Ex-Smoker Award Sets New Liability Standard
A California lung cancer victim who only began smoking after warning labels were placed on cigarette packs won $20 million in punitive damages Monday from two tobacco companies, demonstrating how far the industry’s legendary legal fortunes have fallen.
The award against Philip Morris Inc. and R.J. Reynolds Tobacco Co. in itself will have minimal financial consequences for the companies, which sell $20 million worth of cigarettes in a few hours’ time.
But the verdict appeared to shatter the notion that tobacco companies, despite their other legal woes, at least were safe from claims by those who took up smoking after warning labels appeared in the 1960s.
If such claimants can prevail, it means “the tobacco companies face a virtually unlimited pool of prospective plaintiffs,” said Stephen Gillers, a law professor at New York University. “In other words, they don’t have a shut-off valve.”
The verdict in San Francisco Superior Court capped a 2 1/2-month trial and brought the total damage award to Leslie J. Whiteley and her husband to $21.7 million. The 40-year-old Whiteley, an Ojai mother of four, is gravely ill with lung cancer that has spread to her brain and liver.
Whiteley began smoking at age 13 in 1972, well after warnings were introduced. That element of her smoking history, along with evidence about her years-long alcohol abuse and use of marijuana, appeared very favorable to the defense.
But, in the third consecutive West Coast defeat for the tobacco industry, the 12-member jury last week found Philip Morris and Reynolds, makers of the brands Whiteley smoked and the top two U.S. cigarette manufacturers, liable for negligence and fraud. Jurors awarded $1.72 million in compensatory damages to Whiteley and her husband, Leonard Whiteley, setting the stage for the punitive damages phase that concluded Monday.
“We’re disappointed . . . and certainly intend to appeal,” said Daniel W. Donahue, senior vice president and deputy general counsel for R.J. Reynolds.
Tobacco Companies Plan to Appeal
William S. Ohlemeyer, vice president and associate general counsel for industry leader Philip Morris, said it “flies in the face of common sense to suggest that an individual who . . . never smoked a cigarette from a package that did not have a surgeon general’s warning on it was somehow uninformed or misled about the health risks of smoking.”
Ohlemeyer said he believes the companies have a strong basis for appeal, arguing that Superior Court Judge John E. Munter erred in allowing the jury to consider evidence of cigarette ads that appeared before Whiteley was born, and company “statements or conduct that she never heard or relied upon in making her decisions to smoke.”
“We’re thrilled,” said Madelyn Chaber, lead attorney for Whiteley. “I think the message is that you can’t put a label on a product and then lie and misrepresent. Hopefully, that’s the message to the rest of the corporate world.”
Several jurors later told The Times that they discussed a range of possible awards, from nothing to more than $1 billion, leading to a 9-to-3 compromise on the $20-million figure.
Some “wanted a much higher amount. They wanted to shut down Big Tobacco,” said juror Leonard Bove, a wastewater treatment plant operator in Redwood City.
Jury foreman Michael Criscola said other jurors were influenced by industry testimony about the companies’ recent acceptance of controls on some of its marketing efforts.
The verdict came on the same day that closing arguments began in Miami in a crucial phase of a class-action trial on behalf of sick or deceased Florida smokers. Jurors in that case, who have already ruled that cigarette makers lied about the hazards and addictiveness of smoking, will decide as early as next week whether to award compensatory damages to three class representatives stricken with cancer. They will then decide whether to award punitive damages in a potentially huge lump sum to as many as hundreds of thousands of Florida smokers.
The Whiteley verdict also gave the industry little time to savor its important victory last week in the U.S. Supreme Court, which ruled that the Food and Drug Administration had exceeded its authority in asserting jurisdiction over tobacco products. That legal battle did not involve claims for damages. Rather, it concerned whether the FDA could regulate cigarettes as drug-delivery devices and even lower or eliminate the nicotine content to make it easier for smokers to quit.
The industry is expected to try to use that victory as a bargaining chip in negotiations with Congress and health groups over future regulation of tobacco and protection from lawsuits.
In closing arguments on punitive damages in the Whiteley case, Chaber had described the compensatory damages of $1.72 million as a “mosquito bite,” and asked the jury for a punitive award of $115 million--which she said represented about 1% of the net worth of the two companies’ tobacco operations.
Firm’s Lawyer Says Industry Is Reforming
Philip Morris attorney David Hardy said punitive damages weren’t needed because the industry has already reformed itself by agreeing to marketing restrictions and multibillion-dollar payments under its 1998 settlements with the states.
Along with other recent cases, the Whiteley verdict suggests that juror attitudes are hardening in the face of internal documents contradicting the industry’s public stands on the risks and addictiveness of smoking.
The Whiteley verdict “was a very tough decision for the industry,” said Martin Feldman, a tobacco analyst with Salomon Smith Barney. It represented the industry’s third straight West Coast defeat--all with punitive damages--despite “the industry having used its most able and perhaps best prepared attorneys ever,” Feldman said.
“The industry has not yet shown it is able to deal with the [internal] documents these plaintiff lawyers are bringing in evidence,” he said.
In February of last year, another San Francisco jury ordered Philip Morris to pay $51.5 million in damages to a lung cancer victim who also was represented by Chaber. The next month, a Portland, Ore., jury ordered Philip Morris to pay $80 million in damages in another lung cancer case. Judges later trimmed the awards to $26.5 million and $32 million, respectively, and both cases are on appeal.
Tobacco cases proceed at glacial speed, and at no time have as many as 10 gone to trial in a single year. Some analysts said the large punitive awards could quicken the pace by drawing more plaintiffs’ attorneys into the litigation and triggering thousands more claims.
“The more cases like this that are brought, and the more cookie-cutter in nature they become, the greater the number of plaintiff lawyers that might find these cases attractive,” Feldman said.
However, Bill Pecoriello, a tobacco analyst with Sanford C. Bernstein & Co., said the number of filings is unlikely to grow dramatically until it is shown that at least some plaintiffs’ verdicts can withstand appeals.
Indeed, although the industry has agreed to expensive out-of-court settlements, it has never paid damages in a traditional smoking and health case. That’s because the industry’s West Coast losses are on appeal, and three prior damage awards against cigarette makers in Florida and New Jersey were overturned.
Striking a further note of optimism, some industry backers have pointed to courtroom victories in Memphis, Baton Rouge and Kansas City, Mo., in recent months as evidence of an isolated anti-tobacco bias in California.
But that may be of little comfort, given California’s huge population and potential to generate a flood of new claims, said Gary Schwartz, a professor and tort-law expert at UCLA’s School of Law. “We’re not Rhode Island here,” Schwartz said.
