The tobacco industry Friday agreed to pay $300 million to settle a landmark class-action suit by U.S. flight attendants, ending a long-running trial in Miami that was the first to test cigarette makers' liability for illnesses supposedly caused by secondhand smoke.
Under the deal's unusual terms, the $300 million will fund a vast medical research program rather than be paid to flight attendants, who can still proceed with individual damage suits against the industry.
The dramatic announcement brought a sudden halt to a case that had been underway for four months and that the industry had once been highly confident of winning.
The industry settled because a loss would have proved a huge embarrassment and a severe blow to its cherished goal of a nationwide tobacco peace accord, legal and political observers said. A proposed settlement worked out in June between tobacco companies, state attorneys general and private class-action lawyers is being considered by Congress. An anti-tobacco verdict in a major case could weaken support for the deal.
The outcome also means a huge financial windfall and professional triumph for the plaintiffs' attorneys, Stanley and Susan Rosenblatt, the husband-and-wife team who will be paid $49 million in legal fees and costs on top of the $300 million. When the Rosenblatts filed the case in 1991, and even when jury selection began this June, most experts and even fellow anti-tobacco lawyers thought they barely stood a chance.
The trial ended Friday morning, when Dade County Circuit Judge Robert P. Kaye announced the agreement to surprised jurors and sent them home. Tobacco lawyers had been close to wrapping up their defense, and jury deliberations on the first phase of the case would have begun late this month or in early November.
Lead plaintiff Norma Broin, a nonsmoking flight attendant who contracted lung cancer in 1989, was jubilant about the outcome, the third settlement of a major tobacco case in three months.
"Passive smoke was exposed for what it is, injurious to nonsmokers," Broin said, adding that the settlement "isn't only a positive for flight attendants" but "for all of humanity."
Richard Daynard, head of the Boston-based Tobacco Products Liability Project, called it a "spectacular win" for plaintiffs, with direct benefits to public health.
The industry response was muted. Cigarette makers Philip Morris Cos., R.J. Reynolds, Brown & Williamson and Lorillard said in a joint statement that the settlement "represents a common-sense approach" that is "consistent with the much broader legislative resolution now pending before Congress."
Gary Black, a tobacco analyst at the investment research firm of Sanford C. Bernstein and Co., described the settlement as "a business decision . . . to preserve what [the companies] are really seeking, which is the national deal."
"I don't think the industry thought they were going to lose, but they weren't going to take any chances."
New York University law professor Stephen Gillers said the settlement reflects the sea change in the industry's response to legal attacks. When the case was filed, tobacco companies believed "the way to put this [litigation] behind them was to make sure nobody got anything."
But now, the companies have decided that "the way to put this behind them is to start giving out money until everyone is satisfied and leaves them alone."
The $300 million will be paid in three annual installments and fund a new foundation devoted to research on early detection and cure of smoking-related diseases. The industry also agreed to support federal legislation extending the ban on smoking on domestic flights to international flights beginning or ending in the U.S.
Under the settlement, flight attendants will be able to proceed with individual claims against tobacco companies but under a unique set of ground rules that in certain ways tilts the playing field in their favor.
The industry agreed to waive defenses based on statute of limitations--eliminating a major obstacle for many flight attendants whose health problems arose many years ago.
In addition, the companies agreed to take upon themselves the legal burden of proving that certain diseases--including lung cancer, emphysema and chronic obstructive pulmonary disease--are not caused by secondhand smoke.
Ordinarily, flight attendants would have to prove that passive smoking can cause these illnesses, and did cause their specific health problems. But under the agreement, secondhand smoke would be assumed to be a generic cause of those illnesses, unless the industry can convince jurors otherwise.
In a plus for the industry, however, punitive damages will not be allowed in flight attendant lawsuits. In settling the case, the industry took a calculated risk that without the prospect of punitive damages, relatively few claims would be filed.
But in an interview Friday, Stanley Rosenblatt, 61, vowed to file individual claims for Norma Broin and other flight attendants named in the case as class representatives.
With Friday's announcement, the once-implacable industry has now blinked in all three of the mega-trials that have come in the wake of the proposed $368.5-billion tobacco truce announced June 20.
In July and August, the industry agreed to pay $3.4 billion and $11.3 billion, respectively, to settle lawsuits filed by Mississippi and Florida to recoup health care costs of treating sick smokers.
The latest settlement has increased speculation that the next two big cases, brought by the state of Texas and private class-action attorneys in Pennsylvania, may also be resolved out of court.
While acknowledging that the industry, in settling, did not admit that secondhand smoke is dangerous, Rosenblatt said that "people with any degree of sophistication never believe the fiction that when a company pays out big money," they do so simply because they're "nice guys or want finality."
There's no longer "any controversy on the issue of whether secondhand smoke causes disease," he said.
In recent weeks, the case had buzzed with settlement rumors, and Rosenblatt apologized Friday for having denied to reporters that discussions were taking place.
He said negotiations actually began during jury selection in June and had continued on and off since--with the industry insisting that "if there was a leak there would be no deal."
According to Rosenblatt, the companies "were adamant" that they wouldn't pay damages to flight attendants. But Rosenblatt said he and his clients were more interested in preserving their right to sue and the $300-million research fund than in getting a few thousand dollars for each flight attendant.
The case, known as Broin vs. Philip Morris, was the first anti-tobacco class action, filed three years before state attorneys general and an alliance of wealthy plaintiffs' lawyers began filing mass claims against the industry.
The Rosenblatts had refused to ally their mom-and-pop Miami firm with other plaintiffs' attorneys. At various times, Rosenblatt said, he concluded that "all those lawyers who told us we were crazy to get involved in the first place were right . . . . There were so many obstacles that we always thought it was doubtful that we would see any money."
Their prospects seemed dim, not only because of the industry's superior firepower. Evidence linking secondhand smoke to disease is not nearly as strong as for active smoking, and proving that specific illnesses were caused by passive smoking would have been extremely difficult.
In the initial phase of the trial, jurors would only have decided if secondhand smoke generally can cause illness, and if the industry lied or concealed the evidence. Had they won on those points, the plaintiffs still would have had to show in subsequent mini-trials that ailments of individual flight attendants were due to secondhand smoke.
But an avalanche of anti-smoking news since the case began in June apparently sapped the industry's confidence. Although jurors were admonished to avoid news from the smoking wars, some in the industry thought "external factors . . . made it virtually impossible to have a jury that would decide the case solely on the evidence," said an industry spokesman who would not speak if identified.
In another setback for the defense, Judge Kaye refused to allow testimony that the flight attendants' ailments may have been caused by cosmic radiation or other environmental exposures.
During the trial, the Rosenblatts said as many as 60,000 flight attendants might have suffered health damage from secondhand smoke. The industry said that estimate was grossly overstated.
The settlement got preliminary approval from Kaye on Friday, but a hearing will be held in the next few months before final approval is given.
A second class-action suit by the Rosenblatts seeking damages for all injured smokers in Florida is scheduled for trial early next year.
"I've had no overtures" to settle, Rosenblatt said. "If they start talking to us about settlement we will listen just as we did here."