were found liable for their intentional and negligent misrepresentations of material fact and for their false promises violating, not a duty based on smoking and health, but the broader state law duty not to deceive.”

Chaber called the ruling “fantastic” for future cases because it stated clearly that companies may be held liable for fraudulent conduct. She said the Whiteley family would ask for a rehearing, appeal to the state high court or retry the case.

“We are not walking away from this,” Chaber said. “I will retry it if I have to.... Leslie has four minor children who have lost a mother, and they will become the new plaintiffs in the case.”

Daniel U. Smith, who represented Whiteley on appeal, said “it would be a snap” to win the case again without alluding to the industry’s conduct during the 10 years it was immune in California.

“That is the problem with the decision,” he said. “Virtually nothing happened in those 10 years. All the fraud that got her addicted was before the ‘70s or during the ‘70s.”

But the three-member appeals panel said the verdict had to be overturned because Whiteley’s trial contained allegations that the industry had continued from the 1950s through the late 1990s “an uninterrupted course of blameworthy conduct,” including misleading the public as to the hazards of smoking and targeting minors through advertising.

“A proper instruction advising the jury that it could not find defendants liable for fraud or negligence based upon its conduct during the last 10 years of that period would have made such argument impossible,” Kline wrote for the panel.

The jury award that was overturned Wednesday included $1.7 million in compensatory and $20 million in punitive damages against the tobacco companies.