Attorneys Disagree on Who Really Won Smoking Case

Cigarette companies and opposing lawyers Tuesday both tried to claim victory in this week’s landmark verdict against the tobacco industry--the first time in U.S. history that a tobacco company has been told to pay damages in a lung-cancer death case.

Lawyers for the plaintiff, Antonio Cipollone, pointed to the $400,000 awarded their client in the 1984 death of his wife Rose. The six-person federal jury in New Jersey found Monday that Liggett Group breached the warranty expressed in its ads that its cigarettes were safe.

But the tobacco industry noted that the plaintiff’s lawyers failed to persuade a jury that Liggett and two other cigarette makers--Philip Morris and Lorillard--fraudulently misrepresented the risks of smoking and conspired to mislead the public.

The top lawyer for Lorillard called Monday’s verdict “clearly a victory for the cigarette manufacturers.” Any effort “to characterize it otherwise is a distortion,” said Arthur Stevens, vice president and general counsel of Lorillard.

At a press conference in Manhattan, Philip Morris and Lorillard declared their satisfaction at being exonerated and noted that Cipollone’s lawyers, led by Marc Z. Edell, had spent $2 million on the case, far more than they got out of it.

Murray Bring, general counsel for Philip Morris, said the important thing is that the verdict and damage award should make the “manageable problem” of tobacco litigation even “more manageable.”

“I don’t see the plaintiff’s bar generally taking much comfort from the . . . return on investment that Mr. Edell got,” Bring said.

But George Kilbourne, a Martinez, Calif., lawyer who has about a dozen cases pending against cigarette companies, said he took a lot of comfort in it. “The first case is the one you spend a lot of money on,” Kilbourne said. “We now know they can be won.”

Kilbourne called documents obtained by Cipollone “explosive.” They will be available for use in other smoking liability cases, of which about 90 are pending. Kilbourne said the Cipollone verdict will not open the “flood gates” as some anti-smoking groups have predicted, but will cause more cases to be filed.

Edell himself dismissed the tobacco industry’s claims of victory, declaring that the only industry that could lose a $400,000 verdict and claim victory “is the same industry that told you that it still hasn’t been proven that cigarette smoking causes lung cancer.”

Although visibly disappointed Monday at the size of the damage award, Edell said Tuesday that he considered the case a “building block” for future cases and “did not anticipate recovering all the monies that we invested in this particular lawsuit.”

Wall Street and litigation analysts also regarded the verdict as a setback for the industry but were divided on the magnitude of the defeat.

Tobacco stocks came under pressure Tuesday in the wake of the verdict. Philip Morris fell $1.75 a share to $83.25; RJR Nabisco, owner of R. J. Reynolds, fell $1 to close at $47. Liggett dropped 50 cents to $7.625. The stock of Loews, owner of Lorillard, slipped 25 cents to $65.125.

But tobacco stocks have long been depressed by fears that one of the many product liability suits would be successful, prompting hundreds of similar suits.

Becky Barfield, a vice president of First Boston Corp., said tobacco stocks are unlikely to fall much more. “I think the Street sees this as being the smallest kind of loss” the industry could suffer, she said, referring to Wall Street.

The tobacco industry fought hard, and its battle was costly. Its defense involved more than 20 lawyers and was “the most expensive production that I have ever seen in a courtroom,” said Calvert Crary, a litigation analyst at Martin Simpson & Co., a brokerage in New York.

“If this is not a $50-million case, I’m not a litigation analyst,” Crary said. The tobacco companies can’t spend that much “too many times before they go broke,” he said.

The damage award against Liggett was for breach of the warranty expressed in its ads before 1966, that its cigarettes were safe. Rose Cipollone, who died of lung cancer at the age of 58 after filing the suit, smoked Liggett’s Chesterfield and L&M; brands from 1942, when she was 16, until 1968. Under New Jersey law, jurors did not have to find that Cipollone specifically relied on ads describing Chesterfield as safe for “nose, throat and accessory organs,” and touting L&M; as “just what the doctor ordered.”

Jurors also found that Liggett failed in its duty to warn the public before 1966, when a government-ordered caution statement went on cigarette packages, that it was hazardous to smoke. But the jury levied no damages on grounds that Liggett’s failure to warn was only 20% responsible for Cipollone’s continuing to smoke. Under New Jersey law, the failure to warn would have had to be at least 51% responsible for Cipollone’s smoking and death in order for damages to be assessed against Liggett.

Used Industry Documents

Cipollone smoked the brands of Philip Morris--the No. 1 U.S. cigarette maker--and Lorillard--the fourth biggest tobacco company--from 1968 until her lung was removed in 1983. But breach of warranty and failure-to-warn claims were dismissed against those companies after a federal appeals court ruled that the congressionally mandated warning in 1966 served as a shield against such claims.

Along with Liggett, Philip Morris and Lorillard were exonerated of the remaining charges that the three firms fraudulently misrepresented the risks of smoking and conspired to mislead the public.

Cipollone lawyers obtained thousands of internal industry documents and showed about 300 of the most damaging to the jury in support of the fraud and conspiracy charges. Some documents suggested that the industry knew nearly a half-century ago of a suspected link between smoking and cancer, but sought to manipulate their customers through a stream of denials and by funding research to create a false impression they were seeking the truth.

But according to Philip Morris lawyer Bring, the jury’s rejection of the conspiracy charge “stands for one proposition and one proposition only, and that is that in the 30-some years that the smoking and health controversy has been raging, this industry acted responsibly.”

The Cipollone lawyers said Tuesday that they now are considering a somewhat different legal strategy against the tobacco companies to prove the conspiracy charge.

Edell said that he and his co-counsels are considering adding claims under the Racketeer Influenced and Corrupt Organizations statute in six pending lawsuits.

The RICO law, primarily designed for government prosecution of organized crime, permits civil suits accusing businesses or individuals of engaging in a “pattern of racketeering” through fraud or other acts.

Rejection of Argument

In the Cipollone case, the plaintiff’s lawyers not only had to prove conspiracy but that the conspiracy directly influenced Cipollone’s decision to smoke and her subsequent death. Under the broad provisions of the RICO law, Edell said, there would be less need to show that the conspiracy affected the smoking behavior of a specific individual.

Asked about possible use of the RICO law, Bring issued a one-word response: “Ludicrous.”

Puffing on a Marlboro Light at a press conference earlier in the day, Bring told a crowd of 150 reporters and financial analysts that the industry had been engaged “in trying to find an answer to one of the most perplexing issues that faces mankind, and that is: What causes cancer?” Bring contended that the jury’s finding that Cipollone was 80% responsible for her decision to keep smoking was a rejection of the argument that nicotine is addictive and that Cipollone was an addicted person.

He and Lorillard attorney Stevens stated repeatedly that Cipollone’s “very big, very rich” New Jersey law firms by their own admission had invested $2 million of their own money in expenses and billable time, hoping to win a large award from the tobacco companies.

But they refused to comment on estimates that the three tobacco firms had spent at least $50 million defending the case since it was filed in 1983.

“I’m not going to get into a discussion of the fees we pay our lawyers,” Bring said. “I don’t think that’s relevant.”