Tobacco

Tobacco litigation can be divided into three distinct time frames based on the types of claims pursued and the legal theories on which those claims were based. The first wave of tobacco litigation (1954–1973) involved cases based mainly on the theories of deceit, breach of express and implied warranties, and NEGLIGENCE. Cases filed during the second wave of tobacco litigation (1983–1992) were based on the legal theories of failure to warn and strict liability. Neither of the first two waves of litigation proved to be successful for the plaintiffs.

The first wave of litigation was characterized by the tobacco industry's adamant claims that smoking and chewing tobacco products were not harmful to consumers. Plaintiffs during that time did not have the extensive medical studies demonstrating serious health consequences that are available today to support their claims. Thus, plaintiffs had a difficult time establishing the essential element of proximate cause (causal connection to the injury) in their tort cases. By the time of the second wave of tobacco litigation, the connection between smoking and illness had been firmly established, but the tobacco industry was still able to argue with great success that smokers assumed the risks of smoking by freely deciding to smoke. The FCLAA's requirement that a warning label be placed on all cigarette packaging and advertising supported the tobacco companies' defenses of contributory negligence and ASSUMPTION OF THE RISK.

During the first two waves of litigation, the tobacco companies were also successful in using their size and financial strength to make litigation as difficult as possible for the plaintiffs. The tobacco industry filed and argued every conceivable motion, took countless depositions, and sent out extensive interrogatories. As a result, it was extremely burdensome and expensive for plaintiffs and their attorneys to pursue their cases.

The third wave of tobacco litigation began in the early 1990s and consisted of CLASS ACTION suits brought by those injured by tobacco products, and medical cost reimbursement suits brought by states and insurance companies. The claims in the third wave were based on proven medical theories. First, plaintiffs could demonstrate that tobacco companies knew that nicotine is pharmacologically active and highly addictive but hid that knowledge and, in fact, denied it under oath. Second, plaintiffs could show that tobacco companies manipulated nicotine levels in their products in an attempt to foster addiction in their consumers. Common legal theories used in the third wave of litigation included fraud, intentional and negligent misrepresentation, emotional distress, violation of CONSUMER PROTECTION statutes, breach of express and implied warranties, strict liability, conspiracy, antitrust, negligent performance of a voluntary undertaking, UNJUST ENRICHMENT or indemnity, civil claims under the Federal RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS (RICO) ACT (18 U.S.C.A. §§ 1961 et seq. [1970]), and various criminal theories.

Litigation began with the certification of two class action suits (Broin v. Philip Morris, 641 So. 2d 888 [Fla. App. 3d Dist. 1994], review denied, Philip Morris Inc. v. Broin, 654 So. 2d 919 [Fla. 1995], and Castano v. American Tobacco, 84 F.3d 734 [5th Cir. 1996]). The class members in Broin were nonsmoking flight attendants who claimed that they suffered from various illnesses caused by their exposure to ETS from air travelers' cigarettes. Castano was based on plaintiffs' claims that tobacco companies intentionally manipulated nicotine levels, even though the companies knew that nicotine was a hazardous and addictive substance. The Castano class consisted of all nicotine-dependent persons or their estates, heirs, family members, or "significant others" in the United States and its territories and possessions, who have bought and smoked cigarettes manufactured by the defendants.

Because of the breadth of the class, the U.S. Court of Appeals for the Fifth Circuit ruled that the plaintiffs in Castano should not have been certified as a class; had the court allowed the case to proceed, it would likely have become the largest class action in U.S. history. After the decertification of the Castano class, plaintiffs' lawyers decided to pursue statewide class action suits in state courts around the nation.

Lawsuits since Castano have sought to eliminate the problem of certifying a large class. For example, Engle v. R. J. Reynolds, 672 So. 2d 39 [Ct. App. Fla. 3d Dist. 1996], review denied, 682 So. 2d 1100 (Fla. 1996), involved essentially the same claims as Castano, but the class was much smaller. The class certified in Engle consisted of Florida citizens and residents, and their survivors, who had suffered, presently suffer, or have died from diseases and other medical conditions caused by their addiction to cigarettes. The Engle class action was allowed to proceed, which made it the first class action lawsuit against tobacco companies to go to trial. In 2000, a six-person jury awarded the class members a record $145 billion in PUNITIVE DAMAGES.

A wave of state reimbursement suits began in 1994, when the state of Mississippi filed an unprecedented lawsuit on behalf of the state's taxpayers against the tobacco industry to recoup the state's share of MEDICAID costs incurred as a result of tobacco-related illnesses (Moore v. American Tobacco, No. 94-1429 [Miss. Chan. Ct. 1994]). The state of Mississippi proceeded on legal theories of unjust enrichment and restitution, based on the fact that the state's taxpayers had been directly injured by the actions of the tobacco industry because they were forced to pay Medicaid costs associated with tobacco-related illnesses.

In 1994, the state of Minnesota filed a medical cost reimbursement suit, with the insurance company Blue Cross-Blue Shield of Minnesota as co-plaintiff. When West Virginia filed its medical reimbursement lawsuit, it named as defendants not only tobacco companies, but also the Kimberly-Clarke Corporation, developer of the tobacco reconstitution process that enables tobacco companies to manipulate nicotine levels. In 1995, the state of Florida filed a lawsuit against the tobacco industry under Florida's Medicaid Third-Party Liability Act, effectively preventing tobacco industry defendants from prevailing under defenses of ASSUMPTION OF RISK and contributory negligence. Texas filed suit, in 1996, and brought claims based in part on the RICO Act and on theories of mail and wire fraud, antitrust violations, and public NUISANCE. The state of Washington additionally sued the law firms that had represented the tobacco companies for many years, arguing that they unlawfully helped their clients keep certain documents confidential.

Eventually, the tobacco companies were forced to seek a national settlement of all state tobacco claims. In 1996, the Brooke Group and Liggett Group, two of the largest U.S. tobacco companies, settled with the states of West Virginia, Florida, Mississippi, Massachusetts, and Louisiana. This settlement was noteworthy because it represented the end of the tobacco industry's unified effort to avoid paying out monetary damages. After this settlement the major tobacco companies began intensive negotiations with all 50 state attorneys general.

By 1998, the states of Florida, Minnesota, Mississippi, and Texas had negotiated individual settlements worth billions of dollars to each state. The remaining 46 states continued to negotiate with the tobacco companies and, in November 1998, a deal was reached. The key elements of the settlement included the payment to the states of $206 billion over a 25-year period, funding to support research on programs to reduce youth smoking, limitations on advertising and sporting event sponsorship, and a ban on cartoon characters in advertising and "branded" merchandise (e.g., T-shirts). In addition, the companies agreed to disband the TOBACCO INSTITUTE, the Council for Tobacco Research, and the Council for Indoor Air Research. While supposedly neutral, these groups disseminated false information about the safety of tobacco products and lobbied against increased tobacco regulation. The companies also agreed to establish a website that would contain all documents produced in state and other smoking and health-related lawsuits.

The federal government has also pursued a similar course against the tobacco industry, seeking billions of dollars in damages. The government filed suit, in 1998, asserting that smoking causes cancer and other serious illnesses. These illnesses cost the federal government $25 billion annually in health care claims. It sought to recover more than four decades' worth of expenses, plus damages. In 2001, a federal district court dismissed two of the three claims, allowing only the RICO theory of liability to move forward (United States v. Philip Morris Inc., 153 F. Supp. 2d 32 [D.D.C.2001]). By 2003, the government and the companies had not resolved the litigation and it was unclear whether a settlement might be reached.

Despite the national settlement with the states, the tobacco companies continue to defend themselves in lawsuits waged by individuals claiming health problems caused by either smoking or breathing secondhand smoke. In order to obtain the maximum benefit, plaintiffs' attorneys organize and work together. Plaintiffs also have access to new evidence obtained from internal tobacco company documents and former tobacco industry researchers to significantly bolster their cases. For example, the Minnesota Court of Appeals decided in State ex rel. Humphrey v. Philip Morris Inc., 606 N.W.2d 676 (Minn. App.2000), that tobacco company documents could be released to the public. During the initial Minnesota tobacco trial, the judge ordered the companies to release many internal documents. Since the parties settled before a verdict was reached, the tobacco companies sought to prevent public access to the documents given to the plaintiffs. The appeals court ruled that the trial court had properly examined the issues and that the documents could be released to the public. The appeals court also pointed out that many of the documents had already been disseminated publicly. The ruling cleared the way for a massive release of internal documents and indices that would aid other plaintiffs in their pending lawsuits against tobacco companies.