Anti-Smoking Group May Resort to Racketeering Law
Lawyers who won the first victory in U.S. history over a tobacco company in a lung-cancer death case said Tuesday that they believe a federal racketeering law can be used against cigarette companies.
Marc Z. Edell, lead lawyer for plaintiff Antonio Cipollone in the case decided Monday, said he and his co-counsels are considering adding claims under the Racketeer Influenced and Corrupt Organizations statute against cigarette companies in six other 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.
Cipollone’s lawyers prevailed Monday on one claim against Liggett Group Inc., but 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.
To win on the conspiracy charge, Cipollone’s lawyers would have had to prove not only that there was a conspiracy but that it was closely connected with Rose Cipollone’s smoking and death. But under the RICO law, the burden of proving reliance by a smoker on fraudulent statements or acts might be less, Edell said. Whether successfully applied or not, the use of a racketeering law against the cigarette makers could not help their public image.
Asked about possible use of the RICO law, Murry Bring, general counsel for Philip Morris, declared: “Ludicrous.”
Meanwhile, the top lawyer for Lorillard, called Monday’s verdict--in which a federal court jury here ordered Liggett Group to pay $400,000 in damages for the death of Rose Cipollone, deceased wife of plaintiff Antonio Cipollone--”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.
Claims Victory
On Tuesday, both sides tried to put the best spin on Monday’s complicated verdict--the first to go against the tobacco industry since it began defending these lawsuits more than 30 years ago.
At a press conference in Manhattan, Philip Morris declared its satisfaction at being exonerated and noted that Cipollone’s lawyers had spent far more on the case than they got out of it.
At a law office in Short Hills, N.J., Edell, who led the plaintiff’s legal team, said 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.”
Wall Street and litigation analysts also regarded the verdict as a setback for the industry but were divided on the magnitude of the defeat. The industry’s defense, which involved more than 20 lawyers, was “the most expensive production that I have ever seen in a courtroom,” said Calvert Crary of Martin Simpson & Co.
“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.
But Becky Barfield, a vice president of First Boston Corp., said tobacco stocks, traditionally depressed by product liability fears, 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 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 of 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 cigarettes, 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 for damages for liability 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 ruling 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 investments in research for public relations gain.
But according to Bring of Philip Morris, 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.”
Puffing on a Marlboro Light, 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 Cipollone was an addicted person.
He and 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.
Won’t Discuss Fees
But they refused to comment on published 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.”
The important thing, Bring said, 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 the 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.
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.”
