Cigarette Class Action Suits News

While the class action lawsuit has gained exposure in headlines and popular culture as a means of vindicating the little guy in the face of corporate malfeasance, it has proved a singularly unsuccessful device in tobacco litigation. The early days of class action litigation against Big Tobacco were characterized by mixed results, but later developments included numerous reversals of plaintiffs' awards and a clear trend away from certification. Various attempts to change the basis of class action claims (from personal injury to consumer protection issues, for example) were also largely unsuccessful. Today, the spark generated in the late '90s has fizzled: a survey of class action litigation web sites finds no mention of tobacco except in a historical context, and only two such cases await decision on appeal.

Individual smokers have been presenting claims against the major U.S. tobacco companies since the 1950s. Most early claims were defeated on the basis that the damaging effects of smoking were widely known and smoking was a personal choice. This changed in the 1990s with the introduction of evidence revealing that cigarette makers had known for years that their product was addictive, and multi-million dollar awards were not uncommon. Tobacco class action litigation began in 1997. A majority of these cases were never tried as they were denied certification, which means that the courts refused to hear the case as a class action.

Class actions are typically used when a large number of people have similar claims against one defendant. They have traditionally been acclaimed as an effective means of redress for plaintiffs whose financial claims are too small to litigate individually. The first hurdle in any class action suit is certification: the court must rule as to whether a case meets the specific requirements of the applicable class action rule. While each state has its own class action rules, they are all fundamentally similar and mirror the class action requirements of the federal courts.

These four basic requirements for certification as a class action are a class so large that individual suits would be impractical, common legal or factual claims, a class representative whose claims are typical of all members of the class, and a class representative who will adequately represent and protect the interests of the class. Because there are a multitude of individual factual issues in tobacco litigation cases (including a person's smoking habits, medical history, and reliance on industry advertising), most were denied certification on the basis that they did not satisfy all of the requirements. The few notable exceptions to this rule ultimately resulted in decertification or reversal.

Castano v. American Tobacco Co. was a landmark class action suit brought in 1994 by a consortium of plaintiffs' law firms on behalf of a national class of nicotine-addicted smokers and their estates. Certification was granted on February 17, 1995, but the suit was decertified by the U.S. Court of Appeals for the Fifth Circuit on May 23, 1996. This decision cited numerous obstacles to tobacco class actions, including the predominance of individual issues over common issues and the feasibility of individual damage claims. The Castano decision was influential in future cases, and most federal and state courts refused to certify (or ultimately decertified) future tobacco class actions.

An exception was Broin v. Philip Morris Inc., which was certified before the Castano decision was issued, and which was settled during trial. The first tobacco class action litigation to reach trial, Broin was filed on behalf of a class of non-smoking flight attendants for U.S. based airlines who were suffering tobacco-related illnesses. This case was also the first to raise the issue of liability for secondhand smoke. In October of 1997, the major U.S. tobacco companies and their affiliates settled the suit for $349 million. The Broin case continued to generate controversy as attorneys' fees and funding of a research foundation left the plaintiffs without money for damages. The settlement also precluded future litigation by flight attendants against the tobacco industry.

As tobacco class action litigation evolved, attempts were made to prosecute claims on the basis of consumer protection statutes. "Lights" suits were typical of this type of class action, which argued that the tobacco companies' actions harmed the plaintiffs' finances rather than their health. These suits basically alleged that tobacco companies violated the consumer protection statutes by deceptively claiming that lights contained less tar and nicotine than "full flavor" cigarettes, and were therefore safer. Because the legal requirements for certification of these consumer protection suits were similar to those of other class actions, most of these claims were denied certification. A notable exception was the Price case.

The first "lights" class action to go to trial, Price v. Philip Morris, Inc., was tried in Illinois' Third Circuit Court. On March 21, 2003, Philip Morris USA was found liable for not warning smokers that "light" cigarettes were as harmful as the regular variety and was ordered to pay $10.1 billion in damages. This decision was initially seen as setting a precedent for future "lights" cases, but on December 15, 2005, the Supreme Court of Illinois reversed the judgment of the lower court. The Supreme Court's decision cited the approval of the "light" advertising label by the Federal Trade Commission, which regulates cigarette marketing, thus making the smokers' claim exempt under Illinois consumer protection laws. In January of this year, a petition was filed asking the Illinois Supreme Court to vacate its December ruling. Although it was widely reported that a ruling was expected on March 27, 2006, the Court instead announced that it was still considering whether it would rehear the Price appeal.

Another type of tobacco class action suit brought under consumer protection statutes were "targeted marketing" cases, in which plaintiffs contended that the industry intentionally encouraged certain classes of people to smoke through deceptive advertising. These claims proved unsuccessful in most states as the majority of courts found that their consumer protection statutes also required proof of individual injury or reliance. Two California cases, Brown v. American Tobacco Co. and Daniels v. Philip Morris Inc., were originally certified based on state code, but subsequent approval of Proposition 64 in November of 2004 resulted in the decertification of both cases due to the predominance of individual rather than common issues.

Tobacco plaintiffs have also requested certification for class actions seeking medical monitoring relief. These actions generally sought relief in the form of a court-supervised medical monitoring fund to screen class members for smoking-related diseases. For the most part, courts have denied certification of such actions, citing the manageability and efficiency problems inherent in cases with such a vast number of both class members and individual issues.

A landmark medical monitoring case was Blankenship v. Philip Morris Inc. or In Re: Tobacco Litigation (Medical Monitoring Cases). This West Virginia case, in which a class of smokers sought medical monitoring for 250,000 smoking-related diseases, was the first medical monitoring class action to reach trial. After two months of a jury trial, a defense verdict was returned on November 14, 2001. That verdict was affirmed by the West Virginia Supreme Court on May 6, 2004. Subsequent medical monitoring claims have not been successful.

Only two tobacco class action suits are currently on appeal. The more publicized of the two, Engle v. R.J. Reynolds Tobacco Co., was filed in May of 1994 on behalf of a class of approximately 500,000 Florida smokers, and included claims that the tobacco industry misled these smokers about both the danger and the addictive nature of smoking. The first tobacco class action to reach a jury verdict, Engle resulted in a record jury award of $145 billion in punitive damages and $12 million in compensatory damages. Almost three years later however, on May 3, 2003, Florida's Third District Court of Appeals overturned the award and decertified the class. On May 12, 2004, the Florida Supreme Court agreed to review the case, and oral argument occurred on November 3, 2004.

Also on appeal is Scott v. American Tobacco Co., Inc., a Louisiana class action seeking billions of dollars to fund a medical monitoring program. The first phase of the trial ended on July 28, 2003, with the jury rejecting the plaintiffs' claim for medical monitoring, but finding that smoking cessation programs were valid. The second phase of Scott resulted in a May 21, 2004 jury award of $590 million to fund a ten-year smoking cessation program. Following the defendants' unsuccessful motion to have the verdict set aside, an appeal was filed. To date, oral argument has not been scheduled.

During the twelve years since class action suits were first filed, the tobacco industry has faced additional challenges. The most recent was a 1999 suit filed by the U.S. Department of Justice (DOJ), under the Racketeer Influenced Corrupt Organizations (RICO) Act, alleging that the tobacco companies intentionally concealed the health risks of cigarette smoking and marketed cigarettes to minors. The eight month trial ended in June of 2005, with the government requesting the tobacco industry pay $10 billion for a smoking cessation program. Since then, various public health groups have filed motions to intervene in an effort to expand the remedies proposed by the government.

Prior to the DOJ trial, the industry faced a protracted legal battle with the states that began in 1994 when Mississippi was the first state to sue tobacco manufacturers to recover the Medicaid costs of treating smoking-related illnesses. Four states (Florida, Minnesota, Mississippi and Texas) eventually settled with the tobacco companies for $40 billion. In 1998, the remaining 46 states and the District of Columbia reached a $206 billion settlement. This Master Settlement Agreement (MSA) has had unforeseen repercussions on tobacco class action litigation.

In addition to the payment of $206 billion over 25 years, the MSA also required the tobacco companies to change marketing and advertising methods, pay for a $1.5 billion anti-smoking campaign, allow access to previously secret industry documents, and disband industry trade groups such as the Tobacco Institute. According to the Attorneys General who signed the MSA, the agreement did not provide the tobacco companies with immunity from future private or class action lawsuits, but did preclude state-based lawsuits. Subsequent developments, however, indicate a trend toward interpreting the MSA as precluding any claim similar to those brought by the states.

In overturning the $145 billion award for punitive damages in Engle, the court held that the claims for punitive damage in both the previous state case and Engle were based on the same alleged facts and involved the same public interest, and therefore were precluded by the MSA. Earlier this month, the Georgia Supreme Court made a similar ruling in a private suit known as Gault, in which the family of a smoker who died of lung cancer sought punitive damages. The Georgia ruling is certain to influence the imminent Florida Supreme Court decision in Engle. These two decisions also strengthen the tobacco industry's defense that such claims are excluded by the MSA.

With only the Scott and Engle appeals remaining, and recent rulings portending further plaintiffs' setbacks, it appears that, like the Marlboro Man, tobacco class action litigation is history.