Cigarette Makers Liable in Florida Class-Action Case

Cigarette makers suffered a major legal defeat Wednesday in Miami, where a jury found them liable for illnesses in a huge class of current and former Florida smokers numbering in the hundreds of thousands.

The jury of four men and two women voted unanimously to reject the industry’s contention that there is no definitive scientific proof that smoking causes disease and that it is not addictive.

The verdict, which was widely expected, capped a yearlong trial in the first class-action suit by smokers ever to reach a jury in the United States. But the verdict only ends the first phase of the byzantine case.

The industry ultimately could be forced to pay tens of billions of dollars, though in this part of the marathon case jurors merely decided general liability issues and not damages.

“This is an extraordinary loss for the tobacco industry,” said Matthew Myers, general counsel for the National Center for Tobacco-Free Kids. “If this verdict is upheld, it poses the most serious financial risk from the courts that the industry has ever faced.”

Still, he cautioned that “ultimate victory is not certain” for the plaintiffs because of the possibility of appeals. Indeed, the smokers and ex-smokers face many other hurdles before they ever see a dime, including a likely challenge to their class-action status. And in the forthcoming individual trials, the industry will be able to employ defenses that have proved successful in the past.

In addition to Wednesday’s defeat, the industry faces hundreds of individual cases around the country, including cases filed by health insurers. There is also the looming possibility that the federal government may lodge a multibillion-dollar suit against the cigarette manufacturers, seeking to recover tax money spent treating sick smokers through various federal programs.

The industry reached a $206-billion settlement in November with 46 states, but that deal did not bar class actions such as the one in Florida or individual lawsuits.

Based on Wednesday’s findings in the trial’s first phase, the same jury will now regroup for a series of mini-trials to decide if any of the nine individuals designated as class representatives should be compensated for such smoking-related ailments as heart disease and cancer.

Any damages awarded to those class representatives would be used as guidelines in trying or settling tens of thousands more claims by sick smokers or their survivors.

The jury ruled for plaintiffs on almost every general issue, finding cigarette makers guilty of negligence, concluding that cigarettes are addictive and agreeing that cigarette makers for decades lied to the public about the risks and addictiveness of smoking. In addition, the jurors found that the companies could be found liable for intentional infliction of emotional distress.

Moreover, the jurors ruled that in future cases plaintiffs could ask for punitive damages from whichever cigarette companies they are suing, opening the industry up to potentially huge damages. Gary Black of Sanford Bernstein & Co., a leading cigarette industry analyst, said the punitive damage ruling would have a negative effect on tobacco stocks starting today. The verdict was announced after the stock markets closed Wednesday, although word got out earlier in the day that a verdict was coming and several tobacco stocks declined.

Although the verdict represents a major setback for the industry, it merely sets the stage for the mini-trials to follow, in which cigarette makers can still argue that the ailments of specific smokers had another cause--that smokers could have quit had they desired--and smokers weren’t defrauded because they didn’t rely on any of the falsehoods uttered by the industry.

In other words, the first verdict mainly establishes ground rules favorable to plaintiffs for resolving individual claims.

But that victory is no small matter, stressed Stanford University law professor Robert Rabin. He emphasized that the next set of cases will be heard by the same jury. “And that jury has just found this industry responsible for a whole range of reprehensible conduct,” said Rabin, who has closely followed cigarette litigation for years.

Indeed, Martin Feldman of Salomon Smith Barney, another leading cigarette analyst, said “the prime reason the industry lost this phase was because of the plaintiffs’ use of” damaging internal industry documents made public as a result of extensive litigation against the industry in recent years.

During the trial, Stanley Rosenblatt, the Miami attorney who was the plaintiffs’ lead lawyer, described the industry’s conduct as a “rampant and cynical long-standing pattern of fraud.” He produced many industry documents that indicated the cigarette companies had suppressed information about the health hazards of their products and about nicotine’s addictive qualities.

The industry claimed that there was no scientific proof that smoking causes any illnesses and that the public had been well aware for years that smoking is risky.

The jury clearly disagreed. The panel found that cigarettes cause bladder cancer, strokes, cervical cancer, emphysema, heart disease, kidney cancer, lung cancer, pregnancy complications, tongue cancer, stomach cancer and many other ailments. In fact, the jury found that cigarettes were responsible for 20 of 23 illnesses listed on the long, complicated jury form. The only exceptions were asthmatic bronchitis, infertility and bronchioloalveolar carcinoma.

The panel found every defendant liable. The defendants include Philip Morris Inc.; R.J. Reynolds Tobacco Co.; Brown & Williamson Tobacco Corp.; Lorillard Tobacco Co.; Liggett Group Inc.; Brooke Group Ltd., which acquired Liggett; the Council for Tobacco Research, the industry’s research wing; and the Tobacco Institute, the industry’s lobbying arm.

It seems likely that the industry will attempt to appeal the verdict as soon as it can, but it might not be permitted to appeal until after there have been verdicts in the subsequent individual cases seeking damages.

Columbia University law professor John Coffee said he thought the verdict was clearly vulnerable on appeal on the grounds that the class of smokers certified as plaintiffs by Florida trial Judge Robert Kaye is too big and too disparate to pass legal muster.

“This is a sprawling class with all kinds of claimants,” Coffee said. “This class would not be certified in any federal court,” he said, referring to a 1996 U.S. 5th Circuit Court of Appeals decision in New Orleans that threw out a nationwide class-action case against the cigarette firms and several subsequent decisions rejecting certification of smaller classes in individual states. The only place where a statewide class has been certified, he said, is Louisiana.

But both Rabin and Northeastern University law professor Richard Daynard disagreed. They both noted that a Florida appeals court had upheld the validity of the class several years ago and that the Florida Supreme Court declined to review that decision. “I think the certifications looks pretty strong at this point in Florida,” Rabin said. Still, the companies ultimately could seek review in the U.S. Supreme Court.

But they weren’t speaking Wednesday.

After the announcement of the verdict, Judge Kaye said that a strict gag order that he imposed months ago would remain in effect. Consequently, neither the bevy of industry lawyers, or Stanley and Susan Rosenblatt, the husband-and-wife team that represented the plaintiffs, would make any comment to the press.

The Rosenblatts have become formidable adversaries to the industry, with this case marking their second major triumph against the nation’s cigarette companies.

In October 1997, the industry agreed to pay $300 million to settle a class-action suit by U.S. flight attendants in a case that was the first to test cigarette makers’ liability for illnesses supposedly caused by secondhand smoke.

Wednesday’s verdict also follows a massive $13-billion settlement that the industry agreed to pay the state of Florida in August 1997 to avoid a trial.

In addition, the industry agreed to several public health concessions that then-Florida Gov. Lawton Chiles insisted be part of any deal to resolve the suit. Since that time, there has been a considerable amount of anti-tobacco advertising in the state financed by the massive settlement, helping create a more favorable climate for the plaintiffs.

The closely watched lawsuit that reached its first climax Wednesday has come to be known as the Engle case, for Dr. Howard Engle, a Miami Beach doctor who has emphysema and was the lead plaintiff.

Jury selection in the massive case began last July, and jurors began hearing testimony in October. The trial featured 84 witnesses--58 for the plaintiffs, among them some former surgeons general, and 26 for the defense, including industry executives--and nearly 1,400 exhibits, 1,098 presented by the plaintiffs and 270 by the defense.

In 40 years of litigation, juries have awarded damages in smoking cases only five times. Three of those verdicts were overturned on appeal and the other two--an $81-million verdict in Portland, Ore., in March and a $51-million verdict in San Francisco in February--are being appealed.

The industry did not pay a dime in damages until 1997, when it started settling massive cases filed by states seeking to recover tax money spent treating sick smokers. The industry settled cases filed by Mississippi, Florida, Texas and Minnesota for about $41 billion. Then in November, the industry settled with the other 46 states for $206 billion.

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Big Tobacco Cases

In the last two years, tobacco companies have settled claims for $246 billion in cases filed by state attorneys general around the country. They still face hundreds of suits by individual smokers. Some of the past year’s major decisions:

* In February, a San Francisco jury ordered Philip Morris to pay a Los Angeles smoker with inoperable lung cancer $51.5 million; the award was later reduced to $26.5 million.

* In March, a jury in Portland, Ore., awarded $80 million against Philip Morris to the family of a smoker who died of lung cancer.

* In March, an Ohio jury cleared the nation’s major cigarette companies of allegations by 114 union health funds that they conspired to suppress information about the hazards of smoking.